In two cases involving beer manufacturers who claimed that they were “successor manufacturers” under Ohio’s Alcoholic Beverages Franchise Act (ABFA), R.C. 1333.85(D), U.S. District Judge Michael H. Watson of the Southern District of Ohio in Columbus has issued two new opinions that ruled in favor of the distributorships and prevented the attempted termination of their long-standing franchise relationships.
In Beverage Distributors, Inc. v. Miller Brewing Company, No. 2:08-cv-00827 (S.D. Ohio March 22, 2011), MillerCoors, LLC, a joint venture between the Miller Brewing Company and the Coors Brewing Company, was claiming that it had the legal right to terminate existing Miller and Coors distributorships in Ohio without cause because it was allegedly a “successor manufacturer” under R.C. 1333.85(D). Although the distributors argued that R.C. 1333.85(D) did not provide any right of termination, Judge Watson did not reach this question because he found as a matter of law that both Miller and Coors retained and exercised control over the joint venture, and thus the proposed termination was prohibited under R.C. 1333.85(B)(4), which prohibits termination when a manufacturer transfers brands to another manufacturer over which it exercises control. Accordingly, Judge Watson held that ABFA “prohibited” MillerCoors from terminating the plaintiff’s distributorships as a matter of law.
In Bellas Company v. Pabst Brewing Company, No. 2:10-cv-00907 (S.D. Ohio Mar. 11, 2011), the case presented a similar issue involving the attempted termination of distributorships by Pabst Brewing Company, which claimed that it was a “successor manufacturer” under the ABFA, based upon the fact that its parent ownership changed in June 2010. Judge Watson found, however, that the stock purchase agreement provided that all existing Pabst distribution agreements remained in “full force and effect,” and that Pabst breached the existing distribution agreements because it failed to provide 60 days notice prior to termination. As a result, Judge Watson held that the attempted termination was legally ineffective and that the agreements “continue to bind Pabst” as a matter of law.