In a significant case involving the definition of “successor manufacturer” under Ohio’s Alcohol Beverages Franchise Act (AFBA), R.C. 1333.85(D), the U.S. Court of Appeals for the Sixth Circuit issued a published opinion that held that MillerCoors, LLC, a joint venture formed by Miller Brewing Company and Coors Brewing Company, does not have the right to terminate existing distribution agreements under Ohio law.
In Beverage Distributors, Inc. v. Miller Brewing Company, --- F.3d ----, 2012 WL 3517378 (6th Cir. Aug. 16, 2012), MillerCoors was claiming that it had the legal right to terminate existing Miller and Coors distributorships in Ohio without just 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, the Sixth Circuit did not reach this question because it agreed with the district court 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, the Sixth Circuit affirmed that AFBA “prohibited” MillerCoors from terminating the plaintiff’s distributorships as a matter of law.
This unanimous opinion was designated for publication by the Sixth Circuit, and establishes a significant precedent that re-affirms that the definition of “successor manufacturer” in Section 1333.85(D) must be read in the context of the prohibitions on termination in Section 1333.8(B) and that termination cannot be permitted under Section 1333.85(D) if it is prohibited by Section 1333.85(B). It further re-affirms that termination is prohibited if a manufacturer transfers the brand to a joint venture or to any other entity over which it exercises control.