Beverage Distributors, Inc. v. Miller Brewing Company

690 F.3d 788, 2012 WL 3517378, 2012 U.S. App. LEXIS 17186
CourtCourt of Appeals for the Sixth Circuit
DecidedAugust 16, 2012
Docket11-3484
StatusPublished
Cited by9 cases

This text of 690 F.3d 788 (Beverage Distributors, Inc. v. Miller Brewing Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beverage Distributors, Inc. v. Miller Brewing Company, 690 F.3d 788, 2012 WL 3517378, 2012 U.S. App. LEXIS 17186 (6th Cir. 2012).

Opinion

OPINION

BOYCE F. MARTIN, JR., Circuit Judge.

MillerCoors, Miller Brewing Company (“Miller”) and its parent company SABMiller, and Coors Brewing Company (“Coors”) and its parent company Molson Coors Brewing Company (collectively, “the Manufacturers”) appeal the district court’s grant of summary judgment for Beverage Distributors, Inc., Dayton Heidelberg Distributing Co., Inc., Esber Beverage Co., Muxie Distributing Co., Inc., and Tramonte Distributing Co. (collectively, “the Distributors”). The Distributors filed lawsuits against the Manufacturers after MillerCoors — a joint venture created by Miller and Coors to sell the two brands in the United States — notified the Distributors that it intended to terminate their distributorships pursuant to its rights as a “successor manufacturer.” The Distributors’ suits were consolidated in the district court, where the Distributors requested injunctive relief and a judicial declaration that MillerCoors is not a “successor manufacturer” under Ohio law and, therefore, is prohibited under Ohio’s Alcoholic Beverages Franchise Act (“the Act”) from terminating the distributorships without “just cause” or consent. The district court found that MillerCoors is not a “successor manufacturer” under Ohio law because it is controlled by Miller and Coors, and, therefore, the Act prohibits MillerCoors from terminating the distributorships. For the following reasons, we AFFIRM.

I.

The district court, in Beverage Distributors, Inc., et al. v. Miller Brewing Co., et al., 803 F.Supp.2d 765, 766-68 (S.D.Ohio 2011) (citations omitted), laid out the relevant facts underlying these consolidated cases as follows:

[Tjhese cases entail the creation of a joint venture, [MillerCoors] by two competing beer manufacturers, [Miller and Coors].... The stated purpose of the joint venture was to better position the Miller and Coors brands to compete with the dominant beer manufacturer in the United States, Anheuser Busch.
Plaintiffs are Ohio wholesalers of beer and wine. Prior to the launch of MillerCoors in July 2008, each [Distributor] acted as the exclusive distributor of Miller and/or Coors brands within that [Distributor’s] defined territory pursuant to written franchise agreements.
In about 2002, Miller began to explore a transaction with Coors. In December 2007, Miller and Coors entered a Joint Venture Agreement which contemplated the creation of MillerCoors. MillerCoors was created as a Delaware limited liability company in April 2008. On July 1, 2008, SABMiller, Miller, Molson Coors, and Coors entered the MillerCoors LCC Amended and Restated Operating Agreement (“Operating Agreement”) governing the operation of the MillerCoors joint venture. On that date, Miller and Coors contributed and assigned most of their assets in the United States to MillerCoors. The assignment included the distribution agreements Miller and Coors had with [the Distributors]. Miller and Coors both engaged in restructuring of their respective businesses and assets in anticipation of the launch of MillerCoors.
Miller and Coors each have a 50% voting interest in MillerCoors. Miller has [a] 58% economic interest in MillerCoors, while Coors has a 42% economic interest in MillerCoors.
*791 Miller and Coors each have the right to appoint five members of the ten-member MillerCoors board of directors. Miller appointed five of its own current officers or employees to serve on the MillerCoors board of directors. Likewise, Coors appointed five of its own current officers or employees to the MillerCoors board.... Directors may be removed at any time with or without cause by the company that appointed them. The board members owe their fiduciary duty to the company that appointed them, not to MillerCoors or the other directors. If the MillerCoors board is deadlocked, the matter is referred to the CEOs of SAB Miller [and] Molson Coors. If the CEOs are unable to agree, the matter is deemed to have not been approved by the board.
The MillerCoors board of directors did not appoint MillerCoors’ executive officers. Rather, Miller and Coors each selected the officers of MillerCoors. For example, Coors appointed the CEO and Miller appointed the CFO. All of the executive officers of MillerCoors are former officers or employees of Miller or Coors.... The four-member committee that recommends executive compensation and benefits to the MillerCoors board includes the CEOs of SAB Miller and Molson Coors or their nominees. The Operating Agreement provides for monthly cross-functional meetings between the MillerCoors executives and their counterparts in SAB Miller and Molson Coors. Thus, the Operating Agreement contemplates that the CEO of MillerCoors will meet monthly with the CEOs of SAB Miller and Molson Coors. Similarly, the CFO of MillerCoors is required to meet monthly with the CFOs of SAB Miller and Molson Coors. MillerCoors ... confirmed that the cross-functional meetings occur....
MillerCoors’ revenues and cash are distributed directly to Miller and Coors. MillerCoors then asks Miller and Coors for cash back to meet MillerCoors’ operating and capital requirements. MillerCoors does not take on any debt under this arrangement.
Between August 19 and September 4, 2008, MillerCoors notified [the Distributors] that it intended to terminate their distribution rights as a successor manufacturer pursuant to Ohio Rev.Code § 1333.85(D). [The Distributors] began filing these consolidated lawsuits shortly thereafter, seeking a declaration that [the Manufacturers] lack just cause or any other basis to terminate their distributorships, and an injunction preventing [the Manufacturers] from terminating [the Distributors].

Under Ohio Revised Code § 1333.85:

[N]o manufacturer or distributor shall cancel or fail to renew a franchise or substantially change a sales area or territory without the prior consent of the other party for other than just cause and without at least sixty days’ written notice to the other party setting forth the reasons for such cancellation, failure to renew, or substantial change,

(emphasis added). The Act provides two exceptions to this rule: the first, section 1333.85(A), is not at issue in this case; the second, section 1333.85(D), is the “successor manufacturer” exception at issue here. Section 1333.85(D) provides, in part:

If a successor manufacturer acquires all or substantially all of the stock or assets of another manufacturer through merger or acquisition or acquires or is the assignee of a particular product or brand of alcoholic beverage from another manufacturer, the successor manufacturer, within ninety days of the date of the merger, acquisition, purchase, or assignment, may give written notice of *792 termination, nonrenewal, or renewal of the franchise to a distributor of the acquired product or brand.... If the successor manufacturer complies with the provisions of this division, just cause or consent of the distributor shall not be required for the termination or nonrenewal.

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Bluebook (online)
690 F.3d 788, 2012 WL 3517378, 2012 U.S. App. LEXIS 17186, Counsel Stack Legal Research, https://law.counselstack.com/opinion/beverage-distributors-inc-v-miller-brewing-company-ca6-2012.