CROWN BEVERAGE v. Dixie Brewing Co.

695 So. 2d 1090, 96 La.App. 4 Cir. 2103, 1997 La. App. LEXIS 1484, 1997 WL 283724
CourtLouisiana Court of Appeal
DecidedMay 28, 1997
Docket96-CA-2103
StatusPublished
Cited by3 cases

This text of 695 So. 2d 1090 (CROWN BEVERAGE v. Dixie Brewing Co.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CROWN BEVERAGE v. Dixie Brewing Co., 695 So. 2d 1090, 96 La.App. 4 Cir. 2103, 1997 La. App. LEXIS 1484, 1997 WL 283724 (La. Ct. App. 1997).

Opinion

695 So.2d 1090 (1997)

CROWN BEVERAGE COMPANY
v.
DIXIE BREWING COMPANY, INC.

No. 96-CA-2103.

Court of Appeal of Louisiana, Fourth Circuit.

May 28, 1997.

Benjamin R. Slater, III, Mark E. Van Horn, Donald J. Miester, Jr., Slater Law Firm, New Orleans, for Plaintiff/Appellee Crown Beverage Company.

Robert S. Rooth, Corinne Ann Morrison, Chaffe, McCall, Phillips, Toler & Sarpy, L.L.P., New Orleans, for Defendant/Appellant Dixie Brewing Company, Inc.

Before KLEES, ARMSTRONG and MURRAY, JJ.

ARMSTRONG, Judge.

This appeal from a preliminary injunction raises the question of whether a statute regulating contracts between beer suppliers and beer wholesalers is retroactive so as to regulate contracts entered into prior to the 1993 enactment of the statute. The preliminary injunction in this case was predicated upon the statute being retroactive, so as to regulate contracts entered into prior to the statute's 1993 enactment, and enjoined the defendant beer supplier from violating the statute and most particularly from terminating a contract entered into with the plaintiff beer wholesaler in 1990. We hold that the 1993 statute is not retroactive, and so does not regulate the 1990 contract at issue, and we vacate the preliminary injunction and remand for further proceedings.

*1091 The defendant beer supplier is Dixie Brewing Company, Inc. ("Dixie") and the plaintiff beer wholesaler is Crown Beverage Company ("Crown"). In 1989, Dixie filed for Chapter 11 bankruptcy from which it emerged, by a confirmed plan for reorganization, in 1993. On July 19, 1990, while in bankruptcy, Dixie entered into a Wholesale Sales Agreement ("the Agreement") with Crown. The "Term" provision of the agreement provides that the Agreement will run until terminated by one of the parties as allowed for by the Agreement. In particular, the Agreement allows Crown to terminate upon ninety days notice and allows Dixie to terminate upon thirty days notice. Crown's right to terminate is not qualified in any way and so, apparently, is an unrestricted right to terminate at will. Dixie is given the right to terminate if "in its sole discretion [it] determine[s] that [Crown] is deficient in any one or more of its obligations of performances herein set forth."

The Agreement provided Crown with a non-exclusive "Area of Sales Responsibility" or "ASR" of Orleans, St. Bernard, and Jefferson (excepting Grand Isle) Parishes and makes various provisions obligating Crown to maximize the sales of Dixie beer in that area. Crown is to "actively and effectively resell and promote [Dixie beer] to retailers and to develop and promote [Dixie beer] among retailers and consumers within" Crown's ASR. Crown is to "aggressively promote the sale and distribution of [Dixie beer]." Crown "expressly agrees to devote sufficient time, effort and resources to promote diligently [Dixie beer] to the full extent of [Dixie beer's] potential consumer acceptance" in Crown's ASR.

Dixie became concerned that sales of its beer by Crown were dropping dramatically while sales of Dixie beer by other wholesalers were increasing. Sales of Dixie beer by Crown dropped from 97,511 cases in 1991 to 54,984 cases in 1995 and 26,485 cases in the first six months of 1996 (annualized 52,970 cases for 1996). At the same time, sales of Dixie beer by all other wholesalers went from 81,402 cases in 1991 to 187,560 cases in 1995 and 86,161 cases for the first six months of 1996 (annualized 172,322 for 1996). Also, during approximately that same time period, the number of retail outlets in the Greater New Orleans area carrying Dixie beer declined from about 1,200 outlets to about 600 outlets. There are about 3,000 potential outlets in the Greater New Orleans area.[1]

Crown sells at least fifteen beers which compete with Dixie beer. Supermarkets in the Greater New Orleans area are the largest sellers of Dixie beer and are, therefore, very important retail outlets for Dixie. Dixie discovered that various supermarkets in the Greater New Orleans area would, at least at times, be "out of stock" of Dixie beer. Also, Dixie discovered that the amount of shelf space in Greater New Orleans area supermarkets which was allocated to Dixie beer (which allocation was typically under Crown's control) was much less than the shelf space allocated to other brands of beer sold by Crown. This allocation of shelf space tends to affect beer sales.

On July 2, 1996, Dixie hand delivered to Crown a letter giving thirty days notice of termination of the Agreement as provided for in the Agreement. Crown filed the present action against Dixie, contending, among other things, that the termination of the Agreement would violate Chapter 6 of Title 26 of the Revised Statutes, captioned "Business Relations—Wholesalers and Suppliers of Beer," which appears at La. R.S. 26:801-812 (hereinafter "Chapter 6"), which had been enacted in 1993. Chapter 6, among many other provisions which impose sweeping and detailed regulation of contracts between beer suppliers and beer wholesalers, provides that a beer supplier may not terminate a contract with a beer wholesaler unless the beer supplier (1) has satisfied certain statutory notice requirements, (2) has acted in good faith, and (3) has "good cause" for the termination. La. R.S. 26:805.A. The statute also places upon the beer supplier the burden of proving those prerequisites for termination. La. R.S. 26:805.B. The statutory *1092 requirement of "good cause" is addressed in La. R.S. 26:805.D but it is not clear whether that provision describes the only circumstances which constitute "good cause" or whether it instead describes one, but not the only set of circumstances which constitute "good cause." In any case, it is apparent that Chapter 6's restrictions on termination, particularly its "good cause" requirement, are substantially inconsistent with Dixie's contractual right to terminate if "in its sole discretion" Dixie determines that Crown's performance is deficient.

Both because of Chapter 6's sweeping regulation of beer-supplier-wholesaler contracts in general, and because of its restrictions on beer suppliers' contract terminations in particular, it is readily apparent that Chapter 6, if retroactive so as to be applicable to the Agreement, would significantly change the substantive rights and obligations of Crown and Dixie under the Agreement. Consequently, Dixie argues both that Chapter 6 is not retroactive so as to be applicable to the Agreement and, alternatively, that if Chapter 6 is retroactive so as to be applicable to the Agreement, then Chapter 6 is unconstitutional in that respect as impairing the obligations of contracts. See U.S. Const. Art. I, § 10; La. Const. of 1974, Art. I, § 23. However, as we find that Chapter 6, enacted in 1993, is not retroactive, and does not apply to the 1990 Agreement, we need not address the issue of its constitutionality.

Chapter 6 itself provides that:

"This Chapter shall apply to agreements entered into or renewed after [Chapter 6's effective date of] May 26, 1993." La. R.S. 26:809(A). As to the Revised Statutes as a whole, of which Chapter 6 is a part: "No section of the Revised Statutes is retroactive unless it is expressly so stated." La. R.S. 1:2 (emphasis added). As to statutes in general, the Civil Code provides:
In the absence of contrary legislative expression, substantive laws apply prospectively only. Procedural and interpretative laws apply both prospectively and retroactively, unless there is a legislative expression to the contrary.

La. Civ.Code art. 6.

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Bluebook (online)
695 So. 2d 1090, 96 La.App. 4 Cir. 2103, 1997 La. App. LEXIS 1484, 1997 WL 283724, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crown-beverage-v-dixie-brewing-co-lactapp-1997.