Beverage Distributors, Inc. v. Miller Brewing Co.
803 F. Supp. 2d 765
S.D. Ohio2011Background
- Consolidated diversity actions arise from termination of Ohio ABFA franchises by MillerCoors.
- MillerCoors formed in 2008 as a joint venture between Miller and Coors to compete with Anheuser-Busch.
- Plaintiffs were Ohio beer and wine distributors whose exclusive distribution rights for Miller/Coors brands were terminated.
- Operating Agreement for MillerCoors appointed equal board control to Miller and Coors; executives largely from Miller/Coors; MillerCoors revenues flow to Miller and Coors.
- Defendants seek to terminate distributors under Ohio Rev.Code § 1333.85(D) as a successor manufacturer; plaintiffs challenge that MillerCoors is not a successor under the statute.
- Court grants plaintiffs’ summary judgment and denies defendants’ on the central issue of successor manufacturer status.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MillerCoors is a successor manufacturer under § 1333.85(D). | Plaintiffs contend MillerCoors is not a successor because Miller/Coors retain control. | Defendants contend the joint venture constitutes a successor under § 1333.85(D). | Yes; MillerCoors is not a successor; control by Miller/Coors defeats successor status. |
| Whether the § 1333.85(B)(4) control analysis governs successor status. | Plaintiffs argue B(4) applies because prior manufacturers exercise control over the transferee. | Defendants argue B(4) does not apply due to lack of majority control and separate entity. | Totality-of-the-circumstances control applies; prior owners exercise control over MillerCoors. |
| Whether equal board control and executive interdependence evidence control. | Plaintiffs rely on equal 5-5 board, independent directors, and cross-company meetings as showing control. | Defendants point to paper independence (Section 1.1) and lack of standalone management. | Indicia collectively show control by Miller and Coors over MillerCoors. |
| Whether restructuring or merger-like events trigger § 1333.85(B)(2) but not § 1333.85(D). | Restructuring/transfer under common control should not permit termination absent just cause. | Defendants rely on InBev and Schieffelin to limit the successor exception to mergers. | Respective reasoning supports applying § 1333.85(B)(2) and § 1333.85(D) to determine termination rights. |
Key Cases Cited
- Ford v. McCue, 163 Ohio St. 498, 127 N.E.2d 209 (1955) (Ohio Supreme Court 1955) (equal control considerations in partnerships)
- Grendell v. Ohio Enviro. Prot. Agency, 146 Ohio App.3d 1, 764 N.E.2d 1067 (6th Dist.2001) (Ohio App. 2001) (equal control concept in joint ventures)
- Cox v. Lemonds, 107 Ohio App.3d 442, 669 N.E.2d 23 (Ohio Ct. App. 2 Dist.1995) (Ohio App. 1995) (tie-breaking or significant control in 50-50 partnerships)
- Turner v. Eberlin, 117 Ohio St.3d 381, 884 N.E.2d 39 (2009) (Ohio Supreme Court 2009) (application of Black's Dictionary definitions to statutory terms)
- Theoharous v. Fong, 256 F.3d 1219 (11th Cir.2001) (11th Cir. 2001) (control as a function of totality of circumstances in corporate settings)