Esber Beverage Co. v. Labatt USA Operating Co., L.L.C.
138 Ohio St. 3d 71
| Ohio | 2013Background
- Esber Beverage was the exclusive Labatt distributor in a ten-county Ohio territory under a written franchise agreement with InBev.
- InBev sold the Labatt U.S. rights (including wholesale distributor contracts) to Labatt USA Operating Co., L.L.C. (Labatt Operating) as part of a divestiture resolving an antitrust action; closing occurred March 13, 2009.
- Labatt Operating, as successor manufacturer, solicited distributor presentations and on May 15, 2009 sent Esber a termination notice stating it acted under R.C. 1333.85(D) and would compensate Esber as required.
- Esber sued; the trial court granted preliminary relief for Esber and partial summary judgment holding the successor had assumed the written contract and thus could not invoke the 90-day termination right.
- The Fifth District reversed, holding R.C. 1333.85(D) permits a successor manufacturer to terminate a distributor (written or de facto franchise) within 90 days of acquisition, subject to statutory compensation requirements.
- The Ohio Supreme Court affirmed the court of appeals: the statute is clear and unambiguous, successor termination within 90 days is allowed if notice is timely and compensation is provided.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a successor manufacturer may terminate a distributor without cause within 90 days when the distributor has a written franchise with the predecessor | Esber: successor cannot terminate without cause if the successor assumed or entered into a written contract with distributor | Labatt: R.C. 1333.85(D) allows successor to terminate (written or de facto franchise) within 90 days if notice and statutorily required compensation are given | Court: R.C. 1333.85(D) is plain; successor may terminate within 90 days and must compensate the terminated distributor |
| Whether a predecessor’s written franchise agreement prevents successor’s statutory termination right | Esber: written contract limits successor’s ability to terminate | Labatt: statutory right cannot be waived; contract provisions inconsistent with statute are void under R.C. 1333.83 | Court: contractual waiver is void; statute controls |
| What conditions must the successor satisfy to terminate under R.C. 1333.85(D) | Esber: additional protections should apply because of an existing written agreement | Labatt: only compliance with 90-day written notice and statutory compensation is required | Court: timely written notice within 90 days and payment for inventory and lost franchise value suffice |
| Standard of review for summary judgment disposition | Esber: factual dispute about assumption of contract required denial of summary judgment | Labatt: statute governs as a matter of law, so summary judgment for successor appropriate | Court: de novo review; statute dispositive so summary judgment for Labatt Operating was proper |
Key Cases Cited
- Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95 Ohio St.3d 314 (2002) (standard of review for summary judgment)
- Temple v. Wean United, Inc., 50 Ohio St.2d 317 (1977) (summary judgment factors under Ohio law)
- M.H. v. Cuyahoga Falls, 134 Ohio St.3d 65 (2012) (affirming summary-judgment review standard)
- Estate of Johnson v. Randall Smith, Inc., 135 Ohio St.3d 440 (2013) (plain-language statutory interpretation rule)