Southern Glazer's Distributors of Ohio, LLC v. Great Lakes Brewing Co.
860 F.3d 844
| 6th Cir. | 2017Background
- Great Lakes Brewing (manufacturer) had a written distributor franchise with Ohio Glazer’s for the Columbus market; key clauses: Section 9 (owner change requires prior written consent; manufacturer shall not unreasonably withhold consent and must use reasonable business judgment) and Section 10 (termination for cause, including ownership change without consent).
- Glazer’s merged with Southern Wine & Spirits, converting the Ohio distributor into Southern Glazer’s Distributors of Ohio, without obtaining Great Lakes’ prior consent; Great Lakes notified termination (60‑day effective date) citing the contract.
- Southern Glazer’s of Ohio sued for a preliminary injunction to block termination, arguing Section 9(a) is invalid under the Ohio Alcoholic Beverages Franchise Act (Ohio Rev. Code §§ 1333.82–87), which plaintiff reads to prohibit manufacturer consent requirements for ownership changes.
- District court granted the preliminary injunction after weighing the four traditional factors (likelihood of success; irreparable harm; harm to others; public interest).
- Sixth Circuit reversed: it held as a matter of law that the contract consent provision is consistent with the Franchise Act, so plaintiff lacked a likelihood of success; remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of contract consent clause under Ohio Franchise Act | §1333.84(F) shows legislature omitted consent requirement for ownership changes, so Section 9(a) is void as expanding statutory scope | Section 9(d) requires reasonable business judgment and mirrors §1333.84(F)’s good‑faith/reasonable‑dealings standard; contract does not waive the Act and is permissible | Contract consent provision valid under Ohio law; plaintiff unlikely to succeed on this claim |
| Effect of other possibly invalid contract provisions on Section 9 | Because another clause (Section 10(d)) may conflict with the Act, Section 9 should be void too | Invalidity of a separate, irrelevant clause does not invalidate Section 9; severability and actual compliance with the Act control | Court rejects invalidity‑by‑proximity; Section 9 stands despite other invalid terms |
| Irreparable harm from termination | Loss of Great Lakes product would cause loss of customer goodwill and spillover losses not fully compensable by money; Great Lakes comprises substantial share of branch revenue | Contract contains liquidated damages provision so monetary relief could be adequate | Irreparable harm likely: loss of unique product and customer goodwill favors injunction |
| Public interest in granting injunction | Enforcement of statutory protections (Franchise Act) favors blocking termination | Public interest in enforcing private agreements weighs against injunction when contract complies with statute | Public interest favors enforcing the contract; thus the public‑interest factor does not support injunction |
Key Cases Cited
- Univ. of Tex. v. Camenisch, 451 U.S. 390 (preservation of status quo by preliminary injunction)
- Certified Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535 (preliminary injunction standards; movant need not prove case in full)
- Munaf v. Geren, 553 U.S. 674 (preliminary injunction is extraordinary relief)
- Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (injunctions require clear showing of entitlement)
- Bays v. City of Fairborn, 668 F.3d 814 (four‑factor preliminary injunction test)
- Winnett v. Caterpillar, Inc., 609 F.3d 404 (injunction must be reversed if no likelihood of success)
- Mich. State AFL–CIO v. Miller, 103 F.3d 1240 (standards for injunction review)
- Planet Aid v. City of St. Johns, 782 F.3d 318 (abuse of discretion standard for injunctions; de novo review of legal conclusions)
- Six Clinics Holding Corp., II v. Cafcomp Sys., Inc., 119 F.3d 393 (balancing injunction factors and "serious questions" framework)
- Yoder & Frey Auctioneers, Inc. v. EquipmentFacts, LLC, 774 F.3d 1065 (district court abuses discretion when it commits legal error in injunction analysis)
- Basicomputer Corp. v. Scott, 973 F.2d 507 (loss of customer goodwill is irreparable harm)
- Esber Beverage Co. v. Labatt USA Operating Co., L.L.C., 3 N.E.3d 1173 (overview of Ohio Franchise Act)