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Esber Beverage Company v. Heineken Usa

November 14, 2011

ESBER BEVERAGE COMPANY PLAINTIFF-APPELLEE
v.
HEINEKEN USA, INC, ET AL DEFENDANTS-APPELLANTS



Appeal from the Stark County Court of Common Pleas, Case No. 2008 CV 05055

The opinion of the court was delivered by: Hoffman, P.J.

Cite as Esber Beverage Co. v. Heineken USA Inc.,

CHARACTER OF PROCEEDING:

JUDGMENT:

DATE OF JUDGMENT ENTRY:

JUDGES: Hon. William B. Hoffman, P.J. Hon. Sheila G. Farmer, J. Hon. John W. Wise, J.

OPINION

Affirmed

(¶1) Defendants-Appellants Heineken USA, Inc., et al. (hereinafter, collectively "HUSA") appeal the September 18, 2009 Judgment Entry entered by the Stark County Court of Common Pleas, which granted declaratory judgment in favor of plaintiffappellee Esber Beverage Co. (hereinafter "Esber").

STATEMENT OF THE FACTS AND CASE

(¶2) Esber is a Canton, Ohio based, family-owned and operated beverage wholesaler serving Ohio and the United States. Esber has distributed Heineken products since 1969, and Newcastle Brown Ale (hereinafter, "the Brand") since 1976.

(¶3) Prior to April 28, 2008, Heineken NV was an international company based in Holland. HUSA is a wholly owned subsidiary of Heineken BV, which, in turn, is a wholly owned subsidiary of Heineken NV. Also, prior to April 28, 2008, Scottish & Newcastle (S&N) was an international company with subsidiaries in 19 countries; Scottish & Newcastle UK Ltd ("S&N UK") was a wholly owned subsidiary of S&N based in the United Kingdom; Newcastle Federation Breweries ("NFB") was a wholly owned subsidiary of S&N UK and brewed the Brand; and Scottich & Newcastle Importers, Inc. ("SNIC") was a wholly owned subsidiary of S&N UK, located in California, and through which NFB imported the Brand into the United States. At all times prior to September 1, 2008, Esber was distributing the Brand through NFB's import agent, SNIC, pursuant to its franchise governed by the Ohio Alcoholic Beverage Franchise Act, R.C. 1333.83 et seq. ("the Act").

(¶4) In 2007, and early 2008, Heineken NV and Carlsberg A/S, an international company based in Denmark, entered into multiple agreements to form a joint venture company, Sunrise Acquisitions Limited, for the sole purpose of acquiring and dividing the assets of S&N. On January 25, 2008, Sunrise Acquisitions and S&N announced "they had reached an agreement on the terms of the recommended cash acquisition of the entire issued and to be issued share capital of [S&N] by [Sunrise Acquisitions]." Ultimately, Heineken NV acquired S&N's business in Belgium, Finland, India, Ireland, Portugal, the United Kingdom, and the United States. Carlsberg acquired S&N's business in China, France, Greece, Russia, Belarus, Estonia, Latvia, Kazakhstan, Ukraine, Uzbekistan, and Vietnam.

(¶5) Heineken NV acquired S&N UK, NFB, the Brand, and SNIC as part of the businesses, assets and investments it received from the joint venture. Pursuant to the agreement between S&N and Sunrise Acquisitions, Heineken NV assumed exclusive control over and liability for the S&N subsidiaries, effective April 28, 2008.

(¶6) On April 28, 2008, SNIC sent a letter to each of its United States distributors regarding Sunrise Acquisitions' acquisition of S&N and its subsidiaries. In the correspondence, SNIC advised "S&N Breweries will no longer be supplying [the Brand] to us on or before September 1, 2008. Once we are no longer importing [the Brand] into the United States, our contract with you will terminate accordingly. * * * [The Brand is] in the process of being acquired by Heineken NV."

(¶7) On May 1, 2008, HUSA sent a letter to each of its United States distributors regarding the acquisition, and indicating HUSA expected "to be appointed as the US importer for [the Brand] at the earliest opportunity, but no later than September 1, 2008." Thereafter, on May 21, and 27, 2008, HUSA sent identical letters to all of its United States distributors, including Esber, advising the distributors HUSA would, in fact, "become the exclusive US importer for the [Brand] on September 1, 2008." By letter dated June 23, 2008, NFB appointed HUSA as its new import agent for the Brand. By letter dated July 9, 2008, SNIC informed HUSA of SNIC's relinquishment of its representation as the prior import agent of the Brand in order to allow HUSA to become the new import agent. HUSA sent a letter to the Ohio Department of Commerce, Division of Liquor Control, on August 25, 2008, notifying the Department that HUSA would be appointed the sole US importer of the Brand effective September 1, 2008. HUSA indicated SNIC and NFB had authorized such.

(¶8) On October 24, 2008, HUSA notified Esber it was terminating Esber's franchise in the Brand pursuant to R.C. 1333.85(D). On November 25, 2008, Esber filed a declaratory judgment action against Heineken NV*fn1 , its sister companies, Superior Beverage Group, Ltd. and Central Beverage Group Ltd., and HUSA. Esber sought a declaration the termination of its franchise in the Brand was unlawful. The trial court granted a temporary restraining order on November 26, 2008, temporarily enjoining HUSA from terminating Esber's franchise. ...


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