Successor Brewers Under The Beer Industry Fair Dealing Act
It’s a BIFDA Thursday here at the blog. These are fun days. We present, for your review, a case from the series of decisions involving the Beer Industry Fair Dealing Act . As a refresher, yes, the Beer Industry Fair Dealing Act is the reason Bell’s wasn’t around for a time in Chicago. This article by Nicholas Day from the Chicago Reader is a passionate introduction to the BIFDA subject and a must-read.
Today’s case is Grant Importing & Distributing Co. v. Amtec International of NY Corp. (Part I). The plaintiffs in Grant were Illinois beer distributors who were responsible for distributing Zywiec beer in Illinois through contracts they had with Zywiec’s then exclusive importer, Advance Brands Importing, Inc. Advance advised the distributors that the brewer of Zywiec refused to ship beer to Advance for importing anymore and had given the contract for American importing to Amtec.
Amtec didn’t agree to distribute any beer to the plaintiffs, effectively terminating the arrangement they had with Advance to be the exclusive wholesalers of Zywiec in their geographic areas within Illinois. The distributors sued under BIFDA claiming that BIFDA required Amtec, as a successor to Advance, to not only provide the required notice for cancelling a distribution agreement, but also that Amtec had not shown the “good cause” required under BIFDA for cancelling a distribution agreement.
The distributors sought a restraining order to keep Amtec from selling any Zywiec beer in Illinois until the distributor’s exclusive distribution rights could be adjudicated. Amtec responded that it was Grupa Zywiec, the manufacturer of Zywiec beer that had terminated Advance’s right to import, which was the reason for termination of the distribution agreements. Amtec claimed that Grupa Zywiec selected Amtec as the exclusive importer after terminating Advance and that as such, Amtec was not a successor, under BIFDA, to Advance, and therefore was not bound by the methods and requirements prescribed in BIFDA for termination with a wholesaler of a distribution agreement.
The trial court agreed with Amtec and so did the appellate court.
A successor (brewer or importer) under the Beer Industry Fair Dealing Act was:
[A]ny person who in any way obtains the distribution rights that a brewer or master distributor once had to manufacture or distribute a brand or brands of beer whether by merger, purchase of corporate shares, purchase of assets, or any other arrangement.
The appellate court held that because Amtec did not acquire Advance importation rights by “merger, purchase of corporate shares, purchase of assets, or any other arrangement” then Amtec was not a successor under the Act and couldn’t be held to the terms in BIFDA requiring advance notice and good cause for the termination of a beer distribution agreement:
It is clear from the matters of record that the defendants did not obtain their distribution rights from Advanced and, as a consequence, they do not qualify as either successor brewers or brewers under the Act.
This was all because the rights had been transferred by Grupa Zywiec from Advance to Amtec and Amtec didn’t acquire anything directly from Advance. This case is a good lesson for those looking for a way around BIFDA broad definition of what constitutes a successor and for those looking to enforce a BIFDA provision, it provides valuable information for knowing just how valuable a contract with the right party can be.
But this isn’t the end of this matter. A companion case arose a year later, which we’ll bring to you next week.