A Second Successor Brewer Lesson for the Beer Industry Fair Dealing Act

Yes, we’ve made it to another Beer Industry Fair Dealing Act Thursday for all the beer industry folks doing business in Illinois.  Last week we brought you the first part of the lessons from Grant Importing & Distributing Co. v. Amtec International of NY Corp.  This week it’s round two for that exciting case.

Almost one year after the Illinois Appellate Court’s decision in Grant, the case was re-filed and removed to federal court.  A copy of the removal and complaint can be found here.  While the federal case was ultimately dismissed by stipulation between the parties, there was an opinion entered by the federal court on a motion to dismiss premised on BIFDA (815 ILCS 720/1 et seq.) that’s worth reading.

In Grant – Part II – the defendant again argued in line with the original appellate court opinion that Amtec wasn’t as successor under BIFDA.  What was different this time was that the plaintiffs had added a sentence to their complaint that they:

“have learned from a credible source that, notwithstanding Amtec’s representations to the contrary, Amtec did make a payment to Star Brands at or about the time Amtec acquired the rights to import and distribute Zywiec Beer to wholesalers in, inter alia, the State of Illinois.”

This alleged payment was enough to keep the federal court from dismissing the case based on the previous decision by the Illinois Appellate Court.  That’s because the original opinion was predicated on a complete lack of evidence about a relationship between Amtec and the previous importer but instead had dealt directly with the brewer Zywiec in acquiring its rights.  The trial court and appellate court in that case made a:

“finding that Amtec was not a “successor brewer” under BIFDA since there was no evidence to suggest that Amtec acquired its distribution rights from Star Brands through merger, purchase of corporate shares, purchase of assets, or another similar arrangement.”

The simple allegation that the plaintiffs had learned that money was paid between the two importers was enough to keep the federal case from being dismissed under BIFDA.

Compared to the original decision, this one offers a stark contrast based on a minimal allegation that would need to be proven through discovery – but the difference is that in one case, the action went away, and in the other, the parties would have to pursue litigation and incur attorneys fees to prove or disprove a transfer between the importers.

The BIFDA lesson is that any kind of monetary transfer – even if the contracts run through the original brewer – can create the kind of “other arrangement” mentioned in BIFDA for entrenching someone’s status as a successor brewer.