KRIS and Winebow: Selling the Wine While Fighting Over the Exit And How to Get There
Sending a termination notice does not empty a warehouse, transfer a trademark, update a brand website, or put the next distributor in business. Somebody still has to sell the wine, and the agreement should spell out what both sides owe each other until the relationship is fully done and the handoff to the next distributor is complete.
How a breakup became a lawsuit
Winebow began distributing Italian producer Franz Haas’s KRIS wines in 2006 and acquired a 49% interest in two KRIS trademarks. A 2023 Italian arbitration award declared the supply agreement “dissolved on the 24th of October 2021,” but required sales of remaining inventory and an end to exclusive-importer representations “once the products are totally sold.” (Order at 4–5.)
Haas alleged that following the arbitration awarding dissolution (i.e., the breakup) Winebow obstructed replacement distribution, slowed sales, and continued claiming exclusivity, costing it national accounts “including Walmart, Sam’s Club, and Olive Garden” and then sued over it. (Order at 7.)
In Franz Haas GmbH/srl v. Winebow, Inc., No. 2:25-CV-05766-JLS (C.D. Cal. Aug. 3, 2026), KRIS producer Franz Haas alleged that Winebow obstructed replacement importers, slowed sales of remaining inventory, and falsely claimed continuing exclusivity after their supply agreement ended. Judge Staton allowed claims for interference with prospective economic advantage and false advertising to proceed, concluding: “Here, Plaintiff has stated a claim for Lanham Act false advertising.” She dismissed the contractual-interference and trademark-infringement claims “without prejudice,” leaving Haas an opportunity to correct its pleading. The surviving claims still require proof. (Order at 15–21.)
While this suit was pending and before the dismissal of some of Franz Haas’s claims, Winebow had also appealed federal confirmation of the award – worth noting for the tenor and benchslap that occurred to Winebow for not having a terribly good case to appeal. In its March 2026 memorandum, the Ninth Circuit rejected Winebow’s document and translation objections and ordered briefing on sanctions: “AFFIRMED; ORDER TO SHOW CAUSE ISSUED.” The panel’s assessment: “Sophisticated litigants should know better than to waste the court’s or opposing party’s resources on spurious arguments.” (Mem. at 5, 7.)
Back in the district court, Judge Staton separately called Winebow’s out-of-context use of Haas’s earlier briefing “disingenuous.” (Order at 10.)
Good faith while the brand is leaving
In the district court case, the court questioned an interpretation allowing Winebow to “hold onto the remaining inventory for whatever period it chose.” (Order at 9.) It considered a reading requiring sales “using the same standard it had used in the past,” while leaving the Italian-law interpretation open. (Order at 10.) But the drafting problem is familiar: if continuing rights end when the last case sells, specify the effort required to sell it.
As a distributor, negotiate a continuation clause that keeps ordinary operations running through the notice period and any legally or contractually required extension. Tie that period to the agreement’s payment and dispute procedures. Specify the sales calls, account service, inventory rotation, and reporting you must maintain, and require the supplier to keep filling proper orders on existing terms and providing agreed marketing support. Address remaining inventory separately, with a defined sales period, a repurchase process, and the trademark permissions necessary to complete those sales. Preserve your right to challenge termination or compensation without turning continued performance or payment into a release.
FOR EXAMPLE: Notice of termination or nonrenewal shall not, by itself, suspend either party’s performance. Until termination or nonrenewal becomes effective under this Agreement and applicable law, including satisfaction of any payment or legally sufficient tender required before termination or transfer and any applicable standstill, Supplier shall continue filling commercially reasonable orders on existing terms, providing agreed marketing support, and honoring Distributor’s existing exclusivity. Distributor shall continue its agreed sales efforts, account service, inventory rotation, reporting, and payment obligations. Both parties shall perform these duties in good faith.
Following effective termination, Distributor may sell lawfully held, saleable inventory for [60] days, or any longer period required by applicable law. Supplier shall preserve the trademark and marketing permissions reasonably necessary for those sales, subject to existing quality controls. Distributor shall accurately describe its remaining authority in customer communications and advertising. Section [__] governs the return or repurchase of inventory remaining when that period expires.
These obligations survive termination for their stated periods. Continued performance, tender, or acceptance of compensation shall not waive either party’s right to challenge termination, dispute valuation, or seek interim relief, absent a separate written settlement. This provision creates no independent right to terminate and preserves otherwise applicable rights to suspend performance for reasons independent of the termination notice.
Litigants in liquor distribution disputes tend to focus on contracts and franchise laws and forget that the applicable UCC may supply obligations too. UCC § 1-304 imposes “an obligation of good faith in its performance and enforcement” on contracts and duties within the Code’s scope. For lawful exclusive-dealing agreements, UCC § 2-306(2) requires, unless otherwise agreed, the seller “to use best efforts to supply the goods” and the buyer “to use best efforts to promote their sale.” Apply those provisions through the governing state’s enactment. They do not themselves extend a contract after lawful termination, so identify which duties continue during the transition and when they end.
Write the workout into the agreement
Winebow tied its claimed continuing exclusivity to unsold KRIS inventory, while Haas alleged that Winebow slowed sales and obstructed replacement distribution. The court questioned a reading of the Italian arbitration award that would let Winebow “hold onto the remaining inventory for whatever period it chose.” (Order at 9–10.)
Our advice to distributors and brands: negotiate the transition before the breakup. State what notice changes, which duties continue, and the event that ends each duty. If a timely challenge pauses the handoff, specify the duration and how the parties will obtain an interim decision. Require records of continued sales and supply performance so both sides can demonstrate compliance.
Where applicable law or the agreement requires fair market value, reasonable compensation, or another termination payment, connect that obligation to the transition. Define what happens before tender, upon valid tender, and after acceptance. Identify any requirement to pay before transfer, whether a permitted estimate or undisputed payment allows the handoff while valuation continues, and who pays any later adjustment and when.
Negotiate releases separately. Seek express language preserving termination challenges, claims for additional compensation, and interim relief unless resolved in a separate written settlement. Payment of an amount already owed should not silently settle everything else.
Finally, preserve the marketing permissions needed for each authorized sales period, subject to agreed quality controls. Specify when those permissions narrow or end. A contract requiring continued sales should also preserve the tools necessary to make them.
Give the intellectual property an exit too
Winebow’s trademark interest supplied another complication in this case. The court found that “the agreement does not have an automatic reversionary clause.” Haas had not adequately alleged a transfer of Winebow’s interest back to it. (Order at 20–21.)
For those in a similar situation and looking to draft clear contracts or clarify issues in a settlement: Identify whether the distributor receives ownership, a license, or limited permission to use approved materials. Specify the permitted uses, quality controls, revocation conditions, and rights during inventory sales. A license is not necessarily revocable whenever one party changes its mind. An ownership interest needs an actual transfer mechanism, including triggers, deadlines, consideration, and required documents.
Coordinate the public announcement about termination too. This should be an explicit clause in your agreement if you are the sole US representative of some brand as a master wholesaler and are running social media or other accounts for the brand.
FOR EXAMPLE: Schedule A identifies the licensed Marks and marketing materials, the parties’ ownership interests, and the brand-specific digital assets subject to transfer. Supplier licenses Distributor to use the approved Marks and materials for authorized sales during the distribution, transition, and inventory-sales periods established by this Agreement and applicable law, subject to the quality controls in Section []. Notice of termination alone does not revoke that permission; other suspension or revocation must comply with Section []. This license does not alter any existing ownership interest.
No later than the effective date of a change in distribution rights, each party shall update current statements it controls to accurately describe its remaining authority. Each party shall promptly request correction of inaccurate statements in sponsored content it arranged.
On the handoff date specified in Section [__], each party shall transfer the assets identified for transfer in Schedule A to the designated recipient, including administrator and recovery access, using platform-approved procedures. Schedule A shall specify a permitted alternative where an account cannot be transferred. These handoff obligations survive termination.
The designation online of being a sole source caused some confusion and a contractual provision addressing what post-termination communications or advertising can be made would have helped. Here, the court explained that the alleged exclusive-importer claim suggested Winebow was “the sole importer from which such wine could be obtained.” (Order at 18.) Websites, distributor listings, influencer tags, and social profiles should accurately describe the rights that remain. That practical check applies to the departing distributor, the brand, and its replacement.
Set deadlines for correcting those representations and transferring domains, account access, and marketing materials. Agree on that handoff while both sides still want to sell the wine.
