RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 12a0266p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT _________________

BEVERAGE DISTRIBUTORS, INC.; DAYTON

HEIDELBERG DISTRIBUTING COMPANY, INC.;

ESBER BEVERAGE COMPANY; TRAMONTE

DISTRIBUTING CO.; MUXIE DISTRIBUTING

CO., INC.,

Plaintiffs-Appellees,

OHIO VALLEY WINE COMPANY,

 Intervenor Plaintiff ,

v.

MILLER BREWING COMPANY; SABMILLER,

plc SABMILLER HOUSE; MILLERCOORS,

LLC; COORS BREWING COMPANY; MOLSON

COORS BREWING COMPANY,

Defendants-Appellants,

ADOLPH COORS COMPANY,

Defendant.

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No. 11-3484

Appeal from the United States District Court

for the Southern District of Ohio at Columbus.

Nos.: 2:08-cv-827; 2:08-cv-931; 2:08-cv-1112; 2:08-CV-1131; 

2:08-cv-1136—Michael H. Watson, District Judge.

Argued: May 29, 2012

Decided and Filed: August 16, 2012 

Before: MARTIN, GILMAN, and WHITE, Circuit Judges.

_________________

COUNSEL

ARGUED: L. Joseph Loveland, KING & SPALDING LLP, Atlanta, Georgia, for

Appellants. Stephen W. Funk, ROETZEL & ANDRESS, Akron, Ohio, for Appellees

ON BRIEF: L. Joseph Loveland, Merritt E. McAlister, KING & SPALDING LLP,

Atlanta, Georgia, John Russell Chlysta, HANNA, CAMPBELL & POWELL, LLP,

Akron, Ohio, Jeffrey S. Bucholtz, KING & SPALDING LLP, Washington, D.C., for

Appellants. Stephen W. Funk, ROETZEL & ANDRESS, Akron, Ohio, David W.

1
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 2

Alexander, Emily E. Root, SQUIRE, SANDERS & DEMPSEY, LLP, Columbus, Ohio,

Mark D. Wagoner, Jr., SHUMAKER, LOOP & KENDRICK, LLP, Toledo, Ohio, John

P. Maxwell, Paul H. Malesick, Charles E. Ringer, KRUGLIAK, WILKINS, GRIFFITHS

& DOUGHERTY CO., LPA, Canton, Ohio, Tracey Lancione Lloyd, Richard L.

Lancione, LANCIONE LLOYD AND HOFFMAN, Bellaire, Ohio, for Appellees.

_________________

OPINION

_________________

BOYCE F. MARTIN, JR., Circuit Judge. MillerCoors, Miller Brewing Company

(“Miller”) and its parent company SABMiller, and Coors Brewing Company (“Coors”)

and its parent company Molson Coors Brewing Company (collectively, “the

Manufacturers”) appeal the district court’s grant of summary judgment for Beverage

Distributors, Inc., Dayton Heidelberg Distributing Co., Inc., Esber Beverage Co., Muxie

Distributing Co., Inc., and Tramonte Distributing Co. (collectively, “the Distributors”).

The Distributors filed lawsuits against the Manufacturers after MillerCoors—a joint

venture created by Miller and Coors to sell the two brands in the United States—notified

the Distributors that it intended to terminate their distributorships pursuant to its rights

as a “successor manufacturer.” The Distributors’ suits were consolidated in the district

court, where the Distributors requested injunctive relief and a judicial declaration that

MillerCoors is not a “successor manufacturer” under Ohio law and, therefore, is

prohibited under Ohio’s Alcoholic Beverages Franchise Act (“the Act”) from

terminating the distributorships without “just cause” or consent. The district court found

that MillerCoors is not a “successor manufacturer” under Ohio law because it is

controlled by Miller and Coors, and, therefore, the Act prohibits MillerCoors from

terminating the distributorships. For the following reasons, we AFFIRM.

I.

The district court, in Beverage Distributors, Inc., et al. v. Miller Brewing Co., et

al., 803 F. Supp. 2d 765, 766-68 (S.D. Ohio 2011) (citations omitted), laid out the

relevant facts underlying these consolidated cases as follows:
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 3

[T]hese cases entail the creation of a joint venture, [MillerCoors]

by two competing beer manufacturers, [Miller and Coors] . . . . The

stated purpose of the joint venture was to better position the Miller and

Coors brands to compete with the dominant beer manufacturer in the

United States, Anheuser Busch.

Plaintiffs are Ohio wholesalers of beer and wine. Prior to the

launch of MillerCoors in July 2008, each [Distributor] acted as the

exclusive distributor of Miller and/or Coors brands within that

[Distributor’s] defined territory pursuant to written franchise agreements.

In about 2002, Miller began to explore a transaction with Coors.

In December 2007, Miller and Coors entered a Joint Venture Agreement

which contemplated the creation of MillerCoors. MillerCoors was

created as a Delaware limited liability company in April 2008. On July

1, 2008, SABMiller, Miller, Molson Coors, and Coors entered the

MillerCoors LCC Amended and Restated Operating Agreement

(“Operating Agreement”) governing the operation of the MillerCoors

joint venture. On that date, Miller and Coors contributed and assigned

most of their assets in the United States to MillerCoors. The assignment

included the distribution agreements Miller and Coors had with [the

Distributors]. Miller and Coors both engaged in restructuring of their

respective businesses and assets in anticipation of the launch of

MillerCoors.

Miller and Coors each have a 50% voting interest in MillerCoors.

Miller has [a] 58% economic interest in MillerCoors, while Coors has a

42% economic interest in MillerCoors.

Miller and Coors each have the right to appoint five members of

the ten-member MillerCoors board of directors. Miller appointed five of

its own current officers or employees to serve on the MillerCoors board

of directors. Likewise, Coors appointed five of its own current officers

or employees to the MillerCoors board . . . . Directors may be removed

at any time with or without cause by the company that appointed them.

The board members owe their fiduciary duty to the company that

appointed them, not to MillerCoors or the other directors. If the

MillerCoors board is deadlocked, the matter is referred to the CEOs of

SAB Miller [and] Molson Coors. If the CEOs are unable to agree, the

matter is deemed to have not been approved by the board.

The MillerCoors board of directors did not appoint MillerCoors’

executive officers. Rather, Miller and Coors each selected the officers

of MillerCoors. For example, Coors appointed the CEO and Miller

appointed the CFO. All of the executive officers of MillerCoors are

former officers or employees of Miller or Coors . . . . The four-member

committee that recommends executive compensation and benefits to the

MillerCoors board includes the CEOs of SAB Miller and Molson Coors

or their nominees. The Operating Agreement provides for monthly

cross-functional meetings between the MillerCoors executives and their
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 4

counterparts in SAB Miller and Molson Coors. Thus, the Operating

Agreement contemplates that the CEO of MillerCoors will meet monthly

with the CEOs of SAB Miller and Molson Coors. Similarly, the CFO of

MillerCoors is required to meet monthly with the CFOs of SAB Miller

and Molson Coors. MillerCoors . . . confirmed that the cross-functional

meetings occur . . . .

MillerCoors’ revenues and cash are distributed directly to Miller

and Coors. MillerCoors then asks Miller and Coors for cash back to

meet MillerCoors’ operating and capital requirements. MillerCoors does

not take on any debt under this arrangement.

Between August 19 and September 4, 2008, MillerCoors notified

[the Distributors] that it intended to terminate their distribution rights as

a successor manufacturer pursuant to Ohio Rev. Code § 1333.85(D).

[The Distributors] began filing these consolidated lawsuits shortly

thereafter, seeking a declaration that [the Manufacturers] lack just cause

or any other basis to terminate their distributorships, and an injunction

preventing [the Manufacturers] from terminating [the Distributors].

Under Ohio Revised Code § 1333.85:

[N]o manufacturer or distributor shall cancel or fail to renew a franchise

or substantially change a sales area or territory without the prior consent

of the other party for other than just cause and without at least sixty days’

written notice to the other party setting forth the reasons for such

cancellation, failure to renew, or substantial change.

(emphasis added). The Act provides two exceptions to this rule: the first, section

1333.85(A), is not at issue in this case; the second, section 1333.85(D), is the “successor

manufacturer” exception at issue here. Section 1333.85(D) provides, in part:

If a successor manufacturer acquires all or substantially all of the stock

or assets of another manufacturer through merger or acquisition or

acquires or is the assignee of a particular product or brand of alcoholic

beverage from another manufacturer, the successor manufacturer, within

ninety days of the date of the merger, acquisition, purchase, or

assignment, may give written notice of termination, nonrenewal, or

renewal of the franchise to a distributor of the acquired product or brand

. . . . If the successor manufacturer complies with the provisions of this

division, just cause or consent of the distributor shall not be required for

the termination or nonrenewal.
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 5

Section 1333.82(B) of the Act defines a “manufacturer” to be “a person, whether located

in this state or elsewhere, that manufactures or supplies alcoholic beverages to

distributors in this state.” The Act does not define “successor manufacturer.”

The parties executed standstill agreements to maintain the status quo of their

distributor agreements during the pendency of the litigation; the Distributors’ request for

a declaration remained before the district court. Relying on section

1333.85(B)(4)—which provides that “[a] manufacturer’s sale, assignment, or other

transfer of the manufacturer’s product or brand to another manufacturer over which it

exercises control” does not constitute “just cause” for termination—the district court

found as a matter of law that Miller and Coors exercise control over MillerCoors and,

therefore, that MillerCoors is not a “successor manufacturer” under section 1333.85(D).

The district court also found that, because MillerCoors had not demonstrated just cause

and the Distributors did not consent, MillerCoors is prohibited from terminating the

distributorships under the general provisions of section 1333.85.

The district court granted the Distributors’ motions for summary judgment and

denied the Manufacturers’ motions for summary judgment. The Manufacturers appeal,

arguing that MillerCoors is a “successor manufacturer” under Ohio law and, therefore,

MillerCoors has the right under section 1333.85(D) to terminate its distributorships

without being bound by the just cause and consent restrictions outlined in the

introductory paragraph of section 1333.85.

II.

“This Court reviews a district court’s grant of summary judgment de novo.”

Salling v. Budget Rent-A-Car Sys., Inc., 672 F.3d 442, 443 (6th Cir. 2012) (alteration and

citation omitted). Summary judgment is proper if the materials in the record “show[]

that there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.” Fed. R. Civ. P. 56(a). “In deciding a motion for summary

judgment, the court must view the factual evidence and draw all reasonable inferences

in favor of the nonmoving party.” Banks v. Wolfe Cnty. Bd. of Educ., 330 F.3d 888, 892
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 6

(6th Cir. 2003) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986)).

Because federal jurisdiction here is founded on diversity of citizenship pursuant

to 28 U.S.C. § 1332, and because the parties ask this Court to interpret an Ohio statute,

we apply Ohio substantive law to the state-law claims presented. See Kessler v. Visteon

Corp., 448 F.3d 326, 329-30 (6th Cir. 2006) (citing Erie R.R. Co. v. Tompkins, 304 U.S.

64 (1938); State Farm Fire & Cas. Co. v. McGowan, 421 F.3d 433, 436 (6th Cir. 2005)).

“If the [Ohio] Supreme Court has not yet addressed the issue presented, [this Court] must

predict how it would rule, by looking to ‘all relevant data,’ including state appellate

decisions.” Id. at 330. “[I]n all cases where a federal court is exercising jurisdiction

solely because of the diversity of citizenship of the parties, the outcome of the litigation

in the federal court should be substantially the same, so far as legal rules determine the

outcome of a litigation, as it would be if tried in a State court.” Guar. Trust Co. of N.Y.

v. York, 326 U.S. 99, 109 (1945); Kessler, 448 F.3d at 330.

III.

On appeal, the Manufacturers argue that the district court erred in finding that

MillerCoors is not a “successor manufacturer.” They argue that, contrary to the findings

of the district court, MillerCoors is a “successor manufacturer” under the Act because

MillerCoors has “acquire[d] all or substantially all of the stock or assets of [Miller and

Coors] through merger or acquisition.” § 1333.85(D). The Manufacturers claim that,

as a result, MillerCoors may terminate its distributorships lawfully under section

1333.85(D) by providing compensation and timely notice to the distributors, and without

the just cause or consent typically required under the Act.

Under Ohio law, “[w]hen the language of a statute is plain and unambiguous and

conveys a clear and definite meaning, there is no need for [Ohio courts] to apply the

rules of statutory interpretation. Where a statute is found to be subject to various

interpretations, however, a court called upon to interpret its provisions may invoke rules

of statutory construction in order to arrive at the legislative intent.” Symmes Twp. Bd.
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 7

of Trs. v. Smyth, 87 Ohio St.3d 549, 553, 721 N.E.2d 1057, 1061 (Ohio 2000) (citations

and internal quotation marks omitted).

As previously noted, section 1333.85(D) identifies a “successor manufacturer”

as one who “acquires all or substantially all of the stock or assets of another

manufacturer through merger or acquisition or acquires or is the assignee of a particular

product or brand of alcoholic beverage from another manufacturer.” The Distributors

argue that this definition must be read in light of the limiting language of section

1333.85(B)(4), which provides:

[T]he following event[] shall not constitute just cause for cancellation of

or failure to renew a franchise or substantially changing a sales area or

territory without the prior consent of the other party:

. . .

(4) A manufacturer’s sale, assignment, or other transfer of the

manufacturer’s product or brand to another manufacturer over which it

exercises control.

(emphasis added). According to the Distributors, because the Act does not consider a

manufacturer’s sale of its product or brand to a company over which the seller exercises

control to be “just cause” for termination, such a sale also cannot be sufficient to qualify

for the less-restrictive termination process under section 1333.85(D). The Distributors

note that a contrary reading of the Act would render subsection (B)(4) meaningless

because a new manufacturer created out of a corporate restructuring where the original

manufacturer retains some control could simply terminate distributorships without cause

under subsection (D). The Manufacturers, on the other hand, argue that subsections

1333.85(B) and (D) should be read independently, with section 1333.85(B) governing

just cause termination rights of non-successor manufacturers and section 1333.85(D)

governing the exceptional termination rights of successor manufacturers.

Because the Distributors and the Manufacturers offer contradictory and facially

reasonable statutory interpretations as to whether the simple definition in section

1333.85(D) is further limited by the just cause requirements of section 1333.85(B), see

Symmes Twp., 87 Ohio St.3d at 553, 721 N.E.2d at 1061, we follow the lead of Ohio
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 8

courts addressing this question and look to the Act’s broader text and legislative intent

to define “successor manufacturer.” See, e.g., Esber Beverage Co. v. Labatt USA

Operating Co., LLC, No. 2012-Ohio-1183, 2012 WL 983171 (Ohio App. 5 Dist., Mar.

12, 2012). Noting that “[a] court must read various provisions of a statute consistently

and presume that the legislature intended the entire statute to have meaning and effect,”

Esber Beverage Co. v. Heineken USA, Inc., 2011 WL 5626592, ¶ 22 (Ohio App. 5 Dist.,

Nov. 14, 2011) (internal quotation marks omitted), the Ohio Court of Appeals, see, e.g.,

id. at ¶¶ 22-24 (citations and internal quotation marks omitted), has reasoned as follows:

No plausible reason exists as to why the legislature would expressly deny

termination rights in one section, then several paragraphs later, create an

exception that would swallow the original rule. Moreover, it would not

make sense for § 1333.85(D) to condition termination rights on a

“merger or acquisition,” if a contrived sale and/or paper merger, like the

merger in [Heineken], qualified. If the legislature truly intended to grant

manufacturers the ability to buy their way out of franchise agreements by

paying the distributor for the diminished value of its business, it would

have simply said so.

Furthermore, the Act is designed in part to protect distributors

from certain practices of beverage manufacturers . . . .

If the exception to the just cause requirement for successor

manufacturers were read narrowly, and the proceedings about

compliance with that provision were confined to a review of documents

alone, it would be too easy for a manufacturer to set up a new entity

which, on paper, looks like a business that is not under the control of its

predecessor, while at the same time exercising control over the new

entity by disregarding the language of the written instruments that

purported to transfer control.

Ohio courts have interpreted the Act as “demonstrat[ing] clear legislative intent

to deny manufacturers the ability to terminate franchises due to corporate

reorganizations or the shifting of brands among entities under common control.”

Beverage Distribs., Inc. v. Miller Brewing Co., Nos. 2:08-cv-827, 2:08-cv-931, 2:08-cv1112, 2:08-cv-1131, 2:08-cv-1136, 2:09-cv-0022, 2009 WL 1542730, *2 (S.D. Ohio

June 2, 2009) (quoting InBev USA LLC v. Hill Distrib. Co., No. 2:05-CV-00298, slip op.

at *13 (S.D. Ohio Apr. 3, 2006)). Thus, we consider subsection (D) in light of whether
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 9

Miller and Coors exercise control of MillerCoors within the meaning of subsection

(B)(4). See Heineken, 2011 WL 5626592, at *4.

Neither the Ohio legislature nor the Ohio Supreme Court has defined the term

“exercise control” in the context of the Act. Where a statutory term is undefined, the

Ohio Supreme Court has held that courts should give the words their “ordinary and

common” meaning. Pruszynski v. Reeves, 117 Ohio St. 3d 92, 94, 881 N.E.2d 1230,

1233 (Ohio 2008). The district court found that Miller and Coors exercise control over

MillerCoors because they each have fifty-percent control and “equal control is a form

of control.” Beverage Distribs., 803 F. Supp. 2d at 777-79 (citing S.E.C. v. Platforms

Wireless Int’l Corp., 617 F.3d 1072, 1087 (9th Cir. 2010) (noting that control in stock

ownership cases is “a question of fact which depends upon the totality of the

circumstances including an appraisal of the influence upon management and policies of

a corporation by the person involved” (internal quotation marks omitted))).

The Manufacturers argue that we should interpret “control” under section

1333.85(B)(4) to mean “actual control, as effected through a majority voting interest, not

the lesser ability merely to influence that a minority interest may provide.” They point

to the ordinary meaning of “control” and to the definition of “control” found in the sixth

edition of Black’s Law Dictionary (the version in print in 1990, the year of the

enactment of section 1333): the “[p]ower or authority to manage, direct, superintend,

restrict, regulate, govern, administer, or oversee.” The Distributors, on the other hand,

argue that we should use the definition of “control” reflected in the current edition of

Black’s Law Dictionary, and applied by courts in the context of federal securities law

and by the Ohio legislature in the corporate shareholder transactions section of the Ohio

Revised Code: “[t]he direct or indirect power to govern the management and policies of

a person or entity, whether through ownership of voting securities, by contract or

otherwise.” Black’s Law Dictionary 378 (9th ed. 2009).

The parties agree as to the following facts regarding Miller’s and Coors’s control

of MillerCoors. Miller and Coors each have fifty percent of the voting rights in

MillerCoors. Miller and Coors have equal representation on the MillerCoors Board of
No. 11-3484 Beverage Distrib., et al. v. Miller Brewing Co., et al. Page 10

Directors, with both Miller and Coors appointing five of the ten Board members. Peter

Coors, the Chairman of Coors’s Board, is also the Chairman of the MillerCoors Board.

The MillerCoors Operating Agreement provides that all of the Board members owe their

fiduciary duty to the company that appointed them (Miller or Coors) and not to

MillerCoors. Effectively, Miller and Coors each has a veto right over the operating

decisions of MillerCoors. Neither Miller nor Coors has majority control over

MillerCoors. Each party asks us to interpret these facts in favor of its position.

Upon review, we agree with the reasoning of the district court and conclude that

Miller and Coors “exercise control” over MillerCoors under the meaning of subsection

(B)(4). See Beverage Distribs., 803 F. Supp. 2d at 780-81 (“Miller and Coors exercise

control over MillerCoors through their equal voting power, veto power, the appointment

of directors, all of whom are present officers or employees of the joint venture partners,

and who owe their fiduciary duty only to Miller or Coors, their influence over the

executive team, and their funding of MillerCoors.”). Even under the Manufacturers’

proposed definition of “control,” the evidence shows that Miller and Coors together

retain the power to “direct, superintend, restrict, govern, [and] oversee” MillerCoors.

Because subsection (D) must be applied in light of the meaning and purpose of

subsection (B)(4), and given that both Miller and Coors control MillerCoors, we find

that MillerCoors is not a “successor manufacturer” under subsection (D). Therefore,

MillerCoors may not terminate the distributorships under the procedure outlined in

subsection (D). Moreover, MillerCoors has not presented just cause for termination of

the distributorships, and the Distributors did not consent to the termination. Thus,

MillerCoors is also prohibited from terminating the distributorships under the general

provisions of the Act.

IV.

Therefore, we AFFIRM the judgment of the district court.