Court Opinion

ID: 2699616
Source: CourtListenerOpinion
Date Created: 2014-08-04 18:07:14.914865+00
Date Added: 2024-06-11T09:18:46.105273
License: Public Domain

[Cite as Esber Beverage Co. v. Labatt USA Operating Co., L.L.C., 2012-Ohio-1183.]

                                       COURT OF APPEALS
                                      STARK COUNTY, OHIO
                                   FIFTH APPELLATE DISTRICT

                                                     :      JUDGES:
ESBER BEVERAGE COMPANY                               :      William B. Hoffman, P.J.
                                                     :      Sheila G. Farmer, J.
                         Plaintiff-Appellee          :      Julie A. Edwards, J.
                                                     :
-vs-                                                 :      Case Nos. 2011CA00113 and
                                                     :                2011CA00116
                                                     :
LABATT USA OPERATING                                 :
COMPANY, LLC, et al.                                 :      OPINION

                 Defendants-Appellants

CHARACTER OF PROCEEDING:                                     Civil Appeal from Stark County
                                                             Court of Common Pleas Case No.
                                                             2009CV03142

JUDGMENT:                                                    Reversed and Remanded

DATE OF JUDGMENT ENTRY:                                      March 12, 2012

APPEARANCES:

For Plaintiff-Appellee                                       For Defendant-Appellant

LEE E. PLAKAS                                                JAMES B. NIEHAUS
GARY A CORROTO                                               JENNIFER L. WHITNEY
Tzangas, Plakas, Mannos & Raies, Ltd.                        Frantz Ward LLP
220 Market Avenue South                                      2500 Key Tower, 127 Public Square
Eighth Floor                                                 Cleveland, Ohio 44114-1304
Canton, Ohio 44702

STANLEY R. RUBIN                                             PAUL J. PUSATERI
437 Market Avenue, North                                     Milligan Pusateri Co., LPA
Canton, Ohio 44702                                           4684 Douglas Circle
                                                             Canton, Ohio 44718
[Cite as Esber Beverage Co. v. Labatt USA Operating Co., L.L.C., 2012-Ohio-1183.]

For Defendant-Appellant Superior Beverage Group, LTD

JAMES L. MESSENGER
RICHARD J. THOMAS
JERRY R. KRZYS
6 Federal Plaza Central, Suite 1300
Youngstown, Ohio 44503

Edwards, J.

        {¶1}    Appellants, Labatt USA Operating Co.; KPS Capital Partners, L.P.; North

American Breweries, Inc.; Douglas Tomlin; and Superior Beverage Group, Ltd., appeal

a judgment of the Stark County Common Pleas Court in favor of appellee Esber

Beverage Company.

                                   STATEMENT OF FACTS AND CASE

        {¶2}    Appellant KPS Capital Partners, L.P. (KPS) is a Delaware limited

partnership in the business of providing management and investment services to private

equity funds.       Investment funds managed by KPS own North American Breweries

Holdings, LLC, which in turn owns 100% of North American Breweries, Inc. (NAB).

Labatt USA Operating Co. is an indirect, wholly owned subsidiary of NAB. Appellant

Doug Tomlin is regional sales director of appellant Labatt USA Operating Co. Superior

Beverage Group (Superior) is a family-owned distributor of alcoholic beverages located

in Youngstown, Ohio, which distributed the Genesee brands of beer for NAB. Appellee
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                               3

Esber Beverage Company (Esber) is a family-owned beer and wine distribution

business located in Canton, Ohio, which distributed Labatt products in certain counties

in Ohio.

      {¶3}   Esber has distributed the Labatt brands since the 1950’s. Prior to 1995,

Esber acquired the Labatt products from the Labatt Brewing Company Ltd. (LBCL), a

Canadian company.      In 1995, Interbrew, a Belgian brewer, purchased LBCL and

acquired control of the Labatt brands. Interbrew merged with AmBev in 2004 to form

InBev N.V./S.A. At the time of the 2004 merger, Labatt products were imported to the

United States by an entity called Labatt USA LLC, which is not the same company as

appellant Labatt USA Operating Co.

      {¶4}   Following the Interbrew/AmBev merger, InBev N.V./S.A. merged Labatt

USA LLC with Beck’s North America into a third subsidiary, Latrobe Brewing Company,

and renamed the merged company InBev USA L.L.C. As of January 1, 2005, Esber

acquired the Labatt brands from InBev USA (hereinafter, InBev) for distribution in Stark

and surrounding counties. InBev notified Esber that it was terminating Esber’s franchise

pursuant to R.C. 1333.85(D) because InBev was a “successor manufacturer” within the

meaning of the statute and therefore had ninety days to terminate the franchise. Esber

challenged the termination and this Court ultimately concluded that InBev was not a

successor manufacturer, but rather the merger that took place was “more accurately

defined as a restructuring and renaming of its U.S. business operations, with no

products changing ownership control.” Esber Beverage Co. v. InBev USA LLC, Stark

App. No. 2006CA00113, 2007-Ohio-927, ¶66.
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                  4

       {¶5}   On November 30, 2007, InBev and Esber negotiated a new distribution

agreement.    This agreement appointed Esber as the exclusive distributor of Labatt

products in ten Ohio counties for an indefinite term. Esber had the right of first refusal

“to be appointed to carry any new brands or extensions of existing Brands that are

produced in Canada or are imported into the United States by Supplier [InBev] or any

successor in interest . . .” Distribution Agreement, §8(a)(i-x).

       {¶6}   In July of 2008, InBev agreed to acquire Anheuser-Busch Companies, Inc.

The United States Justice Department filed an anti-trust suit against InBev in November,

2008. To resolve the lawsuit, InBev agreed to transfer the Labatt brands to another

entity with the ability to compete in the relevant markets. InBev agreed to sell the Labatt

brands and related assets to a KPS affiliate. The Labatt brands were transferred to

Labatt USA Operating, a KPS affiliate formed to acquire InBev’s assets related to the

Labatt brands. Labatt USA Operating became a subsidiary of NAB, which also owned

High Falls Operating Co., LLC, which distributed Genesee brands. Superior was the

distributor of Genessee brands in the same general market where Esber distributed

Labatt brands.

       {¶7}   Shortly after acquiring the Labatt brands, NAB invited both Esber and

Superior to make a presentation regarding each distributor’s ability to distribute both the

Labatt and Genesee brands in the relevant market. NAB decided to use Superior to

distribute both Labatt and Genesee and notified Esber of its decision to terminate

Esber’s distribution agreement on May 15, 2009.

       {¶8}   Esber filed the instant action on August 14, 2009, for declaratory

judgment, injunctive relief and compensatory damages, alleging breach of contract,
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                               5

promissory estoppel, tortious interference with business relations, conspiracy and

antitrust violations.

       {¶9}    On December 1, 2009, the trial court granted Esber’s motion for a

preliminary injunction, which allowed Esber to continue to distribute Labatt products

during the pendency of the lawsuit.     On cross-motions of the parties for summary

judgment, the trial court granted partial summary judgment to Esber, finding that

appellants were bound by the terms of the distribution agreement and that appellants

did not have the right to terminate the agreement pursuant to R.C. 1333.85(D). The

court found that R.C. 1333.85(D) did not apply because Labatt USA Operating had

assumed the distribution agreement entered into between InBev and Esber and had no

superseding statutory right to terminate the agreement. The court further found that

even if R.C. 1333.85(D) did apply, Labatt USA Operating was not a successor

manufacturer within the meaning of the statute. Judgment Entry, November 29, 2010.

       {¶10} In May of 2011, Esber voluntarily dismissed its remaining claims. The trial

court issued a final appealable order on May 12, 2011, which incorporated the

November 29, 2010 judgment.

       {¶11} Appellants Labatt USA Operating Co. ; KPS Capital Partners, L.P.; North

American Breweries, Inc.; Douglas Tomlin filed a notice of appeal in case number

2011CA00113, assigning the following errors:

       {¶12} “I. THE TRIAL COURT ERRED WHEN IT CONCLUDED THAT NONE OF

THE APPELLANTS ‘CAN PROVE THAT THEY WERE MANUFACTURERS AT THE

TIME OF THE PURCHASE OF THE ASSETS.’
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                           6

       {¶13} “II. THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT

CONCLUDED         THAT      THE   APPELLANTS      WERE      REQUIRED      TO     BE

MANUFACTURERS AT THE TIME OF THE PURCHASE OF ASSETS TO QUALIFY

AS A ‘SUCCESSOR MANUFACTURER’ UNDER R.C. SECTION 1333.85(D).

       {¶14} “III. THE TRIAL COURT ERRED WHEN IT FOUND THAT THE SALE OF

ASSETS FROM INBEV USA, L.L.C. TO APPELLANT LABATT USA OPERATING CO,

LLC WAS NOT A ‘CHANGE IN CORPORATE STRUCTURE, BUT SIMPLY THE SAME

TYPE OF RESTRUCTURING OR TRANSFER DISAPPROVED OF BY THE FIFTH

DISTRICT IN ESBER V. INBEV’ AND, THEREFORE, APPELLANT LABATT USA

OPERATING CO, LLC IS NOT A SUCCESSOR MANUFACTURER UNDER R.C.

SECTION 1333.85(D).

       {¶15} “IV. THE TRIAL COURT ERRED WHEN IT CONCLUDED THAT R.C.

SECTION 1333.85(D) DOES NOT APPLY WHEN A PREDECESSOR’S WRITTEN

DISTRIBUTION       AGREEMENT       IS   TRANSFERRED        TO    A    SUCCESSOR

MANUFACTURER.

       {¶16} “V. THE TRIAL COURT ERRED BY NOT GRANTING SUMMARY

JUDGMENT TO APPELLANTS.”

       {¶17} Appellant Superior filed a notice of appeal in Case Number 2011CA00116,

assigning the following errors:

       {¶18} “I. THE TRIAL COURT ERRED AS A MATER OF LAW IN ITS

NOVEMBER 29, 2010, JUDGMENT ENTRY, BECAUSE LABATT USA OPERATING

COMPANY, LLC IS A ‘SUCCESSOR MANUFACTURER’ AND IT PROVIDED TIMELY

NOTICE OF TERMINATION TO ESBER UNDER R.C. 1333.85(D).
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                               7

      {¶19} “II. THE TRIAL COURT ERRED AS A MATTER OF LAW IN ITS

NOVEMBER       29,   2010    JUDGMENT       ENTRY,     BECAUSE       A   SUCCESSOR

MANUFACTURER MAY TERMINATE A DISTRIBUTOR UNDER R.C. 1333.85(D) IF A

DISTRIBUTOR HAS A WRITTEN FRANCHISE AGREEMENT WITH THE PRIOR

MANUFACTURER, AND A WRITTEN FRANCHISE AGREEMENT MAY NOT LIMIT

THE SUCCESSOR MANUFACTURER’S RIGHT TO TERMINATE DISTRIBUTORS

UNDER R.C. 1333.85(D).

      {¶20} “III. THE TRIAL COURT ERRED AS A MATTER OF LAW BY GRANTING

INJUNCTIVE RELIEF IN ITS NOVEMBER 29, 2010 JUDGMENT ENTRY AND ITS

DECEMBER 1, 2009 JUDGMENT ENTRY, AS CORRECTED ON DECEMBER 10,

2009, BECAUSE, IN THE EVENT OF A WRONGFUL TERMINATION, OHIO’S

ALCOHOLIC      BEVERAGE       FRANCHISE       ACT    PROVIDES      FOR     MONETARY

DAMAGES, NOT INJUNCTIVE RELIEF.”

      {¶21} This Court consolidated the appeals for purposes of the trial court record

and oral argument only on July 1, 2011. However, because the parties raise the same

issues and both appeals originate from the same trial court case, we hereby consolidate

the cases for purposes of opinion and judgment entry as well.

      {¶22} This case concerns the propriety of a summary judgment entered by the

trial court. Summary judgment proceedings present the appellate court with the unique

opportunity of reviewing the evidence in the same manner as the trial court. Smiddy v.

The Wedding Party, Inc. (1987), 30 Ohio St.3d 35, 36. As such, we must refer to Civ.

R. 56(C) which provides in pertinent part: “Summary Judgment shall be rendered

forthwith if the pleadings, depositions, answers to interrogatories, written admissions,
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                     8

affidavits, transcripts of evidence, and written stipulations of fact, if any, timely filed in

the action, show that there is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of law. No evidence or stipulation may

be considered except as stated in this rule. A summary judgment shall not be rendered

unless it appears from the evidence or stipulation, and only from the evidence or

stipulation, that reasonable minds can come to but one conclusion and that conclusion

is adverse to the party against whom the motion for summary judgment is made, that

party being entitled to have the evidence or stipulation construed most strongly in the

party’s favor.”

         {¶23} Pursuant to the above rule, a trial court may not enter summary judgment

if it appears a material fact is genuinely disputed.       The party moving for summary

judgment bears the initial burden of informing the trial court of the basis for its motion

and identifying those portions of the record that demonstrate the absence of a genuine

issue of material fact. The moving party may not make a conclusory assertion that the

non-moving party has no evidence to prove its case. The moving party must specifically

point to some evidence which demonstrates that the moving party cannot support its

claim. If the moving party satisfies this requirement, the burden shifts to the non-moving

party to set forth specific facts demonstrating that there is a genuine issue of material

fact for trial. Vahila v. Hall, 77 Ohio St.3d 421, 429, 1997-Ohio-259, citing Dresher v.

Burt, 75 Ohio St.3d 280, 1996-Ohio-107.

         {¶24} It is upon this standard that we review the appellants’ assignments of

error.

                               Case No. 113 – IV; Case No. 116- II
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                     9

       {¶25} We address these assignments of error first because both raise error as a

matter of law in the trial court’s conclusion that R.C. 1335.85(D) does not apply in the

instant case because appellants assumed InBev’s written distribution agreement with

Esber, an agreement which was for an indefinite term and purported to bind a

successor in interest to InBev. If the trial court correctly determined that the statute did

not apply, we need not reach the issue of whether Labatt USA Operating is a successor

manufacturer within the meaning of the statute.

       {¶26} The Ohio Alcoholic Beverage Franchise Act, R.C. 1333.83 et seq.,

governs the franchise relationships between manufacturers and distributors of alcoholic

beverages, including beer, within the State of Ohio. Under R.C. 1333.85, a franchise

cannot be terminated absent prior consent unless just cause exists and notice is

provided. R.C. 1333.85(A) lists three situations which always constitute just cause: (1)

voluntary bankruptcy; (2) involuntary bankruptcy; or (3) loss of liquor permits. R.C.

1333.85(B) lists four situations which never constitute just cause: (1) failure of a party to

take action that would result in a violation of federal or state law; (2) restructuring, other

than in bankruptcy, of a manufacturer's business; (3) unilateral alteration of the

franchise by a manufacturer for a reason unrelated to any breach of the franchise or

violation of R.C. 1333.82 and 1333.86; and (4) “a manufacturer's sale, assignment, or

other transfer of the manufacturer's product or brand to another manufacturer over

which it exercises control.” R.C. 1333.85(C) governs how a manufacturer and distributor

should deal with excess inventory in case of termination.

       {¶27} R.C. 1333.85(D) is an exception to the general rule requiring just cause.

Under the terms of subsection (D), if a successor manufacturer “acquires all or
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                 10

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,” then it may terminate, via written notice, a

previous manufacturer's franchise agreements within 90 days of the date of the

acquisition. R.C. 1333.85(D). Upon termination, the “distributor shall sell and the

successor manufacturer shall repurchase the distributor's inventory of the terminated or

nonrenewed product or brand” at the “laid-out cost to the distributor including freight and

cartage.” R.C. 1333.85(C) and (D). The successor manufacturer must also compensate

the distributor “for the diminished value of the distributor's business that is directly

related to the sale of the product or brand terminated.” R.C. 1333.85(D). The value of

directly related business includes, but is not limited to, “the appraised market value of

those assets of the distributor principally devoted to the sale of the terminated ...

product or brand and the goodwill associated with that product or brand.” R.C.

1333.85(D).

       {¶28} Appellee argues that R.C. 1333.85(D), when read in pari materia with R.C.

1333.83, is only intended to address the situation where there is an absence of a written

agreement between the parties. Because in the instant case appellants assumed the

written distribution agreement InBev entered into with appellee, appellee argues that

appellants did not have a right to terminate such agreement under R.C. 1333.85(D).

       {¶29} R.C. 1333.85(D) states in pertinent part:

       {¶30} “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
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                 11

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.

Any notice of termination or nonrenewal of the franchise to a distributor of the acquired

product or brand shall be received at the distributor's principal place of business within

the ninety-day period. If notice is not received within this ninety-day period, a franchise

relationship is established between the parties.”

       {¶31} R.C. 1333.83 states in pertinent part:

       {¶32} “When a distributor of beer or wine for a manufacturer, or the successors

or assigns of the manufacturer, distributes the beer or wine for ninety days or more

without a written contract, a franchise relationship is established between the parties,

and sections 1333.82 to 1333.87 of the Revised Code apply to the manufacturer, its

successor or assigns, and the distributor.”

       {¶33} However, there is no need to resort to other methods of statutory

interpretation such as legislative history or reading the statute in pari materia when the

language of the statute is unambiguous. State v. Robinson, 124 Ohio St.3d 76, 919

N.E.2d 190, 2009-Ohio-5937, ¶31. In the instant case, R.C. 1333.83 specifically refers

to the situation when there is not a written contract between the parties. On the other

hand, R.C. 1333.85(D) does not include the language used in R.C. 1333.83 concerning

the lack of a written contract.       Rather, R.C. 1333.85(D) gives the successor

manufacture a right of termination of a “franchise.”       Franchise is defined by R.C.

1333.82(D) to include a contractual relationship:
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                12

      {¶34} “‘Franchise’ means a contract or any other legal device used to establish a

contractual relationship between a manufacturer and a distributor.”

      {¶35} In the instant case, the contractual relationship between the manufacturer

and Esber was established by a contract and thus falls within the definition of

“franchise” as used in R.C. 1333.85(D).        By the plain language of the statute, a

successor manufacturer had ninety days within which to provide Esber with notice of

termination of the franchise.    By the plain language of the statute, such right of

termination does not apply solely to arrangements when there is no written agreement

between the parties. The statute clearly gives a successor manufacturer a narrow

window of time in which to determine whether it wants to keep the franchise agreements

with distributors it assumed from its predecessor, or whether it wants to terminate such

agreements with distributors. Failure of the manufacturer to terminate an agreement

within ninety days establishes a franchise agreement between these two parties that

can only be altered by compliance with the just cause provisions found earlier in the Act.

      {¶36} The fourth assignment of error in Case No. 11-113 and the second

assignment of error in Case No. 11-116 are sustained.

                            Case No. 113 - I, II, III; Case No. 116 - I

      {¶37} In these assignments of error, appellants argue that the court erred in

finding Labatt USA Operating Co. was not a successor manufacturer under R.C.

1333.85(D).

      {¶38} Appellants first argue that the court erred in finding that Labatt USA

Operating Co. was not a “manufacturer” prior to its purchase of Labatt brands from

InBev, and therefore did not qualify as a successor manufacturer under the statute.
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                    13

          {¶39} The trial court held:

          {¶40} “Simply stated, since at this point none of the Defendants can prove that

they were manufacturers at the time of the purchase of the assets, they do not qualify

as successor manufacturers.”

          {¶41} R.C. 1333.82(B) defines manufacturer:

          {¶42} “(B) ‘Manufacturer’ means a person, whether located in this state or

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

state.”

          {¶43} R.C. 1333.85(D) provides in pertinent part:

          {¶44} “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.”

          {¶45} Appellee’s argument is that only a “successor manufacturer” can take

advantage of the right to terminate a franchise agreement for no reason, and, pursuant

to R.C. 1333.85(D) an entity must be a “successor manufacturer” at the time it acquires

the brand of alcoholic beverage from another manufacturer.             Appellee argues that

Labatt USA Operating Co. was not a “manufacturer” at the time it acquired the Labatt

brand, and therefore, could not be a “successor manufacturer.” A “manufacturer” under

R.C. 1333.82(B) is an entity that supplies alcoholic beverages to distributors in this
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                  14

state. Therefore, appellee argues that, because Labatt USA Operating Co. was created

for the purpose of supplying the Labatt brands and it was not supplying anything to

anyone until it acquired the Labatt brands (and the franchise agreement), Labatt USA

Operating Co. was not a “successor manufacturer” at the time it acquired the Labatt

brands. While we acknowledge that a strict reading of the statutory language leads to

the position argued by appellee, we find such a strict reading of the definition of

“manufacturer” also leads to a conclusion that is illogical and could not have been the

intent of the drafters. We do not find that the statutes intended to treat a business’s

right to terminate a franchise differently based on whether the business was created for

the purpose of supplying a brand of alcohol to distributors or whether the business

which acquired the brand was an existing supplier. In either situation, the entity would

be faced with making business decisions on how to operate most efficiently.            We,

therefore, interpret R.C. 1333.82(B) to include as a “manufacturer” one who

manufactures or supplies alcoholic beverages to distributors in this state or is in the

business of manufacturing or supplying alcoholic beverages to distributors in this state.

       {¶46} The trial court further found that appellants did not meet the definition of

“successor” provided by R.C. 1333.85(D):

       {¶47} “From the evidence submitted thus far, this Court finds it disturbing to

discover the ‘ring around the rosy’ actions of KPS, NAB and Labatt USA operating

which demonstrate a series of contradictory positions and raises the issue as to whether

these purchases and sales were a ‘shell game’ and thus a sham. In fact, these acts

resemble the ‘restructuring’ actions that concerned the Fifth District in Esber v. InBev. It
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                               15

is paralyzing that in a blink of an eye, Labatt USA Operating now owns or controls

Labatt USA.

      {¶48} “More importantly, in reviewing the exhibits provided by Esber, both Labatt

USA Operating and Labatt USA appear to be the same entities. A close examination of

the two invoices provided to the Court notes that on the billing invoices for both Labatt

corporate offices on December 8, 2008 (before sale) and September 9, 2009 (after

sale), it reflects the identical address, telephone number, corporate office and language

in the warranty. As a result, it doesn’t appear that there is any change in the corporate

structure, but simply the same type of restructuring or transfer disapproved of by the

Fifth District in Esber v. InBev.” Judgment Entry, November 29, 2010.

      {¶49} In Esber v. InBev, supra, this Court found that a merger was more

accurately defined as a restructuring and renaming of InBev N.V./S.A.’s U.S. business

operations, with no products changing ownership control.        2007-Ohio-927 at ¶66.

Similarly, in Esber Beverage Co. v. Heineken USA, Inc., Stark App. No. 2011CA00033,

2011-Ohio-5939, we found that the assignment or transfer of a manufacturer’s product

or brand to another manufacturer over which it exercises control, in order to manipulate

the date of a transaction to circumvent the 90 day notice provision in R.C. 1333.85(D)

did not meet the requirements of the statute. Id. at ¶25.

      {¶50} However, in the instant case, it is clear that there was a transfer of

ownership and control of the Labatt brands from InBev to Labatt USA Operating Co.,

effective March 13, 2009. There is no evidence that InBev and Labatt USA Operating

Co. are under common control. While InBev used “Labatt USA” as a trade name prior

to the sale of the Labatt brands, InBev sold its assets related to the Labatt products to
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                  16

Labatt USA Operating. The common use of the trade name “Labatt USA” does not

make InBev and Labatt USA Operating the same entity any more than two people

sharing the same name are the same person. InBev was required to divest itself of the

Labatt brands to settle the federal antitrust suit, and the federal court specifically found

that there was no evidence of any secret agreement or that the sale is in any way a

sham. Unlike Esber v. Inbev, supra, and Esber v. Heinenken, supra, the evidence is

undisputed that there was in fact a complete sale of all assets related to the Labatt

brands. The trial court erred in finding that Labatt USA Operating was not a successor

manufacturer within the meaning of R.C. 1333.85(D).

       {¶51} Assignments of error I, II, and III in Case No. 11-113 and assignment of

error I in Case No. 11-116 are sustained.

                                    Case No. 113 - V

       {¶52} Appellants argue that the court erred in failing to grant summary judgment

in their favor. Because we have found as a matter of law that R.C. 1333.85(D) gave

appellants the right to terminate the distribution agreement with Esber, the trial court

should have granted summary judgment to appellants on the issue of their right to

terminate the contract pursuant to statute. The fifth assignment of error in Case No.

113 is sustained.

                                        Case No. 116 - III

       {¶53} Appellant Superior argues that the trial court erred in granting injunctive

relief to Esber because only money damages are available pursuant to the statute.

       {¶54} This Court has recently rejected this argument:
Stark County App. Case Nos. 2011CA00113 and 2011CA00116                                17

       {¶55} “In Tri–County Wholesale Dist. v. The Wine Group, No. 2:10–cv–693

(S.D.Ohio Sept. 2, 2010), the United States District Court for the Southern District of

Ohio, addressed the same argument as HUSA asserts herein. The Court found:

       {¶56} “‘The Franchise Act contemplates suits for ‘damages or other relief.’ Ohio

Rev. Code § 1333.87 (emphasis added). Moreover, numerous courts have issued

injunctions preserving the rights of distributors under the Franchise Act until the merits

could be fully litigated, a fact that presumably has not escaped the Ohio General

Assembly's notice. See, e.g., InBev USA LLC v. Hill Distrib. Co., No. 2:05–cv–298

(S.D.Ohio Mar. 31, 2005) (granting temporary restraining order); Esber Beverage Co. v.

Labatt USA Operating Co., No.2009CV03142 (Stark Cty. Ohio Com. Pl. Dec. 1, 2009)

(granting preliminary injunction).’ Id. at *2. We agree.

       {¶57} “Based upon the language of R.C. 1333.87, we find the trial court did not

err in granting injunctive relief to Esber.” Esber Beverage Co. v. Heineken USA, Inc.,

Stark App. No. 2011CA00033, 2011-Ohio-5939, ¶29-31.

       {¶58} The third assignment of error in Case No. 116 is overruled.

       {¶59} The summary judgment of the Stark County Common Pleas Court is

reversed. This case is remanded to that court for further proceedings according to law.

By: Edwards, J.

Hoffman, P.J. and

Farmer, J. concur

                                                     ______________________________
Stark County App. Case Nos. 2011CA00113 and 2011CA00116               18

                                           ______________________________

                                           ______________________________

                                                     JUDGES

JAE/r1220
[Cite as Esber Beverage Co. v. Labatt USA Operating Co., L.L.C., 2012-Ohio-1183.]

                IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO

                                   FIFTH APPELLATE DISTRICT

ESBER BEVERAGE COMPANY                                :
                                                      :
                            Plaintiff-Appellee        :
                                                      :
                                                      :
-vs-                                                  :       JUDGMENT ENTRY
                                                      :
LABATT USA OPERATING
COMPANY, LLC, et al.,                                 :
                                                      :
                    Defendants-Appellants             :       CASE NOS. 2011CA00113 and
                                                                        2011CA00116

       For the reasons stated in our accompanying Memorandum-Opinion on file, the

judgment of the Stark County Court of Common Pleas is reversed and remanded to the

trial court for further proceedings. Costs assessed to appellee.

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                                                                            JUDGES