Court Opinion

ID: 9478701
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:55:38.109311+00
Date Added: 2024-06-11T17:46:34.334764
License: Public Domain

PER CURIAM:
Collins Wholesale Distributing Company, a rejected applicant for a wine distributorship, brought this action against E. & J. Gallo Winery, pursuant to the North Carolina Wine Distribution Agreements Act, N.C.Gen.Stat. §§ 18B-1200, et seq. (1983) (Act). The district court held Collins had standing to pursue its claim. We hold, pursuant to Empire Distributors of North Carolina, Inc. v. Schieffelin & Co., 859 F.2d 1200 (4th Cir.1988), that Collins lacked standing to bring this action under the Act and reverse.
I.
In January of 1986, plaintiff Collins Wholesale Distributing Company contracted with Southern Distribution Company, Inc., a distributor of defendant E. & J. Gallo Winery in North Carolina, for the purchase by Collins of Southern’s distributorship. The contract was conditioned upon Collins successfully obtaining its appointment as a distributor from each of Southern’s suppliers, including Gallo. After several interviews with representatives of Collins, Gallo denied Collins’ request for appointment.
Collins thereupon brought action against Gallo in Mecklenburg County Superior Court alleging in Count I of its complaint that Gallo violated the North Carolina Wine Distribution Agreements Act, N.C.Gen. Stat. §§ 18B-1200, et seq. (1988), and in Count II that Gallo breached a common law duty codified by the Act. Collins also alleged other common law and statutory violations.
After removing the action to federal court, Gallo filed a motion to dismiss Counts I and II of Collins’ complaint. Gallo asserted that Collins had no standing to assert a claim under the Act because plaintiff was not a “wholesaler,” as defined by the Act, and was therefore not protected by the Act. The district court denied defendant’s motion, concluding that “Collins is a ‘wholesaler’ under N.C.G.S. 18B-1206(2), and is entitled to the judicial protection of 18B-1207(a).” Collins Wholesale Distributing Company v. E. & J. Gallo Winery, 678 F.Supp. 593, 596 (W.D.N.C.1987). Defendant appeals under 28 U.S.C. 1292(b).
II.
Collins asserts that Gallo, by unreasonably withholding its consent to the transfer of Southern’s franchise to Collins, violated the North Carolina Wine Distribution Agreement Act. The pertinent provision provides:
(a) No winery may unreasonably withhold or delay consent to any transfer of the wholesaler’s business or transfer of the stock or other interest in the whole-saleship whenever the wholesaler to be substituted meets the material and reasonable qualifications and standards required of the winery’s wholesalers.
N.C.Gen.Stat. § 18B-1206(a) (1983). N.C. Gen.Stat. § 18B-1207(a) (1983), permits a “wholesaler” aggrieved under this section, to maintain a suit for damages and injunc-tive relief against the winery.
In Empire Distributors, Empire Distributors of North Carolina, Inc., a wine wholesaler, sought to enforce a wine wholesale distribution agreement between Schieffelin & Co., a winery, and another wine wholesaler, C & G Sales, which had been transferred to Empire without Schieffelin’s prior consent. We rejected Empire’s claim on the ground that “the Act does not grant standing to a prospective *819transferee wholesaler, such as Empire, to challenge the refusal of a winery to consent to the transfer.” 859 F.2d at 1203. We added that § 18B-1206 “is intended to protect wholesalers with existing wholesale distribution agreements with wineries, not prospective transferees of those agreements.” Id. “[T]he remedies provided for in section 18B-1207 only implicate compensation to a wholesaler with a current distribution agreement.” Id.
While Collins, unlike Empire, sought the prior consent of Gallo, the Empire case is plainly controlling here. The right created by § 18B-1206, and the corresponding duty on Gallo, extend to Southern, but not to Collins. The Act refers to the qualifications of the “wholesaler to be substituted” not for the purpose of creating any rights in favor of a prospective transferee, but for the purpose of conditioning the winery’s right to withhold its consent to a transfer of business by an existing distributor. Southern, not Collins, was the party to seek Gallo’s consent, and then pursue its remedies under the Act if consent were unreasonably withheld. Collins, of course, is not precluded from pursuing its other statutory and common law remedies, but the right created by § 18B-1206 extends only to Southern.
On the authority of Empire Distributors of North Carolina, Inc. v. Schieffelin & Co., we reverse the judgment of the district court.
REVERSED.