Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—3d Cir.: MillerCoors not liable for awarding craft beer distribution rights to wholesaler’s competitors, (Feb 25, 2015)

By Jody Coultas, J.D.

MillerCoors LLC did not violate its distribution license with Frank B. Fuhrer Wholesale Company or violate its duty of good faith and fair dealing by awarding the distribution rights to its new craft beers to Fuhrer’s competitors, the U.S. Court of Appeals in Philadelphia has held (Frank B. Fuhrer Wholesale Company v. MillerCoors LLC, February 25, 2015, Krause, C.).

Fuhrer was the exclusive wholesale distributor of a list of specified MillerCoors products in the Pittsburgh metropolitan area. The licensing agreement allowed MillerCoors to add new products to its exclusive distribution List, which it did in 2012 and 2013. After MillerCoors added three new craft beers to the distribution list, but awarded the distribution rights to Fuhrer’s competitors, Fuhrer asserted claims for breach of contract, violation of the Pennsylvania Liquor Code, unreasonable restraint of trade, and tortious interference with contract.

The district court’s dismissal of Fuhrer’s claims was affirmed by the court. Fuhrer alleged that MillerCoors breached its contractual duty by requiring Fuhrer to create an entity devoted exclusively to selling the products of MillerCoors in order to receive the right to sell new craft/specialty beers; and refusing to grant Fuhrer the right to sell new craft/specialty beers because Fuhrer sells the products of other manufacturers. According to the terms of the agreement, Fuhrer could distribute other brands of beer without MillerCoors’ consent, but MillerCoors was under no obligation to assign Fuhrer the distribution rights to its new products. Therefore, MillerCoors’ proposal to grant Fuhrer the distribution rights to new products in exchange for additional undertakings by Fuhrer did not constitute bad faith performance, but rather a legal negotiation of a transaction.

The district court properly rejected Fuhrer’s attempt to invoke the duty of good faith to import into its contract a provision “which it neither bargained for nor attained.” MillerCoors did not violate its duty of good faith by undertaking a selection process and exercising its express contractual right to choose a distributor other than Fuhrer for its new products. Finally, there was no evidence of coercion or intimidation to support Fuhrer’s assertion that MillerCoors attempted to force Fuhrer to give up a right protected by the license agreement.

The case is No. 14-1008.

Attorneys: Richard A. Ejzak (Cohen & Grigsby) for Frank B. Fuhrer Wholesale Co. Kevin S. Batik (McGuireWoods), and Tyler W. Highful (King & Spalding) for MillerCoors LLC, Coors Brewing Co., and Molson Coors Brewing.

Companies: Frank B. Fuhrer Wholesale Company; MillerCoors LLC

Cases: FranchisingDistribution DelawareNews NewJerseyNews PennsylvaniaNews