Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—N.D. Ohio: Alcohol wholesaler’s motion to dismiss declaratory judgment suit over business transfer denied, (Sep 4, 2025)

By Donielle Tigay Stutland, J.D.

The cancellation of a sale of a wholesaler does not moot a manufacturer’s request for a declaratory judgment or its claim for anticipatory breach of contract and breach of duty of good faith and fair dealing.

The federal district court for the Northern District of Ohio, Eastern Division denied a motion to dismiss a dispute between an alcohol wholesaler and a manufacturer. A maker of wine and beer, plaintiff Mark Anthony Brands Inc. (“MABI)” filed a complaint against its wholesaler the House of LaRose, Inc. (“LaRose”) in connection with a possible transfer of wholesaler’s business and the wholesaler’s failure to comply with the wholesale agreement between the parties which contained a right of first refusal and a right of approval. As the potential transaction was terminated, the wholesaler filed a motion to dismiss the complaint for lack of jurisdiction, for mootness. The court determined that it had subject-matter jurisdiction to consider the manufacturer’s Complaint. The court concluded that the cancellation of the Proposed Transaction does not moot the manufacturer’s request for a declaratory judgment or its claim for anticipatory breach of contract and breach of duty of good faith and fair dealing (Mark Anthony Brands, Inc. v. House of LaRose, Inc., No. 1:24-cv-02104-CEF (N.D. Ohio Sept. 2, 2025)).

Background. Plaintiff MABI manufactures and sells several alcohol brands that are distributed by LaRose—a licensed beer and wine wholesaler—in three Ohio counties. In November 2009, MABI and LaRose entered into a Wholesaler Appointment Agreement (“Agreement”), under which LaRose became the exclusive wholesaler and distributor of certain MABI products in the three Ohio counties.

The Agreement reserved two express rights to the manufacturer in the event that the wholesaler decided to “Transfer” any part of its business “in which the [MABI] Business is included as part of the transfer or disposition.” In such event, the Agreement provided the manufacturer with “Rights of First Refusal and Approval.” The manufacturer’s “Right of Approval, ”would be triggered in the event that it did not exercise its right of first refusal. In that event, the wholesaler “may proceed to close the proposed Transfer, provided that [LaRose] provides [MABI] with a prior right of approval of the Proposed Purchaser as set forth in this section.”

On August 19, 2024, the wholesaler entered into an Equity Purchase Agreement (“Purchase Agreement”) to sell its entire business, including its contractual distribution rights to MABI’s products, to Columbus Distributing Company (the “Proposed Transfer”). The wholesaler informed the manufacturer of the Proposed Transfer. The wholesaler informed the manufacturer that it would not honor the contractual rights because they violate Ohio Rev. Code Ann. § 4301.24(b). The wholesaler’s position was that since Ohio law prohibits a manufacturer from having any “financial interest, directly or indirectly, by stock ownership, or through interlocking directors in a corporation, or otherwise, in the establishment, maintenance, or promotion in the business of any wholesale distributor,” “MABI’s purported right of first refusal is void ab initio.”

The manufacturer then filed a two-count complaint against LaRose for (1) Declaratory Judgment (“Count I”) and (2) Anticipatory Breach of Contract and Breach of Good Faith and Fair Dealing (“Count II”).

On February 5, 2025, the wholesaler notified the manufacturer that the Proposed Transfer had been terminated and would not close. On February 10, 2025, the wholesaler filed a motion to dismiss all claims under Rule 12(b)(1), arguing that the manufacturer’s claims are moot because “the transaction which MABI is attempting to prevent . . . has been terminated,” thus causing MABI’s complaint to become moot.

Case or Controversy. The wholesaler argued that the suit should be dismissed as moot, as there is no longer federal jurisdiction, given that, “the plaintiff’s injury is redressed in some other way or the court loses the ability to redress it due to some intervening act.”

The manufacturer sought, in part, a judgment pursuant to the Ohio Declaratory Judgment Act.

In Ohio, an anticipatory breach of contract occurs when one party to a contract refuses to perform under the contract’s terms. The manufacturer asserted that, “on multiple occasions,”the wholesaler “gave written and verbal notice” that it would not honor Section 8 of the Agreement. and that the wholesaler told the manufacturer in its October 22, 2024 letter that it considered the manufacturer’s rights of first refusal and approval to be “void ab initio.” The court noted that in its motion to dismiss, the wholesaler does not deny that it repudiated Section 8 of the Agreement. The wholesaler argued that the termination of the Proposed Transfer eliminates any redressable injury that MABI could have sustained as the result of the Proposed Transfer.

The court concluded that the termination of the Proposed Transfer did not nullify the manufacturer’s claims for either count. The court determined that given that the wholesaler informed the manufacturer in the October 22, 2024 letter that it has no intent of ever honoring any of the terms in Section 8 of the Agreement, there is a contractual dispute between the parties as to whether the manufacturer can enforce the protections it claims to have bargained for. Wrote the court, “While true that MABI’s contractual rights are not so imminently threatened as they were before the Proposed Transfer’s termination, the threat to MABI’s contractual rights is sufficiently immediate for this action to proceed.”

The court denied the motion to dismiss, finding that the manufacturer’s claims remain live and justiciable, and the court has subject-matter jurisdiction to consider the complaint. The court also found that the cancellation of the Proposed Transaction does not moot the manufacturer’s request for a declaratory judgment or its claim for anticipatory breach of contract and breach of duty of good faith and fair dealing.

The Case is No. 1:24-cv-02104-CEF.

Judge: Fleming, C.

Attorneys: Ethan W. Weber (Tucker Ellis LLP) for Mark Anthony Brands, Inc. d/b/a Mike's Hard Lemonade Co. Michael D. Madigan (Madigan, Dahl & Harlan, P.A.) for House of LaRose, Inc.

Companies: Mark Anthony Brands, Inc. d/b/a Mike's Hard Lemonade Co.; House of LaRose, Inc.

Cases: FranchisingDistribution OhioNews