Beer Marketer's Insights - Fed Judge Denied Olympic Eagle's Plea for 2nd TRO, Brands Set to Move to Columbia

Federal district ct judge in WA rejected Olympic Eagle's last ditch effort to block impending transition of Constellation brands to Columbia. The same judge that granted the distrib a temporary restraining order (TRO) and a preliminary injunction blocking the move almost a yr ago was not convinced by Olympic's new reading of state law. Recall, last wk, co argued that current termination without cause "result[s] from" Constellation's deal with ABI for the other half of Crown Imports in 2013. State law requires determination of fair mkt value prior to transition to a new distrib when terminations "result from" a supplier buying manufacturing rights to a brand. With no agreement on FMV, brands can't move, Olympic argued. But that provision doesn't apply here, judge confirmed in ruling today. He did agree with Olympic's argument that the term "resulting from" means that the termination wouldn't have happened "but for" the acquisition and did not seem swayed by Constellation's claims that the co's "motivation" is all that matters. But the provision requires both an acquisition and the appointment of a new distributor. Here, those events happened 9 yrs apart. Judge plays out Olympic's logic for triggering the at-issue provision in WA law by using a hypothetical acquisition of brand rights in 1901 and an election of a new distributor 100 yrs later. That "would be an inappropriate application" of the statute, in judge's view."As the theory goes, because Constellation terminated the Seattle ABI distributor in 2015 and transferred those rights to Columbia, Olympic Eagle's termination nine years after the 2013 acquisition and seven years after" the branch termination "is the culmination of Constellation's desire 'to consolidate its Puget Sound area distribution,'" the judge summarized. But "the challenge with this theory is that it is just a theory." As Constellation pointed out, Olympic's "distribution rights were twice affirmed" between 2013 and 2022. A couple times in ruling, the judge references the 34% of Constellation's distribs that also carry ABI brands.In addition to being unpersuaded by the distrib's interpretation of this provision, judge also points out that Olympic didn't show that "it will face irreparable harm that is distinct from the harm caused by the termination." And even tho the distrib continues to argue that STZ "violated the law in terminating&hellip;without cause, the Ninth Circuit has already determined Constellation's without cause termination is lawful." A TRO wouldn't stop the termination, only its timing. So judge opted not to grant the TRO and brand transfer can go on as scheduled with Columbia able to begin delivery of STZ brands imminently.

Fed Judge Denied Olympic Eagle's Plea for 2nd TRO, Brands Set to Move to Columbia

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