In a decision from the United States District Court for the Southern District of Iowa pointing out once again that the issue is not with the three-tiered system, but with a State’s unconstitutional application of exceptions to that system, the court addressed the constitutionality of Iowa’s wine licensing laws under the dormant Commerce Clause and the Twenty-first Amendment. The case, Buckel Family Wine LLC v. Mary Mosiman et al., underscores the ongoing tension between state alcohol regulations unevenly applied between in-state and out-of-state manufacturers and federal commerce protections. Here’s what happened and why it matters.

The Case in a…
Continue Reading Breaking Down the Dormant Commerce Clause Case Against Unevenly Applied Rights Between In-State and Out-of-State Manufacturers: Buckel Family Wine v. Mosiman

The 11th Circuit Court of Appeals recently issued its decision in Lorenzo v. MillerCoors, a case where the plaintiff alleged that Coors Light’s marketing misled consumers into believing the beer was brewed exclusively in the Rocky Mountains using pure Rocky Mountain spring water. The court dismissed these claims, and in doing so, provided a reminder about the line between brand storytelling and actionable advertising.

The Case in a Can (or Bottle)

Coors Light has long leveraged its heritage in Golden, Colorado, to market its…
Continue Reading Coors Light and the Rockies: A Case of Marketing, Misinterpretation, and the Reasonable Consumer

When a supplier pulls the plug on a distribution relationship, it doesn’t just hit the bottom line for the supplier’s products. Often, there’s a ripple effect—other brands in the distributor’s portfolio may take a hit, too. That’s where the concept of convoyed damages comes into play. But as the court’s recent ruling in American Northwest Distributors Inc. v. Four Roses Distillery LLC reminds us, proving those damages is no small feat.

What Are Convoyed Damages?

In the Four Roses case, the distributor, American Northwest Distributors (ANW), argued that losing Four Roses bourbon caused its customers to buy fewer of ANW’s…
Continue Reading Convoyed Damages and Consequential Losses For Distributors In Suits Against Suppliers: Lessons from American Northwest Distributors v. Four Roses

In its recent decision in Cavalier Distributing Co., Inc. v. Lime Ventures, Inc. (link to opinion), the Sixth Circuit Court of Appeals affirmed a ruling denying an injunction to a beer wholesaler after a successor importer failed to sell brands to the distributor that it had bought from a prior importer and did so based on logic and reasoning that effectively impinges on the brand value created by distributors and the fundamental franchise protections for alcohol distributors under Ohio law. The court’s analysis failed to account for critical statutory provisions, undermining the Ohio Alcoholic Beverage Franchise Act’s (OABFA) purpose of…
Continue Reading The Sixth Circuit Misses the Mark in Cavalier v. Lime Ventures – Failing to Protect the Value Distributors Create in Brands

Navigating the legal labyrinth of alcohol franchise laws requires precision, as highlighted in DET Beverages v. Willett Distillery, where procedural missteps led to a court dismissal. This case provides a critical lens into Tennessee’s franchise laws, particularly regarding the transfer of distributor rights.

The Crux of the DisputeDET Distributing had exclusive rights to distribute Willett’s sought-after bourbon brands in Middle Tennessee. When DET sold its assets to DET Beverages (DBLLC), it sought Willett’s consent for the transfer of distribution rights. Willett, however, declined, expressing a preference for a distributor with specialized experience. DET claimed Willett’s refusal violated Tennessee’s franchise laws,…
Continue Reading Crafting Clarity in Alcohol Franchise Transfers: Lessons from DET Beverages v. Willett Distillery

In a classic Granholm v. Heald situation involving a lack of parity between in-state and out-of-state distilleries, Washington state allows in-state distilleries the privileges of direct sale and shipment of their liquors to Washington residents and restricts out-of-state distilleries from doing the same.

Under the Washington laws for alcohol production and sale, Washington distilleries can act as a retailer of their products (and those of other distilleries) if they abide by retailer rules – primarily – maintaining a physical presence in the state. Distilleries that have a physical retail location can ship internet orders directly to customers. The in-state physical…
Continue Reading Case involving alcohol law allowing in-state distilleries shipping direct to citizens and prohibiting out-of-state distilleries from doing the same allowed to proceed after direct comparison to Granholm.

“However, the Court in Lebamoff did not hold that direct ship restrictions are always constitutional. The concurring opinion, which had the support of a majority of the panel, emphasized that the Court upheld Michigan’s statute because “the plaintiffs ha[d] not sufficiently refuted” the defendant’s evidence indicating that the challenged statute “serves the public health.” 

In an opinion limiting its prior Lebamoff decision to the facts, the 6th Circuit has denied an en banc rehearing in its Block v. Canepa case leading the State of Ohio to request a stay of the mandate to remand for further fact finding so that…
Continue Reading The Tennessee Wine Test? 6th Circuit falls in line with requiring evidence of out-of-state alcohol shipping restriction’s health and safety benefits in order to surmount a Dormant Commerce Clause challenge. The State says it wants to take the matter to the Supreme Court.

The Circuits are by and large falling into line regarding the implications and procedures of Tennessee Wine when Dormant Commerce Clause challenges are brought against State alcohol-related laws and regulations. They are rejecting the notion that a summary dismissal of challenges is acceptable and requiring a fact-finding assessment involving evidence greater than conclusory assertions made by “experts” regarding the health and safety effects of laws and regulations. Governments need to present evidence showing that their statutes create the stated effects, and those challenging statutes are able to present evidence to rebut those assertions. Once a plausible complaint alleges a lack…
Continue Reading 1st Circuit closes ranks with those Circuits reading Tennessee Wine as requiring States prove alcohol laws discriminating against out-of-state interests affect health or safety goals or other legitimate interests

The old adage of taking a multiple of the gross profits earned by a beer distributor is the typical response you’ll receive in asking about the fair market value of the distribution rights for a given brand. We hear it a lot as a casual methodology employed between parties in negotiating value and potentially setting a price for the sale of a brand or as damages in lawsuits for improper termination of alcoholic beverage distribution rights. 

But this multiplier method has many faults. Chief among them, it is not an economically rigorous approach to setting price or value, it is…
Continue Reading Another court relies on the discounted cash flow analysis and not the simple multiple of gross profits for valuing distribution rights. Don’t worry, the DCA can result in acceptable numbers as well.

The appeal results from a challenge in Ohio. An out-of-state wine retailer and an in-state wine enthusiast brought suit against the state of Ohio looking for a judgment that the inability of the out-of-state wine shipper to obtain a retail license to ship wine direct to consumers in Ohio without establishing a physical presence in Ohio violated Dormant Commerce Clause principles. You know the argument – in state retailers can ship direct but out-of-state retailers cannot and plaintiffs believe that is a Constitutional violation. The wine enthusiast also brought suit challenging a law that Ohio really doesn’t enforce regarding the…
Continue Reading 6th Circuit hears oral argument in Ohio wine shipping case. Questions regarding implementing an out-of-state license and the evidentiary basis for factual assertions regarding public health and safety justifications for shipping prohibitions predominate.

A Michigan Federal Court has ruled that the motion to dismiss stage is no place to test the merits of claims that a wine supplier’s termination of a distribution agreement with a wine distributor. 

Cana Distributors, a Michigan based wholesaler of wine, sued PortoVino, a supplier of wine (link to complaint), alleging that PortoVino’s termination of their distribution agreement violated MCL §436.1305, Michigan’s statute detailing rights and remedies for the termination of wine distribution agreements. Cana asserted that PortoVino should have paid reasonable compensation for the diminished value of Cana’s business and instead proceeded in “bad faith” alleging it…
Continue Reading Court rejects wine supplier’s attempt to dismiss wine distributor’s lawsuit for improper termination and reasonable compensation finding termination for lack of prompt payment and assertions of improper credit require factual determination.