69 F.3d 337 (9th Cir. 1995), 93-17335, Anheuser-Busch, Inc. v. Natural Beverage Distributors

Docket Nº:93-17335.
Citation:69 F.3d 337
Party Name:95 Daily Journal D.A.R. 14,487 ANHEUSER-BUSCH, INC., Plaintiff-Appellee, v. NATURAL BEVERAGE DISTRIBUTORS, d/b/a Mendocino Coast Distributing Co.; Florence M. Beardslee, Defendants-Appellants.
Case Date:October 27, 1995
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 337

69 F.3d 337 (9th Cir. 1995)

95 Daily Journal D.A.R. 14,487

ANHEUSER-BUSCH, INC., Plaintiff-Appellee,



Distributing Co.; Florence M. Beardslee,


No. 93-17335.

United States Court of Appeals, Ninth Circuit

October 27, 1995

Argued and Submitted May 9, 1995.

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[Copyrighted Material Omitted]

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Richard D. Rosenberg, Alioto & Alioto, San Francisco, California, for defendants-appellants.

Timothy E. Carr, Carr & Mussman, San Francisco, California; Carmine R. Zarlenga, Howrey & Simon, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California.

Before: CHOY, POOLE, and KLEINFELD, Circuit Judges.


CHOY, Circuit Judge:

Ms. Florence Beardslee and Natural Beverage Distributors (collectively "Beardslee") appeal the district court's Orders granting partial summary judgment to plaintiff Anheuser-Busch, Inc. ("Anheuser"), ordering a new trial on her counterclaim against Anheuser, and ultimately dismissing her counterclaim. We affirm all three rulings.


For many years, Beardslee solely-owned and operated Natural Beverage, a wholesale distributorship for Anheuser. Relations between Anheuser and all of its wholesale distributors are governed by a written agreement called the "Anheuser-Busch, Inc. Wholesaler Equity Agreement" (the "Agreement"). Beardslee entered into the Agreement with Anheuser in late 1984. This appeal emanates from litigation surrounding Anheuser's termination of Beardslee's distributorship in 1989.

The Successor-Manager Nomination

Under the Agreement, Beardslee is required to designate a "Successor-Manager," subject to Anheuser's approval, who is capable of taking over the business in the event that the manager no longer can perform his or her duties. Anheuser may not unreasonably withhold its approval of the proposed

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individual. In the event that Anheuser does not approve a proposed Successor-Manager, Anheuser must notify Beardslee and Beardslee is required to submit promptly an additional Successor-Manager application or to obtain a waiver of the application. If after ninety days from the date Beardslee receives notice of Anheuser's disapproval Beardslee does not submit an application acceptable to Anheuser, Beardslee has another ninety days in which to sell her business as a going concern. Should Beardslee fail to sell the business, the Agreement automatically terminates and Anheuser will compensate Beardslee in a certain amount. This is what happened here.

On October 26, 1988, Beardslee hand-delivered to Greg Fleischut, the Anheuser District Manager assigned to Natural Beverage, an application nominating her daughter, Shawna D. Beardslee, for the position of Successor-Manager. At the time Beardslee submitted the application, Shawna had just turned 18 years old and was attending college, where she was studying fashion design and merchandising. On November 23, 1988, Anheuser informed Beardslee by letter that it was exercising its right under the Agreement to disapprove of Shawna's selection as a Successor-Manager because she lacked experience and knowledge in relevant fields. In particular, Anheuser explained:

Our reasons for disapproval include Shawna's lack of management experience in the areas of sales, marketing, operations, and financing. Additionally, Shawna's knowledge of the beer industry, and of business in general, is limited.

Letter from Tom Sobbe to Florence M. Beardslee (Nov. 23, 1988). The letter also informed Beardslee that she had ninety days in which to obtain Anheuser's approval of a qualified Successor-Manager.

When Beardslee did not name another Successor-Manager within the designated time frame, Anheuser notified Beardslee that she had ninety days in which to sell Natural Beverage and that if she did not sell the company, the Agreement would terminate. Anheuser voluntarily extended the time period by an additional sixty days. The district court further provided Beardslee with another thirty days by enjoining Anheuser from terminating the Agreement. In total, Beardslee was given six months in which to sell National Beverage.

On March 8, 1989, the litigation from which this appeal sprang commenced. Anheuser filed an action seeking a declaratory judgment that it would be acting consistently with the terms of the Agreement if it terminated Beardslee's distributorship in the event that Beardslee did not sell Natural Beverage as a going concern within the allotted period.

Beardslee notified Anheuser that she intended to sell the distributorship to Bruce and Jan McKinney and, on March 15, 1989, she signed a purchase contract with the McKinneys who had offered $1,150,000 for the business. Anheuser claims its financial analysis of the proposed sale revealed that the McKinneys would not have had a sufficient cashflow to operate the business and to make the necessary investments the Agreement required. Anheuser based its financial analysis on Natural Beverage's performance in 1988. Beardslee subsequently presented Anheuser with revised proposals. In one, the purchase price was to be $750,000 and the McKinneys were to lease rather than purchase Beardslee's warehouse. Two days after receiving this proposal, Anheuser wrote to Beardslee indicating it needed further information before it could begin reviewing the proposal. Anheuser claims Beardslee never responded to its request for additional information.

On August 11, 1989, Anheuser proposed to Beardslee eight alternative sale arrangements that it would approve between Beardslee and McKinney. Beardslee rejected the proposals.

On August 25, 1989, Beardslee brought a counterclaim against Anheuser, alleging that Anheuser breached the Agreement by withholding unreasonably its approval of Shawna's selection as Successor-Manager and claiming Anheuser tortiously interfered with her contractual relations with the McKinneys. This counterclaim later went to trial.

On August 28, 1989, Anheuser terminated Beardslee's distributorship.

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In late December of 1989, the district court granted partial summary judgment in Anheuser's favor, finding that Anheuser acted within its rights under the Agreement in refusing to approve of Shawna as a Successor-Manager. Beardslee appeals this ruling.

The Natural Beverage Warehouse Fire

On December 10, 1989, a fire burned Beardslee's Natural Beverage warehouse in which Beardslee kept her financial records for the company. 1 In the days and weeks following the fire, detectives from the Fort Bragg Police Department (the "FBPD") and agents from the Bureau of Alcohol, Tobacco, and Firearms (the "Bureau") visited the warehouse. FBPD Detective Les Pierce visited the scene within two days of the fire and observed "salvageable documents." Later, on January 4, 1990, Bureau Agents Joseph Stafford and Darren Gil executed a search warrant on the warehouse. They seized eight filing cabinets containing business records and seven cardboard boxes filled with documents. Stafford noticed that some of the documents were legible. As will be more fully discussed in Part C of this Opinion, it is clear that shortly after the fire Beardslee knew that the documents survived in legible form and that they were in police custody.

The Publicity Order

When an article disparaging Anheuser in connection with the lawsuit appeared in a newspaper, the district court orally admonished Beardslee and ordered her to refrain from "engaging in out of court mail publicity communications that are designed to disparage Anheuser." The district court stressed that the case should be decided on its merits in the courtroom, not in newspapers or in the mail.

Despite the district court's Order that Beardslee refrain from publicizing the litigation with Anheuser, Beardslee agreed to be interviewed at length by several publications. When five or six newspaper articles about the case subsequently appeared, the district court held another hearing on October 12, 1989, to clarify its prior ruling. Although the district court found that Beardslee was not in violation of the letter of its Order, which only specifically referred to mail publicity, he concluded she was "certainly ... in violation of the spirit of what I intended." The district court found that Beardslee's behavior was "a clear and blatant violation of the intent of the court's comments on July 25" and warned that it would not countenance her violating its Orders. The district court then made it clear that the Publicity Order covered all communications with the media. 2 In January of 1992, during the trial on Beardslee's counterclaim, it came to the court's attention that Beardslee had written a letter dated May 8, 1990, containing allegations against Anheuser addressed to several publications, to the television program, "20/20," to the California Insurance Commissioner, to the ACLU, and to several other organizations and individuals. To investigate the matter, the district court judge questioned Beardslee. Beardslee stated under oath that she sent the letter only to the California Insurance Board and to her insurance agent. She claimed that she listed the other parties on the letter in order to get the attention of the insurance concerns. The district court stated that it considered dismissing the case or declaring a mistrial for violating its Order, but apparently did not because Beardslee denied sending the letter to the media. The district court sternly warned Beardslee that serious consequences would flow from deceiving it.

After a second trial had been ordered and before it took place, in July of 1992, Beardslee again violated the district court's Publicity Order; she was...

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