ABA Distributors, Inc. v. Adolph Coors Co.

• Decision Date: 06 July 1982
• Docket Number: No. 80-0298-CV-W-1.,80-0298-CV-W-1.
• Citation: 542 F. Supp. 1272
• Parties: ABA DISTRIBUTORS, INC., Plaintiff, v. ADOLPH COORS COMPANY, Defendant.
• Court: U.S. District Court — Western District of Missouri

542 F. Supp. 1272

ABA DISTRIBUTORS, INC., Plaintiff, v. ADOLPH COORS COMPANY, Defendant.

No. 80-0298-CV-W-1.

United States District Court, W. D. Missouri, W. D.

July 6, 1982.

Harry P. Thomson, Jr., Shughart, Thomson & Kilroy, Kansas City, Mo., for plaintiff.

Kent E. Whittaker, Hillix, Brewer, Hoffhaus & Whittaker, Kansas City, Mo., Leo N. Bradley, Bradley, Campbell & Carney, Golden, Colo., for defendant.

MEMORANDUM OPINION, FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDERS

JOHN W. OLIVER, Senior District Judge.

I. Introduction

This case is before us a second time. The first time the case was considered, this Court granted preliminary injunctive relief. See ABA Distributors, Inc. v. Adolph Coors Co., 496 F.Supp. 1194 (W.D.Mo.1980). On appeal, the Eighth Circuit in ABA Distributors, Inc. v. Adolph Coors Co., 661 F.2d 712 (8th Cir. 1981), dissolved the preliminary injunction granted and remanded the case to this Court suggesting that the parties and Court expedite trial on the merits.

In accordance with that implicit direction of the Court of Appeals, the parties eventually entered into a stipulation in which they agreed that plaintiff's claim for permanent injunctive relief should be presented for this Court's determination on the merits in accordance with procedures agreeable to the parties and approved by the Court. The procedures agreed upon in the stipulation of the parties provided that:

1. The case as above defined is hereby submitted to the Court for its decision on the merits on the basis of all the evidence adduced by the parties in support of and in opposition to plaintiff's motion for a temporary restraining order and plaintiff's motion for a preliminary injunction, together with the following additional evidentiary data:

(a) Abe Gustin will testify, either in person or by affidavit, that should the notice of March 21, 1980 be set aside, ABA could resume its operation of the distributorship immediately....¹

(b) Abe Gustin will testify, either in person or by affidavit, that should the termination notice of March 21, 1980 be set aside, there are several qualified, financially sound, potential purchasers for ABA's distributorship....²

(c) Defendant Coors will submit the deposition of William Cox.

2. The parties recognize that defendant Coors contends that Coors may justify its asserted termination of the ABA/Coors Agreement by proving, through subsequently discovered evidence, that dishonesty or violation of state and federal law by ABA existed at the time of termination (March 21, 1980), even though such evidence was not known to Coors on that date. Specifically, defendant Coors states that it believes that the evidence recited in Exhibit A, attached hereto,³ should be admitted in evidence in determining the questions presented as stated in paragraph 5 below.

3. The parties recognize that plaintiff ABA objects to the evidence outlined in Exhibit A, and contends that the evidence set forth in Exhibit A is not admissible in evidence under applicable law. Further, ABA does not admit the facts alleged in Exhibit A.

4. The parties agree that the Court should and will consider the question of evidence stated in paragraphs 2 and 3 above as the first question for decision. The parties further agree that in the event the Court concludes that plaintiff's objection to the evidence outlined in Exhibit A should be sustained, the Court shall proceed to determine the merits of plaintiff's claim for permanent injunction on the basis of the evidentiary data stated in paragraph 1 above.

In the event the Court concludes that plaintiff ABA's objection to the evidence outlined in Exhibit A should be overruled, the Court shall immediately set the case for further discovery (if not completed), and a hearing in order to afford defendant Coors an opportunity to adduce the additional evidence outlined in Exhibit A attached hereto and to afford plaintiff ABA a like opportunity to cross-examine defendant Coors' witnesses and to adduce any additional rebuttal evidence under the circumstances. The Court will promptly set a discovery schedule, if such discovery has not been completed.

Although the parties stated in paragraph 5 of the stipulation that they were "unable to agree on the questions of law to be presented to the Court for its determination," it is clear that the parties' stated disagreement was more apparent than real. As will be later developed in detail, the parties are in full agreement in regard to the substance of the controlling questions of law presented for decision under the procedures provided in the stipulation; their disagreement relates only to the form and the manner of how those questions should be stated. Paragraph 5 of the stipulation therefore included nine questions of law which ABA submitted for determination,⁴ and five questions of law which Coors submitted for determination in the same paragraph.⁵

Paragraph 6 of the stipulation established an agreed time schedule under which proposed findings of fact, proposed conclusions of law and briefs in support and in opposition were to be filed. Paragraph 7 contained the important agreement of the parties that "the parties agree that, except as above stated, neither side wishes to adduce any additional evidence and that all disputed questions of fact shall be decided on the evidence as above stipulated."

The parties are in complete agreement that the first question of law which this Court should decide is "whether the March 21, 1980 notice of termination may be supported by subsequently discovered evidence." The language in which that question of law is stated illustrates the real agreement of the parties in regard to the substance of the legal question presented for determination. The language in which the legal question is stated is quoted from the question of law submitted by ABA in its subparagraph (g), contained in paragraph 5 of the stipulation. Coors, in its subparagraph (a) of paragraph 5 of the stipulation, used exactly the same language to submit the legal question which it proposed should be considered first by this Court. Coors, however, in its separate submission of the identical question of law submitted by ABA, did no more than add a clause to the language submitted by ABA in order that Coors could include its factual argument that the "subsequently discovered evidence," in fact demonstrated "the existence of adequate cause for such termination."

In part III of this memorandum opinion, we shall state the reasons why we have concluded that the March 21, 1980 notice of termination may not be supported by subsequently discovered evidence. In light of that conclusion, it is apparent that the material factual circumstances relating to our determination of the legal questions presented are not in dispute. We will state our findings of fact in the next part of this opinion and will then consider and decide the legal questions submitted by the parties.⁶

II. Findings of Fact⁷

1. Plaintiff ABA distributors, Inc. (ABA) is a Missouri corporation with its principal place of business at 1909 Vernon Street, North Kansas City, Clay County, Missouri.

2. Defendant Adolph Coors Company (Coors) is a Colorado corporation engaged in the business of brewing and selling Coors beer products from its brewery in Golden, Colorado. Coors transacts business and enters into contracts in the Western District of Missouri.

3. ABA has been authorized to do and was doing business in the State of Missouri as a distributor of Coors beer products.

4. Service of process has been properly made upon Coors in Golden, Colorado.

5. From June 1, 1978 to March 21, 1980 Coors had no distributors nor did Coors sell beer in any states east of the Mississippi River.

6. When Coors sells its beer products to a distributor, it parts with title and dominion over those products. Its contract with that distributor contains certain requirements (quality control), thereafter applicable to the beer.

7. On or about June 1, 1978 ABA and Coors entered into an agreement whereby ABA was appointed a distributor of Coors beer products to resell Coors beer products in a specified geographical area described in said agreement.

8. The specified geographical area described in the agreement included the Kansas City metropolitan area north of 31st Street in Jackson County, Clay County, Platte County and Ray County.

9. Sector Distributing Company, Inc., is the Coors' distributor immediately to the north of ABA's geographical area.

10. Southside Distributing, Inc. is the Coors' distributor immediately to the south of ABA's geographical area.

11. In order to obtain the agreement with Coors, ABA was required to have available approximately $1.4 million dollars, which money was made available by ABA and was expended for capital investments, trucks and equipment, the leasing of warehouse space, and the establishment of accounts and clientele.

12. ABA has expended time and effort promoting Coors beer products.

13. ABA has developed a successful and ongoing business in its territory, and has established successful and ongoing business relationships with its customers and potential customers.

14. In January, 1979 Abe Gustin, President of ABA, was called to Golden, Colorado for a meeting of several Coors distributors and Coors officials.

15. At that meeting, the group of distributors was informed that Coors believed that these distributors were selling Coors beer products outside of the geographical areas defined in their agreements.

16. Abe Gustin, in a private meeting with Coors officials during January, 1979, informed Coors officials that he was not selling Coors beer products outside of ABA's geographical area and stated that Milgrams, a large retailer served by ABA, might be reselling beer outside of the geographical area.

17. In January, 1980 Abe Gustin was called to Golden, Colorado for a meeting with Coors officials who informed him that they believed that ABA was making sales of...