EMPIRE DISTRIBUTORS OF NC v. Schieffelin & Co.
| Decision Date | 19 January 1988 |
| Docket Number | No. C-C-86-389-P.,C-C-86-389-P. |
| Citation | 677 F. Supp. 847 |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | EMPIRE DISTRIBUTORS OF NORTH CAROLINA, INC., Plaintiff, v. SCHIEFFELIN & CO., Defendant. |
Dennis L. Guthrie, Murchison Guthrie & Davis, Charlotte, N.C., for plaintiff.
Armistead J. Maupin, M. Keith Kapp, Maupin Taylor Ellis & Adams, P.A., Raleigh, N.C., for defendant.
THIS MATTER is before the Court on Defendant's and Plaintiff's cross-motions for summary judgment. This case comes within this Court's diversity jurisdiction, 28 U.S.C. § 1332 (1982), and it has been removed from the Wake County Superior Court of the State of North Carolina by Defendant pursuant to Section 1441 of Title 28, United States Code.
This case centers around the North Carolina Wine Distribution Agreements Act, N.C.Gen.Stat. §§ 18B-1200 — 18B-1216 (1983) (the "Act"). The Act became effective when ratified on March 21, 1983, see 1983 N.C.Sess.Laws ch. 85, § 4, and it regulates business relationships between wineries and wine wholesalers in North Carolina, see N.C.Gen.Stat. § 18B-1200 (1983).
According to Plaintiff, the Act requires Defendant to ship wine to Plaintiff since there is a purported existing relationship between the parties. Plaintiff asserts that it is entitled to a permanent mandatory injunction ordering Defendant to ship its wine to Plaintiff. Defendant, on the other hand, does not want to deal with Plaintiff at all. The parties dispute the Act's constitutionality, intended coverage, and appropriate application. As explained more fully below, Defendant's motion for summary judgment will be granted because the Act does not give Plaintiff standing in the courts to seek relief from Defendant's alleged misconduct.
Defendant, Schieffelin & Co. ("Schieffelin"), is a Delaware corporation with its principal place of business in New York. Schieffelin is authorized to do business in North Carolina, and it manufactures, imports, and sells wine in interstate and foreign commerce.
The Act defines a "winery" as "any holder of ... a nonresident wine vendor permit ... who sells at least 1,000 cases of wine in North Carolina per year." N.C. Gen.Stat. § 18B-1201(4) (1983). Schieffelin has North Carolina nonresident vendor permits for the sale and importation of its products, and it has shipped more than 1,000 cases of wine into North Carolina on an annual basis. See Empire Distribs., Inc. v. Schieffelin & Co., slip op. at 2 (ABC Commission March 2, 1987) (final admin. determination) hereinafter ABC Commission Order. Therefore, Schieffelin is a winery under the Act.
Plaintiff, Empire Distributors of North Carolina, Inc. ("Empire"), is incorporated under the laws of the State of Georgia and is licensed to do business in North Carolina. Empire holds a North Carolina permit for the wholesale distribution of wine and beer, see id. slip op. at 1, and it is a wine wholesaler within the meaning of the Act, N.C. Gen.Stat. § 18B-1201(3) (1983).
Prior to December 5, 1984, C & G Sales Company, Inc. ("C & G") was a wholesale distributor of wine and beer holding North Carolina permits that allowed it to distribute wine in North Carolina, see ABC Commission Order, slip op. at 3. C & G was a wine wholesaler within the meaning of the Act, N.C.Gen.Stat. § 18B-1201(3) (1983). From July 1, 1981 until on or about December 5, 1984, C & G represented Schieffelin as a wine wholesale distributor in an eight county area in and around Mecklenburg County, North Carolina.
C & G and Schieffelin had a written agreement, dated July 1, 1981, which governed their business relationship, but that agreement and relationship was altered when the Act went into effect in 1983. The written agreement provided, inter alia, that either party could terminate the agreement, with or without cause, upon at least 30 days notice. On the other hand, the Act provides, inter alia, that "agreements" between wineries and wine wholesalers, as defined in the Act, generally cannot be amended, terminated, canceled, nonrenewed, or discontinued by wineries unless the wineries give at least 90 days prior written notice and show "good cause." N.C.Gen.Stat. §§ 18B-1204, 18B-1205 (1983). In addition, the Act prohibits a winery from unreasonably withholding its consent to a wholesaler's transfer of its business. N.C.Gen.Stat. § 18B-1206 (1983).
In December 1984, Schieffelin received two letters dated December 5, 1984: One from Empire and one from C & G. Both letters informed Schieffelin that Empire had acquired C & G and that Empire intended to take C & G's place as Schieffelin's distributor of wine. Neither Empire nor C & G asked for Schieffelin's prior approval before notifying Schieffelin of the acquisition.
On December 10, 1984, a representative of Schieffelin's wrote letters to both C & G and to the North Carolina Alcoholic Beverage Control Commission ("ABC Commission"). Schieffelin informed C & G that pursuant to section 18B-1205(f) of the Act Schieffelin was immediately terminating the distribution agreement between it and C & G because C & G had apparently gone out of the wine distribution business by discharging all sales personnel and transferring its inventory to Empire. Schieffelin notified the ABC Commission that it was terminating its relationship with C & G. In addition, Schieffelin sought the commission's permission to appoint Blue Ridge Wholesale Wine Company, Inc. of Charlotte, North Carolina ("Blue Ridge") as its wholesale distributor in the sales territory formerly held by C & G. Schieffelin refused to accept Empire as the authorized wholesale distributor of its products, refused to ship wine to Empire, and canceled outstanding orders that were to go to C & G.
Empire, in the meantime, filed a petition for hearing, dated December 13, 1984, before the ABC Commission alleging that Schieffelin had violated the Act by not shipping wine to Empire. In a letter dated December 18, 1984, the ABC Commission notified Schieffelin that Empire had filed a petition before the commission, and, therefore, the commission could not grant Schieffelin's request to appoint Blue Ridge as its distributor because "the Act requires that the agreement between Schieffelin and Empire continue in effect" until the "matter is resolved by the Commission or the courts."
In a letter dated January 11, 1985, Schieffelin, in accordance with the ABC Commission's directive, agreed to ship its products to Empire. Schieffelin, however, reserved, inter alia, the right to contest Empire's right to receive wine and specifically stated that such shipments were not to be construed as constituting an "agreement" as defined in the Act, N.C.Gen.Stat. § 18B-1201(1)(a)-(f) (1983). Such shipments continue to date.
On January 17, 1985, Schieffelin filed a response to Empire's petition and asserted the following:
On April 1, 1985, a prehearing conference was held, and the parties engaged in extensive discovery. Thereafter, during the weeks of February 24, 1986, March 4, 1986, and May 8, 1986, very lengthy hearings were held in Charlotte, North Carolina, before a hearing officer of the ABC Commission. After the hearings, the hearing officer made findings of fact and recommended to the ABC Commission that the nonresident wine vendor permit issued to Schieffelin be revoked.
While the hearing officer's recommendation was pending before the ABC Commission, on July 24, 1986, Empire filed a civil complaint against Schieffelin in Mecklenburg County Superior Court seeking preliminary and permanent mandatory injunctions ordering Schieffelin to continue shipping wine to Empire. That action was removed to this Court on August 22, 1986 by Schieffelin pursuant to Sections 1332 and 1441 of Title 28, United States Code, and it is now pending before this Court.
On March 2, 1987, after a hearing was held before the full ABC Commission, the commission issued an final administrative decision. In a fifteen page order, the ABC Commission made seventy separate findings of fact and nine conclusions of law. The ABC Commission concluded, inter alia, that the Act was in effect for all times relevant to the proceedings, that the ABC Commission had jurisdiction, that Empire had standing under the Act by virtue of its purchase of the business of C & G to seek relief from the Commission, and that Schieffelin violated the Act by failing and refusing to continue in effect, without good cause, the agreement which arose from Empire's acquisition of C & G. The ABC Commission ordered Schieffelin's nonresident wine vendor permit suspended for a period of thirty days, beginning March 23, 1987. ABC Commission Order, slip op. at 13-15.
On or about March 10, 1987, Schieffelin filed a Petition for Review in Wake County Superior Court seeking a stay of the commission's order and a reversal of the commission's findings of fact and conclusions of law. See N.C.Gen.Stat. § 150A-43 (1983) (); see also Fay v. State Bd. of Alcohol Control, 30 N.C.App. 492, 227 S.E.2d 298, cert. denied, 291 N.C. 175, 229 S.E.2d 689 (1976) ()....
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