Empire Distributors of North Carolina, Inc. v. Schieffelin & Co.
| Decision Date | 20 October 1988 |
| Docket Number | No. 88-3034,88-3034 |
| Citation | 859 F.2d 1200 |
| Parties | EMPIRE DISTRIBUTORS OF NORTH CAROLINA, INC., Plaintiff-Appellant, v. SCHIEFFELIN & CO., Defendant-Appellee, The Wine Institute, Amicus Curiae. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Gilbert Howard Deitch (Bauer, Deitch & Raines, P.C., Atlanta, Ga., Dennis L. Guthrie, Murchison, Guthrie, Davis & Henderson, Charlotte, N.C., on brief) for plaintiff-appellant.
Michael Keith Kapp (Armistead J. Maupin, Timothy S. Riordan, Maupin, Taylor, Ellis & Adams, P.A., Raleigh, N.C., on brief), for defendant-appellee.
Arnold M. Lerman, Bruce M. Berman, Wilmer, Cutler & Pickering, Washington, D.C., on brief, for amicus curiae The Wine Institute.
Before CHAPMAN, WILKINSON and WILKINS, Circuit Judges.
Empire Distributors of North Carolina, Inc., a wine wholesaler, brought this action against Schieffelin & Co., a winery, pursuant to the North Carolina Wine Distribution Agreements Act, N.C.Gen.Stat. Secs. 18B-1200, et seq. (1983) (Act). Empire sought to enforce a wine wholesale distribution agreement between Schieffelin and another wine wholesaler, C & G Sales, which had been transferred to Empire without Schieffelin's prior consent. The district court found that Empire lacked standing to bring this action under the Act and granted summary judgment in favor of Schieffelin. We affirm.
A brief description of the policies and pertinent provisions of the Wine Distribution Agreements Act is necessary for a clear understanding of the facts and issue presented here.
The Act, ratified in March 1983, regulates business relations between wineries and wine wholesalers in North Carolina "govern[ing] all wine wholesalerships, including any renewals or amendments." N.C.Gen.Stat. Sec. 18B-1200(b)(4). The enumerated purposes and policies of the Act are to: (1) "promote the compelling interest of the public in fair business relations between wine wholesalers and wineries, and in the continuation of wine wholesalerships on a fair basis"; (2) "protect wine wholesalers against unfair treatment by wineries"; and (3) "provide wine wholesalers with rights and remedies in addition to those existing by contract or common law." N.C.Gen.Stat. Sec. 18B-1200(b).
To effectuate these purposes, the Act specifically provides that regardless of any contractual terms to the contrary, a winery may not amend, cancel, terminate, or refuse to renew a wholesale agreement without good cause. N.C.Gen.Stat. Sec. 18B-1204. Further, "[n]o winery may unreasonably withhold or delay consent to any transfer of the wholesaler's business or transfer of the stock or other interest in the wholesalership whenever the wholesaler to be substituted meets the material and reasonable qualifications and standards required of the winery's wholesalers." N.C.Gen.Stat. Sec. 18B-1206(a). The Act provides administrative procedures for resolution of contract disputes, N.C.Gen.Stat. Sec. 18B-1205, and judicial remedies for violations of the Act, N.C.Gen.Stat. Sec. 18B-1207. Administrative penalties are also available for violations of the Act. N.C.Gen.Stat. Sec. 18B-104 (1983).
Schieffelin, a New York-based Delaware corporation, produces and imports wine for distribution in interstate and foreign commerce. From July 1981 to December 1984 C & G Sales, a North Carolina wine wholesaler, distributed Schieffelin products in an eight-county area surrounding Charlotte, North Carolina, pursuant to a written distribution agreement with Schieffelin. In December 1984 Schieffelin was notified that Empire, a Georgia corporation doing business in North Carolina, had acquired assets of C & G Sales, including its rights under the distribution agreement with Schieffelin. Both C & G Sales and Empire unilaterally informed Schieffelin that Empire would be substituted as Schieffelin's distributor. Schieffelin refused to accept Empire as a substitute, and immediately terminated the distribution agreement with C & G Sales and cancelled its outstanding orders.
Empire and Schieffelin then instituted proceedings with the North Carolina Alcoholic Beverage Control Commission (Commission). Schieffelin sought permission to appoint a new distributor in the area and Empire filed a petition alleging that Schieffelin had violated the Act. Empire also filed this subsequently removed action in state court for violation of the Act, seeking a mandatory injunction compelling Schieffelin to make shipments to Empire.
The Commission denied Schieffelin permission to appoint a new distributor and ordered Schieffelin to resume shipments to Empire as substitute for C & G Sales pending consideration of the petition filed by Empire. See N.C.Gen.Stat. Sec. 18B-1205(d); Empire Distributors of North Carolina, Inc. v. North Carolina Alcoholic Beverage Control Commission, 85 N.C.App. 528, 355 S.E.2d 524 (1987) (). Although Schieffelin asserted that Empire had no standing to bring the petition, it complied with the order.
After extensive proceedings, a Commission hearing officer recommended that Schieffelin's nonresident wine vendor permit be revoked. On review, the Commission found that Empire had standing and that Schieffelin had violated the Act by terminating the distribution agreement without good cause. Instead of revoking Schieffelin's permit, however, the Commission ordered that the permit be suspended for 30 days; the suspension has been stayed pending appeal of the Commission order in state court. To this court's knowledge that appeal is still pending.
Meanwhile, on the basis of diversity of citizenship, Schieffelin removed this action to federal court and answered, alleging in part that Empire was estopped from proceeding under the Act because neither Empire nor C & G Sales had requested consent from Schieffelin prior to the purported transfer. Empire moved for partial summary judgment on the ground that Schieffelin had no right of prior consent. The district court denied the motion, finding that section 18B-1206(a) implicitly gave Schieffelin a right of prior consent to transfer of the C & G Sales wholesale distribution agreement to Empire. Empire Distributors of North Carolina, Inc. v. Schieffelin & Co., 679 F.Supp. 541 (W.D.N.C.1987) (Empire Distributors I ).
Schieffelin then moved for summary judgment on the ground that Empire lacked standing under the Act to bring this action because Empire did not have an existing agreement with Schieffelin. The district court granted summary judgment to Schieffelin, finding that the North Carolina legislature did not intend to extend a right of action to proposed transferees of wine wholesalerships against wineries which withhold consent to transfers. Empire Distributors of North Carolina, Inc. v. Schieffelin & Co., 677 F.Supp. 847 (W.D.N.C.1988) (Empire Distributors II.) 1
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