Guinness Import Co. v. Mark Vii Distributors, Inc.

• Decision Date: 16 July 1997
• Docket Number: Civil No. 4-96-20 (DSD/JMM).
• Citation: 971 F.Supp. 401
• Parties: GUINNESS IMPORT COMPANY, Plaintiff, v. MARK VII DISTRIBUTORS, INC., Defendant and Third-Party Defendant, v. DESNOES & GEDDES, LTD., Third-Party Defendant.
• Court: U.S. District Court — District of Minnesota

971 F.Supp. 401

GUINNESS IMPORT COMPANY, Plaintiff, v. MARK VII DISTRIBUTORS, INC., Defendant and Third-Party Defendant, v. DESNOES & GEDDES, LTD., Third-Party Defendant.

Civil No. 4-96-20 (DSD/JMM).

United States District Court, D. Minnesota, Fourth Division.

July 16, 1997.

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James J. Bertrand, Nicole Engisch, Richard J. Wegener and Leonard, Street & Deinard, Minneapolis, MN, for Guiness Import Co.

Michael D. Madigan, Thomas P. Harlan and Johnson & Madigan, Minneapolis, MN, for Mark VII Distributors, Inc.

Nicole A. Engisch, Richard J. Wegener, Leonard Street & Deinard, Minneapolis, MN, for Desnoes & Geddes Ltd.

ORDER

DOTY, District Judge.

This matter is before the court on third-party defendant's motion to dismiss, defendant's motion for abstention, plaintiff's motion for summary judgment, and defendant's motion for partial summary judgment. Based on a review of the file, record and proceedings herein, the court denies Mark VII's motions to abstain and for partial summary judgment, grants Desnoes and Geddes' motion to dismiss, and grants Guinness' motion for summary judgment.

BACKGROUND

Plaintiff Guinness Import Company ("Guinness") is an importer of malt beverage and cider products. Defendant and third-party plaintiff Mark VII Distributors, Inc. ("Mark VII") is a Minnesota beer wholesaler engaged in the business of selling and distributing malt beverages and other beverage products at wholesale. Third-party defendant Desnoes and Geddes, Ltd. ("D&G") is a Jamaican brewer of beer products, including Red Stripe Lager ("Red Stripe") and Dragon Stout.

In 1991, D&G entered into an importation agreement with Labatt Importers, Inc. ("Labatt") in which Labatt was appointed as D&G's exclusive United States importer of Red Stripe and Dragon Stout. Labatt entered into a distribution agreement with Mark VII for the distribution of the products in Minnesota. In 1995, Labatt's parent company was purchased by Interbrew, a Belgium brewer. Under D&G's and Labatt's agreement, either party could terminate their relationship "in the event the other party has a change in ownership pursuant to which 51 percent or more of the party becomes beneficially owned or controlled by a person or entity other than current shareholders as of the date of this Agreement." Importation Agreement, Engisch Aff., Ex. A. Pursuant to the importation agreement, D&G terminated Labatt as its exclusive importer, so Labatt was entitled to payment of $600,000 as required by the terms of the agreement. By later dated September 8, 1995, Labatt informed Mark VII that Labatt was acquired by Interbrew and with the change in ownership, D&G "elected to terminate its supplier agreement with" Labatt and "appointed effective December 1, 1995, Guinness Import Company as its new United States importer." Letter by Thane Pressman, President and CEO of Labatt, Engisch Aff., Ex. E. In December 1995, D&G appointed Guinness as its importer of Red Stripe and Dragon Stout, for which Guinness paid D&G $600,000. By letter dated December 11, 1995, Guinness informed Mark VII of its appointment as the importer and sole source of supply of the Red Stripe and Dragon Stout brands. Guinness also stated that:

Accordingly, [Guinness] has appointed its network of distributors for Minnesota and Mark VII Distributors ("Mark VII") was not among the distributors [Guinness] appointed. Please be advised that [Guinness] has appointed a network of its existing distributors to distribute the above-mentioned brands in the general marketing area within which Mark VII operates.

Letter by Jack Raineault, Engisch Aff., Ex. F. By letter dated December 15, 1995, counsel for defendant challenged Guinness' conduct as violating the Minnesota Beer Brewers and Wholesalers Act, Minnesota Statutes, Chapter 325B ("the Act").

In January 1996, Guinness commenced this action seeking a declaratory judgment that it is not liable to Mark VII under the Act for allegedly improperly terminating Mark VII as the distributor of Red Stripe and Dragon Stout. Specifically, Guinness seeks a declaratory judgment that it has no obligation to sell Red Stripe and Dragon Stout or any other product to Mark VII and that it has not acted to violate Minnesota Statutes, Chapter 325B. Mark VII alleged counterclaims against Guinness, seeking declaratory judgment and relief for violations of the Act, tortious interference with contract and prospective economic advantage, promissory or equitable estoppel, and unjust enrichment. Mark VII also filed a third-party complaint alleging the same counts against D&G.

Mark VII moves the court to abstain from considering this matter under the abstention doctrine promulgated in Burford v. Sun Oil Company, 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). D&G moves the court to dismiss the third-party complaint for insufficiency of service of process or, in the alternative, for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Guinness moves the court for summary judgment on all claims and counterclaims; and Mark VII moves the court for partial summary judgment.

DISCUSSION

A. Motion to Abstain

The court first addresses whether Burford abstention is appropriate in this case. See Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). In general, abstention is "`an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it.'" Arkansas Medical Society Inc. v. Reynolds, 6 F.3d 519, 529 (8th Cir.1993) (quoting Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 813, 96 S. Ct. 1236, 1244, 47 L.Ed.2d 483 (1976)); Wolfson v. Mutual Benefit Life Ins. Co., 51 F.3d 141, 144 (8th Cir.1995) (referring to extraordinary circumstances as appropriate for Burford abstention). It is well established that abstention is the exception, rather than the rule. Melahn v. Pennock Ins., Inc., 965 F.2d 1497, 1503 (8th Cir.1992).

The Burford doctrine states that "where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere": (1) when there are "`difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case then at bar'"; or (2) where the "`exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.'" New Orleans Public Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 361, 109 S.Ct. 2506, 2514, 105 L.Ed.2d 298 (1989) (quoting Colorado River, 424 U.S. at 814, 96 S.Ct. at 1244-45); Bilden v. United Equitable Ins. Co., 921 F.2d 822, 825 (8th Cir.1990) ("Burford abstention applies when a state has established a complex regulatory scheme supervised by state courts and serving important state interests, and when resolution of the case demands specialized knowledge and application of complicated state laws.").

Although Burford abstention is concerned with protecting complex state regulatory schemes from interference by federal courts, there is no such danger in this case. Admittedly, this case requires an interpretation of the Minnesota Beer Brewers and Wholesalers Act, Minnesota Statutes, Chapter 325B, but this statute does not require a specialized knowledge or involve a complex regulatory scheme. In the exercise of diversity jurisdiction, federal courts are routinely called upon to interpret state law. Burford abstention is not warranted under the circumstances of this case.

B. Motion to Dismiss¹

D&G moves for dismissal of Mark VII's claims for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Mark VII carries the burden of making a prima facie showing that the court has personal jurisdiction over the non-resident defendant. Digi-Tel Holdings, Inc. v. Proteq Telecommunications, Ltd., 89 F.3d 519, 522 (8th Cir.1996). When considering a Rule 12(b)(2) motion, the court must view the evidence in favor of the complaining party and resolve all factual conflicts in that party's favor. Id.; Watlow Elec. Mfg. Co. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir. 1988).

A federal court may assume jurisdiction over nonresident defendants only to the extent permitted by the long-arm statute of the forum state and by constitutional due process. Wessels, Arnold & Henderson v. National Medical Waste, Inc., 65 F.3d 1427, 1431 (8th Cir.1995). Minnesota state courts have held that the Minnesota Legislature intended the state's long-arm statute to have the maximum extraterritorial effect allowed under the Constitution; thus, the court must consider whether the assertion of jurisdiction over D&G is consistent with due process. Minnesota Mining & Manufacturing v. Nippon Carbide Industries, 63 F.3d 694, 697 (8th Cir.1995) (citing Domtar, Inc., v. Niagara Fire Insurance Co., 518 N.W.2d 58, 60-61 (Minn.App.1994), aff'd, 533 N.W.2d 25 (Minn.), cert. denied, ___ U.S. ___, 116 S.Ct. 583, 133 L.Ed.2d 504 (1995)), cert. denied, ___ U.S. ___, 116 S.Ct. 1288, 134 L.Ed.2d 232 (1996).

Due process is satisfied when non-resident defendants have "minimum contacts" with the forum state "such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. State of Washington, Office of Unemployment Compensation and Placement, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). The requisite minimum contacts must be based on acts of the defendant. Asahi Metal Industry Co., Ltd. v. Superior Court of California, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). Whether the minimum contacts are sufficient to satisfy due process depends upon whether the defendant has "`purposefully avail[ed] itself of the privilege of conducting activities within the forum...