National Distributing Co., Inc. v. James B. Beam Distilling Co.
| Decision Date | 18 May 1988 |
| Docket Number | No. 87-3708,87-3708 |
| Citation | 845 F.2d 307 |
| Parties | NATIONAL DISTRIBUTING COMPANY, INC., d/b/a NDC Distributors of Pensacola, d/b/a Consolidated Distributors of Jacksonville, d/b/a Consolidated Distributors of Orlando, a Georgia Corporation, Plaintiff-Appellant, v. JAMES B. BEAM DISTILLING CO. and National Distillers Products Company, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
R. Larry Morris, Levin, Warfield, Middlebrooks, Mabie, Thomas, Mayes & Mitchell, Pensacola, Fla., Wilbur E. Brewton, Taylor, Brion, Buker & Greene, Tallahassee, Fla., James Riley Davis, Allen I. Hirsch, Debra Minker, Arnall, Golden & Gregory, Atlanta, Ga., for plaintiff-appellant.
Benjamin W. Redding, Barron, Redding, Hughes, Fite, Bassett & Fensom, P.A., Panama City, Fla., Daniel J. O'Neill, Paul G. Pennoyer, New York City, for James Beam Distilling.
H. Edward Moore, Pensacola, Fla., for National Distillers.
Appeal from the United States District Court for the Northern District of Florida.
Before JOHNSON and HATCHETT, Circuit Judges, and ESCHBACH *, Senior Circuit Judge.
In this diversity action, appellant, National Distributing Company, challenges the district court's denial of its motion for a preliminary injunction. We affirm.
In May, 1982, appellant, National Distributing Company (NDC), entered into a written distribution contract with appellee, National Distillers Products Company (National Distillers), pursuant to which National Distillers contracted to furnish certain alcoholic beverage brands to NDC for sale to alcoholic beverage vendors throughout the state of Florida. The contract provided that it would terminate on December 31, 1983, but that at least sixty days prior to that date, the parties would review NDC's performance and negotiate in good faith toward an extension of the agreement.
On January 5, 1984, the parties agreed to extend the contract until December 31, 1984. Although the parties again agreed that National Distillers would review NDC's performance and negotiate toward a further extension of the contract, no such negotiations ever occurred. Instead, the parties continued to do business without a written agreement.
At the time the parties signed the original contract, Florida law contained sections 564.045(5) and 565.095(5), commonly referred to as the Brand Withdrawal Act (Act). 1 That law prohibited a manufacturer On May 26, 1987, appellee, James B. Beam Distilling Company (Beam), purchased the assets of National Distillers's alcoholic beverage division, including those products distributed by NDC in Florida. Beam decided to consolidate its distribution network. Accordingly, on June 30, 1987, Beam notified NDC of its intent to terminate the shipment of alcoholic beverages to NDC, and that effective sixty days from that date, NDC would no longer have the right to sell, distribute, or purchase Beam's alcoholic beverage products.
or "primary American source," such as National Distilling, from withdrawing any brand of wine or liquor from a Florida distributor without demonstrating good cause. Under the Act, a distributor could petition the Department of Business Regulation for a declaratory statement if the distributor felt that cause was not shown. The statutes were repealed on May 31, 1985. See Chap. 85-58, Laws of Florida.
On August 13, 1987, NDC commenced this action in state court against National Distilling and Beam seeking a permanent injunction to enjoin Beam from terminating NDC as the distributor of Beam's alcoholic beverage brands in northern Florida. After Beam removed the action to the United States District Court for the Northern District of Florida, the district court held a hearing on NDC's motion for a preliminary injunction. The district court denied NDC's motion for a preliminary injunction and entered an order to that effect on October 28, 1987. In that order, the court also denied NDC's motion for an injunction pending appeal.
NDC appeals the district court's October 28, 1987, order denying its application for a preliminary injunction.
Our review of a district court's decision to grant or deny an application for a preliminary injunction is governed by the abuse of discretion standard. Zardui-Quintana v. Richard, 768 F.2d 1213, 1216 (11th Cir.1985). The district court must exercise its discretion in light of the following four prerequisites:
(1) a substantial likelihood that plaintiff will prevail on the merits, (2) a substantial threat that plaintiff will suffer irreparable injury if the injunction is not granted, (3) that the threatened injury to plaintiff outweighs the threatened harm the injunction may do to defendant, and (4) that granting the preliminary injunction will not disserve the public interest.
Canal Authority v. Callaway, 489 F.2d 567, 572 (5th Cir.1974). Moreover, as we stated in United States v. Jefferson County, 720 F.2d 1511 (11th Cir.1983), a "preliminary injunction is an extraordinary and drastic remedy not to be granted unless the movant 'clearly carries the burden of persuasion' as to the four prerequisites." Jefferson, 720 F.2d at 1519 (quoting Callaway, 489 F.2d at 573).
In denying NDC's motion for a preliminary injunction, the district court found that NDC failed to demonstrate a substantial likelihood of success on the merits. Specifically, the court found that although the Brand Withdrawal Act was incorporated into the original distribution agreement by operation of law, the Act was no longer controlling after the parties' written distribution agreement terminated on December 31, 1984.
The issue in this case, once removed from the shroud of convoluted principles of contract law, is fairly simple. It is well settled that "[t]he laws in force at the time of the making of a contract enter into and form a part of the contract as if they were expressly incorporated into it." Florida Beverage Corp. v. Division of Alcoholic Beverages, 503 So.2d 396, 398 (Fla. 1st D.C.A.1987). Thus, in Somerset Importers v. Dept. of Business Regulation, 428 So.2d 679 (Fla. 1st D.C.A.1983), the Florida First District Court of Appeal held that section 565.095(5) is a statute which, by virtue of the above-stated principle of law, becomes a part of a brand distribution contract between a manufacturer and distributor.
As the court observed in Florida Beverage Corporation, however, parties to a brand distribution agreement are presumed "to have agreed that the brands could not be withdrawn during the term of the agreement absent good cause therefor." Florida Beverage Corp., 503 So.2d at 398 (emphasis added). Implicit in the court's observation is that a brand distribution contract can and probably will have a termination date by its terms, and that once the underlying contract is terminated, the provisions of the Brand Withdrawal Act are nullified and do not supersede the termination provisions of the contract.
We have not overlooked the decisions relied upon by NDC in Florida Beverage Corp. and Standard Distributing Co. v. Florida Dept. of Business Regulation, 473 So.2d 216 (Fla. 1st D.C.A.1985). In Standard Distributing Co., the court held that the rights and obligations which became a part of a brand distribution contract, by virtue of the Brand Withdrawal Act, were not nullified where a manufacturer withdrew a brand prior to the repeal of the Act. Standard Distributing Co., 473 So.2d at 219 (). Subsequently, in Florida Beverage Corp., the court extended the rationale of Standard Distributing Co. and held that the Act was still effective even though the manufacturer in Florida Beverage Corp., similar to Beam here, did not withdraw its brand until after the Act had been repealed. Florida Beverage Corp., 503 So.2d at 398.
In addition to the decisions rendered by Florida's First District Court of Appeal, NDC also relies upon Park Benziger & Co. v. Southern Wine and Spirits, Inc., 391 So.2d 681 (Fla.1980). At issue in Park Benziger was whether the provisions of the Brand Withdrawal Act became incorporated into an oral, terminable at-will contract which arose prior to the effective date of the Act. Reasoning that the effect of the Act would have made an otherwise at-will relationship terminable only for good cause, the...
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