Rex Distrib. Co. v. Anheuser-Busch, LLC

• Decision Date: 23 May 2019
• Docket Number: NO. 2018-IA-00037-SCT,CONSOLIDATED WITH NO. 2018-IA-00038-SCT,2018-IA-00037-SCT
• Citation: 271 So.3d 445
• Court: Mississippi Supreme Court
• Parties: REX DISTRIBUTING COMPANY, INC. v. ANHEUSER-BUSCH, LLC, Mitchell Beverage, LLC, Mitchell Rex Distributing, LLC, Mitchell Distributing Company, Inc. and D.G. Yuengling and Son, Incorporated d/b/a D.G. Yuengling & Son, Inc. Rex Distributing Company, Inc. v. Anheuser-busch, LLC, Mitchell Beverage, LLC, Mitchell Rex Distributing, LLC, Mitchell Distributing Company, Inc. and D.G. Yuengling and Son, Incorporated d/b/a D.G. Yuengling & Son, Inc.

271 So.3d 445

REX DISTRIBUTING COMPANY, INC.

v.ANHEUSER-BUSCH, LLC, Mitchell Beverage, LLC, Mitchell Rex Distributing, LLC, Mitchell Distributing Company, Inc. and D.G. Yuengling and Son, Incorporated d/b/a D.G. Yuengling & Son, Inc.

Rex Distributing Company, Inc.

v.Anheuser-busch, LLC, Mitchell Beverage, LLC, Mitchell Rex Distributing, LLC, Mitchell Distributing Company, Inc. and D.G. Yuengling and Son, Incorporated d/b/a D.G. Yuengling & Son, Inc.

NO. 2018-IA-00037-SCT

CONSOLIDATED WITH NO. 2018-IA-00038-SCT

Supreme Court of Mississippi.

May 23, 2019

ATTORNEYS FOR APPELLANT: NATHAN LAMAR PRESCOTT, JOHN THOMAS LAMAR, III, HANNAFORD, ALYSSON LEIGH MILLS, JASON W. BURGE, MOLLY L. WELLS, TAYLOR ALLISON HECK, JOHN T. LAMAR, JR., HANNAFORD

ATTORNEYS FOR APPELLEES: JAMES GRADY WYLY, III, GULFPORT, W. WAYNE DRINKWATER, JR., JACKSON, M. PATRICK McDOWELL, JACKSON, TAYLOR BRANTLEY McNEEL, BILOXI, PETER E. MOLL, GREGORY W. LANGSDALE, BRIAN D. WALLACH, WILLIAM C. HAMMACK, ROY D. CAMPBELL, III, JACKSON, R. DAVID KAUFMAN, JACKSON, ROBERT MAHONEY, FRED L. BANKS, JR., JACKSON, KYLE STUART MORAN, GULFPORT, ERIN DIANE SALTAFORMAGGIO, MEAGAN OLIVIA LINTON, MERIDIAN, LAUREN OAKS LAWHORN, JACKSON, THEODORE J. ZELLER, III

ATTORNEYS FOR APPELLANT: NATHAN LAMAR PRESCOTT, BILOXI, JOHN THOMAS LAMAR, III, HANNAFORD, JOHN T. LAMAR, JR., SENATOBIA, TAYLOR ALLISON HECK, ALYSSON LEIGH MILLS, JASON W. BURGE, MOLLY L. WELLS

ATTORNEYS FOR APPELLEE: FRED L. BANKS, JR., JACKSON, WILLIAM C. HAMMACK, R. DAVID KAUFMAN, JACKSON, ROY D. CAMPBELL, III, JACKSON, W. WAYNE DRINKWATER, JR., JACKSON, JAMES GRADY WYLY, III, GULFPORT, M. PATRICK McDOWELL, JACKSON, KYLE STUART MORAN, GULFPORT, TAYLOR BRANTLEY McNEEL, BILOXI, LAUREN OAKS LAWHORN, JACKSON, ERIN DIANE SALTAFORMAGGIO, MEAGAN OLIVIA LINTON, MERIDIAN, PETER E. MOLL, GREGORY W. LANGSDALE, BRIAN D. WALLACH, ROBERT MAHONEY, THEODORE J. ZELLER, III

EN BANC.

ISHEE, JUSTICE, FOR THE COURT:

¶1. Rex Distributing Company was a wholesaler of Anheuser-Busch's beer. When Rex sought to sell its business, Anheuser-Busch asserted a contractual right to "redirect" the sale to its preferred buyer, Mitchell Distributing Company. Rex alleges that the redirect provision was void under Mississippi's Beer Industry Fair Dealing Act (BIFDA) and that Anheuser-Busch's interference with the sale caused it damages actionable under the same statute. The trial court dismissed Rex's claims against Anheuser-Busch and Mitchell for failure to state a claim upon which relief can be granted.

¶2. We conclude that Rex alleged a valid cause of action, so we reverse the dismissal of Rex's BIFDA claim against Anheuser-Busch and the derivative claims against Mitchell. We affirm the trial court's judgment dismissing Rex's other claims.

FACTS AND PROCEDURAL HISTORY

¶3. This is an interlocutory appeal from a dismissal under Mississippi Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. The following facts are drawn from Rex's complaint and, for our purposes, must be accepted as true. See Pryer v. Gardner , 247 So.3d 1245, 1250 (Miss. 2018).

¶4. Like most states, Mississippi generally requires a three-tier distribution system for beer. The supplier makes the beer, the wholesaler distributes it, and the retailer sells it to the public. See Miss. Code. Ann. §§ 67-3-45 to - 46 (Rev. 2012); see generally Brian D. Anhalt, Crafting a Model State Law for Today's Beer Industry , 21 Roger Williams U. L. Rev. 162, 171-73 (2016). The Mississippi Beer Industry Fair Dealing Act (BIFDA) further regulates the relationships between beer suppliers, wholesalers, and retailers, specifying things each can and cannot do. See Miss. Code Ann. §§ 67-7-1 to -23 (Rev. 2012). Our beer laws are similar to the general franchise laws present in many states. See Anhalt, supra , at 163-64.

¶5. Rex was a beer distributor/wholesaler. Anheuser-Busch is the largest beer supplier in the country. Rex had a longstanding position as Anheuser-Busch's exclusive distributor for a swath of the Mississippi Gulf Coast. The distribution contract between the two gave Anheuser-Busch a right of first refusal if Rex were sold—"at the price and on the terms and conditions applicable"—and the right to assign the sale to a third-party purchaser of Anheuser-Busch's choosing. The parties call this a right to "match and redirect" the sale.

¶6. When Rex attempted to sell, the high bidder was another nearby distributor, Adams Beverages, Inc. The sale contract (called the Asset Purchase Agreement or APA) provided that the price would be determined by each individual distribution contract Rex successfully transferred to Adams. This depended on the approval of each of the suppliers Rex distributed for—but under Mississippi law, the suppliers' consent "shall not be withheld or unreasonably delayed to a proposed transferee who meets [certain] nondiscriminatory, material and reasonable qualifications and standards." Miss. Code Ann. § 67-7-13(1) (Rev. 2012).

¶7. Two days before Rex's sale to Adams was to close, Anheuser-Busch informed Rex it was exercising a right under the distribution contract to "match and redirect" the sale of Rex to Mitchell Distributing Company, Inc., another local distributor. According to Rex's complaint, this eleventh-hour interference turned out to be part of a continuing scheme by Anheuser-Busch to manipulate its distributors. Anheuser-Busch had recently tried to convince its Mississippi distributors not to sell beer from one of its competitors, Yuengling and Son, but it had been mostly unsuccessful; Mitchell had been the only Anheuser-Busch distributor to spurn Yuengling at Anheuser-Busch's request.¹ Rex alleged Anheuser-Busch asserted the match-and-redirect claim to reward Mitchell and simultaneously to punish Rex for selling a competitor's beer, since under the terms of the sale contract, Rex bore the risk its other suppliers would refuse the transfer of its distribution rights to the new purchaser. That is what Rex alleged Yuengling ultimately did when Rex acceded to Anheuser-Busch's demand, costing Rex $ 3.1 million and leading to this lawsuit.

¶8. Rex sued Anheuser-Busch, Mitchell, and Yuengling. Rex accused Anheuser-Busch and Mitchell of common-law tortious interference with contract and civil conspiracy. It also alleged that Anheuser-Busch's exercise of the match-and-redirect provision violated the Mississippi Beer Industry Fair Dealing Act and Anheuser-Busch breached its contract with Rex by failing to ensure Rex received the same price it would have had Anheuser-Busch not redirected the sale. The trial court dismissed all these counts for failure to state a claim under Rule 12(b)(6). Finally, Rex alleged Yuengling had violated BIFDA by refusing the proposed transfer to Mitchell of Rex's Yuengling distribution rights. This claim survived the motion to dismiss and remains pending in the trial court. This Court granted Rex's petitions for interlocutory appeal from the judgments dismissing its claims against Anheuser-Busch and Mitchell, and the appeals have been consolidated.

DISCUSSION

1. Beer Industry Fair Dealing Act, Mississippi Code Section 67-7-13

¶9. The Mississippi Beer Industry Fair Dealing Act (BIFDA) provides in part that a supplier "shall not interfere with, prevent or unreasonably delay the transfer of the wholesaler's business" so long as the proposed transferee "meets such nondiscriminatory, material and reasonable qualifications and standards required by the supplier for similarly situated wholesalers." Miss. Code Ann. § 67-7-13(2) (Rev. 2012). In relevant part, the statute further permits the supplier to refuse to accept the transfer only "in good faith and for good cause related to the reasonable qualifications" of the transferee. Id.

¶10. At the outset, we observe that we are reviewing the granting of a motion to dismiss for failure to state a claim under Mississippi Rule of Civil Procedure 12(b)(6). At this stage in the litigation, the allegations of Rex's complaint must be accepted as true. See Pryer v. Gardner , 247 So.3d 1245, 1250 (Miss. 2018). Thus we are required to credit the allegations in the complaint that the original proposed transferee, Adams, was reasonably qualified and that Anheuser-Busch lacked good cause to refuse to accept the transfer to Adams.

¶11. BIFDA further provides that wholesalers may not waive its protections: "[a] wholesaler may not waive any of the rights granted in any provision of this chapter and the provisions of any agreement which would have such an effect shall be null and void." Miss. Code Ann. § 67-7-17 (Rev. 2012).

¶12. Rex alleges BIFDA rendered the "match and redirect" contract provision void and that Anheuser-Busch's demand violated Section 67-7-13(2) by "preventing" or "interfering with" the transfer of its business. Anheuser-Busch responds that it did not violate Section 67-7-13(2) because Rex's business was transferred—just not to the company to which Rex wanted it transferred. The trial court found this reasoning persuasive and dismissed Rex's BIFDA claim.

¶13. The interpretation of a statute is a question of law, and the standard of review on appeal is de novo. Natchez Hosp. Co. LLC v. Adams Cty. Bd. of Supervisors , 238 So.3d 1162, 1163 (Miss. 2018). This Court has never interpreted Section 67-7-13(2), and we are not aware of any decisions interpreting similar provisions found in the law of some other states.² Nor have the parties cited any outside authorities, either by courts or commentators. We consider this to be a matter of first impression.

¶14. That being said, Anheuser-Busch's stepping in to insist Rex sell its business to someone else amounted to "preventing" the proposed transfer under any definition of the word. Anheuser-Busch likewise "interfered" with the proposed transfer. The only conceivable definition of the word "interfere" that might not apply would be if it had been used as a term of art referring to common-law tortious interference with contract, which has...