When applying the Franchise Act to a change in U.S. importers, courts consistently hold that a franchise applies to the party that owns and controls the beer brand in Ohio. E.g., BelVino LLC v. Empson (USA) Inc., 2012-Ohio-3074, at ¶ 34 (Ohio App. Ct. 2012); Hill Distrib. Co. v. St. Killian Importing Co., No. 11-CV-706 (ALM), 2011 WL 3957255, at *3 (S.D. Ohio Sept. 7, 2011); see also InBev USA v. Hill Distrib. Co., No. 05-CV-00298 (JLG), 2006 WL 6924045, at *6 (S.D. Ohio Apr. 3, 2006); Esber, 2011-Ohio-5939, at ¶¶ 24-25. To determine which party owns and controls a brand, courts apply a totality-of-the-circumstances test of sorts.
Great Lakes products make up a large portion of Ohio Southern Glazer's portfolio, comprising 25% of the Columbus branch's beer revenue and 4% of that branch's overall revenue. Courts have found irreparable harm when a manufacturer's products comprise as little as .51% of a distributor's overall business. See Hill Distrib. Co. v. St. Killian Importing Co. , No. 2:11-cv-706, 2011 WL 3957255, at *4–5 (S.D. Ohio Sept. 7, 2011) ; cf. Dayton Heidelberg Distrib. Co. v. Vineyard Brands, Inc. , 108 F.Supp.2d 859, 865 n.4 (S.D. Ohio 2000) (holding that loss of franchise was not irreparable harm because defendant's products were not incomparable and "constituted an insignificant portion of the Plaintiffs' total sales").Great Lakes counters that the liquidated damages provision in the franchise agreement ensures that monetary damages will fully compensate Ohio Southern Glazer's. But this argument overlooks the other aspects of harm that plaintiff would incur if the contract is prematurely terminated.
There have also been state and federal cases using a control-based inquiry to conclude that § 1333.85(D) did not apply. In Hill Distributing Co. v. St. Killian Importing Co. , No. 2:11–CV–706, 2011 WL 3957255 (S.D. Ohio Sept. 7, 2011), a Danish company, Carlsberg, allowed Beverage Alliance to import its beer brands into the United States. Id. at *1.
That is true even if the brands at issue constitute a small portion of the portfolio. See Hill Distributing Co. v. St. Killian Importing Co., Inc., No. 2:11-cv-706, 2011 WL 3957255, at *4-5 (S.D. Ohio Sept. 7, 2011) (finding irreparable harm even though brands comprised only 0.51% of distributor's portfolio).
First, this Court has previously found a risk of irreparable harm to a distributor where no other available brand could replace the manufacturer's brands following a termination. See, e.g., Hill Distrib. Co. v. St. Killian Importing Co., Inc., No. 2:11-cv-706, 2011 WL 3957255, at *4-5 (S.D. Ohio Sept. 7, 2011). In that case, the manufacturer's brands comprised only a small percentage—.51% to .54%— of the distributor's business.
Thus, to fit within the R.C. 1333.85(D) exception, a manufacturer must show that neither R.C. 1333.85(B)(2) nor R.C. 1333.85(B)(4) apply. Hill Distrib. Co. v. St. Killian Importing Co., S.D.Ohio No. 2:11-CV-706 (Sept. 7, 2011). {¶ 33} In the case at bar, Premium contends that the asset purchase transaction falls within R.C. 1333.85(B)(4) because McKim exercised control over both TBK and Brew Kettle.
"' Esber Beverage Co. v. Wine Group, Inc., 5th Dist. No. 2011CA00179, 2012-Ohio-1215, ¶ 12 ("Esber Beverage"), quoting Esber Beverage Co. v. LaBatt USA Operating Co., Stark C.P. No. 2009CV03142 (Dec. 1, 2009). See also Beverage Distrib., Inc. v. Miller Brewing Co., 803 F.Supp.2d 765 (S.D.Ohio 2011); Hill Distrib. Co. v. St. Killian Importing Co., Inc., S.D. Ohio No. 2:11-CV-706, 2011 WL 3957255 (Sept. 7, 2011). {¶23} In furtherance of this goal, the OABFA requires every manufacturer of alcoholic beverages to contract with or offer in good faith to their distributors a written franchise specifying the rights and duties of both parties. R.C. 1333.83.
Esber Beverage Co. v. LaBatt USA Operating Co., Stark C.P. No. 2009CV03142 (Dec. 1, 2009). Accord, Beverage Distributors, Inc. v. Miller Brewing Co., 803 F.Supp.2d 765 (S.D. Ohio 2011); Hill Distributing Co. v. St. Killian Importing Co., Inc., S.D. Ohio No. 2:11-CV-706, 2011 WL 3957255 (Sept. 7, 2011). {¶14} At issue in the present case is R.C. 1333.85.