News Anderson Valley Wins ‘Fair Market Value’ Case Against Beer Wholesaler

Anderson Valley Brewing won a court case against Golden Brands Distributing, a subsidiary of Reyes Holdings, in which the definition and application of “fair market value” was contested. It is a case that puts some guardrails on just how far beer distributors can go when demanding to be paid for a brands distribution rights.

The California case, Harbor Distributing LLC (d/b/a Golden Brands) vs. Mainsheet Capital, Inc. (d/b/a Anderson Valley Brewing Co. has been circulating through the court process for about 5 years. Harbor Distributing is owned by Reyes Beverage Group, the largest beer wholesaler in the country. Reyes had demanded that Anderson Valley pay Golden Brands fair market value when Anderson Valley pulled the brand and moved it to other wholesalers in the territory. At the time, Golden Brand demanded that Anderson Valley pay millions of dollars to them in compensation for the rights.

But franchise laws, which lay out the terms for moving a brand from one wholesaler to another, are different in every state, and California has one of the most lenient franchise laws in the statute. Anderson Valley claimed that the states franchise laws did not require them to pay Golden Brands anything to pull the brand. And the judge agreed.

California law does require a “successor beer manufacturer” to pay fair market value when a beer brand changes ownership and then proceeds to move that brand from one wholesaler to another. But since the new owners of Anderson Valley (Keving McGee and his father) were not owners of a beer manufacturer’s license, the judge ruled that this section of the statute did not apply.

Although the ruling is rather narrow, as most court cases are, it is still a helpful determination for brewers that beer wholesalers are not entitled to compensation in all situations.

More on the story here.

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