The Franchise Memorandum

A federal court in Ohio denied a distributor’s motion for a preliminary injunction, holding that it failed to demonstrate a likelihood of success on the merits of its claims against a beer importer who chose a different distributor following the bankruptcy of a previous importer. Cavalier Distrib. Co. v. Lime Ventures, 2023 WL 2384440 (S.D. Ohio Mar. 7, 2023). Cavalier was the Ohio distributor for two different Belgian beer breweries, whose beer it obtained through an importer, Shelton Brothers. When Shelton went bankrupt, Lime became the breweries’ importer and began to use a different Ohio distributor. Cavalier sued Lime and the breweries, alleging that Lime tortiously interfered with its relationship with the breweries and that the three companies had violated its rights under Ohio’s beer franchise statue. Cavalier did not serve process on either brewery, but moved for preliminary injunction against all three parties soon after filing its complaint. One brewery responded to challenge the court’s personal jurisdiction over it. Lime argued that it had no obligation to sell beer to Cavalier following Shelton’s bankruptcy.

The court declined to enter an injunction against the breweries because they had not been properly served, and because of the court’s doubts as to whether either brewery had sufficient minimum contacts with the forum to establish personal jurisdiction. As for Lime, the court held that Cavalier’s franchise relationship was with Shelton, and that relationship was terminated by Shelton’s bankruptcy. Without a franchise relationship, Cavalier could have no claim against Lime for violating the beer franchise statute. Without an existing relationship with Shelton, Cavalier could have no claim against Lime for tortiously interfering with Cavalier’s relationship with Shelton. The court further concluded that, while Cavalier may suffer irreparable injury from the loss of a brand and the accompanying goodwill, multiple potential harms to third parties would result from the issuance of an injunction, which would not serve the public interest.