United States District Court, W.D. Washington
ORDER ON MOTIONS DKT. ##10, 13
B. LEIGHTON, UNITED STATES DISTRICT JUDGE
MATTER is before the Court on Defendant Pabst Brewing
Company's Motion to Dismiss [Dkt. #10] and Plaintiff Odom
Corporation's Motion for Partial Summary Judgment [Dkt.
#13]. This case concerns whether, when a beer
supplier terminates its distributor's contract without
cause, Washington's Wholesale Distributors and Suppliers
of Spirits or Malt Beverages Act, chapter 19.126 RCW,
provides the distributor with a single remedy:
"compensation from the successor distributor for the
laid-in cost of inventory and for the fair market value of
the terminated distribution rights." RCW 19.126.040(4).
Pabst notified Odom of its plan to terminate their agreement
on February 16, 2017. On February 24, Pabst terminated
Odom's distributor contract, and the next day, arranged
for Columbia Distributing to service Odom's former
territory. Columbia purchased Odom's existing inventory,
but Columbia and Odom have yet to agree on the fair market
value of Odom's lost distribution rights.
sued Pabst for its lost profits, business interruption, lost
investment, reliance damages, and other losses, alleging
Pabst breached their contract by terminating it without cause
and by failing to provide sixty days written notice of its
intent to terminate. Pabst asks the Court to dismiss
Odom's complaint because under the Act, Odom's only
viable, remaining claim is against Columbia Distributing for
the fair market value of Odom's terminated distribution
rights. Alternatively, Pabst asks the Court to stay or abate
the case until Odom and Columbia have arbitrated the fair
market value of those rights.
disagrees that its sole recourse for Pabst's termination
of their agreement is against third-party Columbia
Distributing. It argues the Act does not authorize
terminations without cause and includes no statement of
exclusivity. It contends RCW 19.126.040(4) provides a
cumulative remedy for distributors whose contracts have been
terminated wrongfully: statutory compensation from the
successor distributor (in addition to the common law
breach-of-contract damages they might receive from their
supplier). Odom asks the Court to resolve two legal
questions: (1) whether the Act authorizes suppliers to
terminate distributors' contracts without cause and (2)
whether RCW 19.126, 040(4) provides Odom's sole remedy
Standards of Review.
Dismissal under Rule 12(b)(6).
Pabst asks the Court to dismiss Odom's complaint because,
it argues, Odom cannot sustain a claim against Pabst, only
against Columbia. Dismissal under Rule 12(b)(6) may be based
on either the lack of a cognizable legal theory or the
absence of sufficient facts alleged under a cognizable legal
theory. See Balistreri v. Pacifica Police Dep't,
901 F.2d 696, 699 (9th Cir. 1990). A plaintiffs complaint
must allege facts to state a claim for relief plausible on
its face. See Aschcroft v. Iqbal, 129 S.Ct. 1937,
1949 (2009). A claim has "facial plausibility" when
the party seeking relief "pleads factual content that
allows the Court to draw the reasonable inference mat the
defendant is liable for the misconduct alleged."
Id. "[A] plaintiffs obligation to provide the
'grounds' of his 'entitle[ment] to relief
requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.
Factual allegations must be enough to raise a right to relief
above the speculative level." Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (citations and
footnotes omitted). This requires a plaintiff to plead
"more than an unadorned,
Iqbal, 129 S.Ct. at 1949 (citing Twombly).
12(b)(6) motion, "a district court should grant leave to
amend even if no request to amend the pleading was made,
unless it determines that the pleading could not possibly be
cured by the allegation of other facts." Cook,
Perkiss & Liehe v. N. Cal. Collection Serv., 911
F.2d 242, 247 (9th Cir. 1990). However, where the facts are
not in dispute, and the sole issue is whether there is
liability as a matter of substantive law, the Court may deny
leave to amend. See Albrecht v. Lund, 845 F.2d 193,
195-96 (9th Cir. 1988).
Odom asks the Court to grant it partial summary judgment,
declaring Pabst's interpretation of the Act incorrect,
because RCW 19.126.040(4) does not eliminate Odom's
opportunities for relief under the common law. Summary
judgment is appropriate when, viewing the facts in the light
most favorable to the nonmoving party, there is no genuine
issue of material fact which would preclude summary judgment
as a matter of law. Once the moving party has satisfied its
burden, it is entitled to summary judgment if the non-moving
party fails to present, by affidavits, depositions, answers
to interrogatories, or admissions on file, "specific
facts showing that there is a genuine issue for trial."
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
"The mere existence of a scintilla of evidence in
support of the non-moving party's position is not
sufficient." Triton Energy Corp, v. Square D
Co., 68 F.3d 1216, 1221 (9th Cir. 1995). Factual
disputes whose resolution would not affect the outcome are
irrelevant to the consideration of a motion for summary
judgment. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). In other words, "summary judgment
should be granted where the nonmoving party fails to offer
evidence from which a reasonable [fact finder] could return a
[decision] in its favor." Triton Energy, 68
F.3d at 1220.
Termination of a Distribution Contract.
asks the Court to determine whether the Act authorizes
suppliers to terminate distributorships without cause. It
argues the Act does not expressly or implicitly authorize
termination without cause, and Washington courts have agreed.
Pabst argues it could properly terminate Odom's contract
without cause because the Act contemplates such terminations,
and their agreement allowed either party to cancel it at will
after "a reasonable time."
"governs the relationship between suppliers of malt
beverages and spirits and their wholesale distributors to the
full extent consistent with the Constitution and laws of
[Washington] and of the United States." RCW
19.126.010(2). It directs a supplier to give a distributor at
least sixty days written notice and an opportunity to cure
before terminating their agreement, unless (1) the
distributor acts fraudulently, (2) there's
"insolvency, the occurrence of an assignment for the
benefit of creditors, bankruptcy, or suspension in excess of
fourteen days or revocation of a license issued by the state
liquor board, " or (3) the supplier acquires a new brand
and has another distributor handle it. RCW 19.126.040(2)
(incorporating RCW 19.126.030(5)):
A supplier must give the wholesale distributor at least sixty
days prior written notice of the supplier's intent to
cancel or otherwise terminate the agreement, unless such
termination is based on a reason set forth in RCW
19.126.030(5) or results from a supplier acquiring the right
to manufacture or distribute a particular brand and electing
to have that brand handled by a different distributor. The
notice must state all the reasons for the intended
termination or cancellation. Upon receipt of notice, the
wholesale distributor has sixty days in which to rectify any
claimed deficiency. If the deficiency is rectified within
this sixty-day period, the proposed termination or
cancellation is null and void and without legal effect.
RCW 19.126.040(2). RCW 19.126.030(5) says:
The supplier may cancel or otherwise terminate any agreement
with a wholesale distributor immediately and without notice
if the reason for such termination is fraudulent conduct in
any of the wholesale distributor's dealings with the
supplier or its products, insolvency, the occurrence of an
assignment for the benefit of creditors, bankruptcy, or