Jet Wine v. Bacardi Limited, et a l . CV-98-669-JM 09/13/01 P UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Jet Wine & Spirits, Inc.

v. Civil No. 98-669-JM Opinion No.

Bacardi Limited, Bacardi & Company Limited and Bacardi U.S.A., Inc.

O R D E R

Bacardi U.S.A., Inc. ("BUSA"), the remaining defendant in

this case, moves for summary judgment, pursuant to Fed. R. Civ.

P. 56, with respect to Jet Wine & Spirits, Inc.'s ("Jet Wine")

claims against it for intentional interference with contractual

relations and intentional interference with advantageous business

relations. For the reasons articulated below, BUSA's motion

(document no. 64) is granted.

Standard of Review

Summary judgment is appropriate only "if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law." Fed. R. Civ. P.

56(c); see Lehman v. Prudential Ins. Co. of A m . .

, 327 (1st Cir. 1996). A genuine issue is one "that properly can be

resolved only by a finder of fact because [it] . . . may

reasonably be resolved in favor of either party." Anderson v.

Liberty Lobby, Inc.,

(1986). A material fact

is one that affects the outcome of the suit. See i d . at 248.

The moving party bears the initial burden of establishing

that there is no genuine issue of material fact. See Celotex

Corp. v. Catrett,

(1986) . If that burden is

met, the opposing party can avoid summary judgment only by

providing properly supported evidence of disputed material facts

that would require trial. See i d .

In ruling on a motion for summary judgment, the court

construes the evidence in the light most favorable to the non­

movant, resolving all inferences in its favor, and determines

whether the moving party is entitled to judgment as a matter of

law. See Saenqer Orq. v. Nationwide Ins. Associates,

(1st Cir. 1997). The undisputed facts, viewed in the

light most favorable to Jet Wine, are recited below.

Background

Jet Wine is a corporation that is engaged in the business of

brokering alcoholic beverages in Maine, New Hampshire and

2 Vermont. BUSA is a corporation that imports certain brands of

alcoholic beverages and distributes those products throughout the

United States. In this action. Jet Wine accuses BUSA of

intentionally and improperly interfering with contractual

relations between Jet Wine and two of its alcoholic beverage

suppliers, Schieffelin & Somerset Co. ("Schieffelin") and

Carillon Importers Limited ("Carillon") h

Jet Wine's Contractual Agreements

In 1996 and 1997, Jet Wine entered into three written

brokerage agreements with Schieffelin, a company that distributes

and sells various brand name alcoholic beverages. Pursuant to

the agreements, Schieffelin appointed Jet Wine as its exclusive

representative in New Hampshire, Maine and Vermont for the

promotion and solicitation of orders for Schieffelin brands,

including Dewar's White Label Scotch and Dewar's Ancestor Scotch

Previously, this court rejected Jet Wine's assertion that its Complaint supported claims for intentional interference with contractual relations and intentional interference with advantageous business relations based on the theory that BUSA wrongfully interfered with a relationship between Jet Wine and Bacardi & Company Limited ("BACO"). This court also denied Jet Wine's motion to amend its Complaint in order to assert this theory of liability. See Document No. 71. Accordingly, the court rejects Jet Wine's asseverations on summary judgment that its claims arise in part out of contractual or business relations between the plaintiff and BACO.

3 ("Dewar's"). Each of the contracts between Jet Wine and

Schieffelin was to remain in effect until December 31, 1999, at

which time the contract would continue indefinitely unless

terminated by either party upon thirty days written notice.

In 1996, Jet Wine also entered into an oral agreement with

Carillon. Pursuant to this agreement. Jet Wine became Carillon's

exclusive representative in Maine for the promotion and

solicitation of orders for the Bombay brands of alcoholic

beverages.

The Formation of Diageo and FTC Involvement

At or about the time Jet Wine entered into the brokerage

agreements with Schieffelin and Carillon, Carillon was a direct

or indirect subsidiary of Grand Metropolitan p.i.e. ("Grand Met")

and Schieffelin was a joint venture through which Guinness p.i.e.

("Guinness") sold Dewar's in the United States. In 1997, Grand

Met and Guinness agreed to merge to form Diageo p.i.e.

("Diageo"). The proposed merger triggered the Federal Trade

Commission's ("FTC") filing of a complaint against Grand Met,

Guinness and Diageo asserting that the merger would have

significant anticompetitive effects on the premium Scotch whiskey

and gin markets in the United States.

4 In 1998, following a settlement between the parties to the

FTC action, the FTC issued a Decision and Order requiring Diageo

to divest itself of the Dewar's and Bombay brands ("Brands"), as

well as the assets relating to those Brands. The Decision and

Order provided that if the divestiture did not occur within six

months after the execution of an Agreement Containing Consent

Order, the FTC could appoint a trustee to complete the

divestiture.

The Sale of the Brands

In compliance with the FTC order, Diageo sought bids for the

purchase of the Brands. Bacardi Limited ("BL"), the parent

holding company of BUSA, was one of the companies that submitted

a bid. During the course of the bidding process, BL conducted

due diligence with respect to the Brands. BUSA, which

participated in BL's due diligence efforts, learned that Jet Wine

had extended term brokerage agreements for New Hampshire, Maine

and Vermont.2

_____ Diageo ultimately accepted BL's final bid, and in March

1998, Diageo entered into two Asset Purchase Agreements with

2 There is no evidence as to what if anything BUSA learned about the substance of Jet Wine's brokerage agreements other than the fact that Jet Wine had extended term brokerage contracts for New Hampshire, Maine and Vermont.

5 Bacardi & Company Limited ("BACO")3 and William Lawson Distillers

Limited ("Lawson") for the purchase and sale of the Brands.4 The

deal was fully consummated in June 1998, following FTC approval

of the Asset Purchase Agreements. As a result of the FTC's order

that Diageo divest itself of the Brands, and the subsequent sale

of the Brands to BACO and Lawson, Schieffelin no longer held the

Dewar's brand in its portfolio and Carillon no longer held the

Bombay brand in its portfolio.

The Appointment of a New Broker for the Brands

After acquiring the Brands, BACO appointed BIL to be the

worldwide distributor of the Brands. BIL then appointed BUSA to

import and distribute the Brands in the United States. On June

15, 1998, BUSA notified Jet Wine that it was selecting another

company to act as its broker for the Brands in New Hampshire,

Maine and Vermont. BUSA did not provide Jet Wine with advance

notice of its decision to engage an alternative broker.

Moreover, the broker that BUSA chose to represent it in New

3BACO owns trademarks and intellectual property that are used in the manufacturing and sale of alcoholic beverages. BACO is a wholly-owned subsidiary of Bacardi International Limited ("BIL"), and BL owns 99.88% of BIL's stock.

4BACO and Lawson were selected as the Bacardi entities that would acquire the Brands based upon fiscal, financing and tax considerations.

6 Hampshire, Maine and Vermont directly competes with Jet Wine.

Discussion

To prove either intentional interference with contractual

relations or intentional interference with advantageous business

relations. Jet Wine must establish that (1) it had a contractual

relationship with a third party, (2) BUSA knew of this

relationship, (3) BUSA intentionally and improperly interfered

with this relationship, and (4) Jet Wine was damaged by the

interference. See Montrone v. Maxfield,

(1982). See also Prever v. Dartmouth College,

(D.N.H. 1997)(a claim for intentional interference with

prospective contractual relations seeks relief for the

defendant's interference with an existing relationship that gives

rise to a reasonable expectation of economic advantage);

Demetracopoulos v. Wilson,

(1994)(setting

forth the elements of a claim for intentional interference with

contractual relations and emphasizing that defendant's conduct

must be both intentional and improper). Although the New

Hampshire Supreme Court has questioned the validity of claims for

intentional interference with advantageous business relations,

see Clipper Affiliates, Inc. v. Checovich,

, 275

7 (1994), I assume for purposes of this Order that such claims

remain prosecutable under New Hampshire law.5

BUSA is entitled to judgment as a matter of law on both

causes of action. As the undisputed facts show, nothing that

BUSA did interfered, much less intentionally and improperly

interfered, with Jet Wine's exclusive distributorship agreements

with Schieffelin and Carillon. The FTC's order that Diageo

divest itself of the Brands and the subsequent sale of the Brands

to BACO and Lawson in compliance with that order left Schieffelin

and Carillon without the Brands in their portfolios and rendered

Jet Wine's contracts with those suppliers unenforceable. If any

third party action can be said to have interfered with Jet Wine's

relationships with its suppliers, it was the FTC's action and not

5Relying on Clipper, BUSA urges this court to reject Jet Wine's claim for intentional interference with advantageous business relations as an invalid cause of action. While the Clipper court called into question the vitality of such claims, it did not decide the issue. Moreover, since Clipper, this court has continued to assume the existence of an independent cause of action for intentional interference with prospective contractual relations. See Prever,

; Heritage Home Health, Inc. v. Capital Region Health Care Corp.,

*3 (D.N.H. 1996). In light of the relevant case law and Jet Wine's failure to establish a genuine issue of material fact that would defeat BUSA's motion for summary judgment on Jet Wine's intentional interference with prospective relations claim, I will assume for purposes of this Order the existence of such a claim under New Hampshire law. BUSA's decision to appoint Jet Wine's competitor as the broker

for the Brands in New Hampshire, Maine and Vermont. Accordingly,

Jet Wine has established no basis for recovery in tort against

BUSA. See Caribbean Ins. Servs., Inc. v. Am. Bankers Life

Assurance Co. of Florida,

(no basis for recovery in

tort where the only tortious conduct lay in the disruption of the

relationship allegedly created by a contract deemed to be void or

unenforceable); Barrows v. Boles,

(1997) (no

tortious interference with rental agreements between landlord and

tenants where foreclosure extinguished landlord's interest in the

property and therefore any entitlement to rental payments under

the contracts) .6

I reject Jet Wine's assertion that on June 15, 1998, when

BUSA notified Jet Wine that it was appointing a new broker for

the Brands, Jet Wine had an enforceable economic relationship

with Schieffelin and Carillon with respect to the Brands. By

that time, the FTC had ordered Diageo to divest itself of the

6BUSA argues that Jet Wine cannot establish any of the elements necessary to support either of its claims. Because I find that the undisputed facts show that BUSA did not intentionally and improperly interfere with the contractual relationships between Jet Wine and its suppliers, and that BUSA is therefore entitled to judgment as a matter of law on both of Jet Wine's tort claims, I decline to address the remaining elements of the plaintiff's claims.

9 Brands and Diageo had entered into agreements for the sale of the

Brands to BACO and Lawson. Through no fault of BUSA's, neither

Schieffelin nor Carillon was capable of fulfilling its

contractual obligations to Jet Wine.

Conclusion

BUSA's motion for summary judgment (document no. 64) is

granted with respect to both Jet Wine's claim for intentional

interference with contractual relations and Jet Wine's claim for

intentional interference with advantageous business relations.

The Clerk of Court shall enter judgment in accordance with this

Order and close the case.

SO ORDERED.

James R. Muirhead United States Magistrate Judge

Date: September 13, 2001

cc: Gerald J. Caruso, Esq. S. David Siff, Esq. J. Mark Dickison, Esq.

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