Source: https://www.law360.com/, Brian Dowling

April 12, 2021: A Massachusetts beer and wine wholesaler has lost a legal challenge seeking to prevent its key supplier, Jack's Abby Brewing LLC, from breaking off their distribution deal under a new state law, according to a ruling made public Monday.

Suffolk Superior Court Justice Karen Green said Atlantic Importing Co. Inc. had failed to convince her it was likely to prevail in its suit, which challenges the validity of Jack's Abby's termination notice and the constitutionality of a state law passed in January to make it easier for craft brewers to walk away from wholesalers.

In a one-page order dated Wednesday and posted online Monday, Justice Green also said Atlantic didn't show that any potential harm from the breakup was truly irreparable and couldn't just be fixed by payment of damages.

Atlantic filed suit against Jack's Abby last month following the brewery's notice that it was terminating the wholesaler's distribution rights under a new law allowing craft breweries to get out of undesirable relationships with wholesale partners.

The wholesaler wanted the court to halt an arbitration panel designed to determine the fair market value of the distribution rights, a sum that the brewery would owe the wholesaler under the January law.

The arbitration is scheduled to start April 19 with four days of hearings to determine what the brand's distribution rights are worth.

Atlantic had attacked Jack's Abby's termination notice as flawed because it failed to identify which wholesaler would be taking over the work. Atlantic also claimed the underlying law - which took effect in January after a compromise between craft brewery and wholesaler industry groups - violated the state's constitution in mandating arbitration to decide valuation disputes.

The Framingham, Massachusetts, brewery explained that it wanted out of its distribution arrangement with Atlantic due to cratering sales, and the new law allowed it for the first time to walk away without having to show cause.

Justice Green telegraphed her thinking on the case at the end of oral arguments over the preliminary injunction request last week, telling the parties she didn't see irreparable harm despite Atlantic's claims that it faced significant harm to its reputation by losing such a premier brand.

Atlantic counsel J. Mark Dickison of Lawson & Weitzen LLP said the company is appealing the decision and also asking the arbitration panel to dismiss the arbitration.

"Atlantic believes it has an enforceable, binding contract to be the exclusive distributor for Jack's Abby and it will continue to fight to uphold its contractual rights - a contract that Jack's Abby voluntarily agreed to and from which it willingly received the benefit of over $1.5 million in marketing support," Dickison told Law360.

Jack's Abby co-owner Sam Hendler said Monday the company is "heartened that the court rejected Atlantic's arguments to veer off" the course that the new law established.

"From the start, we have had one clear goal - determine a reasonable fair market value for the brands, pay Atlantic and move on with the work required to stabilize this brewery which has had a very challenging year," Hendler said. "We look forward to that process playing out."

Representatives for Atlantic were not immediately available for comment.

Atlantic Importing is represented by J. Mark Dickison, Joshua M.D. Segal and John R. Bauer of Lawson & Weitzen LLP.

Jack's Abby is represented by Kenneth B. Walton and Amanda E. Mathieu of Lewis Brisbois Bisgaard & Smith LLP and John P. Connell of Upton Connell & Devlin LLP.

The case is Atlantic Importing Co. Inc. v. Jack's Abby Brewing LLC, case number 2184CV00725, in the Suffolk County Superior Court of Massachusetts.