Federal Judge: MillerCoors Withheld Marketing Materials in Stone Brewing Lawsuit

A federal magistrate judge last Thursday filed a report and recommendation order largely siding with Stone Brewing’s claims that MillerCoors did not provide all available marketing materials for its Keystone brand during the lawsuit’s discovery phase.

Although U.S. Magistrate Judge Linda Lopez declined to impose sanctions requested by Stone against MillerCoors, she did grant a partial award of monetary sanctions to the San Diego-headquartered craft brewery.

“The court finds that the parties’ legal and factual disputes should be resolved on the merits via motion or trial, not as the result of a discovery sanction,” Lopez wrote in her report and recommendations to U.S. District Judge Roger T. Benitez, the lawsuit’s trial judge.

Stone Brewing filed the lawsuit against MillerCoors in February 2018 in response to new Keystone Light packaging and advertising that featured the words “Key” and “Stone” separated in prominent, capitalized letters. MillerCoors has maintained in its defense that it has used “Stone” and “Stones” in reference to Keystone products dating back to the brand’s debut in 1989.

In a September 5 motion, Stone alleged that MillerCoors failed “to make a full production of historical Keystone materials. The court agreed and ordered MillerCoors to provide all available Keystone marketing and packaging materials by September 20. MillerCoors complied, providing additional marketing materials, which Stone argued had been held back because they did not prominently feature the word “Stone” and hurt MillerCoors’ argument that “Stone” and “Stones” have long been used in reference to the Keystone line.

“Selectively withholding responsive documents because they are unfavorable is an egregious form of discovery abuse that warrants the most severe sanctions available,” Stone argued.

In light of this finding, Lopez recommended that Stone receive a partial payout of its $420,476.63 in legal fees, and Stone be allowed to update its expert reports to include the additional evidence.

In her October 31 report to Benitez, Lopez wrote that although MillerCoors did not comply with its discovery obligations, the court would not recommend evidentiary sanctions.

Lopez recommended denying Stone’s requests in favor of the “less drastic” partial monetary sanction. Stone had requested that the court strike MillerCoors’ defense and counterclaim that it has long used “Stone” and “Stones” and that there is little crossover between economy beers such as Keystone Light, and craft beers made by companies such as Stone Brewing. Stone had also asked that the trial jury be informed that MillerCoors failed to provide all requested materials.

Asked for comment on the recommendations, Stone CEO Dominic Engels said the company was “pleased” with the ruling.

“We find it very disturbing that MillerCoors withheld critical documents that undermine its primary defense in this case, and our legal team will be addressing this matter further,” he said in a statement. “We’re pleased that the court recognized that MillerCoors violated the discovery rules by withholding unfavorable documents and sanctioned MillerCoors for doing so. We look forward to updating our expert reports with this new discovery material and proving its claims at trial.”

MillerCoors spokesman Marty Maloney said the company has “always used our Keystone trademark in an appropriate manner, and will refute claims to the contrary.”

The court ordered Stone to file an updated declaration of legal fees by November 6 to be considered for payment through monetary sanctions against MillerCoors and to submit updated expert reports by November 7.

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