The legal battle between Jack’s Abby Craft Lagers and Atlantic Beverage Distributors has crossed state lines into Rhode Island.
Atlantic Importing and Distributing of Rhode Island, Inc., the Ocean State sister company of the Holliston, Massachusetts-based distributor, filed a lawsuit against Jack’s Abby in Rhode Island’s Providence/Bristol County Superior Court on July 23 to prevent the brewery from terminating Atlantic as its Rhode Island wholesaler. The Framingham, Massachusetts-based craft brewery had successfully ended its relationship with Atlantic’s Massachusetts operation in January.
In mid-July, Jack’s Abby named Sheehan Family Companies-owned Craft Rhode Island as its distributor in the state, several weeks after it had named Sheehan’s Craft Massachusetts, L. Knife & Son and Seaboard Products as its new Massachusetts distributors. Those changes followed the conclusion of a contentious arbitration process with Atlantic.
On August 4, Rhode Island Associate Justice Brian P. Stern sealed the case documents, but according to court filings obtained by Brewbound, Jack’s Abby filed an opposition to Atlantic’s motion for preliminary injunction on September 1 that alleges Atlantic’s Rhode Island operations “probably only really exists on paper, and may not even be a real business.”
The court filings detail a distributing operation without a functioning warehouse and imply that Atlantic’s Massachusetts arm had been operating in Rhode Island without a charter to do business from the secretary of state.
Representatives for both Atlantic and Jack’s Abby declined to comment, citing the sealed nature of the case.
According to court documents, Jack’s Abby signed with Atlantic Rhode Island in April 2015, five months after the wholesaler was incorporated. The brewery shipped its product to Atlantic’s Coventry, Rhode Island-based warehouse until March 2017, “when Jack’s Abby ceased its direct distribution to Atlantic RI and allowed Atlantic MA to become Atlantic RI’s ‘supplier,’ whereby Atlantic MA would submit purchase orders to Jack’s Abby.”
According to the filing, all three parties agreed in March 2017 that Atlantic MA would become a “‘master wholesaler,’ an out-of-state wholesaler selling its inventory to an in-state Rhode Island wholesaler.” The last purchase order Atlantic Rhode Island submitted to Jack’s Abby was dated February 20, 2017, according to Jack’s Abby.
“As Sean Siegal controlled and spoke for both Atlantic MA and Atlantic RI, the purchaser of the brands whether it be Atlantic MA or Atlantic RI, made no material difference to Jack’s Abby at the time,” the craft brewery wrote.
Around the time of the switch to Atlantic MA as the master distributor selling Jack’s Abby’s products in the Ocean State, Atlantic Rhode Island relocated from its Coventry-based warehouse to the address in Cumberland, Rhode Island.
Jack’s Abby co-owner Sam Hendler claims that he visited Atlantic’s Cumberland, Rhode Island warehouse in June, according to court records, and found “by all indications a vacant space or at least a space not being used as a business in that its door was locked; its glass blacked out; there was absolutely no signage or any indication whatsoever of any business operating.”
“There were no delivery trucks on the property (a true signifier of any alcoholic beverage wholesaler business), let alone any delivery trucks bearing any ‘Atlantic’ insignia or name,” the complaint said.
According to Jack’s Abby’s opposition, the Rhode Island department of state “revoked” Atlantic’s corporate charter in November 2018 — but the wholesaler somehow continued to renew its Class B wholesaler license to distribute beer, wine and spirits with the Rhode Island Liquor Commission in 2019, 2020 and 2021. It’s unclear how the charter revocation did not affect Atlantic’s ability to operate.
“The status of those renewals is therefore very suspect,” Jack’s Abby wrote.
In its opposition, Jack’s Abby noted that in his 2016-2020 renewal applications for Atlantic Rhode Island’s Class B wholesaler license, Siegal failed to disclose that he owns Framingham, Massachusetts-based Exhibit A Brewing, which opened in 2016, nor did he disclose that he acquired GrandTen Distilling in January 2021. Rhode Island law prohibits out-of-state beverage alcohol manufacturers from holding wholesaler’s licenses.
“Clearly, if Atlantic RI informed the Rhode Island Liquor Commission that its principal
owner, Sean Siegal, was also the principal owner of the GrandTen Distillery and/or the Exhibit A Brewery, then Atlantic RI would not be allowed to continue to hold a wholesaler license in Rhode Island,” Jack’s Abby wrote.
Jack’s Abby asked Siegal in a letter dated June 14 to “cease and desist” the practice of supplying Jack’s Abby products to Atlantic Rhode Island via Atlantic Massachusetts, “as it is non-compliant with either Massachusetts or Rhode Island laws.” In the letter, Jack’s Abby also noted that it was aware Atlantic Rhode Island “had its authority to conduct business in Rhode Island revoked.”
In its opposition to Atlantic’s motion, Jack’s Abby wrote that the Rhode Island secretary of state reinstated Atlantic’s “authority to transact business” on July 22, one day before Atlantic filed a lawsuit to compel Jack’s Abby to sell its brands to Atlantic Rhode Island and two weeks after Massachusetts’ Suffolk Superior Court denied Atlantic Massachusetts’ emergency renewed motion for preliminary injunction, “which claimed Atlantic MA needed continued purchases of the brands so it could continue to distribute the Jack’s Abby brands in Rhode Island.”
“Atlantic RI filed this lawsuit requesting this court to order Jack’s Abby to sell it the brands even though Atlantic has not requested to purchase the brands since February 2017,” Jack’s Abby wrote.
A hearing is scheduled for September 8.