MillerCoors Fights a Pair of Lawsuits Out West

MillerCoors continues to battle a pair of high-profile lawsuits — including a trademark infringement case brought by Stone Brewing and another case from a Las Vegas beer wholesaler.

Earlier this week, MillerCoors, the U.S. beer division of Molson Coors, responded to Stone Brewing’s motion for a preliminary injunction to prevent the sale of Keystone products in which the word “Stone” had been isolated.

In a May filing, Stone argued that an injunction was necessary due to the rebranded Keystone cans “causing actual and irreparable consumer confusion,” “wreaking havoc in the market” and causing sales “to skyrocket as consumers associate it with Stone.”

However, in the latest court filing — first cited by attorney Brendan Palfreyman, who runs the website — MillerCoors argued that Stone Brewing failed to meet the requirements for a preliminary injunction.

MillerCoors is claiming that Stone failed to prove confusion between the two products or demonstrate “a single example” of a consumer purchase driven by confusion. Additionally, MillerCoors said there is little consumer crossover between the two companies. In fact, according to MillerCoors’ data, about 75 percent of economy beer drinkers are between the ages of 55 and 64, and the majority live in the interior of the U.S.

“Almost none live in Southern California, the geographic area that accounts for a huge percentage of Stone Brewing’s sales,” the lawsuit said.

The company said Stone has shown “no likelihood of irreparable harm,” pointing to increased sales of the San Diego craft brewery’s offerings since the April 2017 Keystone rebrand as well as the delay between the rebrand and the February 2018 filing of the lawsuit.

MillerCoors also argued that the “balance of equities clearly favors” the multinational beer company after it notified Stone Brewing in 2010 that of plans to continue using “Stone” and “Stones” in conjunction with the Keystone brand. And finally, the company claimed an injunction is not in the public interest.

In the filing, MillerCoors also denied allegations that it had instructed retailers to display Keystone products in a way that “obscures” the word “Key” or that it produces in-store displays on which only the word “Stone” is visible. The company also claimed that the name “Keystone” and “Coors Brewing Company” are “unmistakable” when an actual Keystone can is considered.

But that’s not the only legal matter MillerCoors is dealing with.

In Las Vegas, Bonanza Beverage, a nearly six-decades-old wholesaler of Miller brands throughout Sin City, is suing MillerCoors alleging that the beer giant violated Nevada state law by blocking its sale to Southern Glazer’s Wine and Spirits and instead directing it to sell to Breakthru Beverage. At issue in this case is whether a distributor agreement issued by MillerCoors in 2008 supersedes state law on changes in control and ownership of its wholesaler partners.

In the lawsuit, Bonanza argues that state law should govern the transfer of its business to another wholesaler and cites NRS 597.157, which states:

“A supplier shall not unreasonably withhold or delay approval of any assignment, sale or transfer of the stock of a wholesaler … including the wholesaler’s rights and obligations under the terms of a franchise, whenever a person to be substituted under the terms of the franchise meets reasonable standards imposed upon the wholesaler and any other wholesaler of the supplier of the same general class, after consideration of the size and location of the marketing area of the wholesaler.”

Bonanza said Southern Glazer’s, one of the largest alcohol wholesalers in the U.S., “meets or exceeds the reasonable standards imposed upon the wholesaler” and noted that the distributor sold more than 14.8 million cases of beer in Nevada during the last year.

However, MillerCoors contends that its distributor agreement gives it the right to “match and assign” its brand to a wholesaler of its choice, in this case Breakthru, which already distributes Coors products in Las Vegas.

In a statement, MillerCoors said moving its brands to Breakthru in Las Vegas “is well within our rights as the brand owner and the best thing to do for our business.”

“We are following the transition process in our contract, which allows a seller like Bonanza to get full value for their business on fair transaction terms,” the company said. “Our proposal keeps Bonanza fully compensated and consolidates our brands with an existing, high-performing partner.”

However, Bonanza’s attorney, Leif Reid, told Brewbound that the Nevada attorney general issued an opinion in December 2008 saying language in MillerCoors’ distributor agreement violated a state law barring suppliers from acting as a wholesaler, importer or retailer.

“We think that the statute controls,” he added.

While the lawsuit refers to Bonanza’s relationship with Southern Glazer’s as “friendly” competition, the company has a negative history with Breakthru and its predecessor, Wirtz, after talks of a joint venture between the two companies broke down after nine months of negotiations, in 2013.

“A lack of trust between Bonanza and Breakthru had developed from the prior failed negotiation, and the uncertainty surrounding Breakthru’s merger with RNDC [Republic National Distributing Company] further supported the conclusion not to engage in a transaction with Breakthru,” the lawsuit states.

As part of its deal with Southern Glazer’s, Bonanza vice president and co-owner Bill Gialketsis would receive a 2-year contract to work for the company while other employees would be interviewed and considered for roles within the organization..

Bonanza — whose portfolio also includes the Lagunitas, Deschutes, Stone Brewing, Modern Times Beer Co. and Boston Beer Company brands, among others — sold more than 10 million cases last year, Reid said. He added that “none of the other breweries have attempted to exercise the control that MillerCoors have.”

Bonanza is seeking a preliminary and permanent injunction. A hearing is scheduled for next week.

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