Cook County Record

Friday, August 23, 2019

Heineken removes distributor's breach of contract suit to federal court

By Andrew Thomason | Mar 14, 2014

Editor's Note: Court records indicate this lawsuit was dismissed with prejudice by joint stipulation involving both parties on April 6, 2015. 

The U.S. division of Dutch brewer Heineken has removed a lawsuit lodged against it for breach of contract and violating the Illinois Beer Industry Fair Dealing Act to Chicago's federal court.

ACM Distributing Co. Inc., a beer distributor based out of Streator, sued the brewer known for its green bottles on Jan. 30 in the Cook County Circuit Court, claiming it suffered $200,000 in damages after Heineken wrongfully ended a distribution agreement between the two.

Heineken USA Inc. on March 7 filed a notice to remove the suit to the U.S. District Court in Chicago, saying federal rules allow the move because the amount in controversy exceeds $75,000 and there is diversity in citizenship between the parties as its U.S. division is based in New York and ACM is in Illinois.

The underlying complaint originated from a beer distribution disagreement between ACM and Heineken.

ACM signed a contract with Labatt USA in 2000 to distribute Dos Equis Amber, Dos Equis Special Lager, Tecate, Bohemia, Carta Blanca and Sol in many northern Illinois counties.

Heineken got the rights to that distribution agreement in 2004. Soon afterwards, ACM received a "territorial assignment" from Heineken to distribute those beers in LaSalle, Putnam, Grundy and Bureau counties, as well as part of Marshall County.

The territorial assignment had no fixed time period, according to the original complaint, but it did give Heineken the right to end the agreement if it chose to stop distributing the named products in that territory.

ACM operated under the agreement until 2010, when Heineken decided to change distributors of the Mexican beers in the region. ACM contends Heineken ended the agreement without good cause.

Heineken offered ACM compensation for its business, including the fair market value of the company's business relating to the beers it distributed for Heineken, which defined the fair market value as "the gross sales of the brands to retailers, less discounts and costs of goods sold to retailers."

Heineken also offered to buy all of ACM's sellable inventory.

ACM, however, claims the offer made by Heineken doesn't adhere to the Illinois Beer Industry Fair Dealing Act, asserting that the act requires Heineken to offer an actual dollar amount, not just a formula for an amount.

Additionally, despite providing documentation relating to Heineken's formula over the course of seven months, ACM contends Heineken never provided a dollar amount for compensation.

"ACM made numerous attempts to work with Heineken's staff to determine an amount that Heineken would pay ACM after its wrongful termination ... Heineken remained unresponsive" to letters ACM's attorney sent, the complaint alleges.

In January 2011, Heineken sent a letter to ACM stating that "effective immediately, ACM Distributing, is no longer an appointed distributor of the Tecate lager, Carta Blanca, Bohemia, Does Equis Ambar (sic), Dos Equis Lager or Sol Brands of Beer. If you should have any inventory, it should be sold to a distributor ... who is authorized to sell the product."

Represented by Chicago attorney Marc Nelson Blumenthal, ACM then filed suit against Heineken, claiming violation of the Illinois Beer Industry Fair Dealing Act and breach of contract.

ACM is seeking actual damages of more than $50,000 for both counts in its suit, and a financial penalty against Heineken for failure to deal in good faith.

Heineken's removal notice was submitted by a team of attorneys at Giffin, Winning, Cohen & Bodewes in Springfield. The notice lists R. Mark Mifflin as lead counsel and Chicago attorney Rick Hammond of Johnson & Bell Ltd. as local counsel in the matter.


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