Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Crown Beverages, Inc. v. Sierra Nevada Brewing Co.

United States District Court, D. Nevada

April 26, 2017

CROWN BEVERAGES, INC., a Nevada corporation, Plaintiff,
SIERRA NEVADA BREWING CO., a California corporation; Does I through X, inclusive, Defendants.



         I. SUMMARY

         This case centers on a contract dispute between an out of state brewer and a Nevada distributer. Before the Court are a Motion to Dismiss (“Motion”) filed by Defendant Sierra Nevada Brewing Co. (“Sierra Nevada”) (ECF No. 25) and Objections to the Magistrate Judge's March 1, 2016, order on several discovery issues (“Objections”) (ECF No. 71) filed by Plaintiff Crown Beverages, Inc (“Crown”). The Court has reviewed Crown's response (ECF No. 38) and Sierra Nevada's reply (ECF No. 40) to the Motion to Dismiss, as well as Sierra Nevada's response to the Objections (ECF No. 77).

         For the reasons discussed below, Sierra Nevada's Motion is granted in part and denied in part, and Crown's Objections are overruled.


         A. Nevada's Alcohol Distribution Regulatory Scheme

         NRS § 597.120 et seq governs the relationship between alcohol producers (in this case an out of state brewery) and wholesalers in Nevada. Relevant to this case, Nevada requires a brewer to give a wholesaler 90 days' notice before terminating a franchise agreement and also requires the brewer to inform the wholesaler of the reason for the termination. NRS § 597.150(1). The wholesaler is then allowed 60 days to attempt to correct the reason for the termination. NRS § 597.160(3). Furthermore, a supplier must establish good cause for termination. NRS § 597.160(2). Good cause is defined as:

1. Failure by a wholesaler to comply substantially with essential and reasonable requirements imposed on him or her by a supplier, or sought to be imposed by a supplier, if the requirements are not discriminatory as compared with requirements imposed on other similarly suited wholesalers either by their terms or in the manner of their enforcement.
2. Bad faith by the wholesaler in carrying out the terms of the franchise agreement.

NRS § 597.144.

         B. The Relationship Between Sierra Nevada and Crown

         The following facts are based on the allegations in the Amended Complaint (ECF No. 16) and on exhibits attached to Crown's Motion for Preliminary Injunction (ECF No. 14). Crown is a licensed Nevada alcohol wholesaler and importer, and is a registered supplier of alcoholic beverages. (ECF No. 16 ¶¶ 5, 6, 8.) On December 1, 1986, Crown entered into an agreement (“Distribution Agreement”) with Sierra Nevada making Crown the exclusive importer and wholesaler of Sierra Nevada's products in northern Nevada. (Id. ¶ 10.)

         On October 26, 2016, Sierra Nevada sent Crown a letter (“October Letter”) indicating that Sierra Nevada wished to end the business relationship due to Crown's “harassment and bullying tactics directed toward our employees” and asking Crown to “initiate discussions to sell [Crown's] distribution rights.” (Id. ¶ 17; ECF No. 14-4.) On November 3, 2016, Crown filed suit in state court, alleging that Sierra Nevada has violated NRS § 597.120 et seq and committed several torts. (ECF No. 1-1.)

         On November 9, 2016, Sierra Nevada sent Crown a second letter (“November Letter”) in which it stated: “Sierra Nevada did not purport to terminate its [“Distribution Agreement”] with Crown, ” in the October Letter, but now was asserting several bases for termination and providing Crown with the 90 day statutorily required notice. (ECF No. 16 ¶¶ 22, 23; ECF No. 14-5.) Sierra Nevada enumerated several grounds for terminating the Distribution Agreement, including:

(1) submitting false and misleading accounting reports, including overbilling […]; (2) failure to provide a competitive level of service which has drawn complaints from retail accounts raising issues with Crown's performance; (3) ongoing retail execution that fails to meet Sierra Nevada's brand standards […]; (4) below average 2016 execution performance on key brand building executables […]; (5) improper care and oversight of Sierra Nevada's product, including failure to properly refrigerate product and to ensure product was maintained within expiration parameters; and, most importantly, (6) abusive and unprofessional conduct at meetings held with Sierra Nevada people, including one which during [Crown President Paul Bond was] evidently intoxicated and brandished a firearm to threaten them.

(ECF No. 14-5 at 3.)

         The parties met on November 15, 2016, in an attempt to resolve the issues raised in the November Letter. (Id. ¶ 24.) After the meeting, Crown sent a letter proposing steps it would take to cure the problems identified by Sierra Nevada. (Id. ¶ 28.) On November, 28, 2016, Sierra Nevada responded and stated that Crown's proposal was inadequate. (Id. ¶ 30.) In its response, Sierra Nevada also introduced, for the first time, a scoring metric which it claimed also justified its decision. (Id.)

         Sierra Nevada removed the suit to this Court on November 30, 2016. (ECF No. 1.) Crown filed an Amended Complaint on December 14, 2016 (ECF No. 16), and Sierra Nevada filed its Motion to Dismiss on December 27, 2016 (ECF No. 25). Sierra Nevada argues that Crown is attempting to shoehorn several tort claims into their contract claims, and thereby impermissibly “turn [their] contract disputes into tort disputes with the specter of punitive damages.” (ECF No. 25 at 6.)


         A. Legal Standard

         A court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.