S&C Reaches Successful Outcome for Pabst Following MillerCoors Trial

November 28, 2018

On November 28, S&C client Pabst Brewing Company concluded a jury trial against MillerCoors, LLC. The trial was held in Milwaukee County Circuit Court in Wisconsin, the Honorable Timothy Witkowiak presiding, and began on November 12. The jury heard evidence and argument on Pabst's claims for breach of the implied covenant of good faith and fair dealing, and violation of Wisconsin's unfair competition statute (Wis. Stat. § 100.20(1t)).
 
The dispute arises from Pabst's attempt to exercise an extension option in the long-term Brewing Agreement between the two companies, pursuant to which MillerCoors brews roughly 95 percent of Pabst's beer. Under the Agreement, Pabst had sole discretion to extend the Agreement by five years (from June 2020 to June 2025) if MillerCoors determined, in its sole discretion, that it would have sufficient capacity to make Pabst's beer through the extension term. If MillerCoors determined that it would not have sufficient capacity, the parties were obligated to discuss possible solutions to the anticipated capacity constraints. In 2015, after a change in Pabst ownership, MillerCoors announced that it would not have sufficient capacity for Pabst and refused to allow Pabst to extend for less than a near-tripling of Pabst's contractual brewing fee.
 
Pabst argued that the evidence showed MillerCoors' sufficient capacity determination was an impermissible, pretextual excuse to rework the economic terms of contract, exit the contract altogether, and/or harm Pabst as a competitor. MillerCoors argued that the likelihood of future brewery closures and future M&A transactions made it difficult to guarantee capacity for Pabst, and that the fee charged to Pabst was far below market rates in 2015 when Pabst attempted to exercise the option.
 
The trial was bifurcated between liability and damages. During the jury's second day of deliberation following the conclusion of the liability phase, the parties reached a confidential settlement.

The S&C team has been involved in this matter since before the complaint was filed. Pabst previously defeated MillerCoors' motion for judgment on the pleadings, motion to dismiss, motion for summary judgment, motion to compel privileged documents, and motions to exclude expert testimony.
 
The California-based S&C team was led by Robert Sacks, Adam Paris and Sverker Hogberg.