$9.1 Million Binding Arbitration Award

Porter Scott obtained a $9.1 million binding arbitration award before a three judge panel on behalf of one of Sacramento’s major beverage distributors. Following a nine day binding arbitration in San Francisco before a JAMS panel, partners Carl Calnero and Martin Jensen prevailed in a major commercial/business matter of first impression in California. In the case, the firm represented a family-owned, successful beverage distributor who had been denied a fair market value for the sale of their business, based on a contract provision within the distribution rights agreement. That provision purportedly gave the right to the manufacturer to approve or disapprove of the dealership rights sale. The manufacturer, one of the nations largest beer and alcoholic beverage manufacturers, had rejected the sale claiming that the designated purchaser did not satisfy its requirements for approval. Despite the fact that that same purchasing designee had in fact been appointed as a beverage distributor for that very same manufacturer in various other parts of California. The manufacturer contended that it had the right to determine which markets would be served by various dealerships, and therefore impinged on the right of Porter Scott’s client to sell its distribution rights to a bonafide purchaser for a fair market value. California Statutory Law dictates that in such a scenario, if the “disapproval” was accomplished in bad faith, the manufacturer would be responsible to the selling dealer for the difference in fair market value lost. Although statutory law had been clear, the case and decision now cements the rights of dealers to alienate or sell their exclusive distribution rights, no longer subject to the whims of a manufacturer or supplier.