Mississippi Supreme Court Ruling Reinstates Claims Against Anheuser-Busch, Mitchell Distributing

1. Introduction

   On May 23, the Mississippi Supreme Court published its opinion in the case of Rex Distributing Company v. Anheuser-Busch, LLC, et al. The ruling partially reverses the trial court's decision to dismiss all of Rex's claims against Anheuser-Busch and rival distributor Mitchell Distributing Company (Mitchell). The ruling will allow Rex Distributing Company (Rex) to proceed with its lawsuit alleging that Anheuser-Busch violated Mississippi's Beer Industry Fair Dealing Act (BIFDA) by refusing to approve Rex's attempt to sell its distribution rights to Anheuser-Busch products. In addition, the ruling will allow Rex to proceed with a claim against Mitchell for tortious interference and civil conspiracy.

   The ruling clarifies Mississippi beer franchise law by limiting the rights of beer suppliers in the context of distributor transfers, effectively rendering Anheuser-Busch's "match and redirect" contractual provisions unenforceable under Mississippi's Beer Industry Fair Dealing Act (BIFDA).

2. Background and Procedural History

   1. Rex Sells to Adams; Major Suppliers Refuse Consent

      Rex was a longstanding wholesaler of Anheuser-Busch's beer, with an exclusive distribution area in the Gulf Coast region of Mississippi. Rex attempted to sell the assets of its beer distribution business to another nearby distributor, Adams Beverages, Inc. (Adams). The Asset Purchase Agreement provided that the sale price would be determined based on the individual distribution contracts Rex successfully transferred to Adams.

      The written distribution contract between Anheuser-Busch and Rex included a "match and redirect" provision, granting Anheuser-Busch the right to refuse consent to Rex's proposed purchaser, and instead appoint an alternative distributor as the purchaser of Rex's portfolio. The alternate would acquire the distribution rights from Rex "at the price and on the terms and conditions applicable to" the proposed transfer. Anheuser-Busch exercised its match and redirect, blocking Rex's sale of its distribution portfolio to Adams and instead appointing Mitchell as the purchasing distributor. Another major supplier, D.G. Yuengling & Son (Yuengling), then objected to the transfer of its distribution rights to Mitchell, and terminated Rex rather than acquiesce to the transfer. Yuengling's decision to terminate deprived Rex of more than $3 million in sales proceeds. Rex then filed suit, alleging various causes of action against Yuengling, Anheuser-Busch...