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RUDOLPH ROSA v. LATROBE BREWING COMPANY (11/15/85)

filed: November 15, 1985.

RUDOLPH ROSA, INC., EASTWOOD BEER DISTRIBUTORS, INC., AND MOSSO BEVERAGE, INC., APPELLEES,
v.
LATROBE BREWING COMPANY, APPELLANT



Appeal from Order of the Court of Common Pleas, Civil Division, of Westmoreland County, No. 5460 of 1984.

COUNSEL

Daniel I. Booker, Pittsburgh, for appellant.

Thomas R. Betz, Pittsburgh, for appellees.

Wieand, Cirillo and Johnson, JJ.

Author: Wieand

[ 347 Pa. Super. Page 553]

This appeal requires that we interpret 1980 amendments to the Pennsylvania Liquor Code and determine their effect on distributing rights agreements in existence prior to the effective date of such amendments.

The appellant, Latrobe Brewing Company, brewers of Rolling Rock beer, and the appellees, Rudolph Rosa, Inc. (Rosa), Eastwood Beer Distributors, Inc. (Eastwood), and Mosso Beverage, Inc. (Mosso) had been parties to agreements entered circa 1966 by which appellant had designated appellees as distributors of its beer in Latrobe and surrounding areas in Westmoreland County. The appointments were for indefinite periods, but each agreement

[ 347 Pa. Super. Page 554]

    contained a provision that it could be cancelled and the distributorship terminated upon notice by either party.

On June 22, 1980, the Governor approved Act Number 1980-73. By this statute, the legislature amended the Liquor Code,*fn1 effective in sixty days, by adding the following:

(d)(1) All distributing rights as hereinabove required shall be in writing, shall be equitable in their provisions and shall be substantially similar as to terms and conditions with all other distributing rights agreements between the manufacturer giving such agreement and its other importing distributors and distributors shall not be modified, cancelled, terminated or rescinded by the manufacturer without good cause, and shall contain a provision in substance or effect as follows: "The manufacturer recognizes that the importing distributor and distributor are free to manage their business in the manner the importing distributor and distributor deem best and that this prerogative vests in the importing distributor and distributor the exclusive right to establish a selling price, to select the brands of malt or brewed beverages they wish to handle and to determine the efforts and resources which the importing distributor and distributor will exert to develop and promote the same of the manufacturer's products handled by the importing distributor and distributor. However, the manufacturer expects that the importing distributor and distributor will price competitively the products handled by them, devote reasonable effort and resources to the sale of such products and maintain a reasonable sales level." "Good Cause" shall mean the failure by any party to an agreement, without reasonable excuse or justification, to comply substantially with an essential, reasonable and commercially acceptable requirement imposed by the other party under the terms of an agreement.

(2) After January 1, 1980, no manufacturer shall enter into any agreement with more than one distributor or importing distributor for the purpose of establishing

[ 347 Pa. Super. Page 555]

    more than one agreement for designated brand or brands of malt or brewed beverages in any one territory. Each franchise territory which is granted by a manufacturer shall be geographically contiguous.

(3) Except for discontinuance of a brand or a valid termination for good cause, the purchaser of the assets of the manufacturer as defined in this act shall become obligated to all the territorial and brand designations of the agreement in effect on the date of purchase. Purchase of assets as defined for the purposes of this act shall include, but not be limited to, the sale of stock, sale of assets, merger, lease, transfer or consolidation.

(4) The court of common pleas of the county wherein the licensed premises of the importing distributor or distributor are located is hereby vested with jurisdiction and power to enjoin the modification, rescission, cancellation or termination of a franchise or agreement between a manufacturer and an importing distributor or distributor at the instance of such importing distributor or distributor who is or might be adversely affected by such modification, rescission, cancellation or termination, and in granting an injunction the court shall provide that no manufacturer shall supply the customers or territory of the importing distributor or distributor by servicing the territory or customers through other importing distributors or distributors or any other means while the injunction is in effect: Provided, however, That any injunction issued under this subsection shall require the posting of sufficient bond against damages arising from an injunction ...


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