On June 20, a Missouri Circuit Court judge issued one of the first judicial rulings in a battle that could dramatically affect the relationship between producers and distributors of alcohol.

In Missouri, Diageo PLC, Bacardi Ltd., and Pernod Ricard SA are all lobbying to end the state’s franchise laws.  These laws, which ten other states also have, make it difficult for producers to switch to different distributors.  In Missouri, a producer like Diageo cannot terminate an agreement with a distributor absent 90 days notice and good cause.On March 6, 2013, Diageo notified its Missouri distributor, Major Brands, Inc., that it would terminate its relationship with it as of June 30, 2013.  Major Brands then sued Diageo and sought a preliminary injunction to prevent Diageo from terminating its relationship with Major Brands.

In its June 20, 2013 ruling on Major Brands’ request for a preliminary injunction, the Missouri Circuit Court, to the chagrin of the large producers, affirmedMissouri’s franchise law.  The Court further held that there was no good cause for Diageo’s termination of its distribution agreement with Major Brands.  However, in a partial victory for Diageo, the Court declined to issue a preliminary injunction forcing Diageo to continue working with Major Brands – Major Brands would be entitled to money damages only.

The battle in Missouri is far from over.  Bacardi is also seeking to terminate its relationship with Major Brands, and litigation is pending in both Federal and State Courts.  And certainly, the lobbying efforts of both distributors and producers will continue in earnest.