Beer Companies Pabst and MillerCoors Go To Court Over Partnership Dispute

Many individuals and businesses choose to create partnerships. Partnerships can help grow a business, combine resources, and bring together intelligent minds. As beneficial as partnerships can be, there can also be partnership disputes. Partnership disputes are common with businesses of all sizes, and some of the country’s largest beer companies are heading to court over one such dispute.

Pabst and MillerCoors have had a pretty close relationship. Since 1999, MillerCoors has been brewing all of the Pabst beer brands, which include Lone Star, Pabst Blue Ribbon, Old Style, and Natty Boh. This is called contract brewing and it allows small beer companies to meet demand by outsourcing the brewing process to larger companies with the technology and capacity to do so. The current partnership agreement is scheduled to end in 2020, but allows for two five-year contract extensions.

Negotiations regarding potential extensions have not gone so well. Pabst is alleging MillerCoors wants to stop brewing for them so they can take a better position in the market for themselves. Without MillerCoors, Pabst will face extreme hardship. There is only one beer company other than MillerCoors that is big enough to brew all of Pabst’s products and that’s Anheuser-Busch, but Anheuser-Busch does not do contract brewing. MillerCoors claims it does not have the capacity to continue to brew for Pabst and is not required to do so after the contract expiration in 2020.

The partnership dispute boils down to the inability of the companies to agree on how the contract extension should be negotiated. MillerCoors believes it has sole discretion to determine whether or not it will continue brewing for Pabst. Pabst, on the other hand, believes the companies are obligated to work “in good faith” to find a solution if Pabst wants to extend the agreement.

Luckily for Pabst, the companies were able to come to an agreement and settle out court. The trial had finished and had gone to jury deliberation, but a settlement saved Pabst from demise and preserved the partnership. While this may be considered a success, the reality is that the litigation has likely been costly for both companies and has generated a lot of negative press.

What Businesses Can Learn From Pabst and MillerCoors

An important lesson can be learned from the partnership dispute between Pabst and MillerCoors. Any business entering into a contract needs the document to be specific and thorough. The fact that the companies wound up disputing how negotiations should be handled indicates the contract was not sufficiently clear with regard to this process. Only by working with experienced contract attorneys can businesses ensure they are protected from future disputes.

Experienced Houston Contract Lawyers

Regardless of the size of your company, you can greatly benefit from utilizing an experienced contract attorney. The Houston contract lawyers at Feldman & Feldman have extensive experience drafting, reviewing, and litigating a variety of contract matters. Call us today to request a consultation.

Duties Business Partners Have To Each Other

Starting a business is incredibly exciting, but many first time business owners don’t anticipate the many responsibilities involved with running a business. When partners form a business, they must fulfill certain duties to each other. When one or more partners fail to fulfill these duties, partnership disputes arise and can jeopardize the whole business.

Partnership Duties

Partners must always put the interests of the business ahead of their own personal interests. This non-delegable duty can be broken down into several specific duties:

  • Duty of Good Faith and Fair Dealing – Partners must always act honestly and fairly regarding the business. Deception or misrepresentation violates these duties, and partners can be held responsible for their actions.
  • Duty of Loyalty – Partners owe a loyalty to the business. This means partners cannot engage in self-dealing and must avoid conflicts of interest. If there is a conflict of interest, the affected partners must immediately inform the other partners.
  • Duty of Care – Partners will make many business decisions, some on a daily basis. When making decisions, partners are expected to act reasonably and with care.
  • Duty of Full Disclosure – Every partner has a right to certain information regarding the business and the other partners. Partners must disclose to other partners information such as potential business opportunities, contracts entered into, finances, and operations.

Resolving Partnership Disputes

Partnership disputes are very delicate legal matters. If not resolved quickly and efficiently, these disputes can snowball out of control and destroy a business. The best way to preserve a business at the heart of a partnership dispute is to work with an experienced business attorney. A partnership dispute lawyer will be able to assess the situation and devise a strategy for resolution that protects the hard work partners have put into the business.

Houston Partnership Dispute Lawyers

If you are facing any type of internal conflict, don’t wait to get the help of a Houston partnership dispute lawyer. The sooner you involve an attorney, the better you can protect your business. At Feldman & Feldman, our business minded lawyers understand each dispute is unique. Not all partnership disputes are destined for the courtroom. We create unique action plans to resolve business disputes. Contact us today to schedule an appointment with one of our Houston partnership dispute lawyers.