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Complaints leveled in Feb by Chicago distrib Louis Glunz Beer against Canvas, producer of hemp THC bev brand Wynk, look a lot like the familiar claims made in other wrongful termination suits brought by beer distribs. But that's just the problem, Canvas told a fed ct in IL last wk. The fair market value calculations, termination requirements and injunctive relief asserted by Glunz are protections afforded by the state's beer franchise law, or BIFDA, the supplier pointed out in its answer. But that law doesn't govern this contract, the co wrote. In its view, the suit "is an attempt by Glunz to graft BIFDA provisions, which do traditionally govern Glunz's distribution agreements, onto the underlying Agreement here," Canvas responded. And tho Glunz seems to argue that the termination was invalid because it didn't get the 15x past-yr gross profits it believes is FMV for the brand, Canvas asked the ct to rule that termination did in fact go into effect late last Oct.Deciding which party is reading the contract correctly is a "straightforward contract case," Canvas acknowledged, choosing to answer the distrib's breach of contract claim and leave it to the ct. But Glunz didn't stop there and has "thrown in a muck of other claims" about trade secrets and unjust enrichment that have "no basis in fact or law," the co argued, separately asking the ct to dismiss those additional claims."No 'Statutory Minimum'" of 15x, Canvas Sez, Arguing Termination in Line with Contract Key contract clause, titled "Termination or Failure to Renew Without Good Cause," confirms that FMV "shall not be less than" 3x past 12 mos gross profits, recall. A couple days after Canvas issued termination notice late last Aug, Glunz responded by citing a "statutory minimum" of 15x. But "there is no 'statutory minimum' payment owed to Glunz," Canvas told the ct.In its complaint, Glunz claims that a larger FMV payment must be made before the termination is fully executed, asking for both a preliminary and permanent injunction that blocks Canvas from selling its brands to a competitor, the supplier summarizes. The distrib's position appears to be that termination "was not effective, and remains ineffective" until it gets that higher payment, as Canvas reads it. Those are the kinds of protections that contracts governed by the state's franchise law contain, but this contract "only provides that, after Canvas terminates Glunz, it must compensate Glunz," the co wrote.Normal Work to Transition to New Distrib Not Illegal, Didn't Violate Contract, Per Canvas Glunz was indeed the Wynk brand's "initial distributor in the Chicago area" and the supplier "had hoped Glunz's advertised experience, the strong retailer relationships it claimed to have, and its ability to grow brands would assist Canvas in its introduction and growth," it wrote. But the contract "expressly contemplated that the relationship would one day end" and the brands would move "for any reason, or no reason." Canvas "denies that it had any inappropriate discussions with Glunz's direct competitors" before issuing the termination, claiming that it simply "made plans for its future" and later chose a successor "without violating the" contract.Glunz is "intent on extracting more" from Canvas than "the contractually agreed-upon termination fee" it paid last yr, the supplier argued. To do that, the distrib "seeks to complicate these proceedings" by claiming Canvas took and misused trade secrets. But those claims fail, the supplier argued, because it's not clear what trade secrets Glunz refers to or how they were misused.As Canvas reads it, the complaint "broadly labels ordinary business information as trade secrets and suggests that Canvas violated trade secret law by continuing to conduct business after the parties' relationship ended." But it doesn't allege any facts showing that Canvas kept using the supposed trade secrets and "merely speculates that misuse must have occurred." Instead, Glunz "describes routine transition activities that typically occur when a manufacturer changes distributors" and adds them to its core complaint about the size of the compensation it received. Throwing in another claim of "unjust enrichment" is like "attempting to have its cake and eat it, too," Canvas wrote, asking ct to toss that charge along with the trade secret allegations.

Glunz Can't "Graft" IL Beer Franchise Law onto THC Bevs, Canvas Replies; Asks Ct to Toss Other Claims

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