B. Fernández & Hnos. sues Anheuser-Busch for $10M for contract breach
B. Fernández & Hnos. has filed a civil suit against Anheuser-Busch seeking $10 million in damages resulting from the termination of its exclusive distribution agreement at military facilities in Puerto Rico.
B. Fernández has been the exclusive distributor for A-B beer products in Puerto Rico for many decades, and in the lawsuit, it claims that it has created a market for brands such as Budweiser, Bud Light, Bud Lime, Budweiser Select, Busch, Busch Light, Michelob, and Michelob Light, among others.
In August 2018, B. Fernández and Anheuser-Busch signed an agreement giving the local company the sales representation of those and other products at the island’s military facilities. The contract was in effect through March 2020 and provided that it could be extended through March 2021 via written notice before the expiration date.
However, Anheuser-Busch allegedly never extended the agreement, but B. Fernández continued to uninterruptedly provide its services. The local distributor claims its sales representation agreement is protected by the Puerto Rico Sales Representative Act of 1990, known as Act 21, which sets out to shield sales representatives from termination without just cause.
Trouble began brewing earlier this year when B. Fernández staff got wind of Anheuser-Busch’s decision to terminate the agreement. Representatives from both companies met on May 25, 2022, when Anheuser-Busch confirmed its decision, saying it was opting to service Puerto Rico’s military installations with its own people, effective immediately.
In a response the next day, B. Fernández warned Anheuser-Busch that its decision violated the law, asking the stateside firm to reconsider its decision. A week later, Anheuser-Busch confirmed that its determination to terminate the sales representation agreement was final.
The company also argued that it believed that Act 21 did not apply because “the expired written agreement provided that New York law was the applicable law and (ii) that even if Act 21 applied, [Anheuser-Busch] was not appointing another sales representative but assuming on its own the services provided by B. Fernández, which it believed was entirely within its right,” according to the lawsuit filed at the US District Court for Puerto Rico this week.
B. Fernández said there is no “just cause” for Anheuser-Busch’s decision to terminate the sales representation agreement. The latter’s decision to assume the direct provision of services which B. Fernández used to handle, “presumptively impaired the contractual relationship between the parties,” according to the lawsuit.
B. Fernández is seeking damages that take into consideration the value of its investments, the “good will” of the business, the number of years it had overseen the representation of the products, the sales volume and market share, and the amount of benefits obtained through the representation during the last five years.
In the petition in which it asks the court for a preliminary injunction ordering Anheuser-Busch not to terminate the agreement, B. Fernández also estimated its losses from that decision at more than $10 million.
The company also told the court that if financial compensation is not ordered, then it asked the court to take specific action compelling Anheuser-Busch to comply with the agreement and not allow anyone else — including Anheuser-Busch — other than B. Fernández to service military installations.
The case has been assigned to US District Court Judge Pedro A. Delgado-Hernández.