Australian ingredient supplier, Bintani Australia, has filed a lawsuit in US District Court seeking an injunction prohibiting its major hop supplier from breaching a supply agreement.
Bintani took the action after YCH terminated its supply contracts in September. YCH took the action after being notified of Bintani’s partial sale to US Based Rahr Corporation, which owns the Brewers Supply Group in the US. YCH has described Brewers Supply Group as “a competitor of YCH” and claimed the sale was a breach of its distributor agreement.
In its complaint Bintani says that “On September 28, 2018, YCH unexpectedly gave Bintani notice that YCH would be terminating an exclusive distributor arrangement and sales contract with Bintani”. YCH allegedly took the action based on “untrue allegations” that Bintani breached its contract.
The lawsuit states that Bintani has been distributing YCH hop products since 2003 and that “YCH has become Bintani’s largest hop product supplier”. In 2016 the companies signed a new distribution agreement.
On Friday, September 28, YCH Vice President Ryan Hopkins notified Bintani that YCH was terminating all contracts with Bintani ‘for cause’. Hopkins said in his notice that Brewers Supply Group is a competitor of YCH and so Bintani’s sale to Rahr constituted a breach of the Distributor Agreement.
“Not only has confidentiality been violated, but the agreement also stipulates that there shall be no such assignment of rights under the agreement without our prior written approval,” Hopkins wrote.
Bintani alleges that in “subsequent telephone conversations between Bintani and YCH leadership, YCH leadership explained that the reason for the termination was YCH’s individual animosity toward BSG, one of its competitors in North America.”
Bintani subsequently requested that YCH rescind its termination notice.
Bintani also asked that YCH cease and desist from its own violations of the Distributor Agreement which it said came about when YCH began soliciting Australian breweries for the direct sale of hop products.
Bintani argues in its statement of claim that it did not “assign, sell or otherwise transfer the Distributor Agreement or any rights under the agreement to any other entity. Bintani continues to maintain the same operations and leadership, and it intends to exercise its rights—and meet its responsibilities—under the Distributor Agreement.”
“The sale of stock by the shareholders of Bintani did not include or operate as an assignment of the Distributor Agreement. Bintani remains the counter party bound to the contracts with YCH.
“Bintani also has not breached any clause of the Distributor Agreement such that YCH would be entitled to terminate the agreement for cause. Bintani has not breached any confidentiality provisions,” the complaint argues.
Bintani claims that after YCH issued its notice of termination in late-September 2018, “Bintani learned that YCH began to actively solicit Bintani’s brewery customers in Australia, in violation of the exclusivity and non-solicitation provisions in the Distributor Agreement.”
Bintani says it has learned that YCH has “entered into contracts for the sale of hop products with one of Bintani’s largest customers, in violation of the Distributor Agreement.
“In conversations with this Australian customer, Bintani has learned that the brewery and YCH have recently agreed to price, quantity, and payment terms,” the filing alleged.
Bintani has sought an injunction against the termination of the agreement and is seeking arbitration of the dispute.
Bintani declined to comment for this story but issued a statement.
“Bintani confirms that it is taking all available steps, including pursuing its legal rights, to secure hops contracted with Yakima Chief Hops. Unfortunately we are unable to comment on the details of pending litigation. In the meantime, consistent with our long-standing reputation for reliability, Bintani remains committed to doing all we can and then some to take care of our valued and loyal partners,” the statement read.
Jon Burridge, Manager of Hop supplier Hopco, told Brews News that it hoped the dispute could be resolved, but brewers had no present cause for concern.
“Its unfortunate that the politics are potentially going to impact hop supply to breweries here in Australia, let’s hope Bintani and Yakima Chief Hops can resolve this issue immediately and amicably for the sake of Australian brewers,” he said.
“Hopco has a contract for 2017 crop with YCH including proprietary varieties, what happens beyond that will be determined by the US courts.
“Hopco has seen increased demand on a number of US hop varieties including, proprietary varieties and subsequently planned ahead to cover its customers ongoing along with some extra supply in case of an emergency.”
Brews News understands that it is unlikely the dispute will lead to local shortages of relevant hops.
The injunction is expected to be heard within weeks.