Wine of Japan Import, Inc. v. Sapporo U.S.A., Inc. ( 2024 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1051-23
WINE OF JAPAN
IMPORT, INC. and SANWA
TRADING CO., INC.,
Plaintiffs-Appellants,
v.
SAPPORO U.S.A., INC.,
MASASHI MINAMI, ANDREW
MURPHY, and TAKESHI
MIYAHARA,
Defendants-Respondents.
Argued September 11, 2024 – Decided September 24, 2024
Before Judges Currier, Marczyk, and Torregrossa-
O'Connor.
On appeal from the Superior Court of New Jersey, Law
Division, Morris County, Docket No. L-2143-22.
James Philip Chou argued the cause for appellants (Saul
Ewing LLP, attorneys; James Philip Chou and Marshall
O. Dworkin (Moritt Hock & Hamroff LLP), on the
briefs).
Andrew B. Kratenstein (McDermott Will & Emery
LLP) of the New York bar, admitted pro hac vice,
argued the cause for respondents (Jessica Greer Griffith
(McDermott Will & Emery LLP) and Andrew B.
Kratenstein, attorneys; Jessica Greer Griffith and
Andrew B. Kratenstein, of counsel and on the brief).
Kyle Vellutato argued the cause for amicus curiae Beer
Wholesalers' Association of New Jersey (O'Toole
Scrivo, LLC, attorneys; Kyle Vellutato and Antonio
Vayas, of counsel and on the brief).
PER CURIAM
Plaintiffs Wine of Japan Import, Inc. (WOJ), and Sanwa Trading Co., Inc.,
(Sanwa), appeal from the October 23, 2023 Law Division order dismissing their
complaint and granting defendants' Sapporo U.S.A., Inc., Masashi Minami,
Andrew Murphy, and Takeshi Miyahara (Sapporo U.S.A.) motion to compel
arbitration. Based on our review of the record and applicable legal principles,
we dismiss the appeal as moot.
I.
Sapporo Holdings is a Japanese company that brews Sapporo beer. In
1984, Sapporo Holdings founded Sapporo U.S.A. Sapporo U.S.A. relies on
distributors to sell Sapporo products nationally. Sapporo U.S.A. works with
thirteen distributors that sell Sapporo beer in the New York City metropolitan
area including New Jersey. These distribution agreements are non-exclusive.
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Thus, distributors compete with each other on service, brand selection, and other
commercial factors. Plaintiffs are two such distributors who entered into a
Wholesaler Agreement (Agreement) with Sapporo U.S.A. to distribute Sapporo
products in New York and New Jersey.
WOJ was founded in 1973, specializing in the wholesale distribution of
ultra-premium Japanese sake, spirits, and beer in the United States. Sanwa was
established in 1984 as WOJ's importer of alcohol and commercial foodstuffs.
WOJ has a forty-five-year relationship with Sapporo U.S.A. and helped
introduce the Sapporo brand in the United States.
The relationship between Sapporo U.S.A. and plaintiffs is governed by
the most recent Agreement entered into by the parties in March 2005. The
Agreement defines plaintiffs' "non-exclusive" territory as certain counties in the
metropolitan New York area including New Jersey (the Territory). Sapporo
U.S.A. also works with other distributors that sell Sapporo beer in the Territory.
In view of plaintiffs' importance to the success of Sapporo's brand in their
Territory, section 1(a) of the Agreement states:
Sapporo and [plaintiffs] recognize and agree that it is
essential to their mutual objectives under this
Agreement that [plaintiffs] maintain financial and
competitive capabilities to achieve efficient and
effective distribution of Sapporo's products in
[plaintiffs'] Territory . . . and to assure continued
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protection of the high quality and integrity of Sapporo
products.
To advance that goal, under section 1(d) of the Agreement, plaintiffs agreed to
use their "best efforts" to maximize the sale and distribution of Sapporo products
in their territory. Specifically, plaintiffs agreed:
[t]o use [their] best efforts to promote the sale and
distribution of Sapporo's Products to all possible
accounts in its market area. [Plaintiffs] shall furnish
and maintain at [their] own expense the sale and
distribution organization suitable and sufficient for the
proper effective performance of [their] obligations
herein. [Plaintiffs] shall conduct such sales,
promotional and advertising activities reasonably
necessary to fulfill [their] obligations[.]
There is no definition of "best efforts" in the Agreement.
Under section 6(b) of the Agreement, either party has the right to
terminate the Agreement on sixty-days prior written notice so long as the party
giving notice "reasonably believes that such termination will be mutually
beneficial to both parties."
Additionally, and central to the dispute before the trial court, the
Agreement contained a "Governing Law and Arbitration" provision. Section 11
states in pertinent part:
This Agreement shall be governed by, and
construed in accordance with, the laws of the State of
New York. Any controversy or claim arising out of or
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relating to this Agreement shall be settled by arbitration
in New York, New York pursuant to the rules and
regulations of the American Arbitration Association.
Any party seeking arbitration shall notify the other
party and set forth the reasons such arbitration is being
sought. . . . Judgment on the award of the arbitrators
may be entered by any court having jurisdiction to do
so. Sapporo and [plaintiffs] hereby irrevocably consent
to the jurisdiction of the State of New York over their
person and waive any defense based on improper
venue, inconvenient venue arbitration shall be deemed
a breach of this Agreement.
Sapporo U.S.A. asserted that plaintiffs' sales performance began to
decline sometime before the onset of the COVID-19 pandemic in 2020.1
Specifically, it alleged plaintiffs' sales volume decreased over twenty percent
from 2019 to 2022. In September 2022, Sapporo U.S.A. senior executives met
with plaintiffs and expressed concern that plaintiffs' sales performance was
substantially worse than other distributors' sales performance in the Territory.
Sapporo U.S.A. representatives shared sales data demonstrating this disparity.
1
Plaintiffs argue that any purported decline in their sales figures regarding
Sapporo products was a result of natural market conditions and not their alleged
failure to use "best efforts." They note the COVID-19 pandemic particularly
devastated Asian restaurants in New York City, which resulted in the closure of
seven of their retailer-customers in New Jersey and 129 retailer-customers in
New York. These closures had a disproportionate impact on plaintiffs' sales
volumes.
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Plaintiffs allege the meeting was originally planned for Sapporo to
introduce its new vice president of sales. However, they contend Sapporo
U.S.A. used this meeting as an "ambush" to execute a preconceived plan to
terminate the Agreement with plaintiffs.
Shortly thereafter, Sapporo U.S.A., by letters dated October 4, 2022, sent
"Notice[s] of Deficiency and Pending Termination" of the Agreement to
plaintiffs. Sapporo U.S.A. advised plaintiffs that they violated the Agreement
by failing to use their best efforts to promote the sale and distribution of Sapporo
products in their respective territory. Sapporo U.S.A. requested that plaintiffs
provide a written plan of corrective action to cure the sales deficiencies by
October 24, 2022. The termination notices also stated that Sapporo U.S.A. was
willing to discuss the sale of plaintiffs' distribution rights to another distributor
if plaintiffs preferred.
Plaintiffs responded to the termination notices denying any breach of the
Agreement and invited Sapporo U.S.A. to make an offer for their distribution
rights. The parties were unable to agree on the issue of the sale of the
distribution rights.
Plaintiffs filed a complaint and an order to show cause seeking a
preliminary injunction in December 2022. In January 2023, Sapporo U.S.A.
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filed opposition to the request for a preliminary injunction and also moved to
compel arbitration and to dismiss the complaint. After oral arguments, the trial
court granted the application for a preliminary injunction and reserved judgment
on Sapporo U.S.A.'s motion to compel arbitration.
On October 23, 2023, the trial court issued an order and written opinion
granting Sapporo U.S.A.'s motion to compel arbitration, dismissing plaintiffs'
complaint with prejudice, and directed "[t]he parties shall submit this dispute to
binding arbitration before the American Arbitration Association in . . . New
York pursuant to Section 11 of the . . . Agreement . . . ." Plaintiffs did not
initiate arbitration.
On November 14, 2023, Sapporo U.S.A. withdrew the notices of
deficiency and pending termination of the Agreement to "end [the parties']
dispute and continue operating under the . . . Agreement." Despite Sapporo
U.S.A. withdrawing the notices to terminate the Agreement, plaintiffs filed a
notice of appeal in December 2023.
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II.
Plaintiffs raise several issues on appeal. They argue Sapporo U.S.A.
violated New Jersey's Malt Alcoholic Beverage Practices Act (MABPA)2 by
anticipatorily breaching the Agreement between the parties. They contend the
trial court erred in applying New York law because Sapporo U.S.A.'s actions
violated the MABPA. They also assert the Agreement's arbitration clause is
invalid because it does not expressly inform plaintiffs they are waiving their
right to access to the courts. Plaintiffs further contend the trial court erred in its
findings regarding who should decide issues concerning arbitrability. Lastly,
they assert their appeal is not moot.
We granted the Beer Wholesalers' Association of New Jersey (BWANJ)
leave to appear as amicus curiae. BWANJ joins plaintiffs' arguments and
contends the MABPA was designed to protect wholesalers and to prevent
inequity in bargaining power between wholesalers and brewers. It further
contends the choice-of-law analysis necessitates the application of New Jersey
law to this dispute, and the MABPA's enforcement provisions established that
New Jersey courts are the correct forum for this matter.
2
N.J.S.A. 33:1-93.12 to -93.19.
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Sapporo U.S.A. counters that the trial court correctly decided the
arbitration-related issues. More fundamentally, it contends the issues in this
matter are moot, given that it withdrew its notice to terminate.
We begin by addressing the mootness issue. As discussed above, after the
trial court entered its order compelling arbitration, Sapporo U.S.A. withdrew its
notices of termination. Plaintiffs argue that Sapporo U.S.A.'s withdrawal of the
termination notices does not moot this appeal. More particularly, plaintiffs
maintain they are entitled to a declaratory judgment that they were not in breach
of the Agreement and that Sapporo U.S.A. had no basis to terminate the
Agreement in order to ensure this does not become a "recurring tactic" utilized
by Sapporo U.S.A. They contend that Sapporo U.S.A. has not provided any
argument as to "why it cannot or will not repeat" its actions.
"Mootness is a threshold justiciability determination rooted in the notion
that judicial power is to be exercised only when a party is immediately
threatened with harm." Betancourt v. Trinitas Hosp., 415 N.J. Super. 301, 311
(App. Div. 2010). "[O]ur courts normally will not entertain cases when a
controversy no longer exists and the disputed issues have become moot."
DeVesa v. Dorsey, 134 N.J. 420, 428 (1993) (Pollock, J., concurring). An issue
has become moot "when the decision sought in a matter, when rendered, can
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have no practical effect on the existing controversy." N.Y. Susquehanna & W.
Ry. Corp. v. State Dep't of Treasury, 6 N.J. Tax 575, 582 (Tax 1984), aff'd, 204
N.J. Super. 630 (App. Div. 1985).
The doctrine of mootness emanates from the Judiciary's unique
institutional role as a branch of government that only acts when a genuine
dispute is placed before it. We generally do not render advisory decisions
retrospectively opining about the legality of matters that have already been
resolved, for "[o]rdinarily, our interest in preserving judicial resources dictates
that we do not attempt to resolve legal issues in the abstract." Zirger v. Gen.
Accident Ins. Co., 144 N.J. 327, 330 (1996).
In limited instances, courts will address the merits of appeals that have
become moot, electing to do so "where the underlying issue is one of substantial
importance, likely to reoccur but capable of evading review." Ibid. For
example, courts have set aside mootness concerns in certain cases where the
matter evading review posed a significant public question or affected a
significant public interest. See, e.g., In re Conroy, 98 N.J. 321, 342 (1985)
(addressing the withholding or withdrawing of life-sustaining treatment); State
v. Perricone, 37 N.J. 463, 469 (1962) (considering blood transfusions for an
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infant that conflicted with the parents' religious beliefs a significant public
interest).
Guided by these principles, we decline to reach the issues presented by
plaintiffs as the matter is moot at this juncture. Sapporo U.S.A. has retracted its
notices of deficiency and pending termination that gave rise to this litigation.
Plaintiffs have at all times been supplied by Sapporo U.S.A. with beer and now
no longer face the imminent prospect of losing their Sapporo distribution rights.
Contrary to plaintiffs' assertion, there is no indication this is a "recurring tactic"
employed by Sapporo U.S.A. against plaintiffs. This is the only time in the
parties' long business relationship where Sapporo has threatened to terminate
plaintiffs' distribution rights.
Finally, although the issues raised in the appeals are certainly important
to plaintiffs and perhaps a limited class of liquor wholesalers, these matters do
not sufficiently present issues of widespread importance to overcome mootness
principles. This case involves a private commercial dispute that neither impacts
any important public policy, nor, as noted above, is likely to reoccur. Under
these circumstances, we discern no basis to issue an advisory opinion. See State
v. Rose, 206 N.J. 141, 189 (2011) (Rivera-Soto, J., concurring in part and
dissenting in part).
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The appeal is dismissed as moot.
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