Varni Bros. Corp. v. Wine World, Inc.

Statement of the Case and Facts

Wine World, Inc. (Wine World) is a producer and supplier of wines, including Beringer, Napa Ridge, Chateau Souverain and Meridian. Wine World distributes its wines through a network of independent distributors located throughout the United States. Brand Wines & Spirits, Inc. (Brand) and Varni Bros. Corporation (Varni) are former distributors for Wine World in the Fresno and Modesto areas, respectively. Varni began distributing for Wine World in 1975 and Brand began in 1985. The distributing arrangements were never formalized in written contracts.

Although Brand did not begin distributing for Wine World until 1985, Brand’s founder, Harvey Braziel, had distributed for Wine World in the Fresno area while with a company called M&T Distributing Company. After consulting with Wine World in 1985, Brand and Wine World agreed that M&T would assign its distribution rights to Brand.

As wine distributors, Brand and Varni purchased wine from suppliers for resale to retailers in their assigned territories. The development of a market for the vintner’s products was a joint effort between the vintner and the distributor. Distributors provided a wide…