Breakthru Beverage California (BBC) recently won a lawsuit against Golden State Cider (GSC) due to the beverage company terminating their distribution contract without paying the proper termination fees.
After a 15-day jury trial, BBC was awarded a nearly $8 million judgment.
“When BBC first began distributing GSC, it was a very small brand and had fewer than 400 accounts,” says Oren Bitan, a shareholder in law firm Buchalter’s Los Angeles office, the law firm who represented BBC in court.
“At the time, BBC was called Wine Warehouse, and they really helped build GSC up, putting them into chain stores and distributing into Southern California,” Bitan continues. “They really helped build them from a small brand to a significant one, so GSC believed it was outgrowing Wine Warehouse and wanted to move to the bigger beer distribution network.”
Golden State Cider’s Distribution Growth
By the end of 2015, GSC was a fledgling producer of hard cider with nominal sales of hundreds of thousands of dollars in two counties in Northern California. In early 2016, GSC signed a distribution agreement with Wine Warehouse to use “reasonable efforts” to promote the sales of GSC’s cider throughout California.
According to Buchalter, over the next three-and-a-half years, Wine Warehouse grew GSC’s sales to $13 million, reaching 97% of California’s population.
The distribution agreement provided that GSC could terminate Wine Warehouse by paying the company “a fair market value termination fee of two times the profits during the prior year,” according to Buchalter. However, when GSC decided to terminate the agreement in favor of a larger network of distributors, the company refused to pay Wine Warehouse anything, claiming that the distributor had not grown sales enough.
Wine Warehouse Sues Golden State Cider
On August 27, 2019, Wine Warehouse sued GSC for the agreed termination fee, according to Buchalter. GSC then cross-complained, seeking $30+ million.
The beverage brand claimed that the $30 million they received from the sale of its company to Chris and Ariel Jackson, owners of the craft brewery Seismic, would have been more but for Wine Warehouse’s inadequate sales efforts.
“Wine Warehouse’s case was based on the language of the contract that the party signed, which is that is GSC elects to terminate the contract without cause, there’s a fee associated with it,” Bitan explains. “GSC’s cross-complaint tried to show the jury that somehow Wine Warehouse didn’t do a good enough job at increasing the size of the brand, which the jury didn’t agree with.”
The verdict and judgement occurred on March 13, 2025, in which BBC was awarded nearly $8 million. GSC didn’t receive anything for its cross-complaint.
