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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 1 of 49
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`J. Noah Hagey, Esq. (SBN: 262331)
` hagey@braunhagey.com
`Andrew Levine, Esq. (SBN: 278246)
` levine@braunhagey.com
`Ronald J. Fisher, Esq. (SBN: 298660)
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`fisher@braunhagey.com
`Sarah Salomon, Esq. (SBN: 308770)
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`salomon@braunhagey.com
`Hunter B. Thomson, Esq. (SBN: 330533)
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`thomson@braunhagey.com
`BRAUNHAGEY & BORDEN LLP
`351 California Street, 10th Floor
`San Francisco, CA 94104
`Telephone: (415) 599-0210
`Facsimile: (415) 599-0210
`
`Attorneys for Plaintiff
`WSJ, LLC d/b/a SEISMIC BREWING CO.
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`Plaintiff,
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` WSJ, LLC d/b/a SEISMIC BREWING
`COMPANY,
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`v.
`DBI BEVERAGE INC.; DBI BEVERAGE
`NAPA; DBI BEVERAGE SACRAMENTO;
`DBI BEVERAGE SAN FRANCISCO; DBI
`BEVERAGE SAN JOAQUIN; DBI
`BEVERAGE SAN JOSE; REYES
`HOLDINGS, LLC; and HARBOR
`DISTRIBUTING LLC,
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`Defendants.
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`Case No. _________________
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`ANTITRUST
`
`COMPLAINT BY WSJ, LLC d/b/a
`SEISMIC BREWING COMPANY FOR:
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`1. VIOLATIONS OF THE CLAYTON ACT
`(15 U.S.C. § 18.)
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`2. VIOLATIONS OF THE SHERMAN ACT
`(15 U.S.C. § 2)
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`3. VIOLATIONS OF CALIFORNIA’S
`UNFAIR COMPETITION LAW
`(Bus. & Prof. Code § 17200 et seq.)
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`JURY TRIAL DEMANDED
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`COMPLAINT
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`Case No.__________
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`

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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 2 of 49
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`INTRODUCTION
`Seismic is a small, family-owned craft brewer dedicated to producing delicious,
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`sustainable beer from its epicenter in Sonoma County. Seismic brings this complaint for violations
`of federal antitrust laws against the largest distributor in the United States, Reyes, and Seismic’s
`former distributor, DBI, which conspired with Reyes to aid its monopolization of the beer
`distribution market and to harm Seismic’s ability to distribute its products to consumers.
`Craft beer originated in California, and California remains a key driver of growth in
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`the industry. California is home to over 1,000 craft breweries, which is more craft breweries than
`any other state. In 2018, craft brewers in California supported over 61,000 people in full-time jobs,
`paid over $905 million in state and local taxes, and contributed over $9 billion to California’s
`economy.1 They also made great beer.
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`In light of the antitrust violations discussed below, California’s once robust craft
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`beer industry is now in jeopardy. As a recent report issued by the U.S. Treasury on competition
`issues in the alcohol industry recognized, “[d]istributors compete on factors such as logistical
`capabilities, execution, marketing services, and financial terms to win and (franchise laws aside)
`retain the business of suppliers with desirable brands.”2 Beginning no later than 2018, Defendant
`Reyes began rapidly acquiring beer distributors and expanding its market share to dominate beer
`distribution in California. As a result, competition in the beer distribution has decreased, leading to
`craft breweries and retailers being coerced into contracts with materially less favorable service
`commitments.
`On September 13, 2019, Defendant DBI was acquired by Reyes. DBI conspired
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`with Reyes to monopolize the California beer distribution market and unlawfully concentrate
`Reyes’ power for the purposes of destroying fair competition. In furtherance of the conspiracy, DBI
`agreed as part of Reyes’ acquisition to force Seismic and other craft brewers to “negotiate” new,
`
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`1 California Craft Brewers Association, California Craft Beer 2018 Economic Impact (Oct. 2019), available at
`https://californiacraftbeer.com/wp-content/uploads/2019/12/CCBS_economicImpact19_85x11F.pdf.
`2 See U.S. Treasury Report, Competition in the Markets for Beer, Wine, and Spirits, (Feb. 2022) at 23-24 (hereafter, the
`“Federal Alcohol Competition Report”), available at https://home.treasury.gov/system/files/136/Competition-
`Report.pdf?msclkid=cf70c97cb9e611eca58cf50abf0621fa.
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`1
`COMPLAINT
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`Case No. __________
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`

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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 3 of 49
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`anticompetitive distribution agreements that make it virtually impossible to switch distributors
`upon the purported sham assignments of Seismic’s and these brewers’ distribution rights.3
`For example, Defendant Reyes attempted to force Seismic to abandon the contracts
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`it had negotiated at arm’s length with DBI and Elyxir Distributing LLC (which included favorable
`termination terms for Seismic), and instead demanded that Seismic agree to an onerous form
`contract that would have made it virtually impossible for Seismic to switch to a competing
`distributor. When Seismic refused, DBI and Elyxir began pressuring Seismic to abandon its
`contractual rights and submit to Reyes’ contract at Reyes’ behest and direction. They also
`conspired to retaliate against Seismic and others who did not fall in line with their anticompetitive
`plans. For example, after Seismic refused to accede to DBI’s collusion, Reyes placed “bounties”
`that targeted Seismic’s points of distribution in a retaliatory manner. Upon information and belief,
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`bounties were arranged to incentivize DBI’s and Reyes’ salespeople to cause Seismic to lose
`permanent “tap handle” placements at its important retail accounts. Similar attacks targeted other
`craft brewers that rejected DBI’s sham assignments.
`Aftershocks from DBI’s and Reyes’ anticompetitive conduct have damaged
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`competition and caused substantial injuries that the antitrust laws are intended to remedy. As a
`result, Seismic has encountered massive bottlenecks, increased costs, and lost sales revenue trying
`to get its product to market in the territories formerly covered by DBI and co-conspirator Elyxir.
`Seismic has also incurred costs scrambling to replace the bespoke distribution agreements it had
`negotiated—often on less favorable terms than those it had negotiated at arm’s length prior to
`Reyes’ unlawful concentration of the market. Moreover, this highly concentrated market no longer
`allows craft brewers to access a distributor, other than Reyes, that can offer a comparable scope to
`the territories DBI covered.
`In San Francisco, for example, Seismic could not find a replacement distributor for
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`months. Its sales cratered. The city, which is a bellwether of success or failure, became Seismic’s
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`3 Co-conspirator Elyxir Distributing LLC’s participation in the conspiracy followed the same pattern, except that until
`Reyes acquired Elyxir, they were direct competitors in Monterey County. In or about June 2020, Elyxir joined the
`conspiracy and likewise foisted a purported sham assignment of Seismic’s distribution rights (in reality, a wholly new
`contract with a monopolistic distribution network) and threatened to punish Seismic for standing on its rights under the
`distribution agreement.
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`COMPLAINT
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`Case No. __________
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`

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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 4 of 49
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`worst-performing area. Seismic resorted to direct sales and self-distribution there until it was
`finally able to sign on with a new distributor for that territory. Seismic was left with no choice but
`to accept a worse distribution agreement and was unable to bargain for many of the key protections
`that DBI had agreed to in the parties’ distribution agreements.
`Seismic therefore brings this Complaint against DBI and Reyes for violations of the
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`Clayton Act and Sherman Act. Seismic requests injunctive relief to restore a competitive market,
`including an order requiring Reyes to divest itself of its numerous unlawful and anticompetitive
`acquisitions (including of DBI and co-conspirator Elyxir). Seismic also seeks to recover the
`millions of dollars in damages it has incurred as a result of Reyes’, DBI’s, and Reyes’ co-
`conspirator Elyxir’s anticompetitive efforts to use Reyes’ monopoly power to force Seismic to
`consent to an abusively unfavorable and anticompetitive contract.
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` JURISDICTION AND VENUE
`The Court has federal question jurisdiction over the federal claims asserted herein
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`pursuant to 28 U.S.C. § 1331 because they arise under the federal antitrust laws, and supplemental
`jurisdiction over Seismic’s claim under California’s Unfair Competition Law pursuant to 28 U.S.C.
`§ 1367.
`The Court has personal jurisdiction over Defendants because they directed their
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`tortious conduct at persons and activities within the State of California, and these claims arose in
`California.
`The Court further has jurisdiction over Defendants because they have offices and
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`transact business in the State of California and because they have consented to this jurisdiction.
`The Court further has jurisdiction over the DBI Defendants because their principal
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`place of business is in California and they are registered here.
`The Court further has jurisdiction over Defendant Harbor because its principal place
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`of business is in California and it is registered here.
`The Court further has jurisdiction over Defendant Reyes because Harbor is its
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`wholly-owned subsidiary, as described further below.
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`3
`COMPLAINT
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`Case No. __________
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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 5 of 49
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`Venue in this District is proper pursuant to 15 U.S.C. § 22 because Defendants
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`transacted business in this District. Venue in this District is further proper pursuant to 28 U.S.C.
`§ 1391(b)(2) because a substantial part of the events or omissions giving rise to the claim occurred
`in this District.
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`PARTIES
`Plaintiff WSJ, LLC d/b/a Seismic Brewing Company
`A.
`Plaintiff Seismic Brewing Company, a/k/a WSJ, LLC, is a Sonoma County craft
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`brewery, headquartered in Santa Rosa, California, and registered as a limited liability company
`under the laws of the State of Delaware.
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`B.
`The DBI Defendants
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`Defendant DBI Beverage Inc. (“DBI Beverage”) is a Tennessee corporation that,
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`upon information and belief, serves as the parent holding company, operator, manager, owner, and
`corporate decision maker for numerous subsidiary “DBI” beer distributors located around the
`country and in Northern California in particular. DBI Beverage is headquartered, upon information
`and belief, at 2 Ingram Boulevard, La Vergne, Tennessee.
`In Northern California, DBI Beverage operated five wholly-owned subsidiaries, also
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`named as Defendants, that distributed Seismic’s beer: DBI Beverage Napa, DBI Beverage
`Sacramento, DBI Beverage San Francisco, DBI Beverage San Joaquin, and DBI Beverage San Jose
`(collectively, “DBI’s Northern California subsidiaries”).
`Upon information and belief, DBI’s Northern California subsidiaries are mere
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`conduits and instrumentalities of their parent, DBI, who dominates and controls them. There exists
`such a unity of interest and ownership that the individuality or separateness of DBI’s Northern
`California subsidiaries cannot be recognized, because to do so would promote injustice.
`Defendant DBI Beverage Napa (“DBI Napa”) is a California corporation with its
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`principal place of business at 2449 Watney Way, Fairfield, California. DBI Napa is a wholly-
`owned subsidiary of DBI Beverage. Until the sale of substantially all of its assets to Reyes on or
`about September 13, 2019, DBI Napa was engaged in the business of beer and beverage products
`distribution in the counties of Napa, Solano, Lake, and Mendocino through distribution branches
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`4
`COMPLAINT
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`Case No. __________
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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 6 of 49
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`located in the cities of Fairfield and Ukiah. Until events giving rise to this complaint, DBI Napa
`distributed beer manufactured by Seismic.
`Defendant DBI Beverage Sacramento (“DBI Sacramento”) is a California
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`corporation with its principal place of business at 3500 Carlin Drive, West Sacramento, California.
`DBI Sacramento is a wholly-owned subsidiary of DBI Beverage. Until the sale of substantially all
`of its assets to Reyes on or about September 13, 2019, DBI Sacramento was engaged in the
`business of beer and beverage products distribution in all or parts of the counties of Alpine, Butte,
`Colusa, El Dorado, Nevada, Placer, Plumas, Sacramento, Sierra, Sutter, Yolo, and Yuba through
`distribution branches located in the cities of West Sacramento, Chico, and Truckee. Until events
`giving rise to this complaint, DBI Sacramento distributed beer manufactured by Seismic.
`Defendant DBI Beverage San Francisco (“DBI San Francisco”) is a California
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`corporation with its principal place of business at 245 South Spruce Street, No. 900, South San
`Francisco, California. DBI San Francisco is a wholly-owned subsidiary of DBI Beverage. Until the
`sale of substantially all of its assets to Reyes on or about September 13, 2019, DBI San Francisco
`was engaged in the business of beer and beverage products distribution in the counties of San
`Francisco and San Mateo. Until events giving rise to this complaint, DBI San Francisco distributed
`beer manufactured by Seismic.
`Defendant DBI Beverage San Joaquin (“DBI San Joaquin”) is a California
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`corporation with its principal place of business at 4547 Frontier Way, Stockton, California. DBI
`San Joaquin is a wholly-owned subsidiary of DBI Beverage. Until the sale of substantially all of its
`assets to Reyes on or about September 13, 2019, DBI San Joaquin was engaged in the business of
`beer and beverage products distribution in all or parts of the counties of Alpine, Amador,
`Calaveras, Mariposa, Sacramento, San Joaquin, Stanislaus, and Tuolumne through distribution
`branches located in the cities of Stockton and Ceres. Until events giving rise to this complaint, DBI
`San Joaquin distributed beer manufactured by Seismic.
`Defendant DBI Beverage San Jose (“DBI San Jose”) is a California corporation with
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`its principal place of business at 500 Piercy Road, San Jose, California. DBI San Jose is a wholly-
`owned subsidiary of DBI Beverage. Until the sale of substantially all of its assets to Reyes on or
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`COMPLAINT
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`Case No. __________
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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 7 of 49
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`about September 13, 2019, DBI San Jose was engaged in the business of beer and beverage
`products distribution in Santa Clara County. Until events giving rise to this complaint, DBI San
`Jose distributed beer manufactured by Seismic.
`In March 2017, following months of negotiations, Seismic entered into five
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`distribution contracts with DBI (the “Agreements”). The Agreements provided significant
`protections for Seismic, including that DBI use “best efforts” to distribute Seismic beer, broad
`termination rights for Seismic in the event DBI failed to meet sales targets, and a veto right in the
`event DBI sought to assign the Agreements to third parties on unreasonable terms.
`On or about September 13, 2019, DBI Beverage sold substantially all of the assets in
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`DBI’s Northern California subsidiaries to Reyes in a deal valued at over $550 million to acquire
`DBI’s rights under preexisting distribution agreements with brewers like Seismic.4
`
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`The Reyes Defendants
`C.
`Defendant Reyes Holdings, LLC (“Reyes”) is a Delaware limited liability company
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`with its principal place of business in Rosemont, Illinois, a suburb of Chicago. Reyes is controlled
`and dominated by the Reyes family, namely, J. Christopher Reyes; M. Jude Reyes; David K.
`Reyes; William F. Reyes; John J. Reyes; James V. Reyes; and Thomas A. Reyes.
`Reyes is the ninth largest privately held company in the United States. Because it is
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`privately held, Reyes has avoided the disclosure and scrutiny to which publicly traded companies
`are subjected.
`According to its website, Reyes is the largest beer distributor in the United States
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`and operates at least fifteen wholly-owned beer-distributor subsidiaries or d/b/as: Defendant
`Harbor, Allied Beverages, Chesbay Distributing, Chicago Beverage Systems, Crest Beverage,
`Florida Distributing Company, Gate City Beverage, Gold Coast Beverage, Golden Brands, High
`Desert Distributing, Lee Distributors, Premium Distributors of Maryland, Premium Distributors of
`Virginia, Premium Distributors of Washington DC, and Windy City Distributing. Reyes is also the
`fastest-growing beer distributor in the country.
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`4 See Alex Soderstrom, David Ingram Sells California Booze Business, Nashville Business Journal (Jul. 10, 2019),
`available at https://www.bizjournals.com/nashville/news/2019/07/10/david-ingram-sells-california-booze-
`business.html.
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`COMPLAINT
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`Case No. __________
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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 8 of 49
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`Reyes distributes beer in California through at least six wholly-owned, beer-
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`distributor subsidiaries: Defendant Harbor, Allied Beverages, Crest Beverage, Gate City Beverage,
`Golden Brands, and High Desert Distributing.
`Reyes and its wholly owned subsidiaries comprise a vertically integrated firm whose
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`rapid acquisitions of numerous California beer distributors (including DBI and co-conspirator
`Elyxir) have concentrated California’s distribution market, unlawfully provided Reyes monopoly
`power over that market, and impaired competition.
`Beer distribution in California is dominated by two firms, Reyes and Anheuser-
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`Busch InBev (“Anheuser-Busch”). Reyes and Anheuser-Busch collectively control 90% of the beer
`distribution market in California. Anheuser-Busch controls 40% of that market, while Reyes—
`fueled by a rash of unlawful acquisitions over the past two years—now controls more than 50%.
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`Because it controls more than half of the beer distribution market, and because there
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`are significant barriers to entering the market, Reyes exerts tremendous influence over what ends
`up on store shelves. As one industry observer wrote, “[c]onsumers may not notice its hand, but the
`middle tier of the beer industry exerts tremendous influence over what ends up on store shelves.”5
`By controlling access to retailers, Reyes can and does pick winners and losers throughout the
`brewing industry. Reyes has abused and consolidated this power by eliminating brewers’ freedom
`to contract and engaging in an unprecedented series of acquisitions that have placed the beer
`distribution market under its control.
`The effects of Reyes’ entrenched market power are costly because Reyes wields its
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`dominance in ways that are eroding California’s brewing industry as a whole. Reyes has used its
`relationship with macrosuppliers—including Constellation Brands (“Constellation”), which imports
`Modelo, Heineken, and other international beers—to consolidate its grip on the market by forcing
`smaller distributors to sell to Reyes. Reyes’ anticompetitive scheme was to induce Constellation to
`breach its distribution agreements with small distributors by terminating them without cause.
`Without Constellation beers, these smaller distributors no longer had sufficient economy of scale to
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`5 Kate Bernot, Reyes Comes for the King – California Distributor Bets Hard Seltzer, Mexican Imports Dethrone AB
`InBev in the Golden State, GOOD BEER HUNTING (July 10, 2020), available at https://www.goodbeerhunting.com
`/sightlines/2020/7/10/distributor-bets-hard-seltzer-and-mexican-imports-can-dethrone-ab-inbev.
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`COMPLAINT
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`Case No. __________
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`

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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 9 of 49
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`compete, and were faced with two choices—initiate litigation with Constellation and Reyes that
`they could not afford, or succumb to Reyes’ monopoly power by selling to Reyes. A number of
`these distributors have publicly stated that they elected to sell to Reyes because they could not
`afford to vindicate their contractual rights.
`After Reyes uses its market power to force smaller distributors to sell out to Reyes,
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`it then uses that same power and the lack of meaningful distribution alternatives to force brewers to
`abandon their contracted-for rights negotiated with those smaller distributors.
`Indeed, Reyes attempted to force Seismic to abandon the contracts it had negotiated
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`at arm’s length with DBI and Elyxir (which included favorable termination terms for Seismic),
`instead demanding that Seismic agree to an onerous form contract that would have made it virtually
`impossible for Seismic to switch to a competing distributor. When Seismic refused, DBI and co-
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`conspirator Elyxir began pressuring Seismic to abandon its contractual rights and submit to Reyes’
`anticompetitive contract, all at Reyes’ behest and direction.
`As detailed below, Reyes has acquired at least fifteen distributorships across
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`California since 2018, including DBI and Elyxir. Through these acquisitions, Reyes now
`distributes an additional 76 million annual case equivalents6 of beer in California.
`As a result of these anticompetitive acquisitions, Reyes now distributes more than
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`235 million case equivalents throughout the U.S. each year—over 163 million of which are
`distributed in California alone.
`As a result of these acquisitions, Reyes has come to distribute approximately 54% of
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`all beer sold in California.
`Defendant Harbor Distributing, LLC (“Harbor”) is a Delaware limited liability
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`corporation with its principal place of business in Huntington Beach, California. Harbor is a
`wholly-owned subsidiary of Reyes. Upon information and belief, Reyes is the managing member
`of Harbor. Like Reyes’ other wholly-owned, beer-distribution subsidiaries, Harbor is completely
`controlled and dominated by the Reyes family.
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`6 The case equivalent (“CE”) is a standard unit of measure for a beer distributor converted as if everything the brewery
`produced were in cases of 24 12-ounce bottles or cans. One case equals one case equivalent. One brewer’s barrel
`equals 13.78 case equivalents.
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`COMPLAINT
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`Case No. __________
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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 10 of 49
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`Harbor is located in Huntington Beach, California, has registered as an LLC doing
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`business in California, and has a designated agent for service of process in Los Angeles County.
`Reyes will be apprised of the service of this Complaint by service on Harbor in
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`California because Harbor is the wholly-owned subsidiary of Reyes, and they are represented by
`the same counsel, Latham and Watkins.
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`Defendants Reyes and Harbor Operated as a Single Enterprise and are
`Alter Egos of One Another
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`Reyes is a private closely-held entity that wholly owns Harbor.
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`Reyes and Harbor are so organized and controlled, and their affairs are so
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`conducted, as to make them merely an instrumentality, agency, conduit, or adjunct of a single
`unitary Reyes enterprise. See Las Palmas Assoc. v. Las Palmas Ctr. Assoc., 235 Cal. App. 3d 1220,
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`1249 (1991). Each Reyes and Harbor affiliate or subsidiary is so dominated in its finances, policies,
`and practices that these controlled corporations have no separate mind, will, or existence of their
`own, and are but business conduits for their principal, Reyes, such that all of the affiliated
`corporations may be deemed to be a single business enterprise. See Toho-Towa Co., Ltd. v. Morgan
`Creek Prods., Inc., 217 Cal. App. 4th 1096, 1107 (2013); Greenspan v. LADT LLC 191 Cal. App.
`4th 486, 514 (2010).
`On information and belief, each entity in the Reyes enterprise functions solely for
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`revenues to flow to Reyes and its owners. Harbor and its subsidiaries are analogous to departments
`within a single Reyes corporation and are run as such, to the point that Harbor employees have
`Reyes email addresses.
`This fact pattern is sufficient to support claims against Reyes on the basis of alter-
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`ego liability, because Harbor and its subsidiaries are constituent parts of the unitary Reyes single
`enterprise. See Davis v. Seterus, Inc., 21 Cal. App. 5th 283, 305-307 (2018), Toho-Towa Co., Ltd.
`v. Morgan Creek Productions, Inc., 217 Cal. App. 4th 1096, 1107 (2013), Greenspan v. LADT
`LLC, 191 Cal. App. 4th 486, 514 (2010), Troyk v. Farmers Group, Inc., 171 Cal. App. 4th 1305,
`1341 (2009), and Las Palmas Assocs. v. Las Palmas Ctr. Assocs., 235 Cal. App. 3d 1220, 1249
`(1991).
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`COMPLAINT
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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 11 of 49
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`California.
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`At deposition, Harbor admitted that Harbor is nothing more than Reyes’ presence in
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`2.
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`The DBI Defendants Operated as a Single Enterprise and are Alter Egos
`of One Another
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`Defendant DBI Beverage Inc., wholly owns Defendants DBI Beverage Napa, DBI
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`Beverage Sacramento, DBI Beverage San Francisco, DBI Beverage San Joaquin, and DBI
`Beverage San Jose.
`The DBI entities are so organized and controlled, and their affairs are so conducted,
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`as to make them merely an instrumentality, agency, conduit, or adjunct of a single unitary DBI
`enterprise. See Las Palmas Assoc. v. Las Palmas Ctr. Assoc., 235 Cal. App. 3d 1220, 1249 (1991).
`Each DBI affiliate or subsidiary is so dominated in its finances, policies, and practices that these
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`controlled corporations have no separate mind, will, or existence of their own, and are but business
`conduits for their principal, DBI Beverage Inc., such that all of the affiliated corporations may be
`deemed to be a single business enterprise. See Toho-Towa Co., Ltd. v. Morgan Creek Prods., Inc.,
`217 Cal. App. 4th 1096, 1107 (2013); Greenspan v. LADT LLC 191 Cal. App. 4th 486, 514 (2010).
`On information and belief, each entity in the DBI enterprise functions solely for
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`revenues to flow to DBI and its owners. DBI Beverage Inc.’s subsidiary Defendants are analogous
`to departments within a single DBI corporation and are run as such.
`This fact pattern is sufficient to support claims against DBI on the basis of alter-ego
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`liability, because DBI and its subsidiaries are constituent parts of the unitary DBI single enterprise.
`See Davis v. Seterus, Inc., 21 Cal. App. 5th 283, 305-307 (2018), Toho-Towa Co., Ltd. v. Morgan
`Creek Productions, Inc., 217 Cal. App. 4th 1096, 1107 (2013), Greenspan v. LADT LLC, 191 Cal.
`App. 4th 486, 514 (2010), Troyk v. Farmers Group, Inc., 171 Cal. App. 4th 1305, 1341 (2009), and
`Las Palmas Assocs. v. Las Palmas Ctr. Assocs., 235 Cal. App. 3d 1220, 1249 (1991).
`At deposition, DBI confirmed that DBI Beverage, Inc.’s subsidiaries are nothing
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`more than DBI’s presence in various California counties and are run as a single organization.
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`COMPLAINT
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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 12 of 49
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`Co-Conspirator Elyxir Distributing LLC
`D.
`Co-conspirator Elyxir Distributing LLC (“Elyxir”) is a California limited liability
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`corporation with its principal place of business in Watsonville, California. Until the sale of
`substantially all of its assets to Reyes on or about August 21, 2020, Elyxir was engaged in the
`business of beer and beverage products distribution in all or parts of the Monterey Bay Area,
`including Santa Cruz, Monterey, and San Benito counties. Until events giving rise to this
`complaint, Elyxir distributed beer manufactured by Seismic.
`Defendants’ Conspiracy and Group Action Allegations
`E.
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`Defendants are jointly and severally liable for the acts and omissions of their co-
`conspirators and for all damages caused by the conspiracy.
`Beginning at least in or around the summer of 2019, Defendants entered into and
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`engaged in continuing unlawful agreements for the purpose of further monopolizing the market for
`beer distribution in California. Defendants knowingly and intentionally conspired with each other
`with the specific intent to concentrate Reyes’ monopoly power throughout California and for the
`purposes of destroying fair competition.
`Defendants have monopolized, attempted to monopolize, and conspired to
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`monopolize the beer distribution market in California. They are willfully maintaining and abusing a
`monopoly; leveraging their supply monopoly to control distribution and price; preventing other
`market participants, including Seismic, from acquiring competitive distribution agreements;
`blocking Seismic and other craft brewers from competing by eliminating its freedom to contract;
`and allocating the supply and distribution markets among themselves.
`In furtherance of the conspiracy, Defendants collectively agreed as part of Reyes’
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`acquisitions to force Seismic and other craft brewers to negotiate new, anticompetitive distribution
`agreements upon the purported sham assignments of Seismic’s distribution rights. Indeed, Reyes
`attempted to force Seismic to abandon the contracts it had negotiated at arm’s length with DBI and
`Elyxir (which included favorable termination terms for Seismic), instead demanding that Seismic
`agree to an onerous form contract that would have made it virtually impossible for Seismic to
`switch to a competing distributor. When Seismic refused, DBI and co-conspirator Elyxir began
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`COMPLAINT
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`Case No. __________
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`Case 3:22-cv-02282-NC Document 1 Filed 04/12/22 Page 13 of 49
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`pressuring Seismic to abandon its contractual rights and submit to Reyes’ anticompetitive contract
`at Reyes’ behest and direction.
`In September 2019, DBI announced that it intended to assign Seismic’s distribution
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`rights to Reyes. But Reyes refused to accept assignment of DBI’s contract with Seismic. Instead,
`Reyes pressured Seismic to sign new distributor agreements that eviscerated the protections that
`existed in the DBI Agreements. Seismic accordingly exercised its right to make reasonable requests
`for information from Reyes. In response, and at Reyes’ direction, DBI began pressuring Seismic to
`abandon its contractual rights.
`In June 2020, co-conspirator Elyxir announced that it intended to assign Seismic’s
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`distribution rights to Reyes. In a carbon copy of the post-acquisition, sham-assignment conspiracy
`culminating in the DBI acquisition, Reyes again sought to foist the same anticompetitive, anti-
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`brewer distribution agreements upon Seismic. Seismic exercised its right to refuse consent to the
`proposed assignment. As with DBI, Elyxir began pressuring Seismic to abandon its bargained-for
`contractual rights, all at Reyes’ direction.
`The anticompetitive contract Reyes, Elyxir, and DBI have attempted to force
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`Seismic to execute contains materially less favorable terms for Seismic, including as to
`termination. Signing that contract would have made it much more difficult for Seismic to end its
`distributor relationship and seek to engage a new distributor. On information and belief, Reyes has
`similarly conspired with other acquisition target distributors to try and force beer manufacturers
`into these kinds of anticompetitive contracts, all to create further barriers for any competing
`distributor that seeks to enter the market or increase their market share.
`Defendants also conspired to r