A week before trial was slated to begin in a $1 billion dispute over the rights to distribute Dr Pepper/Seven Up in California and Nevada, a Collin County district court judge issued a summary judgment ruling ending the dispute between Dr Pepper and Reyes Coca-Cola Bottling.
When the relationship between Dr Pepper and Reyes — which dated back to the inking of an October 2017 exclusive licensing agreement — hit a snag, Dr Pepper filed a declaratory judgment action in Texas in April 2024, seeking a ruling it had a right to cancel the distribution deal, and two days later Reyes filed suit in California arguing Dr Pepper had breached the agreement.
Collin County District Judge Christine Nowak signed a summary judgment order in favor of Dr Pepper June 30. Trial had been scheduled to begin July 7, was expected to last about four days and each side would have been given 12 hours of testimony time.
Dr Pepper, in fighting to end the California case, had argued that pursuant to the license agreement, litigation had to take place in Texas, Texas law applied to the case and that it had the right to terminate the agreement prior to its October 2025 expiration date.
Reyes contended that because it was considered a franchisee under California law, the Texas forum selection clause wasn’t enforceable and that Texas law didn’t apply. Reyes alleged Dr Pepper had violated the California Franchise Relations Act by terminating the agreement and was owed damages for the lost deal as a result.
The judge in California determined Reyes wasn’t considered a franchisee in this case and dismissed the suit in September 2024.
In the Texas case, Reyes filed counterclaims seeking an injunction that would bar Dr Pepper from ending the agreement and damages for the value of the deal. Judge Nowak granted Dr Pepper partial summary judgment in December 2024, holding Texas law applied to the case and that Dr Pepper had a right under the agreement not to renew it.
Reyes had also alleged Dr Pepper committed fraud — pointing to a five-year plan entered into by marketing employees for both parties — by leading it to believe the contract would be extended, which it said barred Dr Pepper from terminating the deal.
Judge Nowak on June 30 granted summary judgment disposing of those affirmative defenses.
Keurig Dr Pepper’s Chief Legal Officer, Anthony Shoemaker, told The Texas Lawbook he hired Kirkland & Ellis to handle the litigation because of the firm’s specific skillset.
“We wanted a firm with a strong litigation team based in Dallas, since we knew we would need to litigate the case here, but that also had an expertise in California franchise law issues, since Reyes had raised that claim,” he said. “There are lots of great Dallas litigation firms, and lots of firms with strong franchise practice, but Kirkland was one of the few that offered both.”
Dr Pepper/Seven Up is represented by Kirkland & Ellis lawyers Jeremy Fielding, Michael Kalis, Jon Kelley, John Fraser, Aysha Spencer, McKenzie Aston, Mark Holscher and Kristin Rose. The company is represented in-house by Shoemaker and assistant general counsel Stephen Cole.
Reyes Coca-Cola is represented by Jeff Tillotson of Tillotson Johnson & Patton and Joshua Hamilton of Latham & Watkins.
The case number is 494-02603-2024.