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Brown-Forman Corp. v. Miller

Supreme Court of Kentucky

September 28, 2017



          COUNSEL FOR APPELLANT BROWN-FORMAN CORPORATION: Charles J. Cronan, IV Mark Richard Overstreet Bethany A. Breetz Marjorie Ann Farris

          COUNSEL FOR APPELLANT HEAVEN HILL DISTILLERIES, INC.: Virginia Hamilton Snell Donald Joseph Kelly Lisa Catherine DeJaco


          COUNSEL FOR AMICI CURIAE David James Treacy



         I. BACKGROUND

         Appellee, George Miller, [1] owns property in Jefferson County near warehouses owned by Appellants, Brown-Forman Corporation and Heaven Hill Distilleries, Inc. (referred to collectively as Brown-Forman). Brown-Forman's warehouses contain barrels of aging bourbon.

         Bourbon is a uniquely Kentucky liquor. The confluence of geology, geography, fertile soil, and availability of land helped birth the bourbon industry in Kentucky. The Commonwealth's easily accessible limestone water, abundance of oak trees, and expansive land-combined with a four-season climate conducive to growing corn and aging liquor in barrels-enabled Kentucky's nascent bourbon industry to grow and prosper. According to Brown-Forman, as of 2014, Kentucky distillers produce 95% of bourbon worldwide.

         Bourbon's enticing characteristics come from distilling a unique, combination of ingredients and the use of a distinct aging process. 27 C.F.R. § 5.22. Before being labelled bourbon, the distilled spirit must be aged a minimum of two-years in new charred-oak barrels. Id. This distinct aging process is at the epicenter of this dispute.

         During the aging process, Brown-Forman uses warehouses in Jefferson County to store its barrels of bourbon. As it ages, the bourbon interacts with the barrel as the liquid expands and contracts based on ambient temperature and air-flow. Warmer temperatures cause the bourbon to expand and seep further into the barrel, while colder temperatures cause contraction and less contact with the barrel. Movement into and out of the wood over time gives bourbon its color and taste.

         Miller's complaint centers around fugitive ethanol emissions (the so-called "angels' share") that escape from the barrels during this aging process. These fugitive emissions promote the growth of the Baudqinia compniacensis fungus (colloquially referred to as "whiskey fungus"). Miller alleges the whiskey fungus causes a black film-like substance to proliferate on his property, covering virtually all outdoor surfaces-including wood, vinyl, metal, and concrete.

         Miller filed suit in Jefferson County seeking damages based on several state tort theories and injunctive relief. Brown-Forman filed a motion to dismiss for failure to state a claim upon which relief could be granted. The trial court granted Brown-Forman's motion to dismiss, as it determined the federal Clean Air Act preempted Miller's claims. Miller appealed and the Court of Appeals reversed and remanded, holding that the Act did not preempt Miller's claims. This Court granted Brown-Forman's motion for discretionary review.

         For reasons that follow, we affirm the Court of Appeals insofar as it held that the trial court erred in granting Brown-Forman's motion to dismiss the state tort claims for damages, as we agree these claims are not preempted by the Act. However, we reverse the Court of Appeals' holding regarding Miller's injunctive relief. While we disagree with the trial court that the Act preempted the injunctive relief, we hold that the injunctive relief was inappropriate for other reasons.


         We begin our analysis by looking through the lens of the proper standard of review. A trial court should dismiss an action for failure to state a claim upon which relief may be granted only when "it appears the pleading party would not be entitled to relief under any set of facts which could be proved . . . ." Pari-Mutuel Clerks' Union Local 541 v. Kentucky Jockey Club, 551 S.W.2d 801, 803 (Ky. 1977). "In ruling on a motion to dismiss, the pleadings should be liberally construed in the light most favorable to the plaintiff, all allegations being taken as true." Morgan v. Bird, 289 S.W.3d 222, 226 (Ky. App. 2009). "This exacting standard of review eliminates any need by the trial court to make findings of fact; 'rather, the question is purely a matter of law. Stated another way, the court must ask if the facts alleged in the complaint can be proved, would the plaintiff be entitled to relief?"' Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (quoting James v. Wilson, 95 S.W.3d 875, 884 (Ky. App. 2002)). Appellate courts review questions of law such as this de novo, affording no deference to the trial court. Id. at 7.

         In conducting this de novo review, we must decide two separate, but related, legal questions. First, we must determine whether the Clean Air Act preempts Miller's state law tort claims seeking damages. Then, we must determine whether a trial court may issue an injunction such as the one Miller sought.

         III. ANALYSIS

         A. Clean Air Act

         We will first look to the federal act on which this litigation hinges. In passing the Clean Air Act, Congress delegated its implementation and administration to the federal Environmental Protection Agency (EPA). However, Congress also specifically designated a role for states.

         Under the Act, each state may adopt a State Implementation Plan setting out emission limitations, emission standards, and other requirements to meet the National Ambient Air Quality Standards established by the EPA. 42 U.S.C. § 7410. States submit their individual plans to the EPA Administrator for approval. 42 U.S.C: §7410(a)(1). The Act sets out the contents and the ...

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