By Blake Brittain
(Reuters) - A Manhattan federal jury on Wednesday found that Constellation Brands Inc (NYSE:STZ) did not violate a U.S. distribution agreement with Anheuser-Busch InBev SA unit Grupo Modelo by selling hard seltzers branded with the Modelo and Corona names.
The jury accepted Constellation's argument that its license to distribute beer bearing Modelo's brand names also allows it to sell alcoholic drinks like Corona Hard Seltzer and Modelo Ranch Water.
A Grupo Modelo spokesperson said the company was disappointed with the verdict and "evaluating all options."
A Constellation spokesperson said the company was pleased with the verdict and remains "committed to continuing to operate in accordance with the terms of our sublicense agreement."
A Constellation predecessor began distributing Mexico-based Modelo's beers in 1996. Modelo sued Constellation in 2021, alleging its 2020 launch of Corona Hard Seltzer breached their licensing agreement and infringed its trademarks.
Modelo added Modelo Ranch Water to the lawsuit last year after Constellation launched the alcoholic sparkling water drink.
Constellation told the court that the drinks are covered by part of its license that allows it to sell "other versions" of beer or malt beverages under the Modelo brand names.
U.S. Circuit Judge Lewis Kaplan determined in December that the contract's definition of the term "beer" was too ambiguous to decide the case before trial, even though he said Modelo "has more dictionaries on its side of this debate."
Modelo has separately sued Constellation over its tequila- and bourbon-barrel aged Modelo Reserva beers, in a case that is currently in mediation.
Modelo said the tequila-barrel beers break U.S. and Mexican laws governing the use of the word "tequila" and that the bourbon-barrel beers violate Constellation's agreement to sell only "Mexican-style beers" under the Modelo name.
The case is Cerveceria Modelo de Mexico, S. de R.L. de C.V. v. CB Brand Strategies, LLC, U.S. District Court for the Southern District of New York, No. 1:21-cv-01317.