Two companies steeped in Milwaukee history, Pabst Brewing (historic plant, left) and MillerCoors (Miller Valley location. right), are embroiled in a legal battle over MillerCoors' commitment to brewing Pabst brands. Credit: Journal Sentinel files

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Early last year, Pabst Brewing Co. was flirting with a return to its roots, exploring launching a microbrewery at the historic Pabst plant in 2016.

Instead, Pabst has come back to Milwaukee to wage a high-stakes legal battle against hometown heavy hitter MillerCoors LLC.

Pabst and its owner, Los Angeles-based Blue Ribbon Intermediate Holdings LLC, claim in a lawsuit filed in circuit court that MillerCoors has breached without warning a long-term agreement to brew Pabst products, after repeated assurances that MillerCoors had sufficient capacity to honor the deal into the next decade.

The lawsuit characterized MillerCoors' moves "an improper attempt to frustrate Pabst's contract rights, sabotage Pabst's ability to compete and consolidate MillerCoors' already large market share."

Losing the chance to extend the agreement, Pabst says, will cost the company some $400 million in damages.

"We expect this issue to be resolved in our favor, and that it will not affect Pabst's long-term ability to brew," Pabst spokeswoman Alya Wilhelm said.

"The innovation brewery is still slated to open as planned and is unaffected by this suit," referring to Pabst's plans to open a microbrewery and tasting room at the old Pabst plant in Milwaukee.

The future microbrewery and tasting room, as well as a restaurant, will be in a building at 1037 W. Juneau Ave. that was initially built as a church. Pabst later used it as an employee conference center.

The building was sold in December to an affiliate of Blue Ribbon Management LLC, which will lease that space to Pabst. Blue Ribbon in April received several city building permits to proceed with the redevelopment project.

MillerCoors spokesman Jonathan Stern said the company has attempted to work fairly and collaboratively with Pabst regarding the extension of their agreement to no avail.

"It is disappointing that they have chosen to let a court resolve this issue. However, we are highly confident that we have acted properly and in good faith in this matter and we believe the court will agree."

According to the lawsuit, current Pabst CEO Eugene Kashper relied on MillerCoors' assurances about the viability of its deal to brew and package Pabst products when he and another company formed Blue Ribbon Intermediate Holdings and bought Pabst in November 2014.

It says talks on extending the 2007 agreement five years beyond 2020 began normally last year. But during the negotiations, MillerCoors announced it would be closing its Eden, N.C., brewery, which Pabst says is the main MillerCoors facility for brewing Pabst products, and told Pabst it would no longer have sufficient beer production capacity to meet the agreement.

The only way to continue the deal, Pabst claims it was told, was if the fee paid to MillerCoors after 2020 nearly tripled. Pabst's suit calls the offer a poison pill meant to "effect the premature termination of the agreement."

MillerCoors experienced a change of leadership last summer, when Gavin Hattersley replaced Tom Long as CEO. In September, Pabst claims, Hattersley began backtracking on claims about capacity and his company's willingness to extend the agreement, and then announced the North Carolina closure.

MillerCoors, which has been brewing Pabst products since 1999, suddenly claimed it makes no profit on the endeavor, which Pabst calls "facially false and made in bad faith."

The lawsuit makes seven claims, including breach of good faith and fair dealing, strict liability for misrepresentation, fraud and negligence.

Pabst tried to keep the nature of the lawsuit secret. Its lawyers initially filed the action under seal, citing the fact that the 2007 brewing agreement between the companies, attached as an exhibit, is confidential.

But the judge who drew the case, Milwaukee County Circuit Judge David Borowski, never granted the motion to keep the complaint under seal. Late last month, MillerCoors sought to have the case moved to a different judge.

Pabst traces its history to 1848, when Jacob Best opened the brewery with the capacity to brew 18 barrels per batch. Today, the Pabst umbrella covers everything from Old Milwaukee, Old Style and Old Tankard Ale to Schmidt's, Stag and Schaefer.

MillerCoor's footprint in Milwaukee began in 1855, when Frederick Miller settled in Milwaukee, leased and later purchased the Plank Road Brewery. Today, 99 beers fall under MillerCoors, including all the beers under the Miller, Leinenkugels, Coors, Blue Moon, Henry Weinhard's and Molsen labels.

Tom Daykin of the Journal Sentinel staff contributed to this report