                         RECOMMENDED FOR FULL-TEXT PUBLICATION
                             Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                    File Name: 16a0154p.06

                  UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT
                                  _________________


 TRI COUNTY WHOLESALE DISTRIBUTORS, INC.; THE          ┐
 BELLAS COMPANY,                                       │
            Plaintiffs-Appellants/Cross-Appellees,     │
                                                       │
                                                        >      Nos. 15-3710/3769
       v.                                              │
                                                       │
                                                       │
 LABATT USA OPERATING CO., LLC; CERVECERIA             │
 COSTA RICA, S.A., NORTH AMERICAN BREWERIES            │
 HOLDINGS, LLC,                                        │
           Defendants-Appellees/Cross-Appellants.      │
                                                       ┘
                        Appeal from the United States District Court
                       for the Southern District of Ohio at Columbus.
                  No. 2:13-cv-00317—Algenon L. Marbley, District Judge.

                                  Argued: March 17, 2016

                              Decided and Filed: July 6, 2016

               Before: BOGGS, SILER, and BATCHELDER, Circuit Judges.

                                    _________________

                                        COUNSEL

ARGUED: David W. Alexander, SQUIRE PATTON BOGGS (US) LLP, Columbus, Ohio, for
Appellants/Cross-Appellees. James B. Niehaus, FRANTZ WARD LLP, Cleveland, Ohio, for
Appellees/Cross-Appellants. ON BRIEF: David W. Alexander, Larry J. Obhof Jr., Christopher
F. Haas, SQUIRE PATTON BOGGS (US) LLP, Columbus, Ohio, for Appellants/Cross-
Appellees. James B. Niehaus, Christopher C. Koehler, FRANTZ WARD LLP, Cleveland, Ohio,
for Appellees/Cross-Appellants.




                                              1
Nos. 15-3710/3769             Tri County Wholesale Distributors, et al. v.          Page 2
                                   Labatt USA Operating Co., et al.

                                      _________________

                                           OPINION
                                      _________________

       BOGGS, Circuit Judge.         After Prohibition ended in 1933 when the Twenty-First
Amendment was ratified, most states adopted a system for distributing alcoholic beverages that
consists of three tiers: suppliers, distributors, and retailers. Suppliers manufacture or import
alcoholic beverages, and they must sell their products to state-licensed distributors. Those
distributors then sell the products to retailers, who sell them to consumers.        While many
economists are skeptical about the public benefits of this regulatory scheme, Ohio continues to
operate under a three-tier system.

       One feature of Ohio’s three-tier system is that when a supplier and a distributor enter into
a franchise agreement, the agreement is protected from termination without just cause. Ohio
Rev. Code § 1333.85. That protection, however, is subject to an exception for when “a successor
manufacturer acquires all or substantially all of the stock or assets of another manufacturer
through merger or acquisition.” Id. § 1333.85(D). If such an acquisition occurs, the successor
manufacturer may terminate the franchise if it repurchases the distributor’s inventory of the
products and “compensate[s] the distributor for the diminished value of the distributor’s business
that is directly related to the sale of the product or brand terminated or not renewed by the
successor manufacturer.” Ibid. In this case, we consider the scope of transactions covered by
§ 1333.85(D) and the proper method for calculating the diminished value of a distributor’s
business. We also consider whether the Takings Clauses of the federal and Ohio constitutions
protect distributors’ franchises from termination under § 1333.85(D).

                                                I

       The plaintiffs in this case—Tri County Wholesale Distributors and Iron City Distributing
(“the distributors”)—are distributors of alcohol in Ohio that entered into franchise agreements
with a supplier—Labatt USA Operating Co., LLC (“Labatt USA Operating”). The franchise
agreements allowed the distributors to sell several prominent brands of beer in their respective
territories: Labatt, Genesee, Dundee, Honey Brown Lager, and Seagram’s Escapes.
Nos. 15-3710/3769            Tri County Wholesale Distributors, et al. v.         Page 3
                                  Labatt USA Operating Co., et al.

       Labatt USA Operating is 100% owned and controlled by North American Breweries
Holdings, LLC (“NAB Holdings”) through a series of five intermediate nested holding
companies:

                          North American Breweries Holdings, LLC
                                            |               100% Ownership

                    North American Breweries Intermediate Holdings, LLC
                                            |               100% Ownership

                                North American Breweries, Inc.
                                            |               100% Ownership

                                      NAB Holdco, LLC
                                            |               100% Ownership

                      North American Breweries Operating Holdco, LLC
                                            |               100% Ownership

                             Labatt USA Operating Holdings, LLC
                                            |               100% Ownership

                               Labatt USA Operating Co., LLC

       Before December 11, 2012, the membership interests in NAB Holdings were owned by
several investors (“KPS entities”). On December 11, the KPS entities sold their interests in NAB
Holdings through a complex transaction that resulted in CCR American Breweries, Inc. (“CCR”)
owning 100% of NAB Holdings. About three months later, on March 7, 2013, Tri County
received a letter from CCR purporting to terminate Tri County’s right to distribute the brands
supplied by Labatt USA Operating. On March 11, 2013, Iron City received a similar letter. The
letters claimed that CCR was entitled to terminate the franchise agreements because CCR’s
acquisition of NAB Holdings qualified under Ohio Revised Code § 1333.85(D) as a transaction
in which “a successor manufacturer acquire[d] all or substantially all of the stock or assets of
another manufacturer through merger or acquisition.”
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.          Page 4
                                    Labatt USA Operating Co., et al.

       The distributors responded by suing Cerveceria Costa Rica, S.A. (the owner of CCR),
Labatt USA Operating, and NAB Holdings (“the suppliers”) for: (1) a declaratory judgment
stating that the franchises cannot be terminated under § 1333.85(D) and an award of any
damages resulting from the suppliers’ attempted termination of the franchises; (2) in the
alternative, a declaratory judgment stating that the suppliers may not terminate the franchises
under § 1333.85(D) because doing so would violate the Takings Clauses of the federal and Ohio
constitutions; or (3) in the alternative, if the suppliers may terminate the franchises under
§ 1333.85(D), the diminished value of the distributors’ businesses.

       The district court granted the suppliers judgment on the pleadings on the Takings Clause
claim and summary judgment on the claim regarding the scope of § 1333.85(D). The court then
held a bench trial to determine the diminished value of the distributors’ businesses, the details of
which will be discussed below. The court determined that the diminution of the values of Tri
County and Iron City was $2,756,459 and $302,720, respectively.

       The distributors now appeal the district court’s rulings, raising four issues: (1) whether
the suppliers were entitled to terminate the franchises under § 1333.85(D); (2) whether the
terminations, if allowed under § 1333.85(D), violate the Takings Clauses of the federal and Ohio
constitutions; (3) whether the district court should have included in the distributors’ awards the
net operating losses they were expected to incur after the termination of the franchises; and
(4) whether the district court should have relied solely on the distributors’ expert’s proposed
capital structure in calculating the diminished value of the distributors’ businesses. The suppliers
raise two additional issues in their cross-appeal: (1) whether the district court should have
deducted profits earned by the distributors after the valuation date of the brands from the court’s
calculation of the diminished value of the distributors’ businesses; and (2) whether the district
court should have relied solely on the suppliers’ expert’s proposed capital structure in calculating
the diminished value of the distributors’ businesses.

                                                 II

       The first issue is whether the suppliers were entitled to terminate their franchise
agreements with the distributors under § 1333.85(D), a question of law that we review de novo.
Nos. 15-3710/3769             Tri County Wholesale Distributors, et al. v.           Page 5
                                   Labatt USA Operating Co., et al.

Lavado v. Keohane, 992 F.2d 601, 605 (6th Cir. 1993). Under Ohio Revised Code § 1333.85,
suppliers cannot terminate franchise agreements without just cause, but § 1333.85(D) provides
an exception for when “a successor manufacturer acquires all or substantially all of the stock or
assets of another manufacturer through merger or acquisition or acquires or is the assignee of a
particular product or brand of alcoholic beverage from another manufacturer.” The question here
is whether § 1333.85(D) covers CCR’s acquisition of NAB Holdings from the KPS entities.

       The distributors argue that the suppliers are not entitled to terminate the franchise
agreements because the statute requires “a successor manufacturer” to acquire the stock or assets
of “another manufacturer.” According to the distributors, when a supplier is owned by a parent
company, which itself may be owned by several layers of parent companies, transfers of
ownership at the upper levels do not trigger § 1333.85(D), because the upper-level companies are
not “manufacturers.” The distributors claim that only a company directly registered with Ohio’s
Division of Liquor Control can be a “manufacturer.” Thus, the distributors contend that neither
NAB Holdings nor CCR is a manufacturer; only Labatt USA Operating is a manufacturer.

       The district court rejected the distributors’ argument because a strict reading of the word
“manufacturer” as excluding parent companies would lead to a conclusion “that is illogical and
could not have been the intent of the drafters,” quoting Esber Beverage Co. v. Labatt USA
Operating Co., Nos. 2011CA00113, 2011CA00116, 2012 WL 983171, at *6 (Ohio Ct. App.
Mar. 12, 2012), aff’d, 3 N.E.3d 1173 (Ohio 2013). In that case, the Ohio Court of Appeals
considered Labatt USA Operating’s acquisition of the Labatt brands from InBev, and its
subsequent attempt to terminate a franchise agreement that gave Esber the right to distribute the
brands in ten Ohio counties. Id. at *1–2. Esber argued that “because Labatt USA Operating Co.
was created for the purpose of supplying the Labatt brands and it was not supplying anything to
anyone until it acquired the Labatt brands . . . Labatt USA Operating Co. was not a ‘successor
manufacturer’ at the time it acquired the Labatt brands.” Id. at *6. The court disagreed with
Esber’s reading of § 1333.85(D), writing:

       While we acknowledge that a strict reading of the statutory language leads to the
       position argued by appellee [Esber], we find such a strict reading of the definition
       of “manufacturer” also leads to a conclusion that is illogical and could not have
       been the intent of the drafters. We do not find that the statutes intended to treat a
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.            Page 6
                                    Labatt USA Operating Co., et al.

       business’s right to terminate a franchise differently based on whether the business
       was created for the purpose of supplying a brand of alcohol to distributors or
       whether the business which acquired the brand was an existing supplier. In either
       situation, the entity [acquiring the brands] would be faced with making business
       decisions on how to operate most efficiently.
               ....

               . . . [I]n the instant case, it is clear that there was a transfer of ownership
       and control of the Labatt brands from InBev to Labatt USA Operating Co.,
       effective March 13, 2009. There is no evidence that InBev and Labatt USA
       Operating Co. are under common control. . . . [T]he evidence is undisputed that
       there was in fact a complete sale of all assets related to the Labatt brands. The
       trial court therefore erred in finding that Labatt USA Operating was not a
       successor manufacturer within the meaning of R.C. 1333.85(D).

Id. at *6–7. Thus, even though Labatt USA Operating in that case did not sell any alcohol at the
time it acquired the brands, it was a “successor manufacturer” because it received complete
ownership and control of the brands from InBev.

       Esber rejected a strict reading of “manufacturer” that is similar to the one proposed by
the distributors in this case. Hence, the district court rejected the distributors’ argument:

       [T]he Esber Court determined that the dispositive inquiry in determining whether
       an entity was a “manufacturer” within the meaning of “successor manufacturer”
       was whether it was in the business of manufacturing or supplying alcoholic
       products or brands, and thus would be faced with making business decisions
       regarding how to operate most efficiently in the sale of products or brands.

               . . . [T]estimony confirms that in addition CCR’s complete acquisition of
       Labatt USA Operating, it also is tasked with making ultimate business decisions
       concerning the operations of Labatt USA Operating. Thus, it is a “manufacturer”
       within the meaning of the term “successor manufacturer.”

       We agree with the district court’s application of Esber. Such a functional, control-based
approach has been used consistently by courts in significant cases involving the applicability of
§ 1333.85(D). In Superior Beverage Co. v. Schieffelin & Co., Möet-Hennessy’s wholly owned
subsidiary, Schieffelin Partner, was a 50% partner in S & S, which had the distributorship rights
to the Möet-Hennessy brands. Nos. 1:05 CV 0834, 4:05 CV 0868, 2007 WL 2756912, at *1–2
(N.D. Ohio Sept. 20, 2007). S & S then transferred those distributorship rights to Schieffelin &
Co., which was 100% owned by Möet-Hennessy. Id. at *3–4. In effect, Möet-Hennessy went
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.         Page 7
                                    Labatt USA Operating Co., et al.

from having 50% control over business decisions relating to the brands to having 100% control.
Because there was “another separately owned player” that controlled S & S before the transfer of
the brands, id. at *10, the transaction was not one in which an “intra-corporate restructuring took
place entirely within the same corporate family,” and the court held that Schieffelin & Co. was
“a successor manufacturer under the Act as a matter of law,” id. at *11.

       Schieffelin is not identical to this case, as Schieffelin did not involve a transfer of
ownership at the parent-company level. Unlike CCR, Schieffelin & Co. itself “obtained a license
from the State of Ohio to distribute the brands” that it acquired from S & S. Ibid. But Schieffelin
did hold that the applicability of § 1333.85(D) turns on whether there has been a change in
control of the business decisions regarding the brands.          In Schieffelin, a change from
50% ownership to 100% ownership was enough to trigger § 1333.85(D). Here, there was a
100% change in ownership, with a complete change in control of the business decisions relating
to the brands. This is not a situation in which the right hand sells to the left hand. Under a
functional, control-based analysis, § 1333.85(D) applies.

       There have also been state and federal cases using a control-based inquiry to conclude
that § 1333.85(D) did not apply. In Hill Distributing Co. v. St. Killian Importing Co., No. 2:11–
CV–706, 2011 WL 3957255 (S.D. Ohio Sept. 7, 2011), a Danish company, Carlsberg, allowed
Beverage Alliance to import its beer brands into the United States. Id. at *1. St. Killian
subsequently acquired the importation rights from Beverage Alliance, id., while Carlsberg
continued to own and market the brands, id. at *3. In deciding whether St. Killian could
terminate Carlsberg’s franchise agreement with the plaintiff, Hill Distributing, the district court
applied a functional, control-based test:

       Effectively, what has occurred is a restructuring of Carlsberg’s business. It
       maintains control of its Brands, but those brands now have a different importer
       into the United States. Carlsberg continues to brew the beers, own the intellectual
       property, and approve the marketing campaigns. Additionally, it may terminate
       St. Killian under various circumstances and obtain a new importer. In essence,
       this is a restructuring of Carlsberg’s importation arrangement, although its
       ownership and control of the Brands has never wavered.
Nos. 15-3710/3769               Tri County Wholesale Distributors, et al. v.        Page 8
                                     Labatt USA Operating Co., et al.

Ibid. Because Carlsberg controlled the brands before and after the transaction, it was the sole
“manufacturer.” Therefore, the transaction was not an acquisition by a “successor manufacturer”
covered by § 1333.85(D). In Belvino L.L.C. v. Empson (USA) Inc., No. 97305, 2012 WL
2580758 (Ohio Ct. App. July 5, 2012), the Ohio Court of Appeals quoted St. Killian for the
proposition that § 1333.85(D) applies only “when there is a change in ownership and control of
brands through an arms-length merger or acquisition,” id. at *7, and reached the same conclusion
in a case with similar facts:

               In the instant case, when Empson took over as il Molino’s exclusive
       importer in February 2010, Empson did not acquire any ownership rights in il
       Molino. The record demonstrates that il Molino continues to maintain control
       over its brands and can terminate its relationship with Empson at any time.
               il Molino’s reasoning for the change was that it was effectively
       reorganizing its business structure. Because the wine remains under the ownership
       and control of il Molino, Empson does not qualify as a “successor manufacturer”
       under R.C. 1333.85(D). . . . .

Ibid.; cf. Esber Beverage Co. v. Heineken USA, Inc., No. 2011CA33, 2011 WL 5626592, at *2,
*5 (Ohio Ct. App. Nov. 14, 2011) (upholding trial court decision that § 1333.85(D) did not apply
because “the transfer of import rights in the Brand . . . was merely a transfer from one Heineken
controlled entity, NFB, to another Heineken controlled entity, HUSA”).

       Following in the footsteps of these earlier cases, the district court in this case applied a
control-based test. It concluded that because CCR exercised its newly acquired control over the
business decisions of Labatt USA Operating after acquiring NAB Holdings from the KPS
entities, it was a “successor manufacturer,” and could terminate the franchises under
§ 1333.85(D). Such a functional approach is in line with Ohio case law and provides a sensible
reading of the statute, in contrast to the distributors’ hyperliteral approach, which excludes all
transactions at the parent-company level.

       The distributors’ counsel suggested at oral argument that this approach would undermine
the statute’s protectionist purposes and result in an “accelerated and immediate consolidation of
the industry.”    As an initial matter, we see no reason to read § 1333.85(D) as having a
protectionist purpose because that provision is clearly designed to provide successor
manufacturers with the flexibility to “assemble their own team of distributors so long as the
Nos. 15-3710/3769               Tri County Wholesale Distributors, et al. v.          Page 9
                                     Labatt USA Operating Co., et al.

successor manufacturers provide timely notice and compensate those distributors who are not
being retained.” Esber Beverage Co. v. Labatt USA Operating Co., 3 N.E.3d 1173, 1174 (Ohio
2013).

         Furthermore, even under the distributors’ interpretation of the statute, CCR could still
have terminated the franchises if it had only structured the transaction differently. Instead of
acquiring NAB Holdings, CCR could simply have set up a new entity, which would then take
control of the brands directly from Labatt USA Operating. As we have already discussed, this
sort of transaction would clearly trigger § 1333.85(D) under Esber, 2012 WL 983171, at *6.
Therefore, the distributors’ interpretation of § 1333.85(D) would do little to stop any
consolidation that allegedly might occur if successor manufacturers were allowed to terminate
franchise agreements. The distributors’ policy-based arguments are unpersuasive. We agree
with the district court’s interpretation of § 1333.85(D) and hold that the suppliers were entitled to
terminate the franchise agreements.

                                                 III

         The distributors argue in the alternative that, if the suppliers are allowed to terminate
their franchises under § 1333.85(D), such a termination would amount to an unconstitutional
governmental taking for private purposes under the federal and Ohio constitutions. The district
court rejected the distributors’ argument and granted the suppliers judgment on the pleadings, a
decision that we review de novo. Lavado, 992 F.2d at 605. Before diving into the doctrinal
thicket, it is worth pausing for a moment to consider the bigger picture.

         The distributors are the beneficiaries of an anticompetitive statute that deprives suppliers
of their freedom to terminate contracts with distributors. Cf. Letter from C. Steven Baker,
Director, Chicago Regional Office, Federal Trade Commission, to Illinois Senator Dan Cronin
(Mar. 31, 1999) (“[A similar statute in Illinois] would shield the business of liquor distribution
from market forces. . . . The likely result of such a static distribution system will be increased
consumer prices. . . . We are unaware of any evidence establishing the need for this type of
legislation.”). Under § 1333.85, suppliers may not “cancel or fail to renew a franchise or
substantially change a sales area or territory without the prior consent of the other party for other
Nos. 15-3710/3769             Tri County Wholesale Distributors, et al. v.          Page 10
                                   Labatt USA Operating Co., et al.

than just cause.” Any provision of a franchise agreement that waives or fails to comply with this
requirement “is void and unenforceable.” § 1333.83.

       The provision involved in this case, § 1333.85(D), provides an exception to this
anticompetitive scheme when “a successor manufacturer acquires all or substantially all of the
stock or assets of another manufacturer through merger or acquisition.” In that case, the supplier
may end the franchise by repurchasing the distributor’s inventory of the product or brand and
“compensat[ing] the distributor for the diminished value of the distributor’s business that is
directly related to the sale of the product or brand terminated or not renewed by the successor
manufacturer.” The distributors’ argument, in essence, is that the Takings Clauses of the federal
and Ohio constitutions require Ohio to grant them the anticompetitive benefits of § 1333.85
without the exception provided by § 1333.85(D).

       While that is the essence of the distributors’ argument, they frame their case a little
differently. The distributors claim that their franchises are property that has been taken for a
solely private purpose in violation of the federal and Ohio constitutions. That argument fails
because, even if we assume that their franchises are property, the Takings Clauses of the federal
and Ohio constitutions deal with government takings of property. See Armstrong v. United
States, 364 U.S. 40, 49 (1960) (“The Fifth Amendment’s guarantee that private property shall not
be taken for a public use without just compensation was designed to bar Government from
forcing some people alone to bear public burdens which, in all fairness and justice, should be
borne by the public as a whole.”). In this case, the suppliers are private actors who were not
exercising the power of eminent domain under a delegation of authority from the government.
Cf. Nat’l R.R. Passenger Corp. v. Two Parcels of Land, 822 F.2d 1261, 1265 (2d Cir. 1987)
(discussing a statute that allowed Amtrak to exercise the “delegated power of eminent domain”).

       The distributors try to tie the suppliers’ termination of the franchises to the government
by arguing that the termination was sanctioned by the state under § 1333.85(D). That argument
is incorrect. At common law, businesses have the freedom to enter into a contract that allows for
termination, and contracting parties also have an inherent right to breach a contract that is no
longer advantageous, committing what economists call an efficient breach. That common-law
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.           Page 11
                                    Labatt USA Operating Co., et al.

norm is abrogated by § 1333.85, with an exception for situations falling under § 1333.85(D). To
the extent that the distributors have a right to protection from termination, it is a statutory right
created by the state, which the state is free to take away. Cf. Minneapolis Taxi Owners Coal.,
Inc. v. City of Minneapolis, 572 F.3d 502, 509 (8th Cir. 2009) (holding that there is no property
interest in taxi licenses because the benefits of participating in a “highly regulated” market are
subject to a “general expectation of regulatory change”). The distributors’ claims under the
federal and Ohio constitutions fail, and the district court correctly granted the suppliers judgment
on the pleadings.

                                                 IV

       We now consider the proper method for calculating the diminished value of a
distributor’s business under § 1333.85(D). Both parties argue that the district court erred in its
calculation. We review the district court’s rulings on questions of law de novo and questions of
fact for clear error. See Max Trucking, LLC v. Liberty Mut. Ins. Corp., 802 F.3d 793, 803 (6th
Cir. 2015). Mixed questions of law and fact are reviewed de novo. Williams v. Mehra, 186 F.3d
685, 689 (6th Cir. 1999) (en banc).

       The parties identify three issues pertaining to the district court’s calculation of the
diminished value of the distributors’ businesses: (1) whether the court’s calculation should have
included the value of the distributors’ assets that were projected to be depleted during the time
they attempted to acquire replacement brands to distribute; (2) whether the district court
miscalculated the discount rate used to determine the value of the brands by averaging the capital
structures put forth by the two parties’ experts; and (3) whether the district court should have
subtracted from the award the profits that the distributors derived from continuing to distribute
the brands after the date of valuation.

                                                 A

       The distributors argue that the district court miscalculated the diminished value of their
businesses because it failed to include the cash they were projected to lose in net operating losses
while attempting to acquire replacement products. They claim to be entitled to those costs in
addition to the fair market value of the lost brands. The district court declined to award these
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.             Page 12
                                    Labatt USA Operating Co., et al.

costs on the basis that they were already included in the court’s calculation of the lost brands’
fair market value. The suppliers agree, arguing that the distributors are essentially asking for a
double recovery on a portion of their lost profits.

       The distributors present no persuasive rebuttal to the double-recovery argument. They
first point to the testimony of witnesses asserting that the depletion of their assets is a separate
and independent loss from the value of the lost brands. But witness testimony cannot resolve the
legal question of what constitutes “the diminished value of the distributor’s business that is
directly related to the sale of the product or brand terminated or not renewed by the successor
manufacturer.” Ohio Rev. Code § 1333.85(D).

       The distributors’ second argument is that:

       [S]everal times throughout its decision, the District Court unambiguously stated
       that the DCF valuation which formed the basis for its diminished value award was
       not actually an award of Distributors’ projected profits on the NAB Brands.
       Rather the court used those projected profits as a tool to calculate the value of
       NAB Brands as a distinct, intangible asset.

The problem with this argument is that the only reason the distributors would be having net
operating losses after losing the brands is that they are no longer able to earn profits from them.
But when the district court awarded the distributors the value of the lost brands, they received a
sum of money equal to the discounted present-day value of the projected future profits from
those brands. The district court’s award therefore compensates the distributors wholly for the
“diminished value” of their companies. Perhaps if the district court’s calculation of the value of
the brands did not include lost profits, the distributors would have a point. But here, the
projected profits were included in the district court’s calculation. As the district court reasoned:

       [T]he values of the terminated franchises are equal to an estimate of lost profits
       the Distributors would have reaped from such contracts for some reasonable time
       into the future. This number should, theoretically, fully compensate the
       Distributors for the diminished value of their businesses, and put them in the place
       they would have been, from a profit perspective, but for the termination of the
       contracts. . . . It is for this reason that this Court declines to add onto the value of
       the lost franchise contracts any depletion of assets . . . . Such theoretical losses are
       better viewed as lost profits, for which Distributors will be compensated fully
       through a DCF accounting of the Brands’ values.
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.           Page 13
                                    Labatt USA Operating Co., et al.

The district court was correct to deny the distributors additional money equal to their projected
net operating losses.

                                                 B

       Both parties argue that the district court used the wrong capital structure in calculating
the discount rate used to determine the diminished value of the distributors’ businesses—that is
to say, the value of the lost brands. To calculate the value of the lost brands in this case, the
experts of both parties used discounted-cash-flow analysis.         That procedure measures the
present-day value of an asset based on the income it is expected to generate in the future,
discounted to present-day value. Discounting allows for the final valuation to take into account
the time value of money (money today is worth more than money tomorrow) and the uncertainty
that exists about whether the projected future cash flow will actually materialize.

       The formula used by the district court to calculate the discount rate requires the input of a
capital structure. The parties dispute whether the appropriate capital structure should be that of a
typical buyer or that of the entire industry over the long term. The distributors ask us to use the
capital structure of a typical buyer, which their expert Lamont Seckman testified was 35% equity
and 65% debt. The suppliers ask us to use the long-term industry capital structure, which their
expert Samuel Kursh testified was 93.2% equity and 6.8% debt. The district court below
averaged the two experts’ figures in order to arrive at a capital structure of 64.1% equity and
35.9% debt.

       Upon reviewing the parties’ briefs, we conclude that their arguments raise issues of fact,
not law. This court reviews factual questions for clear error, and we must affirm the district
court’s decision unless it leaves us with a “definite and firm conviction that a mistake has been
committed.” Max Trucking, 802 F.3d at 808.

       The distributors raise two arguments for why the district court erred in relying in part on
Dr. Kursh’s long-term industry capital structure. First, they argue that Dr. Kursh “conceded that
the usual valuation methodology does not consider the capital structure of the seller.” But that
testimony from Dr. Kursh must be read in context. The distributors’ counsel asked Dr. Kursh
whether it is typical to consider the seller’s capital structure in determining the discount rate
Nos. 15-3710/3769                Tri County Wholesale Distributors, et al. v.             Page 14
                                      Labatt USA Operating Co., et al.

under “the classical definition of discount rate . . . [which is] the rate necessary to attract . . . the
buyer.” Dr. Kursh acknowledged that, in determining the rate necessary to attract a buyer, the
seller’s capital structure was not relevant. However, Dr. Kursh also testified that he did not use
that approach to calculating the discount rate for a reason: “In the diminished value scenario,
because you’re valuing the brands . . . in the place that they reside, you would look at the seller.”
Thus, contrary to the distributors’ characterization, Dr. Kursh did not testify that his own
methodology was unsuitable for the task at hand. Rather, he acknowledged that the distributors’
counsel accurately described a different methodology, but disputed whether that methodology
was applicable to this case.

        Second, the distributors argue that Dr. Kursh “conceded that there is actually no reported
‘industry average’ capital structure, and that he calculated his figures using many assumptions
for which there is no evidence in the record, and applying a methodology that has never been
published or peer-reviewed.” Dr. Kursh did acknowledge that his calculation of the long-term
industry capital structure required him to “interpre[t] the data” and “make some assumptions.”
But as the district court noted, “[n]either expert presented the Court with foundational data or
evidence showing how they arrived at their respective capital structures,” and “both witnesses
are qualified to produce estimations of the average capital structure used in the beer distribution
industry.” The few excerpts from Dr. Kursh’s testimony cited by the distributors are hardly
sufficient for us to conclude that the court committed clear error when it relied on Dr. Kursh’s
long-term industry capital structure.

        The suppliers argue in their cross-appeal that the district court erred equally in relying in
part on the capital structure put forth by Seckman. Their primary criticism of Seckman’s capital
structure is that it focuses on the typical buyer’s capital structure, when “the method of financing
a purchase is irrelevant to the value of the asset being purchased.” The suppliers provide no
citation to the record to support this assertion. Furthermore, the suppliers seem to contradict this
argument in their reply brief:

        Appellants incorrectly state that Dr. Kursh’s long term industry capital structure
        was based on the seller’s capital structure. . . . The district court chose to use . . .
        the long term industry average [which was] based on NWBA data for all market
        participants – it was not limited to either buyers or sellers. Dr. Kursh’s testimony,
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.           Page 15
                                    Labatt USA Operating Co., et al.

       therefore, was the only reliable evidence on which the District Court could rely to
       calculate the WACC.

By arguing in their reply brief in favor of considering both buyers’ and sellers’ capital structures,
the suppliers undercut their initial argument against considering the typical buyer’s capital
structures. To avoid this problem, the suppliers try to shift their argument in their reply brief by
emphasizing that the district court contradicted itself when it relied on Seckman’s buyer-focused
capital structure while simultaneously finding that “the appropriate discount rate is one that uses
the average industry capital structure.”     We decline to consider this argument because the
“general rule is that appellants cannot raise a new issue for the first time in their reply briefs.”
Bendix Autolite Corp. v. Midwesco Enters., Inc., 820 F.2d 186 (6th Cir. 1987) (quoting
Thompson v. C.I.R., 631 F.2d 642, 649 (9th Cir. 1980)).

       The parties’ factual arguments essentially relitigate the “battle of the experts” that
occurred at the trial court. After reviewing their arguments and the record, we are not left with a
definite and firm conviction that a mistake has been committed. We affirm the district court’s
calculation of the discount rate.

                                                 C

       The suppliers argue in their cross-appeal that the district court should have subtracted
post-valuation-date profits from its calculation of the diminished value of the distributors’
businesses. While this litigation was pending in the district court, the suppliers were not allowed
to transfer the brands in question to new distributors. Furthermore, after the court held the
terminations valid and calculated the value of the brands, it granted the distributors’ motion for a
stay pending appeal, which again prevented the transfer of the brands. The distributors have
therefore been allowed to reap profits from the brands throughout the course of this litigation.
The suppliers claim that these profits should be deducted from the court’s calculation of the
diminished value of the distributors’ businesses, because that calculation already includes
projected future profits. They argue that allowing the distributors to keep the profits they earned
would result in the distributors receiving a windfall.
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.            Page 16
                                    Labatt USA Operating Co., et al.

       As an initial matter, we address two arguments by the distributors that we find to be
unpersuasive. First, the distributors argue that the suppliers’ position is at odds with their prior
argument at the preliminary-injunction stage, during which they argued that a preliminary
injunction was unnecessary because:

       [T]he termination cannot effectively take place until [the suppliers] have
       compensated the Distributors for the diminished value of their businesses caused
       by the termination. . . . [A]bsent further order of this Court, the Distributors will
       be able to continue distributing Labatt Brands and Genesee Brands without
       interruption. In short, the Distributors face no harm that is either actual or
       imminent.

This passage does show that the suppliers previously said that the distributors could continue to
distribute the brands while the litigation was pending. But that position is not inconsistent with
the suppliers’ claim in this case. The suppliers were simply stating the distributors could
continue to distribute the brands until the court ruled on whether the termination was valid, and if
the distributors happened to win the case, they could keep the profits. The above-quoted passage
says nothing about whether the distributors would get to keep the profits if they lost the case.

       The distributors also argue that the suppliers forfeited their argument about post-
valuation-date profits because they did not appeal the district court’s ruling on their motion for
an order allowing them to transfer the brands to a new distributor under § 1333.851. The district
court denied that motion because the procedures set forth in § 1333.851 are only available when
it is clear that § 1333.85(D) applies, and in this case, the key question is whether § 1333.85(D)
applies. The distributors claim that the suppliers’ failure to appeal this decision by the district
court constitutes a forfeiture of their argument for deducting post-valuation-date profits. That
argument fails for the simple reason that this appeal concerns the proper method for calculating
the “diminished value” of the distributors’ businesses under § 1333.85(D), which has nothing to
do with the procedures set forth in § 1333.851.

       Having dispensed with these two arguments, we now turn to the district court’s analysis.
The district court gave several reasons for why it rejected the suppliers’ argument for deducting
post-valuation-date profits. First, the court noted that nothing in the statute specifically calls for
a deduction of post-valuation-date profits. But it is unsurprising that no such provision exists,
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.            Page 17
                                    Labatt USA Operating Co., et al.

because if a supplier successfully uses the statute to terminate a franchise agreement, the
distributor would obviously be unable to earn additional profits after the termination. The
absence of such an express provision does not definitively answer the question raised by the
suppliers, which is whether refusing to deduct post-valuation-date profits is consistent with the
court’s obligation to calculate the “diminished value” of the distributors’ businesses under
§ 1333.85(D). The suppliers argue that when the termination is delayed beyond the rightful date
of termination, which in this case corresponds with the valuation date, profits earned during that
delay cannot be a part of the “diminished” value of the distributors’ businesses.

       The court’s second reason for rejecting the suppliers’ argument was that “[a]lthough the
DCF method [of calculating the franchises’ present-day value] is based conceptually on future
cash flows, it is not, in actuality, merely a representation of future cash flows, but is, instead, an
estimate of the total value of the intangible asset.” This position is at odds with the district
court’s earlier holding regarding the distributors’ net-operating-loss argument, which was
premised on the fact that the experts’ calculations of the franchises’ present-day value already
included projected future profits. If that is so, then awarding the distributors the present-day
value of the franchises in addition to letting them keep post-valuation-date profits would give
them a windfall. The distributors would be profiting from the brands for several years beyond
the date on which the franchise agreements should have been terminated, and such profits are
already included in the experts’ calculations of the “diminished value” of the distributors’
businesses.

       To be more specific, the suppliers attempted to terminate the franchise agreements on
March 7, 2013. As of the date of this decision, it has been over three years since the suppliers
should have been able to terminate the agreements. The special masters’ calculations show that
the first three years of projected profits after discounting make up $976,834 of the $2,757,459
awarded to Tri County and $106,891 of the $302,720 awarded to Iron City—roughly 35% of the
total awards. If we did not account for the profits earned by the distributors during the pendency
of this litigation, the distributors would receive a major windfall through this litigation that
delayed the suppliers’ lawful exercise of their termination rights.
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.            Page 18
                                    Labatt USA Operating Co., et al.

       The court’s third reason for rejecting the suppliers’ position was that the suppliers
themselves made a profit from their transactions with the distributors. The court reasoned: “By
Defendants’ argument, if Plaintiffs are to disgorge their profits, so should Defendants for the
same period. What is more apparent is that both parties have benefitted financially from the
status quo and such post-termination benefits should not enter into this Court’s calculus.”
However, the suppliers’ profits are not relevant to the inquiry prescribed by the statute,
§ 1333.85(D), which states that the supplier must “compensate the distributor for the diminished
value of the distributor’s business.” The statute’s language focuses on the distributors’ losses
and says nothing about the suppliers’ profits. Therefore, granting the distributors an award that
reflects lost future profits from the terminated franchises while also allowing them to earn profits
from those franchises for several years gives them more than they are entitled to under the
statute. Furthermore, it is not entirely fair to say that the suppliers benefited from the status quo.
There is no evidence that the suppliers’ profits from the brands distributed by the plaintiffs were
meaningfully superior to the profits that they would have earned from their desired distributors.
While they may have made some profits from their transactions with the distributors, they were
harmed, perhaps even more, by their inability to negotiate new franchise agreements with new
distributors that may have been more profitable.

       The court’s final reason for rejecting the suppliers’ argument for post-valuation-date
profits was that it “sensed hypocrisy” in the suppliers’ argument, because:

       On the one hand, they stand firmly by the principle that this Court must assess the
       value of the NAB Brands as of the date of termination. As such, this Court is
       prohibited from considering post-termination conditions or events. On the other
       hand, by their demand to deduct post-termination benefits, Defendants
       ask this Court to look to post-termination events. Further, rather than estimating
       post-termination profits based on the conditions of the businesses as of
       March 2013—which is the date from which Defendants determine diminished
       value—Defendants ask this Court to deduct actual profits from March 13 through
       January 2015. This inconsistency, too, goes against deducting post-termination
       benefits.

This analysis would be fair if the suppliers had actually terminated the franchise agreements on
March 7, 2013, and been allowed to negotiate new agreements while this litigation was pending.
But given that the distributors have been allowed to retain the brands for over three years beyond
Nos. 15-3710/3769              Tri County Wholesale Distributors, et al. v.          Page 19
                                    Labatt USA Operating Co., et al.

the termination date, letting them keep the profits derived from those brands while also awarding
them a sum of money that includes projected profits for that time period would give them more
than the “diminished value” of their businesses.

       The district court raised an important point in criticizing the suppliers’ proposed
deduction of actual profits rather than projected profits. The projected profits used in calculating
the diminished value of the distributors’ businesses were discounted substantially in order to
arrive at their value in 2013. Subtracting the actual profits earned by the distributors in 2014,
2015, and 2016 without discounting them would be unfair to the distributors. We agree with the
district court that it would be improper to deduct actual profits. Therefore, we instead hold that
the profits that the distributors were projected to earn during the period of time leading up to the
final resolution of this litigation—that is to say, the date when the franchise agreements are
actually terminated—must be deducted from their award.

                                                   V

       We REVERSE the district court’s calculation of the diminished value of the distributors’
businesses and REMAND with instructions to deduct the profits projected to be earned by the
distributors during the period of time leading up to the date when the franchise agreements are
finally terminated. We AFFIRM the remainder of the district court’s decision.
