Craft Beer Guild, LLC v. Alcoholic Beverages Control Comm'n
117 N.E.3d 676
Mass.2019Background
- Craft Beer Guild (Craft), a licensed wholesaler, paid concealed "rebates" or kickbacks (per-keg or per-tap payments) through third‑party management/marketing companies to induce Massachusetts §12 licensed retailers to carry certain craft beer brands.
- Rebel Restaurants (Rebel) received $20 per keg (passed through from Rebel Marketing) totaling $8,420; Rebel was the only retailer shown actually to have received funds.
- The Massachusetts Alcoholic Beverages Control Commission investigated, found Craft violated G. L. c. 138, § 25A(a) (prohibiting price discrimination among retailers) and 204 C.M.R. § 2.08 (prohibiting commercial bribery via a three‑person inducement scheme), and found Rebel violated § 2.08 for accepting inducements.
- The commission imposed substantial penalties on Craft (suspension accepted as a fine) and a suspension on Rebel; both sought judicial review in Superior Court, which upheld the commission; both appealed to the Supreme Judicial Court.
- The SJC affirmed the decision against Craft (both statutory and regulatory violations) but reversed as to Rebel, concluding § 2.08 cannot be applied to penalize a retailer solely for receiving inducements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of 204 C.M.R. § 2.08 after repeal of § 25A(b) | § 25A(b) repeal removed statutory authority for banning inducements, so § 2.08 is invalid | § 2.08 targets commercial bribery/tied‑house evils and is consistent with the Liquor Control Act's purpose | § 2.08 is valid and harmonizes with statutory scheme; affirmed |
| Whether Craft violated G. L. c. 138, § 25A(a) (price discrimination) | Craft: payments routed through third parties were not discrimination between retailers; lack of contemporaneous differing sales | Commission: rebates and tap payments resulted in differing net prices to retailers (direct or indirect), supported by invoices and stipulation | Sufficient evidence of indirect price discrimination; commission's finding affirmed |
| Whether Craft violated 204 C.M.R. § 2.08 by paying third parties | Craft: inconsistent enforcement and insufficient proof retailers were given money | Commission: a licensee may violate § 2.08 by giving money to third parties to induce retailers; recipient need not be a licensee | § 2.08 applies to a licensee who gives or arranges for payments to induce others; Craft's violation affirmed |
| Whether § 2.08 applies to a retailer who accepts inducements (Rebel) | Rebel: regulation does not prohibit receipt; "permit to be given" means permitting others to give, not permitting oneself to receive | Commission: "permit to be given" covers passive acceptance by retailers; regulation applies to recipients | Regulation cannot reasonably be read to penalize a retailer solely for receipt; judgment against Rebel reversed |
Key Cases Cited
- Vaspourakan, Ltd. v. Alcoholic Beverages Control Comm'n, 401 Mass. 347 (agency fact findings reviewed for substantial evidence)
- Commerce Ins. Co. v. Commissioner of Ins., 447 Mass. 478 (deference to agency legal interpretations limited where interpretation is incorrect)
- Miller Brewing Co. v. Alcoholic Beverages Control Comm'n, 56 Mass. App. Ct. 801 (statutory purpose of §25A and sensitivity to small price discrepancies)
- M. H. Gordon & Son, Inc. v. Alcoholic Beverages Control Comm'n, 371 Mass. 584 (price calculated after discounts and rebates)
- Pepin v. Division of Fisheries & Wildlife, 467 Mass. 210 (presumption of validity for duly promulgated regulations)
- Taylor v. Housing Appeals Comm., 451 Mass. 149 (two‑step test for reviewing regulation validity against statute)
- National Distrib. Co. v. United States Treasury Dep't, Bureau of Alcohol, Tobacco & Firearms, 626 F.2d 997 (discussion of tied‑house evils and unfair trade practices)
- American Distilling Co. v. Wisconsin Liquor Co., 104 F.2d 582 (federal commercial bribery prohibition and its rationale)