NY State Assembly Bill 2009-A488C

Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 30, 2010	3rd reading cal.1330 substituted for s5614b
Jun 09, 2010	referred to commerce, economic development and small business delivered to senate passed assembly
Jan 12, 2010	amended on third reading 488c
Jan 06, 2010	ordered to third reading cal.31 returned to assembly died in senate
Jun 18, 2009	referred to rules delivered to senate passed assembly
Jun 15, 2009	amended on third reading 488b
May 11, 2009	amended on third reading 488a
Feb 26, 2009	advanced to third reading cal.124
Feb 25, 2009	reported
Feb 24, 2009	reported referred to codes
Jan 07, 2009	referred to economic development

2009-A488 - Details

See Senate Version of this Bill:: S5614
Law Section:: Alcoholic Beverage Control Law
Laws Affected:: Amd §55-c, ABC L
Versions Introduced in 2011-2012 Legislative Session:: A789, A8962, S1315

2009-A488 - Summary

Permits brewers with a certain annual volume and with a certain percentage of sales to terminate an agreement with a beer wholesaler without having good cause; requires payment of fair market value of the applicable distribution rights lost; allows for the arbitration panel to review the fair market value; sets forth definitions.

2009-A488 - Sponsor Memo

                                BILL NUMBER:A488

TITLE  OF BILL:   An act to amend the alcoholic beverage control law, in
relation to agreements between small brewers and beer wholesalers

PURPOSE OR GENERAL IDEA OF BILL:   This bill amends the  ABCL  to  allow
small  brewers  having  three percent (3%) or less of a multi-brand beer
wholesaler's annual  business,  the  right  to  terminate  an  agreement
providing  they  pay  the  wholesaler fair compensation, except when the
termination is for "good cause" as provided in Section 55-c of the ABCL.

SUMMARY OF SPECIFIC PROVISIONS:  Section One of this  bill  would  amend
section  55-c  of  the alcoholic beverage control law (ABCL) by adding a
new subdivision 4-c. The bill defines  small  brewer  and  provides  for
ending  an  agreement  with  a  beer wholesaler subject to certain terms
relating to the payment of fair compensation to the beer wholesaler  for
the  transfer of the small brewers' brands. Additionally, the bill gives
the beer wholesaler the right to submit to binding arbitration regarding
"fair market value" and requires the small brewer to pay all arbitration
costs if the "value" is not a "good faith" estimate. Section  Two  would
provide for an immediate effective date.

JUSTIFICATION:   The Beer Franchise Laws were passed in 1996 and amended
in 2001 with the purpose of protecting beer wholesalers which  typically
were  smaller  local  and  often  family owned businesses from arbitrary
termination by large multinational breweries  and  ensure  if  they  did

agree  to sell their distribution rights they would receive fair compen-
sation for the brand they had helped to build.  Over  the  period  these
laws  have  been  in existence much has changed in the brewing industry.
There has been significant  consolidation  of  the  major  multinational
breweries.  Correspondingly  New  York  wholesalers  have  diminished in
number going from 112 in 1991 to less than 60  today  and  those  whole-
salers that remain in business have gotten much bigger. At the same time
the  number  of  small independent breweries in New York State has grown
tremendously from 20 or less in the early 90's to 63  today.  For  these
small  breweries  one of the major issues they face is access to market,
or lack of it, through the  three  tier  distribution  channel  that  is
mandated by law. Today the opportunity for growth for many small brewer-
ies  is restricted because of contracts that require them to exclusively
do business with a particular wholesaler that is not actively supporting
or selling their brand.  Yet  they  are  not  able  to  terminate  their
contract  and  appoint  another  wholesaler except through a lengthy and
potentially costly legal process  that  has  no  assurance  of  success.
Despite  the  fact  that there do exist under the current Beer Franchise
Laws termination provisions "for cause" and under  certain  other  situ-
ations,  e.g.  consolidation, these remedies do not in practice work for
small brewers. If the wholesaler does not want  to  be  terminated  they
threaten  expensive  legal  action  and in most cases the smaller brewer
does not have the resources to afford the legal battle. Thus many  small
brewers  have to live with being "locked in" with relationships that are
not working. It was never the intention of the Beer Franchise Laws to be
used by the wholesaler to lock small breweries into a relationship. Thus

this bill provides a fair and appropriate amendment to  the  Beer  Fran-
chise  Law. It does not disrupt the workforce; jobs will not be lost. On
the contrary it will allow small brewers to accelerate the  growth  they
are  already achieving and thereby create more good job opportunities in
New York. It provides both the beer wholesaler ,and the small brewer  an
equitable  means  to  end  an agreement since it requires the payment of
"fair market "value" to the beer wholesaler for the transferred  brands.
The  bill, furthermore, allows the wholesaler, if they believe they have
not been fairly compensated, to dispute the "fair market value" paid  by
the brewer through binding arbitration

PRIOR LEGISLATIVE HISTORY:  2008: A.9055-B - Veto Memo 92 2007: A.9055 -
Referred to Assembly Economic Development Committee.

FISCAL IMPLICATIONS: 'None

EFFECTIVE DATE: Immediate

2009-A488 - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   488

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced by M. of A. DESTITO, LATIMER, MAGEE, MORELLE, BUTLER, BALL --
  Multi-Sponsored  by -- M. of A. GALEF -- read once and referred to the
  Committee on Economic Development, Job Creation, Commerce and Industry

AN ACT to amend the alcoholic  beverage  control  law,  in  relation  to
  agreements between small brewers and beer wholesalers

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 4 of section 55-c  of  the  alcoholic  beverage
control law is amended by adding a new paragraph (c) to read as follows:
  (C) NOTWITHSTANDING ANY PROVISION OF THIS SUBDIVISION TO THE CONTRARY:
  (I)  ANY  BREWER WITH AN ANNUAL VOLUME AS DEFINED IN THIS PARAGRAPH OF
LESS THAN THREE HUNDRED THOUSAND BARRELS OF BEER AND WHOSE SALES  TO  AN
AFFECTED  BEER  WHOLESALER  ARE THREE PERCENT OR LESS OF THE BEER WHOLE-
SALER'S TOTAL ANNUAL BRAND SALES MEASURED IN CASE  EQUIVALENT  SALES  OF
TWENTY-FOUR--TWELVE OUNCE UNITS MAY TERMINATE AN AGREEMENT WITH ANY BEER
WHOLESALER WITHOUT HAVING GOOD CAUSE FOR SUCH TERMINATION, AS DEFINED IN
PARAGRAPH  (E)  OF  SUBDIVISION  TWO  OF  THIS SECTION, AND SHALL NOT BE
SUBJECT TO LIABILITY TO THE  BEER  WHOLESALER  UNDER  PARAGRAPH  (B)  OF
SUBDIVISION  SEVEN OF THIS SECTION PROVIDED THAT, PRIOR TO THE EFFECTIVE
DATE OF THE TERMINATION, THE BREWER PAYS THE BEER  WHOLESALER  THE  FAIR
MARKET VALUE OF THE DISTRIBUTION RIGHTS WHICH WILL BE LOST OR DIMINISHED
BY  REASON  OF THE TERMINATION. IF THE BREWER AND BEER WHOLESALER CANNOT
MUTUALLY AGREE TO THE FAIR MARKET VALUE OF THE  APPLICABLE  DISTRIBUTION
RIGHTS  LOST OR DIMINISHED BY REASON OF THE TERMINATION, THEN THE BREWER
SHALL PAY THE BEER WHOLESALER A GOOD FAITH ESTIMATE OF THE  FAIR  MARKET
VALUE OF THE APPLICABLE DISTRIBUTION RIGHTS.
  (II) IF THE BEER WHOLESALER BEING TERMINATED UNDER SUBPARAGRAPH (I) OF
THIS  PARAGRAPH  DISPUTES  THAT  THE PAYMENT MADE BY THE BREWER WAS LESS
THAN THE FAIR MARKET VALUE OF THE DISTRIBUTION  RIGHTS,  THEN  THE  BEER
WHOLESALER MAY WITHIN FORTY-FIVE DAYS OF TERMINATION SUBMIT THE QUESTION

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD03513-01-9

A. 488                              2

OF  FAIR  MARKET  VALUE  OF  THE  APPLICABLE DISTRIBUTION RIGHTS LOST OR
DIMINISHED BY REASON OF THE TERMINATION TO BINDING ARBITRATION BEFORE  A
PANEL  OF  THREE  NEUTRAL  ARBITRATORS  APPOINTED IN ACCORDANCE WITH THE
COMMERCIAL  ARBITRATION  RULES  OF THE AMERICAN ARBITRATION ASSOCIATION,
WHICH PANEL SHALL DETERMINE BY MAJORITY DECISION  WHETHER  THE  BREWER'S
PAYMENT MEETS THE REQUIREMENTS OF SUBPARAGRAPH (I) OF THIS PARAGRAPH. IF
THE  ARBITRATION  PANEL RULES THAT THE PAYMENT MADE BY THE BREWER TO THE
BEER WHOLESALER UPON TERMINATION WAS LESS THAN THE FAIR MARKET VALUE  OF
DISTRIBUTION  RIGHTS  LOST  OR  DIMINISHED BY REASON OF THE TERMINATION,
THEN THE BREWER SHALL PAY THE BEER WHOLESALER THE DIFFERENCE BETWEEN THE
PAYMENT MADE TO THE BEER WHOLESALER AND THE DETERMINED FAIR MARKET VALUE
PLUS INTEREST. IF THE ARBITRATION PANEL RULES THAT THE PAYMENT  MADE  BY
THE  BREWER  TO  THE  BEER WHOLESALER UPON TERMINATION WAS MORE THAN THE
FAIR MARKET VALUE OF DISTRIBUTION RIGHTS LOST OR DIMINISHED BY REASON OF
THE TERMINATION, THEN THE BEER  WHOLESALER  SHALL  PAY  THE  BREWER  THE
DIFFERENCE  BETWEEN  THE  PAYMENT  MADE  TO  THE BEER WHOLESALER AND THE
DETERMINED FAIR MARKET VALUE PLUS INTEREST.  ALL  ARBITRATION  FEES  AND
EXPENSES  SHALL  BE EQUALLY DIVIDED AMONG THE PARTIES TO THE ARBITRATION
EXCEPT IF THE ARBITRATION PANEL DETERMINES  THAT  THE  BREWER'S  PAYMENT
UPON TERMINATION WAS NOT A GOOD FAITH ESTIMATE OF THE FAIR MARKET VALUE,
THEN  THE  PANEL  MAY AWARD UP TO ONE HUNDRED PERCENT OF THE ARBITRATION
COSTS TO THE BREWER.
  (III) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO  THE  CONTRARY,
FOR  PURPOSES OF THIS PARAGRAPH, THE TERM "BREWER" SHALL MEAN ANY PERSON
OR ENTITY ENGAGED PRIMARILY IN BUSINESS AS A BREWER OR  MANUFACTURER  OF
BEER.
  (IV) FOR THE PURPOSE OF THIS PARAGRAPH, THE TERM "ANNUAL VOLUME" SHALL
MEAN:    (1)  THE  AGGREGATE NUMBER OF BARRELS OF BEER, UNDER TRADEMARKS
OWNED BY THE BREWERY, BREWED, DIRECTLY OR INDIRECTLY, BY OR ON BEHALF OF
THE BREWER DURING THE MEASURING PERIOD, ON A WORLDWIDE BASIS,  PLUS  (2)
THE  AGGREGATE  NUMBER  OF  BARRELS OF BEER BREWED, DURING THE MEASURING
PERIOD, DIRECTLY OR INDIRECTLY, BY OR ON BEHALF OF ANY PERSON OR  ENTITY
WHICH,  AT  ANY  TIME  DURING  THE  MEASURING  PERIOD,  CONTROLLED,  WAS
CONTROLLED BY OR WAS UNDER COMMON CONTROL WITH THE BREWER, ON  A  WORLD-
WIDE  BASIS.  ANNUAL VOLUME SHALL NOT INCLUDE BEER BREWED UNDER CONTRACT
FOR ANY OTHER BREWER. THERE SHALL BE NO  DOUBLE  COUNTING  OF  THE  SAME
BARRELS OF BEER UNDER CLAUSES ONE AND TWO OF THIS SUBPARAGRAPH.
  (V)  FOR  THE  PURPOSES OF THIS PARAGRAPH, THE TERM "MEASURING PERIOD"
SHALL MEAN THE TWELVE MONTH CALENDAR PERIOD  IMMEDIATELY  PRECEDING  THE
DATE  NOTICE  OF TERMINATION, AS REQUIRED UNDER SUBPARAGRAPH (I) OF THIS
PARAGRAPH THAT WAS GIVEN BY A BREWER TO THE BEER WHOLESALER.
  S 2. This act shall take effect immediately.

2009-A488A - Details

See Senate Version of this Bill:: S5614
Law Section:: Alcoholic Beverage Control Law
Laws Affected:: Amd §55-c, ABC L
Versions Introduced in 2011-2012 Legislative Session:: A789, A8962, S1315

2009-A488A - Summary

Permits brewers with a certain annual volume and with a certain percentage of sales to terminate an agreement with a beer wholesaler without having good cause; requires payment of fair market value of the applicable distribution rights lost; allows for the arbitration panel to review the fair market value; sets forth definitions.

2009-A488A - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 488--A
                                                        Cal. No. 124

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced by M. of A. DESTITO, LATIMER, MAGEE, MORELLE, BUTLER, BALL --
  Multi-Sponsored by -- M. of A. ERRIGO, GALEF -- read once and referred
  to  the  Committee on Economic Development, Job Creation, Commerce and
  Industry -- reported from committee,  advanced  to  a  third  reading,
  amended  and  ordered  reprinted,  retaining its place on the order of
  third reading

AN ACT to amend the alcoholic  beverage  control  law,  in  relation  to
  agreements between small brewers and beer wholesalers

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 4 of section 55-c  of  the  alcoholic  beverage
control law is amended by adding a new paragraph (c) to read as follows:
  (C) NOTWITHSTANDING ANY PROVISION OF THIS SUBDIVISION TO THE CONTRARY:
  (I)  ANY  BREWER WITH AN ANNUAL VOLUME AS DEFINED IN THIS PARAGRAPH OF
LESS THAN THREE HUNDRED THOUSAND BARRELS OF BEER AND WHOSE SALES  TO  AN
AFFECTED  BEER  WHOLESALER  ARE THREE PERCENT OR LESS OF THE BEER WHOLE-
SALER'S TOTAL ANNUAL BRAND SALES MEASURED IN CASE  EQUIVALENT  SALES  OF
TWENTY-FOUR--TWELVE  OUNCE  UNITS,  HEREINAFTER  REFERRED TO AS "COVERED
BREWERS," MAY TERMINATE AN AGREEMENT WITH ANY  BEER  WHOLESALER  WITHOUT
HAVING  GOOD  CAUSE FOR SUCH TERMINATION, AS DEFINED IN PARAGRAPH (E) OF
SUBDIVISION TWO OF THIS SECTION, AND SHALL NOT BE SUBJECT  TO  LIABILITY
TO  THE BEER WHOLESALER UNDER PARAGRAPH (B) OF SUBDIVISION SEVEN OF THIS
SECTION PROVIDED THAT, PRIOR TO THE EFFECTIVE DATE OF  THE  TERMINATION,
SUCH  COVERED  BREWER  PAYS THE BEER WHOLESALER THE FAIR MARKET VALUE OF
THE DISTRIBUTION RIGHTS WHICH WILL BE LOST OR DIMINISHED  BY  REASON  OF
THE  TERMINATION.  IF  SUCH  BREWER  AND BEER WHOLESALER CANNOT MUTUALLY
AGREE TO THE FAIR MARKET VALUE OF  THE  APPLICABLE  DISTRIBUTION  RIGHTS
LOST OR DIMINISHED BY REASON OF THE TERMINATION, THEN THE COVERED BREWER
SHALL  PAY  THE BEER WHOLESALER A GOOD FAITH ESTIMATE OF THE FAIR MARKET
VALUE OF THE APPLICABLE DISTRIBUTION RIGHTS.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD03513-02-9

A. 488--A                           2

  (II) IF THE BEER WHOLESALER BEING TERMINATED UNDER SUBPARAGRAPH (I) OF
THIS PARAGRAPH DISPUTES THAT THE PAYMENT MADE BY THE COVERED BREWER  WAS
LESS  THAN  THE  FAIR  MARKET VALUE OF THE DISTRIBUTION RIGHTS, THEN THE
BEER WHOLESALER MAY WITHIN FORTY-FIVE DAYS  OF  TERMINATION  SUBMIT  THE
QUESTION OF FAIR MARKET VALUE OF THE APPLICABLE DISTRIBUTION RIGHTS LOST
OR DIMINISHED BY REASON OF THE TERMINATION TO BINDING ARBITRATION BEFORE
A  PANEL  OF  THREE NEUTRAL ARBITRATORS APPOINTED IN ACCORDANCE WITH THE
COMMERCIAL ARBITRATION RULES OF THE  AMERICAN  ARBITRATION  ASSOCIATION,
WHICH  PANEL  SHALL  DETERMINE  BY MAJORITY DECISION WHETHER THE COVERED
BREWER'S PAYMENT MEETS THE REQUIREMENTS  OF  SUBPARAGRAPH  (I)  OF  THIS
PARAGRAPH.  IF THE ARBITRATION PANEL RULES THAT THE PAYMENT MADE BY SUCH
BREWER TO THE BEER WHOLESALER UPON TERMINATION WAS LESS  THAN  THE  FAIR
MARKET  VALUE OF DISTRIBUTION RIGHTS LOST OR DIMINISHED BY REASON OF THE
TERMINATION, THEN THE COVERED BREWER SHALL PAY THE BEER  WHOLESALER  THE
DIFFERENCE  BETWEEN  THE  PAYMENT  MADE  TO  THE BEER WHOLESALER AND THE
DETERMINED FAIR MARKET VALUE PLUS INTEREST.  IF  THE  ARBITRATION  PANEL
RULES  THAT  THE PAYMENT MADE BY SUCH BREWER TO THE BEER WHOLESALER UPON
TERMINATION WAS MORE THAN THE FAIR MARKET VALUE OF  DISTRIBUTION  RIGHTS
LOST  OR  DIMINISHED  BY REASON OF THE TERMINATION, THEN THE BEER WHOLE-
SALER SHALL PAY THE COVERED BREWER THE DIFFERENCE  BETWEEN  THE  PAYMENT
MADE  TO  THE  BEER WHOLESALER AND THE DETERMINED FAIR MARKET VALUE PLUS
INTEREST. ALL ARBITRATION FEES AND EXPENSES  SHALL  BE  EQUALLY  DIVIDED
AMONG  THE  PARTIES  TO  THE ARBITRATION EXCEPT IF THE ARBITRATION PANEL
DETERMINES THAT THE BREWER'S PAYMENT UPON TERMINATION  WAS  NOT  A  GOOD
FAITH  ESTIMATE OF THE FAIR MARKET VALUE, THEN THE PANEL MAY AWARD UP TO
ONE HUNDRED PERCENT OF THE ARBITRATION COSTS TO THE COVERED BREWER.
  (III) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO  THE  CONTRARY,
FOR  PURPOSES OF THIS PARAGRAPH, THE TERM "BREWER" SHALL MEAN ANY PERSON
OR ENTITY ENGAGED PRIMARILY IN BUSINESS AS A BREWER OR  MANUFACTURER  OF
BEER.
  (IV)  FOR  THE  PURPOSES OF THIS PARAGRAPH, THE TERM "BEER WHOLESALER"
SHALL MEAN ANY WHOLESALER FOR WHOM LESS THAN FIFTY PERCENT OF ITS  TOTAL
ANNUAL    BRAND   SALES   MEASURED   IN   CASE   EQUIVALENT   SALES   OF
TWENTY-FOUR--TWELVE OUNCE UNITS ARE DERIVED FROM SALES BY  SUCH  COVERED
BREWERS  OR  ANY  OTHER  COMPANY  CONTROLLED BY SUCH WHOLESALER OR WHICH
CONTROLS SUCH WHOLESALER IN HIS OR HER EXCLUSIVE TERRITORY.
  (V) FOR THE PURPOSE OF THIS PARAGRAPH, THE TERM "ANNUAL VOLUME"  SHALL
MEAN:    (1)  THE  AGGREGATE NUMBER OF BARRELS OF BEER, UNDER TRADEMARKS
OWNED BY THE COVERED BREWER AND BREWED, DIRECTLY OR INDIRECTLY, BY OR ON
BEHALF OF THE SUCH BREWER DURING THE MEASURING PERIOD,  ON  A  WORLDWIDE
BASIS,  PLUS  (2) THE AGGREGATE NUMBER OF BARRELS OF BEER BREWED, DURING
THE MEASURING PERIOD, DIRECTLY OR INDIRECTLY, BY OR  ON  BEHALF  OF  ANY
PERSON  OR  ENTITY  WHICH,  AT  ANY  TIME  DURING  THE MEASURING PERIOD,
CONTROLLED, WAS CONTROLLED BY OR WAS  UNDER  COMMON  CONTROL  WITH  SUCH
BREWER,  ON  A  WORLDWIDE  BASIS.  ANNUAL  VOLUME SHALL NOT INCLUDE BEER
BREWED UNDER CONTRACT FOR ANY OTHER BREWER. THERE  SHALL  BE  NO  DOUBLE
COUNTING  OF  THE SAME BARRELS OF BEER UNDER CLAUSES ONE AND TWO OF THIS
SUBPARAGRAPH.
  (VI) FOR THE PURPOSES OF THIS PARAGRAPH, THE TERM  "MEASURING  PERIOD"
SHALL  MEAN  THE  TWELVE MONTH CALENDAR PERIOD IMMEDIATELY PRECEDING THE
DATE NOTICE OF TERMINATION, AS REQUIRED UNDER SUBPARAGRAPH (I)  OF  THIS
PARAGRAPH, WAS GIVEN BY A BREWER TO THE BEER WHOLESALER.
  S 2. This act shall take effect immediately.

2009-A488B - Details

See Senate Version of this Bill:: S5614
Law Section:: Alcoholic Beverage Control Law
Laws Affected:: Amd §55-c, ABC L
Versions Introduced in 2011-2012 Legislative Session:: A789, A8962, S1315

2009-A488B - Summary

Permits brewers with a certain annual volume and with a certain percentage of sales to terminate an agreement with a beer wholesaler without having good cause; requires payment of fair market value of the applicable distribution rights lost; allows for the arbitration panel to review the fair market value; sets forth definitions.

2009-A488B - Sponsor Memo

                                BILL NUMBER:A488B

TITLE OF BILL:
An act
to amend the alcoholic beverage control law, in relation to agreements
between small brewers and beer wholesalers

PURPOSE OR GENERAL IDEA OF BILL: This bill amends the
ABCL to allow
small brewers whose annual volume is less than 300,000 barrels of
beer and whose sales to a wholesaler are (3%) or less of a
multi-brand beer wholesaler's annual business, the right to terminate
an agreement providing they pay the wholesaler fair compensation,
except when the termination is for "good cause" as provided in
Section 55-c of the ABCL.

SUMMARY OF SPECIFIC PROVISIONS: Section one of this
bill amends
Section 55-c of the ABCL by adding a new subdivision 4-c. The bill
defines small brewer in terms of barrelage and share of a wholesalers
business (as above) and provides for ending an agreement with a beer
wholesaler subject to certain terms relating to the payment of fair
compensation to the beer wholesaler for the transfer of the small
brewers' brands. Additionally, the bill gives the beer wholesaler the
right to submit to binding arbitration regarding "fair market value"
and requires the small brewer to pay all arbitration costs if the

"value" is not a "good faith" estimate. The bill provides for a
prospective effective date of January 1, 2010, to allow both beer
wholesalers and small brewer suppliers a 6 month period to work out
any concerns they may have prior to the acts effective date.

JUSTIFICATION: The Beer Franchise Law passed in 1996
and was amended
in 2001 with the purpose of protecting beer wholesalers which were
smaller local and often family owned businesses from arbitrary
termination by large multinational breweries and ensure if they did
agree to sell their distribution rights they would receive fair
compensation. Over the period this law has been in existence much has
changed in the brewing industry. There has been significant
consolidation in the beer wholesaler industry as a result of the law
by the major multinational breweries. As a result New York
wholesalers have diminished in number from 112 in 1996 to less than
60 today and those wholesalers that remain in business have
considerable resources and have gotten much bigger. At the same time
the number of smaller independent breweries in New York State has
grown tremendously from less than 20 in the early 90's to 63 today.
Today the opportunity for growth for many small brewers is restricted
because of contracts that require them to exclusively do business
with a particular wholesaler that is not actively supporting or
selling their brand. Yet they are not able to terminate the contract
and appoint another wholesaler except through a lengthy and
potentially costly legal process that has little assurance of success.
Present remedies under the law do not work for small brewers. If the
wholesaler does not want to be terminated they threaten expensive
legal action knowing that the smaller brewer does not have the
resources to afford the legal battle, thus many small brewers have to
live with being "locked in" with relationships that are not working.


It was never the intention of the Law to be used by the wholesaler to
lock small breweries into a relationship. Thus this bill provides a
fair and appropriate amendment to the Beer Franchise Law. It does not
disrupt the workforce; jobs will not be lost. On the contrary it will
allow small brewers to accelerate the growth they are already
achieving and thereby create more good job opportunities in New York.
The bill allows the wholesaler, if they believe they have not been
fairly compensated, to dispute the "fair market value" paid by the
brewer through binding arbitration. By requiring payment of fair
market value and arbitration, this bill will promote a competitive
and efficient system of distribution of the small brewers brands, and
make such brands more available in New York State, creating jobs and
helping a small but growing
industry.

PRIOR LEGISLATIVE HISTORY: 2008: A. 9055B -Veto Memo
92

FISCAL IMPLICATIONS: None

EFFECTIVE DATE: The Act shall take effect on January
1, 2010.

2009-A488B - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 488--B
                                                        Cal. No. 124

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced by M. of A. DESTITO, LATIMER, MAGEE, MORELLE, BUTLER, BALL --
  Multi-Sponsored by -- M. of A. ERRIGO, GALEF -- read once and referred
  to  the  Committee on Economic Development, Job Creation, Commerce and
  Industry -- reported from committee,  advanced  to  a  third  reading,
  amended  and  ordered  reprinted,  retaining its place on the order of
  third reading -- reported from committee, advanced to a third reading,
  amended and ordered reprinted, retaining its place  on  the  order  of
  third reading

AN  ACT  to  amend  the  alcoholic  beverage control law, in relation to
  agreements between small brewers and beer wholesalers

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subdivision  4  of section 55-c of the alcoholic beverage
control law is amended by adding a new paragraph (c) to read as follows:
  (C) NOTWITHSTANDING ANY PROVISION OF THIS SUBDIVISION TO THE CONTRARY:
  (I) ANY BREWER WITH AN ANNUAL VOLUME AS DEFINED IN  SUBPARAGRAPH  (IV)
OF  THIS  PARAGRAPH  OF LESS THAN THREE HUNDRED THOUSAND BARRELS OF BEER
AND WHOSE SALES TO AN AFFECTED BEER WHOLESALER ARE THREE PERCENT OR LESS
OF THE BEER WHOLESALER'S TOTAL  ANNUAL  BRAND  SALES  MEASURED  IN  CASE
EQUIVALENT  SALES  OF  TWENTY-FOUR--TWELVE  OUNCE UNITS MAY TERMINATE AN
AGREEMENT WITH ANY BEER WHOLESALER WITHOUT HAVING GOOD  CAUSE  FOR  SUCH
TERMINATION,  AS  DEFINED  IN  PARAGRAPH  (E) OF SUBDIVISION TWO OF THIS
SECTION, AND SHALL NOT BE SUBJECT TO LIABILITY TO  THE  BEER  WHOLESALER
UNDER  PARAGRAPH (B) OF SUBDIVISION SEVEN OF THIS SECTION PROVIDED THAT,
PRIOR TO THE EFFECTIVE DATE OF THE TERMINATION, THE BREWER PAYS THE BEER
WHOLESALER THE FAIR MARKET VALUE OF THE DISTRIBUTION RIGHTS  WHICH  WILL
BE  LOST  OR DIMINISHED BY REASON OF THE TERMINATION. IF SUCH BREWER AND
BEER WHOLESALER CANNOT MUTUALLY AGREE TO THE FAIR MARKET  VALUE  OF  THE
APPLICABLE  DISTRIBUTION  RIGHTS  LOST  OR  DIMINISHED  BY REASON OF THE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD03513-05-9

A. 488--B                           2

TERMINATION, THEN THE BREWER SHALL PAY THE BEER WHOLESALER A GOOD  FAITH
ESTIMATE OF THE FAIR MARKET VALUE OF THE APPLICABLE DISTRIBUTION RIGHTS.
  (II) IF THE BEER WHOLESALER BEING TERMINATED UNDER SUBPARAGRAPH (I) OF
THIS  PARAGRAPH  DISPUTES  THAT  THE PAYMENT MADE BY THE BREWER WAS LESS
THAN THE FAIR MARKET VALUE OF THE DISTRIBUTION  RIGHTS,  THEN  THE  BEER
WHOLESALER MAY WITHIN FORTY-FIVE DAYS OF TERMINATION SUBMIT THE QUESTION
OF  FAIR  MARKET  VALUE  OF  THE  APPLICABLE DISTRIBUTION RIGHTS LOST OR
DIMINISHED BY REASON OF THE TERMINATION TO BINDING ARBITRATION BEFORE  A
PANEL  OF  THREE  NEUTRAL  ARBITRATORS  APPOINTED IN ACCORDANCE WITH THE
COMMERCIAL ARBITRATION RULES OF THE  AMERICAN  ARBITRATION  ASSOCIATION,
WHICH  PANEL  SHALL  DETERMINE BY MAJORITY DECISION WHETHER THE BREWER'S
PAYMENT MEETS THE REQUIREMENTS OF SUBPARAGRAPH (I) OF THIS PARAGRAPH. IF
THE ARBITRATION PANEL RULES THAT THE PAYMENT MADE BY THE BREWER  TO  THE
BEER  WHOLESALER UPON TERMINATION WAS LESS THAN THE FAIR MARKET VALUE OF
DISTRIBUTION RIGHTS LOST OR DIMINISHED BY  REASON  OF  THE  TERMINATION,
THEN  THE BREWER MUST PAY THE BEER WHOLESALER THE DIFFERENCE BETWEEN THE
PAYMENT MADE TO THE BEER WHOLESALER AND THE DETERMINED FAIR MARKET VALUE
PLUS INTEREST. IF THE ARBITRATION PANEL RULES THAT THE PAYMENT  MADE  BY
THE  BREWER  TO  THE  BEER WHOLESALER UPON TERMINATION WAS MORE THAN THE
FAIR MARKET VALUE OF DISTRIBUTION RIGHTS LOST OR DIMINISHED BY REASON OF
THE TERMINATION, THEN THE  BEER  WHOLESALER  MUST  PAY  THE  BREWER  THE
DIFFERENCE  BETWEEN  THE  PAYMENT  MADE  TO  THE BEER WHOLESALER AND THE
DETERMINED FAIR MARKET VALUE PLUS INTEREST.  ALL  ARBITRATION  FEES  AND
EXPENSES  SHALL  BE EQUALLY DIVIDED AMONG THE PARTIES TO THE ARBITRATION
EXCEPT IF THE ARBITRATION PANEL DETERMINES  THAT  THE  BREWER'S  PAYMENT
UPON TERMINATION WAS NOT A GOOD FAITH ESTIMATE OF THE FAIR MARKET VALUE,
THEN  THE  PANEL  MAY AWARD UP TO ONE HUNDRED PERCENT OF THE ARBITRATION
COSTS TO THE BREWER.
  (III) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO  THE  CONTRARY,
FOR  PURPOSES OF THIS PARAGRAPH, THE TERM "BREWER" SHALL MEAN ANY PERSON
OR ENTITY ENGAGED PRIMARILY IN BUSINESS AS A BREWER OR  MANUFACTURER  OF
BEER.
  (IV) FOR THE PURPOSE OF THIS PARAGRAPH, THE TERM "ANNUAL VOLUME" SHALL
MEAN:    (1)  THE  AGGREGATE NUMBER OF BARRELS OF BEER, UNDER TRADEMARKS
OWNED BY THAT BREWERY AND BREWED,  DIRECTLY  OR  INDIRECTLY,  BY  OR  ON
BEHALF  OF THE BREWER DURING THE MEASURING PERIOD, ON A WORLDWIDE BASIS,
PLUS (2) THE AGGREGATE NUMBER OF BARRELS  OF  BEER  BREWED,  DURING  THE
MEASURING  PERIOD, DIRECTLY OR INDIRECTLY, BY OR ON BEHALF OF ANY PERSON
OR ENTITY WHICH, AT ANY TIME DURING THE  MEASURING  PERIOD,  CONTROLLED,
WAS  CONTROLLED  BY  OR  WAS  UNDER COMMON CONTROL WITH THE BREWER, ON A
WORLDWIDE BASIS. ANNUAL VOLUME  SHALL  NOT  INCLUDE  BEER  BREWED  UNDER
CONTRACT  FOR ANY OTHER BREWER. THERE SHALL BE NO DOUBLE COUNTING OF THE
SAME BARRELS OF BEER UNDER CLAUSES ONE AND TWO OF THIS SUBPARAGRAPH.
  (V) FOR THE PURPOSES OF THIS PARAGRAPH, THE  TERM  "MEASURING  PERIOD"
SHALL  MEAN  THE  TWELVE MONTH CALENDAR PERIOD IMMEDIATELY PRECEDING THE
DATE NOTICE OF TERMINATION, AS REQUIRED UNDER SUBPARAGRAPH (I)  OF  THIS
PARAGRAPH, WAS GIVEN BY A BREWER TO THE BEER WHOLESALER.
  S 2. This act shall take effect January 1, 2010.

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2009-A488C (ACTIVE) - Details

See Senate Version of this Bill:: S5614
Law Section:: Alcoholic Beverage Control Law
Laws Affected:: Amd §55-c, ABC L
Versions Introduced in 2011-2012 Legislative Session:: A789, A8962, S1315

2009-A488C (ACTIVE) - Summary

Permits brewers with a certain annual volume and with a certain percentage of sales to terminate an agreement with a beer wholesaler without having good cause; requires payment of fair market value of the applicable distribution rights lost; allows for the arbitration panel to review the fair market value; sets forth definitions.

2009-A488C (ACTIVE) - Sponsor Memo

                                BILL NUMBER:A488C

TITLE  OF BILL:   An act to amend the alcoholic beverage control law, in
relation to agreements between small brewers and beer wholesalers

PURPOSE OR GENERAL IDEA OF BILL: This bill  amends  the  ABCL  to  allow
small  brewers  whose annual volume is less than 300,000 barrels of beer
and whose sales to a wholesaler are (3%) or less of a  multi-brand  beer
wholesaler's  annual  business,  the  right  to  terminate  an agreement
providing they pay the wholesaler fair  compensation,  except  when  the
termination is for "good cause" as provided in Section 55-c of the ABCL.

SUMMARY  OF SPECIFIC PROVISIONS: Section one of this bill amends Section
55-c of the ABCL by adding a new subdivision 4-c. The bill defines small
brewer in terms of barrelage and share of  a  wholesalers  business  (as
above)  and  provides  for  ending  an  agreement with a beer wholesaler
subject to certain terms relating to the payment of fair compensation to
the beer wholesaler for the transfer of the small brewers' brands. Addi-
tionally, the bill gives the beer wholesaler  the  right  to  submit  to
binding arbitration regarding "fair market value" and requires the small
brewer to pay all arbitration costs if the "value" is not a "good faith"
estimate.  The bill provides for a prospective effective date of January
1, 2010, to allow both beer wholesalers and small brewer suppliers  a  6
month  period  to  work out any concerns they may have prior to the acts
effective date.

JUSTIFICATION: The Beer Franchise Law passed in 1996 and was amended  in
2001  with the purpose of protecting beer wholesalers which were smaller
local and often family owned businesses from  arbitrary  termination  by
large multinational breweries and ensure if they did agree to sell their
distribution rights they would receive fair compensation. Over the peri-
od this law has been in existence much has changed in the brewing indus-
try.  There  has  been  significant consolidation in the beer wholesaler
industry as a result of the law by the major multinational breweries. As
a result New York wholesalers have diminished in number from 112 in 1996
to less than 60 today and those wholesalers that remain in business have
considerable resources and have gotten much bigger. At the same time the
number of smaller independent breweries in  New  York  State  has  grown
tremendously from less than 20 in the early 90's to 63 today.  Today the
opportunity  for  growth for many small brewers is restricted because of
contracts that require them to exclusively do business with a particular
wholesaler that is not actively supporting or selling their  brand.  Yet
they  are  not able to terminate the contract and appoint another whole-
saler except through a lengthy and potentially costly legal process that
has little assurance of success.  Present remedies under the law do  not
work for small brewers. If the wholesaler does not want to be terminated
they  threaten  expensive  legal  action knowing that the smaller brewer
does not have the resources to afford the legal battle, thus many  small
brewers  have to live with being "locked in" with relationships that are
not working.  It was never the intention of the Law to be  used  by  the
wholesaler  to  lock small breweries into a relationship. Thus this bill
provides a fair and appropriate amendment to the Beer Franchise Law.  It

does  not  disrupt the workforce; jobs will not be lost. On the contrary
it will allow small brewers to accelerate the growth  they  are  already
achieving  and  thereby  create more good job opportunities in New York.
The bill allows the wholesaler, if they believe they have not been fair-
ly  compensated,  to  dispute the "fair market value" paid by the brewer
through binding arbitration. By requiring payment of fair  market  value
and  arbitration,  this  bill  will  promote a competitive and efficient
system of distribution of the small brewers brands, and make such brands
more available in New York State, creating jobs and helping a small  but
growing industry.

PRIOR  LEGISLATIVE HISTORY:   2009: A.488-B - Passed Assembly.  2008: A.
9055-B -Veto Memo 92

FISCAL IMPLICATIONS: None

EFFECTIVE DATE:  The Act shall take effect on January 1, next succeeding
the date on which it shall have become a law.

2009-A488C (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 488--C
                                                         Cal. No. 31

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced by M. of A. DESTITO, LATIMER, MAGEE, MORELLE, BUTLER, BALL --
  Multi-Sponsored by -- M. of A. ERRIGO, GALEF -- read once and referred
  to  the  Committee on Economic Development, Job Creation, Commerce and
  Industry -- reported from committee,  advanced  to  a  third  reading,
  amended  and  ordered  reprinted,  retaining its place on the order of
  third reading -- reported from committee, advanced to a third reading,
  amended and ordered reprinted, retaining its place  on  the  order  of
  third reading -- reported from committee, advanced to a third reading,
  amended  and  ordered  reprinted,  retaining its place on the order of
  third reading

AN ACT to amend the alcoholic  beverage  control  law,  in  relation  to
  agreements between small brewers and beer wholesalers

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 4 of section 55-c  of  the  alcoholic  beverage
control law is amended by adding a new paragraph (c) to read as follows:
  (C) NOTWITHSTANDING ANY PROVISION OF THIS SUBDIVISION TO THE CONTRARY:
  (I)  ANY  BREWER WITH AN ANNUAL VOLUME AS DEFINED IN SUBPARAGRAPH (IV)
OF THIS PARAGRAPH OF LESS THAN THREE HUNDRED THOUSAND  BARRELS  OF  BEER
AND WHOSE SALES TO AN AFFECTED BEER WHOLESALER ARE THREE PERCENT OR LESS
OF  THE  BEER  WHOLESALER'S  TOTAL  ANNUAL  BRAND SALES MEASURED IN CASE
EQUIVALENT SALES OF TWENTY-FOUR--TWELVE OUNCE  UNITS  MAY  TERMINATE  AN
AGREEMENT  WITH  ANY  BEER WHOLESALER WITHOUT HAVING GOOD CAUSE FOR SUCH
TERMINATION, AS DEFINED IN PARAGRAPH (E)  OF  SUBDIVISION  TWO  OF  THIS
SECTION,  AND  SHALL  NOT BE SUBJECT TO LIABILITY TO THE BEER WHOLESALER
UNDER PARAGRAPH (B) OF SUBDIVISION SEVEN OF THIS SECTION PROVIDED  THAT,
PRIOR TO THE EFFECTIVE DATE OF THE TERMINATION, THE BREWER PAYS THE BEER
WHOLESALER  THE  FAIR MARKET VALUE OF THE DISTRIBUTION RIGHTS WHICH WILL
BE LOST OR DIMINISHED BY REASON OF THE TERMINATION. IF SUCH  BREWER  AND
BEER  WHOLESALER  CANNOT  MUTUALLY AGREE TO THE FAIR MARKET VALUE OF THE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD03513-06-0

A. 488--C                           2

APPLICABLE DISTRIBUTION RIGHTS LOST  OR  DIMINISHED  BY  REASON  OF  THE
TERMINATION,  THEN THE BREWER SHALL PAY THE BEER WHOLESALER A GOOD FAITH
ESTIMATE OF THE FAIR MARKET VALUE OF THE APPLICABLE DISTRIBUTION RIGHTS.
  (II) IF THE BEER WHOLESALER BEING TERMINATED UNDER SUBPARAGRAPH (I) OF
THIS  PARAGRAPH  DISPUTES  THAT  THE PAYMENT MADE BY THE BREWER WAS LESS
THAN THE FAIR MARKET VALUE OF THE DISTRIBUTION  RIGHTS,  THEN  THE  BEER
WHOLESALER MAY WITHIN FORTY-FIVE DAYS OF TERMINATION SUBMIT THE QUESTION
OF  FAIR  MARKET  VALUE  OF  THE  APPLICABLE DISTRIBUTION RIGHTS LOST OR
DIMINISHED BY REASON OF THE TERMINATION TO BINDING ARBITRATION BEFORE  A
PANEL  OF  THREE  NEUTRAL  ARBITRATORS  APPOINTED IN ACCORDANCE WITH THE
COMMERCIAL ARBITRATION RULES OF THE  AMERICAN  ARBITRATION  ASSOCIATION,
WHICH  PANEL  SHALL  DETERMINE BY MAJORITY DECISION WHETHER THE BREWER'S
PAYMENT MEETS THE REQUIREMENTS OF SUBPARAGRAPH (I) OF THIS PARAGRAPH. IF
THE ARBITRATION PANEL RULES THAT THE PAYMENT MADE BY THE BREWER  TO  THE
BEER  WHOLESALER UPON TERMINATION WAS LESS THAN THE FAIR MARKET VALUE OF
DISTRIBUTION RIGHTS LOST OR DIMINISHED BY  REASON  OF  THE  TERMINATION,
THEN  THE BREWER MUST PAY THE BEER WHOLESALER THE DIFFERENCE BETWEEN THE
PAYMENT MADE TO THE BEER WHOLESALER AND THE DETERMINED FAIR MARKET VALUE
PLUS INTEREST. IF THE ARBITRATION PANEL RULES THAT THE PAYMENT  MADE  BY
THE  BREWER  TO  THE  BEER WHOLESALER UPON TERMINATION WAS MORE THAN THE
FAIR MARKET VALUE OF DISTRIBUTION RIGHTS LOST OR DIMINISHED BY REASON OF
THE TERMINATION, THEN THE  BEER  WHOLESALER  MUST  PAY  THE  BREWER  THE
DIFFERENCE  BETWEEN  THE  PAYMENT  MADE  TO  THE BEER WHOLESALER AND THE
DETERMINED FAIR MARKET VALUE PLUS INTEREST.  ALL  ARBITRATION  FEES  AND
EXPENSES  SHALL  BE EQUALLY DIVIDED AMONG THE PARTIES TO THE ARBITRATION
EXCEPT IF THE ARBITRATION PANEL DETERMINES  THAT  THE  BREWER'S  PAYMENT
UPON TERMINATION WAS NOT A GOOD FAITH ESTIMATE OF THE FAIR MARKET VALUE,
THEN  THE  PANEL  MAY AWARD UP TO ONE HUNDRED PERCENT OF THE ARBITRATION
COSTS TO THE BREWER.
  (III) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO  THE  CONTRARY,
FOR  PURPOSES OF THIS PARAGRAPH, THE TERM "BREWER" SHALL MEAN ANY PERSON
OR ENTITY ENGAGED PRIMARILY IN BUSINESS AS A BREWER OR  MANUFACTURER  OF
BEER.
  (IV) FOR THE PURPOSE OF THIS PARAGRAPH, THE TERM "ANNUAL VOLUME" SHALL
MEAN:    (1)  THE  AGGREGATE NUMBER OF BARRELS OF BEER, UNDER TRADEMARKS
OWNED BY THAT BREWERY AND BREWED,  DIRECTLY  OR  INDIRECTLY,  BY  OR  ON
BEHALF  OF THE BREWER DURING THE MEASURING PERIOD, ON A WORLDWIDE BASIS,
PLUS (2) THE AGGREGATE NUMBER OF BARRELS  OF  BEER  BREWED,  DURING  THE
MEASURING  PERIOD, DIRECTLY OR INDIRECTLY, BY OR ON BEHALF OF ANY PERSON
OR ENTITY WHICH, AT ANY TIME DURING THE  MEASURING  PERIOD,  CONTROLLED,
WAS  CONTROLLED  BY  OR  WAS  UNDER COMMON CONTROL WITH THE BREWER, ON A
WORLDWIDE BASIS. ANNUAL VOLUME  SHALL  NOT  INCLUDE  BEER  BREWED  UNDER
CONTRACT  FOR ANY OTHER BREWER. THERE SHALL BE NO DOUBLE COUNTING OF THE
SAME BARRELS OF BEER UNDER CLAUSES ONE AND TWO OF THIS SUBPARAGRAPH.
  (V) FOR THE PURPOSES OF THIS PARAGRAPH, THE  TERM  "MEASURING  PERIOD"
SHALL  MEAN  THE  TWELVE MONTH CALENDAR PERIOD IMMEDIATELY PRECEDING THE
DATE NOTICE OF TERMINATION, AS REQUIRED UNDER SUBPARAGRAPH (I)  OF  THIS
PARAGRAPH, WAS GIVEN BY A BREWER TO THE BEER WHOLESALER.
  S  2. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law.

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DESTITO

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co-Sponsors

George Latimer

William Magee

Joseph Morelle

Marc Butler

multi-Sponsors

Joseph Errigo

Sandy Galef

Peter Lopez

2009-A488C (ACTIVE) - Details

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2009-A488C (ACTIVE) - Sponsor Memo

2009-A488C (ACTIVE) - Bill Text download pdf

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