NY State Senate Bill 2009-S5614B

Archive: Last Bill Status Via A488 - On Floor Calendar

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 30, 2010	3rd reading cal.1330 substituted for s5614b
Jun 30, 2010	substituted by a488c
Jun 29, 2010	ordered to third reading cal.1330 committee discharged and committed to rules
Jan 13, 2010	print number 5614b
Jan 13, 2010	amend and recommit to commerce, economic development and small business
Jan 06, 2010	referred to commerce, economic development and small business
Jun 18, 2009	print number 5614a
Jun 18, 2009	amend and recommit to commerce, economic development and small business
May 21, 2009	referred to commerce, economic development and small business

Votes

- Jun 29, 2010 - Rules Committee Vote
  S5614B
  
  Aye
  
  20
  
  Nay
  
  1
  
  Aye with Reservations
  
  2
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  
  0
  - - Rules Committee Vote: Jun 29, 2010
      
      aye (20)
      
      Espada
      
      Farley
      
      Hassell-Thompson
      
      Johnson
      
      Klein
      
      Krueger
      
      LaValle
      
      Larkin
      
      Montgomery
      
      Padavan
      
      Parker
      
      Saland
      
      Serrano
      
      Seward
      
      Skelos
      
      Smith
      
      Stachowski
      
      Stewart-Cousins
      
      Valesky
      
      Volker
      
      nay (1)
      
      Dilan
      
      aye wr (2)
      
      Duane
      
      Hannon

Bill Amendments

Original

B (Active)

2009-S5614 - Details

See Assembly Version of this Bill:: A488
Law Section:: Alcoholic Beverage Control Law
Laws Affected:: Amd §55-c, ABC L
Versions Introduced in 2011-2012 Legislative Session:: S1315, A789, A8962

2009-S5614 - 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-S5614 - Sponsor Memo

                                 BILL NUMBER:  S5614

 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 a small brewer as covered 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.  This bill defines "beer
wholesaler" as any wholesaler having less than fifty percent of its
total annual brand sales derived from sales by the covered brewer.
Additionally, the bill gives the beer wholesaler the right to submit
to binding arbitration regarding "fair market value" and requires the
small covered 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
compensation 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 wholesalers 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 brewers 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 breweries 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 situations, 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 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.
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

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
Immediate.

2009-S5614 - Bill Text download pdf

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

                                  5614

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              May 21, 2009
                               ___________

Introduced  by  Sen. VALESKY -- read twice and ordered printed, and when
  printed to be committed to the Committee on Commerce, Economic  Devel-
  opment and Small Business

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.
  (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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03513-03-9

S. 5614                             2

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.

co-Sponsors

2009-S5614A - Details

See Assembly Version of this Bill:: A488
Law Section:: Alcoholic Beverage Control Law
Laws Affected:: Amd §55-c, ABC L
Versions Introduced in 2011-2012 Legislative Session:: S1315, A789, A8962

2009-S5614A - Summary

2009-S5614A - Sponsor Memo

                                 BILL NUMBER:  S5614A

 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-S5614A - Bill Text download pdf

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

                                 5614--A

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              May 21, 2009
                               ___________

Introduced  by  Sens. VALESKY, GRIFFO -- read twice and ordered printed,
  and when printed to be committed to the Committee on Commerce, Econom-
  ic Development  and  Small  Business  --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee

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
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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03513-04-9

S. 5614--A                          2

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.

co-Sponsors

2009-S5614B (ACTIVE) - Details

See Assembly Version of this Bill:: A488
Law Section:: Alcoholic Beverage Control Law
Laws Affected:: Amd §55-c, ABC L
Versions Introduced in 2011-2012 Legislative Session:: S1315, A789, A8962

2009-S5614B (ACTIVE) - Summary

2009-S5614B (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S5614B

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

 FISCAL IMPLICATIONS :
None.

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

2009-S5614B (ACTIVE) - Bill Text download pdf

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

                                 5614--B

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              May 21, 2009
                               ___________

Introduced  by  Sens. VALESKY, GRIFFO -- read twice and ordered printed,
  and when printed to be committed to the Committee on Commerce, Econom-
  ic Development  and  Small  Business  --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee -- recommitted to the Committee on Commerce, Economic  Development
  and Small Business in accordance with Senate Rule 6, sec. 8 -- commit-
  tee  discharged, bill amended, ordered reprinted as amended and recom-
  mitted to said committee

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
TERMINATION,  THEN THE 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.
                                                           LBD03513-07-0

S. 5614--B                          2

  (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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Senate Bill S5614B

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Sponsored By

David J. Valesky

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Joseph A. Griffo

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