The New York State Senate

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

                                   789

                       2011-2012 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by M. of A. DESTITO, MORELLE, MAGEE, JAFFEE, LATIMER, BUTLER
  -- Multi-Sponsored by -- M. of A. GALEF, P. LOPEZ  --  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 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.

                                                           LBD01630-01-1

A. 789                              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 on the first of January next succeed-
ing the date on which it shall have become a law.