Licenses and permits – Alcohol – Kickbacks

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Where the Alcoholic Beverages Control Commission imposed penalties on (1) a licensed wholesaler of craft beers and (2) a licensed retailer, the commission properly determined that the wholesaler violated both G.L.c. 138, section25A(a) and 204 Code Mass. Regs. section2.08, but the terms of the regulation do not apply to the retailer’s conduct in accepting money derived from kickbacks paid by the wholesaler.

“In these cases, we review two decisions of the alcoholic beverages control commission (commission) that resulted in the issuance of penalties against Craft Beer Guild, LLC (Craft), a licensed wholesaler of craft beers doing business as Craft Brewers Guild, and Rebel Restaurants, Inc. (Rebel), a licensed retailer doing business as Jerry Remy’s, which purchased kegs of craft beer from Craft for sale to its bar and restaurant customers. After an investigation and evidentiary hearings, the commission determined that Craft had paid monetary rebates in differing amounts on craft beer purchases to certain licensed retailers in violation of G.L.c. 138, section25A(a), which prohibits licensed wholesalers from discriminating, directly or indirectly, in price among retailers that purchase the same alcoholic beverage. The commission also concluded that both Craft and Rebel violated a regulation prohibiting a particular scheme of commercial bribery, 204 Code Mass. Regs. section2.08 (1993), which provides that ‘[n]o licensee shall give or permit to be given money or any other thing of substantial value in any effort to induce any person to persuade or influence any other person to purchase … any particular brand or kind of alcoholic beverages’ — the validity of which Craft and Rebel both challenge. Craft and Rebel each sought judicial review of the commission’s decisions; one Superior Court judge affirmed the commission’s penalty against Craft, and another judge affirmed the penalty against Rebel. …

“We affirm the judgment against Craft, concluding that the commission properly determined that Craft violated both the statute and the regulation, and that the regulation remains valid. But because we conclude that the terms of the regulation do not apply to Rebel’s conduct in accepting money derived from kickbacks paid by Craft, we reverse the judgment against Rebel.”

Craft Beer Guild, LLC v. Alcoholic Beverages Control Commission; Rebel Restaurants, Inc. v. Alcoholic Beverages Control Commission (Lawyers Weekly No. 10-044-19) (37 pages) (Gants, J.) Cases heard by Wilkins, J., and Ricciuti, J., on motions for judgment on the pleadings. J. Mark Dickison (Joshua M.D. Segal also present) for Craft Beer Guild, LLC; Thomas R. Kiley (Meredith Fierro also present) for Rebel Restaurants, Inc.; Kirk G. Hanson for Alcoholic Beverages Control Commission; Kevin M. Considine, for Beer Distributors of Massachusetts, Inc., amicus curiae, submitted a brief (Docket Nos. SJC-12547 and 12595) (Feb. 28, 2019).

Click here to read the full text of the opinion (corrected version issued August 2019).