Last Call: Massachusetts High Court Denies Craft Beer Guild ‘Pay-to-Play’ Appeal; Drizly Sues Co-Founder

Massachusetts High Court Rules Against Craft Beer Guild Appeal

The Supreme Judicial Court of Massachusetts has denied Sheehan Family Companies subsidiary Craft Beer Guild’s attempt to appeal a ruling that it violated laws prohibiting unfair trade practices and illegal “pay-to-play” activities, according to the Boston Globe.

The state high court agreed with the Massachusetts Alcoholic Beverages Control Commission (ABCC), which found that the beer wholesaler had violated the state law against “price discrimination” — a practice in which distributors sell the same quantity of a product at different prices to different retailers — by offering rebates to some retailers but not others. Additionally, the high court ruled on a separate case that Massachusetts’ laws do not clearly block retailers from accepting inducements, and thus dismissed an anti-bribery ruling against Rebel Restaurants, the Globe reported.

In a statement to the press, the ABCC said it remains “committed to ensuring an equal playing field in the alcoholic beverages industry” in Massachusetts.

“We are pleased with today’s decision from the Supreme Judicial Court, upholding the regulation that prohibits manufacturers and wholesalers from bribing retailers,” the ABCC said.

Tom Schreibel, a spokesman for the Sheehan Family Companies, told Brewbound that although the beer wholesaler was “disappointed with the ruling,” the company had achieved “clarity” on the law.

“At least it’s been held in statute, so we know that,” he said. “Obviously, they wanted to win, but at least we got clarification.”

As Brewbound previously reported, the ABCC found that Craft Beer Guild, which distributes more than 200 craft brands from throughout Massachusetts, had paid bars about $120,000 from for tap handle placements.

In the 2017 ruling upheld this week by the Supreme Judicial Court, a Suffolk Superior Court judge ruled that the ABCC, which slapped Craft Beer Guild — which also operates as Craft Brewers Guild — with a 90-day license suspension in 2016 after an investigation revealed the company had “engaged in a pervasive illegal enterprise involving numerous retailers and corporations that spanned at least five years.” In lieu of suspension, Craft Beer Guild agreed to pay a $2.6 million fine.

Drizly Files Lawsuit Against Co-Founder, Eyes Cannabis Delivery

A lawsuit filed this week by Boston-based on-demand alcohol delivery company Drizly against Nick Rellas, its former co-founder and CEO, revealed the e-commerce company’s plans to expand into medical and recreational cannabis delivery later this year, according to Law 360.

The lawsuit alleges that Rellas, who exited Drizly in August, violated a 1-year non-compete and a nondisclosure agreement by attempting to start his own e-commerce cannabis delivery business, the outlet reported.

“Beginning in late 2017 and continuing through his tenure as CEO, Drizly decided to enter an adjacent market for another highly controlled product: legalized medical and recreational cannabis,” the lawsuit said. “Drizly has approached potential commercial retail partners, explored the best path to market, consulted with state regulatory officials, and crafted a market entry plan.”

Although Drizly is seeking a preliminary injunction to prevent Rellas’ competing business and monetary damages, the company is reportedly in settlement discussions with Rellas. A court date is slated for March 4.

Track 7 Co-Founder Accused of Sexual Harassment

The founders of Sacramento-based Track 7 Brewing Co. are engaged in a legal battle amongst themselves. Husband-and-wife Geoff and Rebecca Scott have filed a wrongful termination lawsuit against fellow co-founder and CEO, Ryan Graham, as well as the craft brewery’s minority owners, claiming they were pushed out of the company in retaliation for trying to hold Graham accountable for instances of sexual harassment, according to the Sacramento Bee.

According to the lawsuit, Graham made several sexual comments to a female employee as far back as 2016. An independent law firm retained by the brewery to investigate the incidents determined Graham likely committed 10 acts of sexual harassment and inappropriate workplace behavior, the Sacramento Business Journal reported.

Graham, who has denied the allegations, was reportedly placed on administrative leave in 2016 after an incident with the female employee during the Great American Beer Festival in Denver, but he was reinstated in January 2017 and assumed control of the company. In the lawsuit, the Scotts claim Graham reached a confidential settlement with the female employee in October 2017 over the claims.

In April 2018, the Scotts, who co-founded the company with Graham and his wife, Jenna Graham, claim they were forced out after Geoff refused a demotion and Rebecca’s position was eliminated, the Bee reported.

The Scotts, who claim they haven’t been compensated since May 2018, are seeking acknowledgment of their 40 percent stake in the company as well as punitive damages and legal fees, according to Capital Public Radio.

BI: US Beer Shipments Grow in January

U.S. beer companies shipped more than 12.3 million barrels in January, up 1.2 percent over the same period last year, according to the Beer Institute (BI), which cited unofficial estimates of domestic tax paid shipments from the Alcohol and Tobacco Tax and Trade Bureau (TTB).

January 2019 shipment numbers come up against easy comps, as shipments in January 2018 declined 5.6 percent, to about 12.2 million barrels from the nearly 12.9 million barrels shipped in January 2017.

BI chief economist Michael Uhrich noted some of the growth was due to suppliers, such as Boston Beer Company, building inventories of offerings such as hard seltzers in advance to demand during the spring and summer months.

US Supreme Won’t Hear Consumers’ MegaBrew Challenge

The U.S. Supreme Court has passed on hearing beer consumers’ bid to block Anheuser-Busch InBev’s $107 billion acquisition of rival SABMiller, according to Law 360.

A group of consumers had filed a lawsuit arguing that allowing the MegaBrew merger to proceed would have constricted the beer market, the outlet reported.

In October, the merger cleared its final hurdle to approval as a federal judge signed a “Modified Final Judgment” — more than two years after the Department of Justice initially green-lit the acquisition.

New Holland Receives Approval For Pabst-Branded Whiskey

New Holland Brewing Co. recently received federal label approval for a Pabst Brewing Co.-branded whiskey, signaling a contract distilling arrangement between the two companies, according to

Recall that Michigan beer company inked a marketing, sales and distribution agreement with Pabst in December 2016. Additionally, Pabst already sells a bourbon under the Not Your Father’s label.

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