The Brewers Association (BA), Massachusetts Brewers Guild (MBG) and Beer Distributors of Massachusetts (BDMA) have filed an amicus memorandum in support of the Bay State’s franchise reform law.
The filing is in conjunction with a complaint filed by Atlantic Beverage Distributors against Jack’s Abby Craft Lagers stemming from the craft brewery’s termination of the wholesaler following the passage of 25E ½ in early 2021.
The law allows brewers with annual production volume fewer than 250,000 barrels to terminate wholesaler relationships with 30 days’ notice and the payment of the fair market value for the brand’s rights. If the two cannot agree on fair market value, as Jack’s Abby and Atlantic could not, an arbitrator steps in. Arbitration between Jack’s Abby and Atlantic was completed with an arbitrator-determined award of an undisclosed amount sent from the brewer to the wholesaler on June 28.
In its complaint, Atlantic contends that 25E ½ is unconstitutional because it requires an arbitrator to assign fair market value instead of a jury. The BA, MBG and BDMA (the amici) disagreed with Atlantic’s assertion in a brief filed with Suffolk Superior Court business litigation session on January 24.
“On the contrary, the Amici believe the act is constitutionally sound,” they wrote.
In a legal brief that called upon legal precedence dating back to the 1700s, the amici argued that 25E ½’s arbitration provision does not violate the Massachusetts Declaration of Rights because of the nature of the rights afforded to brewers and wholesalers.
“Indeed, none of the rights or obligations of the participants in the alcoholic beverages industry towards each other, are rights or obligations that entitle a party to a jury trial to resolve, as they are not private property rights but statutory rights born out of the state’s interest in promoting public policy and public health within the alcoholic beverages industry,” the amici wrote (emphasis theirs).
The amici noted that they “have a significant interest in the instant action in that they advocated in favor of the act in various forms for over 10 years.” Members of all three trade groups “rely on the act in making their business decisions.”
Atlantic, the plaintiff in the lawsuit, is not a member of the Beer Distributors of Massachusetts.
The BA has joined in the filing of other amicus briefs in past lawsuits, general counsel Marc Sorini told Brewbound.
“We believe it is important to support the Massachusetts Brewers Guild and the Beer Distributors of Massachusetts as they defend the small brewer provisions of the state’s franchise law,” he said. “Those provisions were the product of an important legislative compromise that recognized the need to reform the original Massachusetts franchise law, enacted back in 1971 (the nation’s oldest beer franchise law), while continuing to address legitimate wholesaler concerns.”
Franchise law reform is “of paramount importance” to the BA, Sorini said, adding that the case outlined in Atlantic’s appeal is “narrow.”
“We are confident that the court of appeals will agree with the Superior Court that the franchise law complies with Massachusetts’ constitution,” he said. “But even an adverse ruling will not cast doubt on the policy need for franchise reform or on the legal viability of franchise reform legislation in other states.”