Best Way Beer & Soda Distributors, Inc. v. New York State Liquor Authority

99 A.D.2d 727, 472 N.Y.S.2d 350, 1984 N.Y. App. Div. LEXIS 17082

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: February 23, 1984
• Status: Published

Opinions

Determination of the respondent New York State Liquor Authority, rendered February 15, 1983, which ordered a 20-day suspension, 10 days to be served forthwith and 10 days to be temporarily deferred, and a $5,000 bond claim as against the wholesale beer license issued to petitioner Best Way Beer & Soda Distributors, Inc., is modified, on the law and facts, to grant the petition to the extent of remanding for reconsideration of the penalty imposed, and otherwise confirmed, without costs. The facts herein are essentially undisputed. Petitioner was charged with violating subdivision 2 of section 55-b of the Alcoholic Beverage Control Law in that it increased the price of beer sold to retail licensees within 180 days after the last price decrease on such beer. More specifically, it was stipulated that on March 13,1982, the petitioner was selling 12 oz. bottles of Miller beer at a price of $7.90 per case in New York City; that on April 2 and April 3,1982, the petitioner had decreased the New York City price for such beer to $7.60 per case for 30 or more cases and that on April 11,12 and 16,1982, the petitioner increased the New York City price of such beer back to $7.90 per case. The petitioner does not challenge the respondent authority’s determination on the ground that it was not supported by substantial evidence. Petitioner does assert that subdivision 2 of section 55-b of the Alcoholic Beverage Control Law violates the Sherman Antitrust Act in that it fosters and promotes restraint of trade and price fixing, thereby eliminating competition. However, the purpose of subdivision 2 of section 55-b is not to promote restraints of trade but to prevent them. If this enactment did not exist, the large volume beer wholesalers could lower their prices below their cost, for short periods of time. After so forcing the smaller beer wholesalers out of business, the few remaining large wholesalers could then immediately fix their prices at artificially high prices. Subdivision 1 of section 55-b of the Alcoholic Beverage Control Law sets forth the purpose of the Legislature in enacting this law as follows: “It is hereby declared as the policy of the state that the sale and distribution of beer shall be subject to certain restrictions, prohibitions and regulations which tend to maintain an orderly market and prevent destructive competition. The necessity of the provisions of this section is therefore declared as a matter of legislative necessity” (emphasis added). The dissent disagrees with the foregoing analysis of the purpose of section 55-b and finds it “plausible” that the statute does tend to discourage competition. Where the wording of the statute and the intent and purpose of the Legislature is clear and unambiguous, the courts are not privileged to lightly ignore its evaluation of the effect of the legislation and to interpose contrary views of what the public need demands {Betz v Horr, 276 NY 83). Even assuming the purpose of the statute is to discourage competition, the Federal antitrust laws do not prohibit a State “as sovereign” from imposing certain anticompetitive restraints “as an act of government” in order to effectuate an orderly market (Parker v Brown, 317 US 341, 352). California Liq. Dealers v Midcal Aluminum (445 US 97), cited by the dissent, is not to the contrary. There the Supreme Court dealt with a challenge to California’s pricing plan which gave wine producers the power to prevent price competition by dictating the prices charged by wholesalers. The court held that the scheme constituted resale price maintenance in violation of the Sherman Act since a private party was delegated the power to prevent price competition. However, the Supreme Court in Midcal set forth two criteria for antitrust immunity under Parker v Brown {supra). “First, the challenged restraint must be ‘one clearly articulated and affirmatively expressed as state policy’; second, the policy must be ‘actively supervised’ by the state itself [citation omitted]” (California Liq. Dealers v Midcal Aluminum, supra, at p 105). The first criterion is concededly met in the instant case by subdivision 1 of the challenged section of the Alcoholic Beverage Control Law set forth above. Insofar as the second criterion is concerned, section 55-b neither permits nor sanctions private parties engaging in resale price maintenance in violation of the Sherman Act. After the brewer or wholesaler decreases its price, it may not raise the price for 180 days thereafter. This scheme is not promulgated or controlled by the brewers or wholesalers, but is administered by the State Liquor Authority, an agency of the State of New York. Therefore, even assuming, arguendo, the purpose of the statute to be anticompetitive, it is “compelled by direction of the state acting as a sovereign” (Goldfarb v Virginia State Bar, 421 US 773, 791), and as such, the regulation is immune from the Sherman Act under Parker v Brown (supra). However, we deem the penalty imposed by respondent authority upon petitioner to be “so grave in its impact * * * that it is disproportionate to the misconduct” (Matter of Pell v Board of Educ., 34 NY2d 222, 234). The testimony submitted indicates that petitioner co-operated fully in respondent’s investigation and it appears the violation was unintentional. The improper pricing continued only for a period of one week and there is no evidence that this inadvertent violation by petitioner will be continued or repeated in the future. Consequently, the imposition of a fine would appear to be a more appropriate penalty. However, we remand for reconsideration by respondent authority to determine the exact nature of the penalty to be imposed (see Rob Tess Rest. Corp. v New York State Liq. Auth., 49 NY2d 874). Concur — Ross, Carro, Asch and Bloom, JJ.