Diane Serra Inc. v. Charmer Industries, Inc.

190 Misc. 2d 386, 737 N.Y.S.2d 529, 2002 N.Y. Misc. LEXIS 35
CourtNew York Supreme Court
DecidedJanuary 28, 2002
StatusPublished

This text of 190 Misc. 2d 386 (Diane Serra Inc. v. Charmer Industries, Inc.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Diane Serra Inc. v. Charmer Industries, Inc., 190 Misc. 2d 386, 737 N.Y.S.2d 529, 2002 N.Y. Misc. LEXIS 35 (N.Y. Super. Ct. 2002).

Opinion

OPINION OF THE COURT

Herman Cahn, J.

Motion sequence numbers 002 and 003 are consolidated for disposition.

[387]*387In motion sequence number 002, defendants Charmer Industries, Inc. and Peerless Importers, Inc., move to dismiss the complaint (CPLR 3211 [a] [7]), on the ground that no private right of action for price discrimination exists under the Alcoholic Beverage Control Law. In motion sequence number 003, plaintiffs Diane Serra Inc. and Garnet Wines & Liquors Inc. move for permission to serve a sur-reply to the earlier motion, pursuant to Commercial Division rule 19.

Plaintiffs are wine and liquor retailers; defendants are wine and liquor wholesalers. Both retailers and wholesalers are licensed in accordance with the Alcoholic Beverage Control Law.

By virtue of the Alcoholic Beverage Control Law and the regulations promulgated thereunder, retailers who are delinquent in the payment of the invoices rendered to them are to be reported by their supplier to the State Liquor Authority (SLA), which maintains a “delinquent list.” Retailers on the “delinquent list” must pay for subsequent shipments COD, until the delinquencies are cured, and they are removed from the delinquent list. Plaintiffs are both on the delinquent list.

Defendants are spirits wholesalers, each of whom have the exclusive right to sell numerous popular brands. Plaintiffs assert that they must necessarily carry all or some of these brands to remain competitive.

Plaintiffs allege that defendants offered their customers a 1% discount for payment within 10 days of shipment, but that the discount was not available to retailers on the “delinquent list” such as themselves. Since they are required to pay COD, the failure to grant them the discount is alleged to be price discrimination in violation of the Alcoholic Beverage Control Law and regulations.

Plaintiffs have commenced this action nominally on behalf of a class of liquor retail licensees who, like themselves, were delinquent (see, Alcoholic Beverage Control Law § 101-a [2]) in payments made to at least one defendant and were not offered the discount, although defendants offered it to retail licensees who were not delinquent. In the complaint, plaintiffs assert causes of action for violations of Alcoholic Beverage Control Law § 101-b (2) (a), unjust enrichment, and breach of contract.

Defendants seek dismissal of the first cause of action on grounds that the Alcoholic Beverage Control Law does not provide for a private right of action for price discrimination.

In opposition, plaintiffs concede that no express private right of action exists, but contend that a private right of action for [388]*388discriminatory pricing practices may be fairly implied from the legislative history and the language of the statute itself.

In the absence of a private right of action expressly authorized by statute, courts must determine whether the Legislature intended to create such right by considering three essential criteria (Sheehy v Big Flats Community Day, 73 NY2d 629 [1989]). “Whether a private cause of action was intended will turn in the first instance on whether the plaintiff is ‘one of the class for whose especial benefit the statute was enacted’ (Motyka v City of Amsterdam, 15 NY2d 134, 139) * * * Important also are what indications there are in the statute or its legislative history of an intent to create (or conversely to deny) such a remedy and, most importantly, the consistency of doing so with the purposes underlying the legislative scheme” (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314, 325 [1983] [citations omitted]). Thus, “a private cause of action is implied where it can be shown that plaintiff belongs to the class of legislatively intended beneficiaries and that a right of action would be ‘clearly in furtherance of the legislative purpose’ ” (CPC Intl. v McKesson Corp., 70 NY2d 268, 276 [1987], quoting Burns Jackson Miller Summit & Spitzer v Lindner, supra at 329). Plaintiffs have failed to demonstrate the existence of any of these factors.

Contrary to plaintiffs’ contentions, neither the legislative history, the statute itself nor relevant case law indicates that the Legislature enacted the Alcoholic Beverage Control Law specifically for the benefit of retail licensees or intended that they possess a private right of action for price discrimination.

The Alcoholic Beverage Control Law was enacted “to regulate and control the manufacture, sale and distribution within the state of alcoholic beverages” (Alcoholic Beverage Control Law § 2). The Legislature empowered the SLA “to determine whether public convenience and advantage will be promoted by the issuance of licenses to traffic in alcoholic beverages, the increase or decrease in the number thereof and the location of premises licensed thereby, subject only to the right of judicial review hereinafter provided for” (Alcoholic Beverage Control Law § 2; see, Alcoholic Beverage Control Law § 121).

The Legislature also determined that a prohibition on price discrimination among retailers by wholesalers would foster and promote the interests of the consuming public (see, Alcoholic Beverage Control Law § 101-b [2]). In the statute, the Legislature set forth the public policy behind the prohibition as follows:

[389]*389“It is the declared policy of the state that it is necessary to regulate and control the manufacture, sale, and distribution within the state of alcoholic beverages for the purpose of fostering and promoting temperance in their consumption and respect for and obedience to the law. In order to eliminate undue stimulation of sales of alcoholic beverages and the practice of manufacturers and wholesalers in granting discounts, rebates, allowances, free goods, and other inducements to selected licensees, which contribute to a disorderly distribution of alcoholic beverages, and which are detrimental to the proper regulation of the liquor industry and contrary to the interests of temperance, it is hereby further declared as the policy of the state that the sale of alcoholic beverages should be subjected to certain restrictions, prohibitions and regulations. The necessity for the enactment of the provisions of this section is, therefore, declared as a matter of legislative determination.” (Alcoholic Beverage Control Law § 101-b [1].)

Courts have considered the legislative purpose behind the price discrimination prohibition and found that the Legislature intended to prevent price discrimination by discouraging monopoly and encouraging competition in order to keep prices low for the benefit of consumers (see, Matter of Great E. Liq. Corp. v State Liq. Auth., 25 NY2d 525 [1969]; Matter of Affiliated Distillers Brands Corp. v State Liq. Auth., 32 AD2d 336 [1st Dept 1969], affd sub nom. Austin, Nichols & Co. v State Liq. Auth., 26 NY2d 982 [1970]).

A review of the specific provisions of the Alcoholic Beverage Control Law indicates that the Legislature vested in the SLA the right to monitor the activities of market participants and to ensure their compliance with the statute, promoting an orderly and regulated market free of improper influence by the market participants for the benefit of the consuming public.

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Related

Great E. Liq. v. Liq. Auth.
25 N.Y.2d 525 (New York Court of Appeals, 1969)
Motyka v. City of Amsterdam
204 N.E.2d 635 (New York Court of Appeals, 1965)
Austin, Nichols & Co. v. State Liquor Authority
259 N.E.2d 492 (New York Court of Appeals, 1970)
Burns Jackson Miller Summit & Spitzer v. Lindner
451 N.E.2d 459 (New York Court of Appeals, 1983)
CPC International Inc. v. McKesson
514 N.E.2d 116 (New York Court of Appeals, 1987)
Sheehy v. Big Flats Community Day, Inc.
541 N.E.2d 18 (New York Court of Appeals, 1989)
Affiliated Distillers Brands Corp. v. State Liquor Authority
32 A.D.2d 336 (Appellate Division of the Supreme Court of New York, 1969)

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Bluebook (online)
190 Misc. 2d 386, 737 N.Y.S.2d 529, 2002 N.Y. Misc. LEXIS 35, Counsel Stack Legal Research, https://law.counselstack.com/opinion/diane-serra-inc-v-charmer-industries-inc-nysupct-2002.