Somerset Importers, Ltd. v. Alcoholic Beverages Control Commission

551 N.E.2d 545, 28 Mass. App. Ct. 381, 1990 Mass. App. LEXIS 160
CourtMassachusetts Appeals Court
DecidedMarch 19, 1990
DocketNo. 88-P-923
StatusPublished
Cited by11 cases

This text of 551 N.E.2d 545 (Somerset Importers, Ltd. v. Alcoholic Beverages Control Commission) is published on Counsel Stack Legal Research, covering Massachusetts Appeals Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Somerset Importers, Ltd. v. Alcoholic Beverages Control Commission, 551 N.E.2d 545, 28 Mass. App. Ct. 381, 1990 Mass. App. LEXIS 160 (Mass. Ct. App. 1990).

Opinion

Kass, J.

What produced the controversy is that Somerset Importers, Ltd. (Somerset), refused to sell to New England Liquor Sales Co., Inc. (New England), as much Tanqueray gin, a brand name product, as the latter wanted to buy. This raised the question whether, within the meaning of G. L. c. 138, § 25E, the statutory phrase “refusal to sell” means a partial curtailment of sales as well as an entire discontinuance of sales.

The Alcoholic Beverages Control Commission (ABCC) concluded that the limitation on quantity which Somerset sought to impose transgressed the statute and ordered that Somerset sell to New England in any year up to 110% of the highest annual quantity of Tanqueray gin which New England had bought in the preceding four calendar years.2 On review under G. L. c. 30A, § 14, a judge of the Superior Court affirmed the administrative agency decision. Neither party was content with the judgment and both have appealed; Somerset is aggrieved that it is required to sell too much Tanqueray and New England is aggrieved that Somerset is not required to sell enough, viz., however much New England desires to buy. We affirm.3

[383]*383Here are the material facts leading up to the filing, in April, 1985, of New England’s application to the ABCC for relief under G. L. c. 138, § 25E. About a month earlier, New England, a wholesaler, had placed an order for 2,250 cases of Tanqueray.4 *4 Somerset refused to accept the order on the ground that it was too large, although it invited an “appropriate order” for the 1.75-liter size. In early April, 1985, New England ordered an additional 1,270 cases from Somerset and was turned down, although Somerset shipped 200 cases that were thought necessary to meet the needs of New England’s retail customers. There was the rub. New England was selling a major share of its Tanqueray inventory to an affiliated wholesaler, Whitehall Company, Ltd. (Whitehall).5 Somerset had chosen not to deal with Whitehall and was distinctly less than intoxicated with the diversion of Tanqueray gin to Whitehall via New England. Sales from a licensed wholesaler to another licensed wholesaler are, however, lawful under G. L. c. 138, § 18. Cf. Beverages Intl., Ltd. v. Alcoholic Beverages Control Commn., 24 Mass. App. Ct. 708, 708-709 (1987). No clause in the agreement, dated February 1, 1972, under which Somerset agreed to sell to New England, prohibited the sale of beverages by New England to another wholesaler.

1. “Refusal to sell” within the meaning of § 25E. Under G. L. c. 138, § 25E, as appearing in St. 1982, c. 627, § 10, it is an “unfair trade practice and therefor unlawful for any . . . importer ... of any alcoholic beverage to refuse to sell, except for good cause shown, any item having a brand name to any licensed wholesaler to whom such . . . importer . . . has made regular sales of such brand item during a period of six months preceding any refusal to sell.” For purposes of the statute, “good cause” for refusing to sell is limited to five grounds set forth in the sec[384]*384ond paragraph of § 25E. See Seagram Distillers Co. v. Alcoholic Beverages Control Commn., 401 Mass. 713, 716 (1988); Union Liquors Co. v. Alcoholic Beverages Control Commn., 11 Mass. App. Ct. 936, 938 (1981).

It is common ground among the parties that none of the statutory grounds for refusing to sell were in the picture. Rather it is Somerset’s position that “to refuse to sell” does not encompass reasonable rationing. New England, Somerset emphasizes, was not denied the Tanqueray gin needed to satisfy orders from retailers. Somerset claims to have declined to fill only those orders which greatly exceeded the monthly orders for past comparable periods. On the basis of language in the first sentence of the second paragraph of § 25E, which speaks of “discontinuing sales to such wholesalers” (emphasis supplied), Somerset suggests that “refusal to sell” means a total abrogation of sales.

“Refusal to sell,” however, must mean something other than an entire cutting off. Otherwise it would be possible to restrict sales to a symbolic amount which was so small that it would eliminate a wholesaler as a factor so far as a particular brand name product was concerned. A purpose of § 25E, counteracting vertical integration in the liquor distribution business, would be subverted. See Pastene Wine & Spirits Co. v. Alcoholic Beverages Control Commn., 401 Mass. 612, 618 (1988); Seagram Distillers Co. v. Alcoholic Beverages Control Commn., 401 Mass. at 716. Somerset appears to recognize the weakness of the total refusal to sell theory because it proceeds to restate its position by arguing that it is a termination of the business relationship or constructive termination of the business relationship which § 25E proscribes. Under that less absolute standard it would, nevertheless, be within the power of a distributor to restrict merchandise to a wholesaler so substantially that the competitive position of that wholesaler would be compromised.

The better view, adopted by the ABCC, is that “refusal to sell” marks a material curtailment of the volume of sales made in the regular course of business. A legislative purpose to maintain normal business volume may be inferred by the [385]*385interim remedy § 25E provides upon a complaint to the ABCC of unlawful cutback. Pending determination by the ABCC, the distributor is bound “to make sales in the regular course” to the wholesaler. G. L. c. 138, § 25E. An interpretation of § 25E made by the administrative agency charged with administering the statute is one to which we accord weight. Cleary v. Cardullo’s, Inc., 347 Mass. 337, 343 (1964). Amherst-Pelham Regional School Comm. v. Department of Educ., 376 Mass. 480, 491-492 (1978). Beverages International, Ltd. v. Alcoholic Beverages Control Commn., 24 Mass. App. Ct. at 711-712. Such is particularly the case when “the details of legislative policy have not been spelled out in the statute.” Howard Johnson Co. v. Alcoholic Beverages Control Commn., 24 Mass. App. Ct. 487, 491 (1987).

In deciding that a partial refusal to ship an order constituted a violation of § 25E, the ABCC expressly acknowledged that the case might stand otherwise were it commercially impracticable for an importer6 to fill an order. If inventory at the source were exhausted by a sudden surge in popularity of a product or by disruption in the supply line (e.g., drought, frost, fire, strike, shipwreck) an importer could, presumably, ration its existing stock to its customers on a prorated basis.

The ABCC correctly ruled that § 25E reached partial refusals to fill orders and that it, therefore, had jurisdiction to hear New England’s complaint.

2. Adequacy of the agency’s findings. Assuming sales volume in accordance with the regular course of business as the correct standard under § 25E, Somerset states a backup position: the ABCC’s ultimate finding that New England’s orders were consistent with quantities it had historically ordered is unsupported by either substantial evidence in the record or subsidiary findings by the ABCC. It is, of course, understood that an administrative agency must make subsidiary findings and state reasons sufficient to enable a reviewing court to judge whether the agency’s conclusions and order [386]*386were founded in fact and law.

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Bluebook (online)
551 N.E.2d 545, 28 Mass. App. Ct. 381, 1990 Mass. App. LEXIS 160, Counsel Stack Legal Research, https://law.counselstack.com/opinion/somerset-importers-ltd-v-alcoholic-beverages-control-commission-massappct-1990.