Court Opinion

ID: 5867192
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:36:38.796834+00
Date Added: 2024-06-11T08:44:36.303755
License: Public Domain

Kupferman, J. (dissenting).
I would annul the determination of the State Liquor Authority (Authority) on the ground that the New York affirmation statute (Alcoholic Beverage Control Law, § 101-b)*, as applied by the Authority, imposes an impermissible burden on interstate com*62merce in violation of the commerce clause of the Federal Constitution (US Const, art I, § 8, cl 3).
Brown-Forman Distillers Corp., the petitioner in this transferred CPLR article 78 proceeding, supplies numerous brands of wine and liquor to wholesalers in approximately 30 States, including New York. Of those States, approximately 20 have affirmation statutes modeled after that in effect in New York.
The issue presented is whether it is constitutional for the respondent Authority to penalize petitioner for allegedly falsely affirming that its prices to wholesalers for individual brands were as low in New York as in any other State, on the ground that a lump-sum promotional allowance given by petitioner to its wholesalers in other States, but prohibited by law in New York, effectively lowered the wholesale prices in other States below the prices affirmed in New York.
In 1977, the Federal Bureau of Alcohol, Tobacco and Firearms (BATF) ruled that the Federal Alcohol Administration Act does not prohibit the granting of lump-sum promotional allowances. (See BATF Bulletin 77-17.) In May, 1978, the BATF conditionally approved petitioner’s request to conduct the program of promotional allowances which is the subject of this litigation. Among the conditions for approval are the following: (i) the allowances are to be with “no strings”, to be spent as the wholesalers see fit; (ii) the amounts of the allowances are not to be dependent upon the wholesalers’ volume of sales of any particular brand; and (iii) the program may be terminated at any time by petitioner.
Petitioner then sought permission from respondent to conduct the program in New York, but respondent refused to approve the program on the ground that subdivision 2 of section 101-b of the Alcoholic Beverage Control Law proscribes the furnishing of such allowances. That section provides in pertinent part: “It shall be unlawful for any person who sells liquors or wines to wholesalers or retailers * * * (b) to grant, directly or indirectly, any discount, rebate, free goods, allowance or other inducement of any kind whatsoever”.
*63Petitioner holds liquor licenses for two premises used for distribution in New York. After a hearing with respect to each license, the hearing officer held that petitioner had falsely affirmed that its New York wholesale prices were as low as those in Massachusetts, where, the hearing officer held that petitioner’s wholesale prices were effectively lowered by the promotional allowance approved as aforesaid by BATE. The respondent Authority adopted the determination of the hearing officer.
The immediate effect of the Authority’s determination, if confirmed, would be to require petitioner either to lower its wholesale prices in New York to reflect the amount of the promotional allowances granted in other States, despite the fact that the allowances are not allocated by brand or unit but given in a lump sum, or to discontinue its Federally approved promotional program of granting allowances in other States. Should petitioner choose to lower its New York prices to comply, then, under the affirmation statutes in other States, petitioner would have, to offer the same newly lowered prices as those offered in New York. Thus, the practical effect of section 101-b (subds 2, 3, par [d]) of the Alcoholic Beverage Control Law, as applied, is impermissibly to control petitioner’s prices in other States. (See United States Brewers Assn. v Healy, 692 F2d 275, 279-282, affd _ US _, 52 USLW 3308.)
Under the circumstances of this case, the mode of liquor regulation chosen by New York constitutes such an interference with petitioner’s operations elsewhere as to offend the commerce clause. (See Seagram & Sons v Hostetter, 384 US 35, 42-43, citing Baldwin v G.A.F. Seelig, 294 US 511.)
Carro, Bloom and Alexander, JJ., concur with Asch, J.; Kupferman, J. P., dissents in an opinion.
Determination of respondent dated February 5, 1982, confirmed, the petition dismissed, without costs and without disbursements.

 Section 101-b (subd 3, par [d]) provides in pertinent part: “There shall be filed *** an affirmation duly verified by the owner of such brand of liquor, or by the wholesaler designated as agent * * * that the bottle and case price of liquor to wholesalers set forth in such schedule is no higher than the lowest price at which such item of liquor will be sold by such brand owner or such wholesaler designated as agent, or any related person, to any wholesaler anywhere in any other state of the United States *** during the calendar month for which such schedule shall be in effect”.