Court Opinion

ID: 5866650
Source: CourtListenerOpinion
Date Created: 2022-01-13 01:35:05.056974+00
Date Added: 2024-06-11T08:44:35.512858
License: Public Domain

Murphy, P. J.,
dissents in a memorandum as follows: This article 78 proceeding involves the validity and enforcement of subdivision 2 of section 55-b of the Alcoholic Beverage Control Law. This section reads as follows: “2. No brewer or beer wholesaler may increase the price per case, draft package or special package of beer sold to beer wholesalers or retail licensees until at least one hundred eighty days have elapsed since his last price decrease on such case, draft package or special package, provided, however, that the brewer or beer wholesaler may increase any price established by him at any time in the amount of any direct tax increase on beer, or on containers thereof, actually paid by such brewer or beer wholesaler, and provided further, however, that if a brewer or beer wholesaler has increased his price to beer wholesalers at any time pursuant to the provisions hereof, the beer wholesaler may increase the price established by him on such package in an amount equal to the direct price increase to the beer wholesaler. The price per case, draft package or special package of beer sold to beer wholesalers or retail licensees on the first day of the month following the effective date of this act shall be deemed the base price, to or from which price increases or decreases may be made in accordance with the provisions of this section.” Petitioner is licensed by the respondent to sell beer at wholesale only to retail licensees. At the administrative hearing, petitioner stipulated that, on March 13, 1982, it had sold 12 oz. bottles of Miller beer at a price of $7.90 per case. It further stipulated that, on April 2 and April 3,1982, it had sold that beer at $7.60 per case. It was also stipulated that, on April 11,12 and 16,1982, the price of that beer was raised to $7.90 per case. Petitioner was found in violation of subdivision 2 of section 55-b of the Alcoholic Beverage Control Law. The respondent imposed a 20-day suspension of petitioner’s license. Ten days were to be served forthwith; 10 days were to be temporarily deferred. The penalty also included a $5,000 bond claim. There is substantial evidence in the record to support the administrative determination with regard to the violation of subdivision 2 of section 55-b. Likewise, the penalty imposed does not shock the conscience. However, peti*729tioner alleges in the petition that subdivision 2 of section 55-b of the Alcoholic Beverage Control Law “is unconstitutional in that said statute fosters and promotes restraint of trade and price fixing while eliminating competition”. In its brief, petitioner advances the same argument based upon a violation of the Sherman Antitrust Act. Petitioner argues that it is a “small” wholesaler and that it does not have the financial resources or the facilities to comply with subdivision 2 of section 55-b of the Alcoholic Beverage Control Law. It is petitioner’s position that only “large” wholesalers can comply with the statute and that they alone are benefited by it. In the answer, respondent denied the allegation in the petition relating to price fixing. Respondent, in its brief, avers that subdivision 2 of section 55-b does not promote restraints of trade but prevents it. That section, according to respondent, does not eliminate competition but promotes it. Respondent stresses that, but for subdivision 2 of section 55-b of the Alcoholic Beverage Control Law, “large” wholesalers could lower their prices until they forced the “small” wholesalers out of business. It is not evident to me why subdivision 2 of section 55-b encourages competition or maintains an orderly market. The argument advanced by petitioner seems very plausible, i.e., the “small” wholesaler is being damaged by the restrictive force of the statute. In a recent decision, the United States Supreme Court found that the California wine pricing program was in violation of the Sherman Act (California Liq. Dealers v Midcal Aluminum, 445 US 97). The present proceeding should be evaluated in the light of the opinion in California (supra), to determine whether subdivision 2 of section 55-b unlawfully permits “large” wholesalers to fix very low prices and drive “small” wholesalers out of business. I would agree with the majority that the State of New York has met the first standard for immunity from the Sherman Act. The legislative policy is aimed at maintaining an orderly market and preventing destructive competition (Alcoholic Beverage Control Law, § 55-b, subd 1). However, a serious question is raised as to whether the State has met the second standard. Specifically, an issue is raised as to whether the State has actively supervised this policy (California Liq. Dealers v Midcal Aluminum, supra, at pp 105-106). The State of New York merely permits wholesalers to set prices for a period of 180 days. If the particular wholesaler does not maintain the price for 180 days, then the State, through the State Liquor Authority, enforces an appropriate penalty under section 55-b of the Alcoholic Beverage Control Law. The State neither establishes prices nor reviews the reasonableness of the prices set by the wholesaler. It does not monitor market conditions nor does it engage in any “pointed examination” of this program. Under such circumstances it is very questionable whether the State is actively supervising this program under section 55-b of the Alcoholic Beverage Control Law. The portion of the petition which seeks to hold subdivision 2 of section 55-b in violation of the Sherman Act should be converted to an action for declaratory judgment and the matter should be remanded for further proceedings including an evidentiary hearing (Matter of Kovarsky v Housing & Dev. Admin., 31 NY2d 184, 191). The portion of the petition as seeks to vacate the administrative determination should be held in abeyance pending resolution of the declaratory judgment action.