S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                         1315

                              2011-2012 Regular Sessions

                                   I N  S E N A T E

                                    January 6, 2011
                                      ___________

       Introduced  by  Sen.  GRIFFO -- read twice and ordered printed, and when
         printed to be committed to the Committee on Commerce, Economic  Devel-
         opment and Small Business

       AN  ACT  to  amend  the  alcoholic  beverage control law, in relation to
         agreements between small brewers and beer wholesalers

         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section  1.  Subdivision  4  of section 55-c of the alcoholic beverage
    2  control law is amended by adding a new paragraph (c) to read as follows:
    3    (C) NOTWITHSTANDING ANY PROVISION OF THIS SUBDIVISION TO THE CONTRARY:
    4    (I) ANY BREWER WITH AN ANNUAL VOLUME AS DEFINED IN  SUBPARAGRAPH  (IV)
    5  OF  THIS  PARAGRAPH  OF LESS THAN THREE HUNDRED THOUSAND BARRELS OF BEER
    6  AND WHOSE SALES TO AN AFFECTED BEER WHOLESALER ARE THREE PERCENT OR LESS
    7  OF THE BEER WHOLESALER'S TOTAL  ANNUAL  BRAND  SALES  MEASURED  IN  CASE
    8  EQUIVALENT  SALES  OF  TWENTY-FOUR--TWELVE  OUNCE UNITS MAY TERMINATE AN
    9  AGREEMENT WITH ANY BEER WHOLESALER WITHOUT HAVING GOOD  CAUSE  FOR  SUCH
   10  TERMINATION,  AS  DEFINED  IN  PARAGRAPH  (E) OF SUBDIVISION TWO OF THIS
   11  SECTION, AND SHALL NOT BE SUBJECT TO LIABILITY TO  THE  BEER  WHOLESALER
   12  UNDER  PARAGRAPH (B) OF SUBDIVISION SEVEN OF THIS SECTION PROVIDED THAT,
   13  PRIOR TO THE EFFECTIVE DATE OF THE TERMINATION, THE BREWER PAYS THE BEER
   14  WHOLESALER THE FAIR MARKET VALUE OF THE DISTRIBUTION RIGHTS  WHICH  WILL
   15  BE  LOST  OR DIMINISHED BY REASON OF THE TERMINATION. IF SUCH BREWER AND
   16  BEER WHOLESALER CANNOT MUTUALLY AGREE TO THE FAIR MARKET  VALUE  OF  THE
   17  APPLICABLE  DISTRIBUTION  RIGHTS  LOST  OR  DIMINISHED  BY REASON OF THE
   18  TERMINATION, THEN THE BREWER SHALL PAY THE BEER WHOLESALER A GOOD  FAITH
   19  ESTIMATE OF THE FAIR MARKET VALUE OF THE APPLICABLE DISTRIBUTION RIGHTS.
   20    (II) IF THE BEER WHOLESALER BEING TERMINATED UNDER SUBPARAGRAPH (I) OF
   21  THIS  PARAGRAPH  DISPUTES  THAT  THE PAYMENT MADE BY THE BREWER WAS LESS
   22  THAN THE FAIR MARKET VALUE OF THE DISTRIBUTION  RIGHTS,  THEN  THE  BEER
   23  WHOLESALER MAY WITHIN FORTY-FIVE DAYS OF TERMINATION SUBMIT THE QUESTION
   24  OF  FAIR  MARKET  VALUE  OF  THE  APPLICABLE DISTRIBUTION RIGHTS LOST OR

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD01630-01-1

       S. 1315                             2

    1  DIMINISHED BY REASON OF THE TERMINATION TO BINDING ARBITRATION BEFORE  A
    2  PANEL  OF  THREE  NEUTRAL  ARBITRATORS  APPOINTED IN ACCORDANCE WITH THE
    3  COMMERCIAL ARBITRATION RULES OF THE  AMERICAN  ARBITRATION  ASSOCIATION,
    4  WHICH  PANEL  SHALL  DETERMINE BY MAJORITY DECISION WHETHER THE BREWER'S
    5  PAYMENT MEETS THE REQUIREMENTS OF SUBPARAGRAPH (I) OF THIS PARAGRAPH. IF
    6  THE ARBITRATION PANEL RULES THAT THE PAYMENT MADE BY THE BREWER  TO  THE
    7  BEER  WHOLESALER UPON TERMINATION WAS LESS THAN THE FAIR MARKET VALUE OF
    8  DISTRIBUTION RIGHTS LOST OR DIMINISHED BY  REASON  OF  THE  TERMINATION,
    9  THEN  THE BREWER MUST PAY THE BEER WHOLESALER THE DIFFERENCE BETWEEN THE
   10  PAYMENT MADE TO THE BEER WHOLESALER AND THE DETERMINED FAIR MARKET VALUE
   11  PLUS INTEREST. IF THE ARBITRATION PANEL RULES THAT THE PAYMENT  MADE  BY
   12  THE  BREWER  TO  THE  BEER WHOLESALER UPON TERMINATION WAS MORE THAN THE
   13  FAIR MARKET VALUE OF DISTRIBUTION RIGHTS LOST OR DIMINISHED BY REASON OF
   14  THE TERMINATION, THEN THE  BEER  WHOLESALER  MUST  PAY  THE  BREWER  THE
   15  DIFFERENCE  BETWEEN  THE  PAYMENT  MADE  TO  THE BEER WHOLESALER AND THE
   16  DETERMINED FAIR MARKET VALUE PLUS INTEREST.  ALL  ARBITRATION  FEES  AND
   17  EXPENSES  SHALL  BE EQUALLY DIVIDED AMONG THE PARTIES TO THE ARBITRATION
   18  EXCEPT IF THE ARBITRATION PANEL DETERMINES  THAT  THE  BREWER'S  PAYMENT
   19  UPON TERMINATION WAS NOT A GOOD FAITH ESTIMATE OF THE FAIR MARKET VALUE,
   20  THEN  THE  PANEL  MAY AWARD UP TO ONE HUNDRED PERCENT OF THE ARBITRATION
   21  COSTS TO THE BREWER.
   22    (III) NOTWITHSTANDING ANY PROVISION OF THIS SECTION TO  THE  CONTRARY,
   23  FOR  PURPOSES OF THIS PARAGRAPH, THE TERM "BREWER" SHALL MEAN ANY PERSON
   24  OR ENTITY ENGAGED PRIMARILY IN BUSINESS AS A BREWER OR  MANUFACTURER  OF
   25  BEER.
   26    (IV) FOR THE PURPOSE OF THIS PARAGRAPH, THE TERM "ANNUAL VOLUME" SHALL
   27  MEAN:    (1)  THE  AGGREGATE NUMBER OF BARRELS OF BEER, UNDER TRADEMARKS
   28  OWNED BY THAT BREWERY AND BREWED,  DIRECTLY  OR  INDIRECTLY,  BY  OR  ON
   29  BEHALF  OF THE BREWER DURING THE MEASURING PERIOD, ON A WORLDWIDE BASIS,
   30  PLUS (2) THE AGGREGATE NUMBER OF BARRELS  OF  BEER  BREWED,  DURING  THE
   31  MEASURING  PERIOD, DIRECTLY OR INDIRECTLY, BY OR ON BEHALF OF ANY PERSON
   32  OR ENTITY WHICH, AT ANY TIME DURING THE  MEASURING  PERIOD,  CONTROLLED,
   33  WAS  CONTROLLED  BY  OR  WAS  UNDER COMMON CONTROL WITH THE BREWER, ON A
   34  WORLDWIDE BASIS. ANNUAL VOLUME  SHALL  NOT  INCLUDE  BEER  BREWED  UNDER
   35  CONTRACT  FOR ANY OTHER BREWER. THERE SHALL BE NO DOUBLE COUNTING OF THE
   36  SAME BARRELS OF BEER UNDER CLAUSES ONE AND TWO OF THIS SUBPARAGRAPH.
   37    (V) FOR THE PURPOSES OF THIS PARAGRAPH, THE  TERM  "MEASURING  PERIOD"
   38  SHALL  MEAN  THE  TWELVE MONTH CALENDAR PERIOD IMMEDIATELY PRECEDING THE
   39  DATE NOTICE OF TERMINATION, AS REQUIRED UNDER SUBPARAGRAPH (I)  OF  THIS
   40  PARAGRAPH, WAS GIVEN BY A BREWER TO THE BEER WHOLESALER.
   41    S  2. This act shall take effect on the first of January next succeed-
   42  ing the date on which it shall have become a law.