By Kevin McNally, VBWA Counsel
The second half of 2023 saw a couple of important decisions come out of our ABC legal system, one of which has at long last been resolved and the other is heading for the appeals courts.
Vinoshipper
The first, Zero Links Markets (aka, “Vinoshipper”) involved a California-based wine shipper whose business model ran afoul of ABC laws concerning direct-to-consumer shipping.
Vinoshipper was taking orders for wine from consumers via the internet and then directing various out-of-state wineries to ship the product directly to the Virginia consumer.
The problem was that only Vinoshipper was licensed by ABC as a wine shipper and not the wineries that were actually shipping the wine into Virginia.
In 2020, a hearing officer and the ABC Board found Vinoshipper in violation of Virginia law. Vinoshipper appealed the Board’s decision to the Richmond Circuit Court, which, in June 2022, issued an Order overturning the ABC Board.
ABC appealed the Circuit Court’s order to the Virginia Court of Appeals, and both the VBWA and VWWA filed a brief as amicus curiae (“friends of the court”) supporting the ABC. In August 2023 the Court of Appeals overturned the original Circuit Court decision and reinstated the finding of the ABC Board.
Vinoshipper petitioned the Virginia Supreme Court to review the case, but failed to timely file its Notice of Appeal with the Court of Appeals – a prerequisite for appealing to the Supreme Court. Because of that, the Virginia Supreme Court dismissed Vinoshipper’s appeal, finally bringing this three-year legal drama to a close. As a result, Vinoshipper will have to conform its business model to Virginia law or cease shipping wine to Virginia consumers.
What It Means for Wholesalers: This case is a victory for both ABC’s authority to enforce Virginia’s laws and regulations and for law-abiding industry members seeking a level playing field on which to compete.
Boston Beer/Hard Mtn Dew
The other legal drama coursing through the ABC legal system is the Boston Beer Hard Mtn Dew Beer Franchise Law case.
That case concerns Boston Beer’s appointment of Blue Cloud Distribution (a PepsiCo subsidiary) as the distributor of the Hard Mtn Dew brand in Virginia.
In November 2022, Boston Beer distributors Blue Ridge Beverage and Premium Distributors of Virginia filed a petition with the ABC alleging that Boston Beer was in violation of the Virginia Beer Franchise Act’s prohibition on having more than one distributor for its products in any single assigned territory. After conducting some discovery, the opposing parties both filed motions for summary judgment based upon agreed-upon stipulated facts.
Following oral arguments on the parties’ motions, the ABC administrative law judge held that Boston Beer was in violation of Virginia’s Franchise Act insofar as it had appointed more than one distributor for the brewery’s brands in the Blue Ridge and Premium territory.
The judge ordered the distribution agreement between Boston Beer and Blue Cloud distribution nullified. Boston Beer appealed the Initial Decision to the ABC Board which heard oral argument in early November 2023.
The ABC Board issued its decision 10 days later, upholding the original decision and order of the administrative law judge. Boston Beer has until the end of this December to seek an appeal of the ABC Board’s decision to the Richmond Circuit Court. Hopefully, this franchise case will not drag on for anywhere near as long as the Vinoshipper matter.
What It Means for Wholesalers: In any event, the ruling of the ABC Board firmly establishes that the plain language of Virginia’s “one distributor rule” applies to any and every brand of beer that a brewery chooses to distribute in the Commonwealth.
