324 Liquor Corp. v. McLaughlin

• Decision Date: 23 June 1983
• Citation: 464 N.Y.S.2d 355,119 Misc.2d 746
• Court: New York Supreme Court
• Parties: , 1983-2 Trade Cases P 65,569 In the Matter of the Application of 324 LIQUOR CORP., d/b/a Yorkshire Wine & Spirits, Petitioner, For a Review Pursuant to Article 78 of the Civil Practice Law and Rules, v. Edward J. McLAUGHLIN, Hugh B. Marius, Robert Doyle, Terrence R. Flynn and Frederick Pannozzo, Respondents.

Page 355

464 N.Y.S.2d 355

119 Misc.2d 746, 1983-2 Trade Cases P 65,569

In the Matter of the Application of 324 LIQUOR CORP., d/b/a

Yorkshire Wine & Spirits, Petitioner,

For a Review Pursuant to Article 78 of the Civil Practice

Law and Rules, v. Edward J. McLAUGHLIN, Hugh B. Marius, Robert Doyle, Terrence

R. Flynn and Frederick Pannozzo, Respondents.

Supreme Court, Special Term,

New York County, Part I.

June 23, 1983.

Seymour Howard, Jericho, for petitioner.

Robert Abrams, Atty. Gen., New York City, for respondents; Robert S. Hammer, Asst. Atty. Gen., New York City, of counsel.

ARTHUR E. BLYN, Justice:

In this article 78 proceeding, petitioner seeks to review and annual respondents' determination which after a hearing found it guilty of advertising and selling liquor at a price below the minimum retail price allowed by law and suspended its license for ten days and ordered its compliance bond forfeited.

At the hearing petitioner stipulated that it had advertised and sold the liquor as charged in respondents' specifications, but contended that the minimum resale prices relied upon by the State Liquor Authority were illegal. The trier of fact sustained the charges and the findings were confirmed by the Commissioner and the penalty imposed.

In this proceeding, petitioner, while admitting the facts of the sale, renews its challenge to the legality of the statute and regulations under which it was charged. Specifically, petitioner contends that (1) the statutory scheme contained in sections 101-b and 101-bb of the Alcoholic Beverage Control Law, which in effect requires wholesalers to establish minimum retail prices for brands of liquor and eliminates price competition among retailers, is invalid as a violation of the Sherman Anti-Trust Act; (2) in promulgating its Rule 16 which requires that the price per bottle must exceed the price per the case in which it is contained by $1.92 divided by the number of bottles in the case, the Authority exceeded its powers since it does not have the statutory power to compel wholesalers to add any amount to their prices; and (3) by issuing its Bulletin 471 which permitted wholesalers to "post-off" (i.e., reduce) the legal case price in any month without fully passing through the full post-off to the bottle price, the Authority exceeded its statutory powers by allowing wholesalers to offer quantity discounts in excess of those permitted by section 101-b and to fix the legal minimum of that intended by statute.

Petitioner's challenge to the State's pricing regulatory mechanism is, however, without merit, and its reliance on California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 misplaced. Section 101-b is a price-posting rather than a resale price maintenance statute such as was at issue in California Retail v. Midcal Aluminum, supra. (Battipaglia v. New York State Liquor Authority, 80 Civ. 5701 Thus, there is no conflict between that section and the Sherman Act (Id. at 6):

"requires that each wholesaler publish the prices at which it will sell its products to retailers, permits adjustments downward to meet competition, and mandates that it will maintain any prices for a 30-day period. The statute also requires that retailers purchase only liquor and wine sold in compliance with this system. In all other material respects, section 101-b is silent about retail sales". (Id. at 4.)

It is the State, not the wholesalers, which sets the price range at the lower levels of distribution (Id. at 5-6; Serlin Wine & Spirit Merchants, Inc. v. Healy, 512 F.Supp. 936 (D.Conn.)). Similarly, that retailers may not sell their products at a price below their "cost" (defined as the price to the retailer plus twelve percentum...