Central Liquor Co. v. Oklahoma Alcoholic Beverage Control Bd., s. 57284

• Decision Date: 09 February 1982
• Docket Number: Nos. 57284,57394,s. 57284
• Citation: 640 P.2d 1351
• Parties: CENTRAL LIQUOR COMPANY, a partnership composed of Robert Z. Naifeh, Appellee, and Stuart S. Carey, d/b/a Metro Beverage Company, Appellee, v. OKLAHOMA ALCOHOLIC BEVERAGE CONTROL BOARD, composed of Joan Blankenship, Heber Finch, Winston Boydston, Randall Spears and Allen Morain as Members and Richard Crisp as Director of the Alcoholic Beverage Control Board, Appellants, and Joseph E. Seagrams and Sons, Inc., an Indiana corporation, Appellant, and Heublein, Inc., a corporation, Appellant, and Oklahoma Retail Liquor Association, Amicus Curiae, and Bacardi Imports, Inc., Amicus Curiae.
• Court: Oklahoma Supreme Court

Page 1351

640 P.2d 1351

1982 OK 16

CENTRAL LIQUOR COMPANY, a partnership composed of Robert Z.

Naifeh, Appellee, and Stuart S. Carey, d/b/a Metro Beverage Company, Appellee, v. OKLAHOMA ALCOHOLIC BEVERAGE CONTROL BOARD, composed of Joan

Blankenship, Heber Finch, Winston Boydston, Randall Spears

and Allen Morain as Members and Richard Crisp as Director of

the Alcoholic Beverage Control Board, Appellants,

and

Joseph E. Seagrams and Sons, Inc., an Indiana corporation, Appellant,

and

Heublein, Inc., a corporation, Appellant,

and

Oklahoma Retail Liquor Association, Amicus Curiae,

and

Bacardi Imports, Inc., Amicus Curiae.

Nos. 57284, 57394.

Supreme Court of Oklahoma.

Feb. 9, 1982.

Appeal from the District Court, Oklahoma County; Joe Cannon, Judge.

Appellants appeal the judgment of the trial court which enjoined the implementation of any procedures to determine the ultimate destination of intoxicants shipped to Oklahoma wholesalers and held that non-resident sellers are required to supply Oklahoma wholesalers every alcoholic beverage ordered at the lowest price charged anywhere in the United States, regardless of the destination of the product.

REVERSED.

Jeff L. Hartmann, Oklahoma City, for appellee Central Liquor Co.

Spradling, Alpern, Friot & Gum by Stephen P. Friot, Oklahoma City, for appellee Stuart S. Carey, d/b/a Metro Beverage Co.

Jan Eric Cartwright, Atty. Gen., Michael C. Conaway, and James B. Franks, Asst. Attys. Gen., Deputy Chief, Civ. Div., Oklahoma City, for appellants Oklahoma Alcoholic Beverage Control Board, Etc.

Crowe & Dunlevy by D. Kent Meyers, Oklahoma City, Pillsbury, Madison & Sutro by Parker A. Maddux, San Francisco, Cal., Fuller, Tubb & Pomeroy by Jerry Tubb, Oklahoma City, M. Jacqueline McCurdy, Vice-President-Regulatory Counsel, New York City, for appellant Joseph E. Seagram & Sons, Inc.

Hastie & Kirschner by John W. Swinford, Jr., Oklahoma City, Howrey & Simon by Ralph J. Savarese, Ray A. Jacobsen, Jr. and Mary C. Lyons, Washington, D. C., for appellant Heublein, Inc.

J. W. Doolin, Lawton, for amicus curiae Oklahoma Retail Liquor Assn.

Crowe & Dunlevy by Val R. Miller, Oklahoma City, for amicus curiae Bacardi Imports, Inc. HODGES, Justice.

The seminal question presented is whether non-resident sellers of intoxicants can be compelled to sell Oklahoma wholesalers substantial quantities of alcoholic beverages for resale in other states at prices controlled by the Oklahoma Statutes.

In 1978, appellees, Central Liquor Company, a partnership comprised of Robert Z. and Franklin Naifeh (Central) and Stuart Carey, d/b/a Metro Beverage Company (Metro), and other licensed wholesalers, began to purchase large quantities of popular brands of liquors from non-resident sellers, including Heublein, Inc. (Heublein), and Joseph E. Seagram & Sons, Inc. (Seagram), appellants, for resale outside the State of Oklahoma. From 1978 until 1980, although the market for intoxicants in Oklahoma has remained constant or increased gradually, total annual sales of wine and liquor increased 51% from 24.7 million to 37.2 million liters. Seventy percent of the increase consisted of products shipped for resale outside the State of Oklahoma. By 1980, 23% of all products sold by licensed Oklahoma liquor wholesalers were resold to wholesalers in other states, principally California, who were not franchised distributors of Heublein and Seagram products. Central received 41 million dollars in 1980 from out-of-state sales, which comprised 76% of all out-of-state sales; and during the last three months of 1980, Metro derived 3.6 million dollars from out-of-state sales. The effect of the "Oklahoma connection" is pellucidly dramatized by the shift in sales of products. The growth of sales through Oklahoma parallels the comparable decline in business by franchised California wholesalers.

There are no distilleries located in Oklahoma. Central, Metro, and other Oklahoma wholesalers obtain the intoxicating beverages which they sell from warehouses maintained by Heublein, Seagram, and other licensed non-resident sellers in other states. Seagram furnishes some of its brands from a warehouse in Oklahoma City, and Heublein products are sold from shipping points in Michigan and California. Products destined for the Oklahoma wholesalers' out-of-state customers are either filled from inventory in the wholesaler's warehouse or sent by direct shipment. Prior to March 5, 1981, 75-80% of Metro's out-of-state business was handled by direct shipment. Central also used direct shipment to conduct a substantial portion of its out-of-state business.

The legality of the out-of-state shipments was challenged, and Richard Crisp, the Director of the Oklahoma Alcoholic Beverage Control Board (ABC Board), sought an Attorney General's Opinion. The Attorney General held in Op.Atty.Gen. No. 81-57 (March 5, 1981) that neither the forced sale clause of the Okla.Const. art. 27, § 3 ¹ and 37 O.S.1971 § 533, ² nor the price affirmation statute, 37 O.S.1971 § 536.1, ³ required non-resident sellers to sell to Oklahoma wholesalers at the lowest price charged for that spirit anywhere in the United States if it were for consumption outside the state; nor was it required that non-resident sellers fill the entire quantity of each order submitted by an Oklahoma wholesaler if the product were intended for use, distribution or consumption outside the state.

Following the issuance of the Attorney General's Opinion, Central began routing all goods through its Oklahoma warehouse before transporting them to out-of-state customers. The ABC Board implemented the Attorney General's Opinion by permitting non-resident sellers to request information from each Oklahoma wholesaler concerning the amount of each purchase order to be distributed in Oklahoma. Central sought declaratory and injunctive relief, challenging the Attorney General's Opinion, and seeking to prevent the ABC Board's enforcement of the Opinion. Seagram, Heublein and Metro were permitted to intervene.

At the trial on the merits, the district court vacated the Attorney General's Opinion; enjoined the ABC Board from enforcing the Opinion or from the implementation of any procedures to determine the ultimate destination of wines or spirits shipped to Oklahoma wholesalers; determined that every non-resident seller is required to supply each Oklahoma wholesaler every alcoholic beverage ordered at the lowest price charged anywhere in the United States, regardless of the destination of the product; and held, pursuant to 37 O.S.Supp. 1978 § 521(e), ⁴ Oklahoma wholesalers were permitted to sell unlimited quantities of wine and spirits at Oklahoma prices to out-of-state customers.

Although several questions are urged on appeal, the dispositive issue is whether the trial court's conclusion, that every non-resident seller is required to supply each Oklahoma wholesaler every alcoholic beverage ordered at the lowest price charged anywhere in the United States, is warranted by the Oklahoma Constitution and Oklahoma Alcoholic Beverage Control Act, 37 O.S.1971 § 502, et seq.

The fundamental rule of statutory construction is to ascertain, and, if possible, give effect to the intention and purpose of the Legislature as expressed in the statute. ⁵ The Act does not provide any basis for the requirement that non-resident sellers of intoxicants sell unlimited quantities of alcoholic beverages for resale in...