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Category archives for “Retailers”

California Grocers Association Challenges ABC Advisory on New Self-Checkout Ban

December 29th, 2011

On January 1, 2012, California Business and Professions Code Section 23394.7 goes into effect, which aims to regulate alcohol sales at self-checkout terminals. The controversial law provides that “no privileges under an off-sale license shall be exercised by the licensee at any customer-operated checkout stand located on the licensee’s physical premises.” The law has been opposed since its inception by grocery stores with self-checkout and has been supported by retail clerks labor unions, among other entities.

The California Alcoholic Beverage Control issued an Industry Advisory to explain the new law last week, and the California Grocers Association (“CGA”) just filed a petition contesting the terms of the Advisory. For example, the Industry Advisory provides in part, “it is clear that ‘customer-operated checkout stand’ means a checkout stand or station that is designated for operation by the customer.” In its petition in the California Third District Court of Appeal, the CGA argues that the ABC overstepped its regulatory authority by defining one of the law’s key provisions in the Advisory, rather than going through the formal rule-making process required by the California Administrative Procedure Act. The CGA also argues that the definition put forth by the ABC is inconsistent with the statute. The CGA has asked that the Advisory be set aside, or that its effect at least be delayed until the issue has been resolved. Check back for updates!

Spirits Tastings Approved In Tennessee

June 27th, 2011

Earlier this month, Tennessee became the 35th state to allow spirits tastings, with the passage of Senate Bill 1224, which will permit restaurants, bars, and liquor stores to offer limited alcohol sampling. The bill, which was signed into law on June 10thand is codified at Tennessee Code Annotated Section 57-3-404(h)(2), will allow spirits retailers to conduct tastings for “sales, education, and promotional purposes.” Similar to tasting laws in most other states, spirits wholesalers may not take part in the events, and are specifically precluded from directly or indirectly providing any “products, funding, labor, support or reimbursements to a retailer.” The Tennessee Alcoholic Beverage Commission will be establishing rules specifying how tastings must be conducted.

Tennessee is among a growing list of states that have authorized limited tastings since 2009, joining California, Maine, Michigan, New Jersey, Vermont, Virginia, and Washington.

Wine and Grocers

May 27th, 2011

Paper or plastic, Bordeaux or rosé? Two states, Tennessee and New York, currently have active bills aimed at permitting grocery stores to sell wine. Proponents of the bills argue the change will generate jobs and create new tax revenue by expanding the consumer base. Opponents argue that liquor stores in the states, which are small and locally owned by law, will suffer steep losses in revenue and possibly face layoffs. In Tennessee, it appears that the bill’s opponents have been more persuasive to date, with a vote on the measure postponed until the summer of 2012. The New York Bill has bipartisan support and is possibly up for a vote before the legislative session ends in late June. Similar bills have been defeated in New York by the liquor store lobby in the past. As a preemptive measure, the new bill includes incentives for liquor stores, including the right to own more than one store. Even the title of the bill, “the wine industry and liquor store development act” reflects the hope that the liquor store lobby can be appeased. Given the fiscal climate, one factor that may garner additional emboldened supporters this time around is the “changeover” fees potentially generated by the measure: $346.7 million in new revenue in the first year through franchise and license fees, excise taxes and sales taxes.

Still No Certiorari Decision from the Supreme Court on Wine Country Gift Baskets.com Case

February 28th, 2011

The pins and needles many in the alcoholic beverage industry were on this morning remain, as the Supreme Court’s orders list issued this morningwas silent on the certiorari decision for Wine Country Gift Baskets.com, et.al., v. John T. Steen, Jr., et.al.Cases are typically distributed among the Supreme Court Justices on Fridays for their conferences, during which they discuss whether or not to grant certiorari. Orders are then typically issued the following Monday. If a case that goes to conference on a Friday is not among the order list published on the following Monday, it usually means the case is being discussed among the Justices, with a few but not a majority, arguing for the grant of certiorari. However, once a case has gone to conference more than once without a subsequent order being issued, it tends to mean that the votes for the certiorari grant are not and will not be there. This is now the second time Wine County Gift Baskets.com, et.al., v. John T. Steen, Jr., et.al. has gone to conference (first on February 18, 2011 and second on February 25, 2011) and not been included in the following Monday’s orders. Thus, it is unlikely that the case will be granted certiorari, although not impossible. If the case is denied certiorari, the Fifth Circuit’s decision will stand. For a summary of the Fifth Circuit’s decision, see our prior post here.

California ABC Stakeholder Meeting

February 8th, 2011

Last week, partners Barry Strike and Kristen Techel attended the California ABC’s annual Stakeholder Meeting in Sacramento. The meeting covered everything from furlough status and budget to planned action items for 2011 and 2012. Stakeholder working groups were established to further investigate and provide recommendations to the new ABC Director, Jacob Appelsmith. The four groups will cover issues related to Third Party Providers, Brands and Trademarks and other Things of Value, Licensing Process and Industry Training, and Public Convenience or Necessity.

Interestingly, during the meeting Matt Botting, General Counsel to the ABC, indicated they had not seen many applications for the new tasting permit for off-sale retailers, which we originally discussed here and here. If you’re interested in learning more about or applying for the new instructional tasting license, please feel free to contact any of the attorneys here at Strike & Techel.

ABC VIOLATION ROUND-UP: Failure to Observe License Conditions

January 3rd, 2011

The California ABC actively enforces the alcoholic beverage laws of the state. We’ve been posting a series of “ABC Violation Round-Up” items discussing some of the violations we have seen in recent enforcement actions.

This week….. failure to observe license conditions.

The Violation: It is common for the ABC to issue a conditional license, particularly when issuing a retail license in an over-concentrated or high-crime area. A conditional license contains restrictions in excess of the rules typically applicable to a license of that type. For example, a conditional license might restrict operating hours, prohibit loitering, or restrict the sale of single cans of beer or malt liquor. If a conditional license is issued, the printed conditions must be available for review upon request by any ABC investigator and all listed conditions must be followed. Failure to comply with any condition is grounds for ABC discipline, which can include license revocation.

How to Avoid It: If you have a conditional license, make sure the printed conditions are kept in a secure place at the licensed premises and are available upon request by the ABC or other law enforcement personnel. Make sure the limitations are reviewed with all of your employees and that they understand the importance of compliance. Take particular time to review the conditions with employees who have worked at an alcoholic beverage licensee in the past. Since conditions are license-specific, they may have worked under different restrictions in their prior employment.

Petition to Remove Condition: If a conditional license has been in place for a year or more, and the grounds that led to imposition of a condition no longer exist, it may be possible to petition the ABC to have the condition removed from the license. Our firm routinely files Petitions to Remove Conditions and any of our attorneys can discuss the process with you.

Statute: California Business and Professions Code § 23804

Standard Penalty: 15 day suspension with 5 days stayed for one year. Penalties vary depending on the specific condition violated.

2011 New Year’s Resolutions: Employee Training on Sales to Minors

December 17th, 2010

If it’s not already there, move employee training to the top of the resolution list for 2011. In January, California’s Department of Alcoholic Beverage Control (“ABC”) will begin awarding grants to local law enforcement agencies to continue the implementation of Minor Decoy and Shoulder Tap programs. The operational period for the grants and this round of programs will run from February 1, 2011 through June 30, 2011. California law enforcement has been using the Minor Decoy program since the 1980s. For details on the Minor Decoy program, see our prior post here. The Shoulder Tap program is a newer program where an underage individual working with the police asks adults near alcohol retailers to purchase alcohol for the individual. The grants for this cycle of programming range from $2,500 to $10,000. While employee training is always important, given the likelihood of increased enforcement beginning in February 2011, now is a good time to review, revise, and update policies and make sure employees understand the consequences of selling to minors.

New Year’s Prediction: Geo Location and Alcohol Advertising

December 8th, 2010

We’ve posted about alcohol and social media before, but are revisiting the issue to discuss geo location and location-based advertising.

Websites and mobile apps like Foursquare, Shop Kick, and Facebook Places allow advertisers to identify the location of their audience members and then send an offer based on the consumer’s location. The marketing potential for alcoholic beverage suppliers and retailers is epic. Presume a social media savvy consumer, Joe, who checks in everywhere he goes and provides personal information across a variety of web platforms. Joe likes craft beer, and he likes to drink it in San Francisco’s Haight district. These geography-based applications will allow the brewers, bars and restaurants that Joe interacts with online and via the geo apps to know when Joe is in the Haight and send him a coupon for a discounted pint of craft beer, expiring in only a few hours. The opportunities for a personalized call to action are profound.

Though the technology is very cool, there are plentiful legal pitfalls. Leaving aside regulatory acronyms all mobile advertisers should heed (e.g. MMA, FCC, FTC, TCPA, CTIA), there are alcoholic beverage law issues with geo targeting. The rules on alcohol discounts vary by state and by the party selling the alcohol. How will these programs ensure that the underlying offers are legally compliant? How will the geo location sites identify users who are underage or have a chronic drinking problem? What about states where solicitation requires a license, or is prohibited? We expect to see alcohol advertising tiptoe into geo location in 2011, and expect to see regulators follow quickly.

Update on New Sampling Rules at Retail Stores in California

December 7th, 2010

A few weeks ago, we wrote about the new permit available to California off-premise consumption retailers that will allow suppliers to come to their premises and conduct instructional consumer tastings. The ABC just released an industry advisory with additional helpful information. The industry advisory is available here.

United States Supreme Court Asked to Hear Case on Retailer Direct Shipping

November 27th, 2010

A petition for writ of certiorari was filed with the United States Supreme Court earlier this week asking the court to determine

“Whether, notwithstanding Granholm v. Heald, 544 U.S. 460 (2005), the Twenty-first Amendment overrides the Commerce Clause and allows States to discriminate against out-of-state businesses in the sale of alcoholic beverages.”

In the seminal Granholm case, the Supreme Court ruled that states cannot permit in-state wineries to ship direct to consumers within the state, while prohibiting out of state wineries from doing the same. The question of whether the same rationale applies to retailers remains unresolved. The current petition to the Supreme Court is based on a dispute in Texas as to whether out-of-state alcoholic beverage retailers should be allowed to ship to Texas consumers under the same rules applied to in-state alcoholic beverage retailers. The case was originally brought in 2006 by Siesta Village Market and several other retainers against the Texas Alcoholic Beverage Commission. Siesta Village has dropped its appeal but K& L Wine Merchants and other notable retailers remain. A couple of large Texas distributors (Glazer’s and Republic) joined as intervenors in order to protect their position in the three-tier distribution system. The case was appealed to the Fifth Circuit on various issues and has now worked its way through to the final appeal – the U.S. Supreme Court. The Supreme Court accepts very few cases for review – typically accepting only those cases involving a substantial federal interest or a conflict between two or more Circuit Courts of Appeals. Statistically, the case stands little chance of being accepted, but the scope of the Granholm decision and its applicability to retailers (as opposed to only wineries) may be ripe for further judicial instruction. The State has until December 22 to file its response. The Court will decide whether or not to hear the case within a few months.

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Category archives for “Retailers”