MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF'S
MOTION FOR JUDGMENT ON THE PLEADINGS
Douglas H. Wilkins Associate Justice, Superior Court
plaintiff Craft Beer Guild, LLC d/b/a Craft Brewers Guild
(" Craft" ) is appealing an adjudicatory decision,
dated February 12, 2016 (" Decision" ) of the
Alcoholic Beverages Control Commission (" ABCC" or
" Commission" ) under G.L.C. 30A, § 14. After
the ABCC filed the Administrative Record (A.R.) and a
Supplemental Administrative Record (S.A.R.) on September 22,
2016, Craft filed its " Plaintiff Craft Beer Guild, LLC
d/b/a Craft Brewers Guild's Motion for Judgment on the
Pleadings" (" Motion" ) on June 29, 2017,
pursuant to Superior Court Standing Order 1-96 as
amended. After a hearing on the Motion on
September 12, 2017, at which the Court heard from both
parties, the Court DENIES THE MOTION.
is a wholesaler of alcoholic beverages licensed under G.L.C.
138, § 18. It distributes about 200 craft beer brands
to, among others, retailers such as restaurants and bars
licensed under G.L.C. 138, § 12 for consumption of
alcohol. In October 2014, one of the owners of a
Crafts-distributed brand tweeted allegations that its brand
had been removed from the tap at Boston location because
Massachusetts suppliers and wholesalers were making unlawful
payments to retail licensees in exchange for those retailers
carrying Craft brands. The Commission began an investigation,
which lasted about seven months and resulted in a Violation
Violation Report led to administrative charges against Craft
for violation of the price discrimination law (G.L.C. 138,
§ 25A(a)) and of 204 Code Mass. Regs. § 2.04(1),
quoted below. The ABCC had not previously brought such a
proceeding against any licensee under § 2.08.
the proceedings, Craft stipulated to the facts in the
Violation Report. After adjudicatory hearings, the ABCC found
that Craft violated 204 CMR 2.08 and G.L.C. 138, § 25A.
Based on the stipulated facts, the Commission found that in
2013 and 2014, Craft negotiated and implemented a series of
schemes between itself, numerous retail licensees and certain
third-party management companies that managed the retail
licensees. Craft negotiated payment arrangements with the
third-party management companies in exchange for tap lines
committed to Craft brands at retail licensees that those
companies managed. Generally, the payments were either on the
basis of $1,000 to $2,000 per draft line payable every six
months or rebates paid every six months of $15 or $20 per
keg. The third-party management companies issued invoices to
Craft billing for fictitious services that were never
performed. Once invoiced, Craft would pay the fictitious
service fee to the management company. Craft paid at least
$120,000 during the pendency of this scheme.
rebates and payments were not reported to the Commission or
reported in the Boston Beverage Journal. They were not
available to all retail licensees. Even among those who
received rebates, not all licensees received the same level
of rebate or payment.
ABCC found two violations, for which it imposed the following
On the first violation, 204 C.M.R. 2.08, the Commission
suspends the license for fifteen (15) months, with ninety
(90) days to be served and the balance of 12 months held in
abeyance for two years provided no further violations of
Chapter 138 of Commission Regulations occur.
On the second violation, M.G.L.C. 138, § 25A, the
Commission suspends the license for fifteen (15) months with
ninety (90) days to be served and the balance of 12 months
held in abeyance for two years provided no further violations
of Chapter 138 or Commission Regulations occur. This
suspension is to run concurrently with the penalty imposed
for 204 C.M.R. 2.08.
avoided serving the suspension by paying a $2,623,466.70 fine
in lieu of suspension pursuant to G.L.C. 138, § 23. It
timely appealed the decision by filing a complaint in this
court on March 10, 2016.
Section 14(7) of G.L.C. 30A, this Court may reverse, remand,
or modify an agency decision if the substantial rights of any
party may have been prejudiced because the agency decision is
based on an error of law or on unlawful procedure, is
arbitrary and capricious or unwarranted by facts found by the
agency, or is unsupported by substantial evidence. G.L.C.
30A, § 14(7)(c)-(g). The appealing party bears the
burden of demonstrating the invalidity of the agency
decision. See Bagley v. Contributory Ret. Appeal
Bd., 397 Mass. 255, 258, 490 N.E.2d 1177 (1986).
first challenges the finding that it violated 204 Code Mass.
Regs. § 2.08. It argues that this finding was based on
two errors of law and lacked substantial evidence. The
substantial evidence argument depends heavily upon accepting
Craft's view of the law.
Craft argues that the Legislature withdrew any statutory
authority for that regulation when it repealed G.L.C. 138,
amended by St. 1946, § 304, section 25A contained two
clauses. The first, which remains in effect, prohibits price
discrimination. The second, later repealed, provided:
No licensee authorized under this chapter to sell alcoholic
beverages to wholesalers or retailers shall--
* * *
(b) Grant, directly or indirectly, any discount, rebate, free
goods, allowance or other inducement, except a discount not
in excess of two per centum for quantity of alcoholic
beverages except wines, or a discount not in excess of five
per centum for quantity of wines.
overlap between clause (b) and the regulation in question is
No licensee shall give or permit to be given money or any
other thing of substantial value in any effort to induce any
person to persuade or influence any other person to purchase,
or contract for the purchase of any particular brand or kind
of alcoholic beverages, or to persuade or influence any
person to refrain from purchasing, or contracting for the
purchase of any particular brand or kind of alcoholic
204 Code Mass. Regs. § 2.08. The ABCC enacted the
predecessor of this regulation, then known as Regulation 47,
at some time after enactment of St. 1946, c. 304, but before
1970. The Court agrees with Craft that it is logical to infer
that the ABCC relied upon § 25A to adopt this
regulation, although there is no reason to believe that it
relied solely upon paragraph (b).
terms, Regulation 47 had the capacity to serve as a tool to
implement the price discrimination prohibition of §
25A(a) if inducements were part of a price discrimination
scheme. This was consistent with the entire legislative
purpose in 1946. The emergency preamble to St. 1946, §
304 found that " [t]he practice of manufacturers and
wholesalers in granting discounts, rebates, allowances, free
goods and other inducements to favored licensees
contributes to a disorderly distribution of alcoholic
beverages" and that deferred operation of the amendment
would " delay the proper regulation thereunder of the
alcoholic beverage industry and be contrary to the interests
of temperance . . ." [emphasis added]. The concept of
inducements to favored licensees was therefore central to
section 25A as amended. There is no reason to believe that
this policy applied only to clause (b).
1970, c. 140, § 1, the Legislature struck out clause (b)
of G.L.C. 138, § 25A. It did not strike or amend clause
(a). The title of the 1970 amendment reads: " An act
relative to the filing of schedules of prices of alcoholic
beverages and repealing the law relative to discounts in the
sale of such beverages." The title of this act may
" act as an aid for the application of its test."
Anheuser-Busch, Inc. v. ABCC, 75 Mass.App.Ct. 203,
208, 912 N.E.2d 1034 (2009). In the title the words "
the law" refer to out clause (b) of G.L.C. 138, §
25A. The Legislature meant to repeal the rule against all
discounts beyond those expressly allowed in that clause.
There is no reason to believe that it intended to allow
discounts (or rebates) employed in a price discrimination
scheme. The decision not to repeal clause (a) of G.L.C. 138,
§ 25A proves that it did not. As amended, " Section
25A . . . " does not address the legality of discounts
based on sales between a wholesaler and a retailer." See
generally Van Munching Co. v. Alcoholic Beverages Control
Commission, 41 Mass.App.Ct. 308, 310-11, 670 N.E.2d 401
(1996) (quoting motion judge). " The subject of §
25A is discrimination . . ." Id. (no allegation
that the licensee in that case engaged in price
is apparently no other legislative history for the 1970 Act.
No statement by the Legislature or the ABCC addresses the
continued validity of 204 Code Mass. Regs. § 2.08. If
complete repeal of that regulation were intended, it is
strange that there is no record of any attempt to repeal it,
or even any request by regulated industry members to do so.
Silence may reflect an understanding by the public and
private sectors most involved at the time that the 1970 Act
did not require repealing the regulation. Nevertheless, the
repeal of former G.L.C. 138, § 25A(b) would be
meaningless if the ABCC could simply prohibit all discounts
by regulation. See generally Van Munching Co., 41
Mass.App.Ct. 308, 310-11, 670 N.E.2d 401 (1996). The Court
agrees with Craft that the 1970 Act therefore implicitly but
necessarily withdrew all authority for a broad regulation
that prohibited discounts generally.
however, that conclusion arises not from any express
legislative statement but only by implication. The scope of
this implied repeal necessarily requires consideration not
only of what was repealed, but also what was retained. In
asserting complete invalidation of the regulation, Craft
skips this logical step. Repeal does not necessarily mean
that the Legislature intended to preclude application of the
regulation as written to, for instance, § 25A(a) which
was not repealed. The Court must ask whether implied repeal
of the regulation was total or partial.
regulation is invalid on its face only if it cannot be
applied lawfully to any set of facts. Cf. Massachusetts
Coalition for the Homeless v. Secretary of the Executive
Office of Health & Human Servs., 422 Mass. 214,
226-27, 661 N.E.2d 1276 (1996) (distinction between validity
of a regulation on its face and as-applied). The question is
whether 204 Code Mass. Regs exceeded the ABCC's "
statutory authority" and therefore is " arbitrary
and capricious on [its] face in that [it] would by definition
be unrelated to the achievement of any statutory
goals." Mass. Fed'n of Teachers, AFT, AFL-CIO v.
Board of Education, 436 Mass. 763, 776, 767 N.E.2d 549
(2002) (citation omitted; emphasis added). More precisely,
the Court must determine whether 204 Code Mass. Regs. §
2.08 is related to achieving " any" statutory
goals, not just whether it served the repealed statutory
goals of former § 25A(b).
case, unlike Van Munching, the relevant facts
include ABCC's allegation and finding of price
discrimination under G.L.c. 138, § 25A(a). The
Legislature never intended to preclude regulatory enforcement
of the anti-discrimination prohibition. The 1970 Act left
§ 25A(a) intact. When applied in the context of price
discrimination, 204 Code Mass. Regs. § 2.08 therefore
does not conflict with the 1970 repeal. On the contrary, when
so applied, it regulates an area specifically preserved in
1970, even as the Legislature repealed clause (b) of the same
section. As will be seen, it answers some of Craft's
objections to the finding of a § 25A(a) violation. It
serves an important and meaningful purpose, for example, in
articulating what practices, by which licensees, qualify as
methods by which licensees might perpetrate price
discrimination. It makes clear that, for purposes of
determining discrimination, the retail price may reflect
discounts, deductions or credits. See, e.g., M.H. Gordon
& Son, Inc. v. Alcoholic Beverages Control, 371
Mass. 584, 591, 358 N.E.2d 778 (1976) (" 'Price'
means the actual amount paid to the supplier for goods
furnished to the buyer" ); G.L.C. 138, § 25D(d)
(calculation of price accounts for " all discounts . . .
and all rebates" ). Section 2.08 is therefore not
invalid in all its applications, even though it does lack any