Bell’s Fighting Loveland/Reyes in VA Court

Dear Client:

On Tuesday, the Virginia Alcoholic Beverage Control Authority made a decision on the motion to dismiss and compel arbitration (filed by Bell’s) in the case between Bell’s and Loveland Distributing in Virginia. Ultimately, considering the nexus of the parties’ distribution agreements, as well as state and federal laws, the VA ABC moved to compel arbitration, and said it would issue parameters about said arbitration within 10 days.

Recall that an impasse in the transfer of Bell’s brands from Loveland to Reyes’ Premium Beverage during the former’s sale to the latter last year resulted in Bell’s pulling out first from Richmond, VA, and then the state [see CBD 02-11-2019]. Larry Bell contends the termination arose out of Loveland’s refusal to share key info of the sale, as per their contract. Loveland and Premium filed a complaint against the brewer with the VA ABC, alleging that Bell’s is in violation of the state’s franchise law.

The court considered both Loveland’s and Bell’s arguments, with whom the ABC both half agreed and disagreed with.

THE BACKGROUND: Bell’s former distributor in Virginia, Loveland, agreed to sell to Reyes’ Premium Distributors of Virginia in October last year [see BBD 10-10-2018].

But ultimately Bell’s had a problem with the transfer of its distribution rights to Premium, as in the course of Loveland’s attempt to provide “all reasonable evidence” of Premium’s qualifications, it denied Bell’s request for the actual schedules of the Asset Purchase Agreement, as the distributor said that contained “personal information.” (Documents do note that Loveland did provide “voluminous data” otherwise.)

At that point “the parties became intransigent,” per VA ABC document.

SOME HIGHLIGHTS. At the outset of its dispute’s nature, VA ABC says the issues at hand “challenges the panel to harmonize federal (Commerce and Supremacy Clauses and FAA) and Virginia interests (21st Amendment …).”

Also key: Bell’s had a written agreement with Loveland in 2015 for “distribution of specified Bell’s brands in named Virginia localities.”

Part of that agreement states that the laws of VA are incorporated as required, and “except as provided in Paragraph 11 shall supersede any conflicting provision of this agreement.”

Naturally Paragraph 11 considers “Dispute Resolution,” and says that all disputes arising from the agreement, including termination, “shall be decided by binding arbitration in accordance with the rules of the American Arbitration Association.”

So, back to the ABC’s rationale: The panel found no Commerce Clause issues at hand, and cited evidence that the Supreme Court “recently reiterated courts should respect parties agreements to resolve disputes by arbitration” — which of course the agreement required.

Further, it says the Beer Franchise Act’s Goals “require arbitration”: “In the present circumstances, every purpose of the BFA suggests some form of arbitration. … requiring compliance with terms voluntarily agreed upon promotes fair business relationships and honoring franchise agreements, particularly when, as here, Loveland has provided no reason to question the validity of the agreement.”

Notably, though, the ABC wasn’t totally buying either party’s positions, calling Loveland’s “misguided” when it tried to slough off the Agreement as though they had simply “inherited it” when they purchased the right to distribute the brewer’s brands. “The record belies any claim that Loveland was coerced or tricked into accepting the Agreement,” per document.

Then, too, the ABC found at least part of Bell’s position “untenable,” as the brewer argues “the FAA mandates the enforcing the arbitration agreement using the federal arbitration statutory procedure.” But, says the ABC: “The FAA contains statutory procedures but their use is not mandatory.”

IT’S NOT JUST BEER: CAMPARI EXPLORING NON-ALC IN EUROPE

It’s not just beer chasing non-alc.

As sister publication Wine & Spirits Daily reported yesterday, Campari chief Bob Kunze-Concewitz said on their Q1 earnings call that they’re exploring non-alc options, especially overseas.

Campari is revitalizing the Crodino brand, a non-alcoholic bitter aperitif, which tested “very positively” in Europe last year.

Bob teased that they’re also testing other non-alc ideas. “We’re also working on [new product development] in this area,” he said, adding, “I won’t say much more on this. I think it will be interesting to see what happens next year. I think we have a very strong competence in liquid development in the non-alcoholic area and a strong competence in aperitifs.”

Sounds like Crodino at least will just be relaunched in Europe. But given current health and wellness trends in the US, if all goes well in Europe, why not bring the non-alcs to the US market?   

This looks like a consumer trend with legs — at least, all the suppliers seem to think so.

USPS ALCOHOL BILL BACK IN CONGRESS

Jackie Speier is at it again. The California Congresswoman has introduced yet another bill to allow the US Postal Service to get in on the alcohol shipping action.

The bill, called the USPS Shipping Equity Act, would allow USPS to ship alcohol directly from licensed producers and retailers to legal drinking age consumers in states where direct-to-consumer shipping is permitted.  

It has a fair amount of support too, endorsed by WineAmerica, the Wine Institute, the American Craft Spirits Association, the US Association of Cider Makers, the Kentucky Distillers’ Association and the Distilled Spirits Council.

JACKIE’S CASE. “In most states, private carriers such as FedEx and UPS are already delivering alcoholic beverages. It makes no sense to create a competitive disadvantage for the USPS by barring them from these kinds of shipments, especially given the Postal Service’s dire financial condition,” Rep. Speier said in a release. “Congress needs to lift this ban for the benefit of beverage manufacturers, consumers, and our struggling postal service.”

As you may know, this isn’t the first time the congresswoman has submitted such legislation. In fact, it’s actually the fourth attempt, per FedSmith. As sister pub Wine & Spirits Daily notes, a similar bill was introduced in 2015, then again in 2017 [see WSD 10-26-2017], and in 2018 it was folded into a broader postal reform bill. But, each time, the bill didn’t make it very far. We’ll keep you posted on how it shakes out this time.

EDITOR’S NOTE:  UPDATE ON OUR READER APP

Good news. Our SchuPub reader app for iPhone and Android has been fixed and updated to now include imbedded links and images, just like the email and web versions. Download the app for free and start reading BBD and all our publications in one easy place on your phone or tablet.  Search app store for SchuPub.  

Until tomorrow,

Harry, Jenn, and Jordan

“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails” – William Arthur Ward

———- Sell Day Calendar ———-

Today’s Sell Day: 7

Sell days this month: 23

Sell days this month last year: 23

This month ends on a: Fri.

This month last year ended on a: Thurs.

YTD sell days Over/Under:  0