HP0892, LD 1258, item 1, An Act To Amend the Laws Governing the Relationship between Alcoholic Beverage Wholesalers and Certificate of Approval Holders

An Act To Amend the Laws Governing the Relationship between Alcoholic Beverage Wholesalers and Certificate of Approval Holders

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 28-A MRSA §1452, as enacted by PL 1987, c. 45, Pt. A, §4, is amended to read:

§ 1452. No inducement or coercion

1. Certificate of approval holder. No A certificate of approval holder may not:

A. Induce or coerce, or attempt to induce or coerce, any wholesale licensee to accept delivery of any liquor or any other commodity which that has not been ordered by the wholesale licensee;

B. Induce or coerce, or attempt to induce or coerce, any wholesale licensee to do any illegal act or thing by threatening to amend, cancel, terminate or refuse to renew any agreement existing between a certificate of approval holder and a wholesale licensee; or

C. Require a wholesale licensee to assent to any condition, stipulation or provision limiting the wholesale licensee in his the licensee's right to sell the product of any other certificate of approval holder anywhere in the State if the acquisition of the product of another certificate of approval holder does not materially impair the quality of service or quantity of sales of the existing brand or brands of the certificate of approval holder seeking to impose the condition, stipulation or provision . ;

D. Require that any dispute arising out of any agreement with a wholesale licensee be determined by the application of the laws of another jurisdiction or a federal court sitting in another state; or

E. Require that the wholesale licensee waive or otherwise agree to not enforce any provision in this chapter.

Sec. 2. 28-A MRSA §1454, sub-§1, as enacted by PL 1987, c. 45, Pt. A, §4, is amended to read:

1. Good cause. Notwithstanding the terms, provisions or conditions of any agreement, no a certificate of approval holder may not amend, cancel, terminate or refuse to continue or renew any agreement, or cause a wholesale licensee to resign from an agreement, unless good cause can be established or proven for amendment, termination, cancellation, nonrenewal, noncontinuation or causing a resignation. "Good cause" does not include the sale or purchase of a certificate of approval holder. "Good cause" includes, but is not limited to, the following:

A. Revocation of the wholesale licensee's license to do business in the State;

B. Bankruptcy or insolvency of the wholesale licensee;

C. Assignment for the benefit of creditors or similar disposition of the assets of the wholesale licensee; and

D. Failure by the wholesale licensee to substantially comply, without reasonable excuse or justification, with any reasonable and material requirement imposed upon him the licensee by the certificate of approval holder.

The burden is on the certificate of approval holder to establish good cause under this subsection.

Sec. 3. 28-A MRSA §1455, sub-§1, as enacted by PL 1987, c. 45, Pt. A, §4, is amended to read:

1. Written notice. Before any termination procedure initiated by the certificate of approval holder, the certificate of approval holder shall give the wholesale licensee written notice of any claimed deficiency existing in his the licensee's territory and shall give the wholesale licensee reasonable time to correct the claimed deficiency or deficiencies. If a claimed deficiency subject to a notice under this section is corrected within the reasonable period of time given by the notice to the wholesale licensee, the certificate of approval holder may not terminate an agreement with the wholesale licensee based upon that deficiency. After this reasonable time has elapsed and the deficiency has not been corrected, the certificate of approval holder shall provide the wholesale licensee at least 90 days prior written notice of any intent to amend, terminate, cancel or not renew any agreement. The notice must state all the reasons for the intended amendment, termination, cancellation or nonrenewal. The notice provisions of this section do not apply if the reason for the amendment, termination, cancellation or nonrenewal is:

A. The bankruptcy or insolvency of the wholesale licensee;

B. An assignment for the benefit of creditors or similar disposition of the assets of the wholesale licensee's business;

C. Revocation of the wholesale licensee's license; or

D. Conviction or a plea of guilty or no contest to a charge of violating a law relating to the business that materially affects the wholesale licensee's ability to remain in business.

Sec. 4. 28-A MRSA §1456, as enacted by PL 1987, c. 45, Pt. A, §4, is amended to read:

§ 1456. Assignment, transfer, merger or sale of business

No A certificate of approval holder may not unreasonably withhold consent to or interfere with any assignment, transfer , merger or sale of the wholesale licensee's business whenever if the wholesale licensee to be substituted meets the material and reasonable qualifications and standards required of its the certificate of approval holder's wholesale licensees.

Sec. 5. 28-A MRSA §1457, as enacted by PL 1987, c. 45, Pt. A, §4, is amended to read:

§ 1457. Compensation

1. Reasonable compensation. Any A certificate of approval holder which that amends, cancels, terminates or refuses to continue or renew any agreement, or causes a wholesale licensee to resign, unless for good cause shown, as defined in section 1454, from an agreement or unreasonably withholds consent to any assignment, transfer , merger or sale of a wholesale licensee's business, shall pay the wholesale licensee reasonable compensation for damages to the value of the wholesale licensee's business related to the terminated , including a diminishment in the overall business, as a result of the termination of a brand or brands under this subsection, including damages resulting from the certificate of approval holder's notice or publication of intent to assign, transfer or sell a brand. The value of the wholesale licensee's business includes inventory and other tangible assets and its good will.

2. Neutral arbitrator. If the certificate of approval holder and the wholesale licensee are unable to agree on the reasonable compensation to be paid for the value of the wholesale licensee's business, as defined in subsection 1, they shall submit the matter to a neutral arbitrator selected by the parties, or, if they cannot agree, by the Chief Justice of the Supreme Judicial Court. The costs of the arbitration shall must be paid 1/2 by the wholesale licensee and 1/2 by the certificate of approval holder or otherwise the arbitration proceeding shall be is governed by the Maine Uniform Arbitration Act.

3. Compensation must be agreed upon. Unless both parties consent, a certificate of approval holder may not amend, cancel, terminate or refuse to continue or renew any agreement, or cause a wholesale licensee to resign, until all issues of compensation under this section have been determined and the affected wholesale licensee is compensated.

4. Wholesale licensee to serve territory. Unless both parties consent, a wholesale licensee shall continue to serve a territory exclusively subject to an agreement in dispute under this section until the dispute is finally resolved under this section or section 1458.

5. Discontinuation of brand from territory. The provisions of this section do not preclude a certificate of approval holder from discontinuing a brand from a territory if that brand is not sold in the territory for a period of at least 5 years after the brand is discontinued.

Sec. 6. 28-A MRSA §1458, sub-§2, as enacted by PL 1987, c. 45, Pt. A, §4, is amended to read:

2. Equitable relief. The court may grant equitable relief necessary to remedy the effects of conduct which it that the court finds to exist and which is prohibited under this chapter, including, but not limited to, declaratory judgment and injunctive relief. An injunction under this subsection concerning section 1457 may not be issued if a brand that is subject to the dispute represents 5% or less of the distributor's gross revenue.

summary

This bill amends the liquor laws as they pertain to agreements between certificate of approval holders and wholesale licensees by adding prohibited coercive actions by certificate of approval holders and amending the laws surrounding the sale of a wholesale licensee's business, the termination of an agreement by a certificate of approval holder, compensation to a wholesale licensee for damages from an unlawful action by a certificate of approval holder and the injunctive relief provisions.

HP0892 LD 1258	Session - 126th Maine Legislature		LR 1349 Item 1
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