SECTIONS 25000-25010 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 25000-25010

25000. (a) Each manufacturer, importer, and wholesaler of beer
shall file and thereafter maintain on file with the department, in
such form as the department may provide, a written schedule of
selling prices charged by the licensee for beer sold and distributed
by the licensee to customers in California, except that the transfer,
including the sale, of beer between wholesalers who sell the same
brand in package is permitted without filing the schedule of selling
prices, and the transfer, including the sale, of beer made under
contract from a contract beer manufacturer making the beer to a beer
manufacturer receiving the beer is permitted without filing the
schedule of selling prices. All prices filed shall be for immediate
delivery. Each manufacturer, importer, and wholesaler of beer shall
file a price schedule for each county in which his or her customers
have their premises, whether the price that is posted is f.o.b. or
delivered, or both. Different prices for different trading areas
within a county shall be based upon natural geographical differences
justifying the different prices, and shall not be established for
special customers. This section shall not affect or alter any
provisions of law concerning quantity discounts on beer.
(b) For purposes of this section, a "contract beer manufacturer"
is a beer manufacturer that does all of the following:
(1) Makes beer pursuant to a written contract with another beer
manufacturer, and neither entity has a controlling interest in the
other entity.
(2) Makes beer in accordance with a recipe that is a trade secret
of the beer manufacturer having its beer made under contract.
(3) Has no right to sell the beer to any other beer manufacturer,
importer, or wholesaler other than the beer manufacturer who
contracted for the beer.
(c) For purposes of this section, "beer manufacturer" includes any
holder of a beer manufacturer's license, any holder of an
out-of-state beer manufacturer's certificate, or any holder of a beer
and wine importer's general license.

25000.2. (a) For purposes of this section:
(1) "Acquire" means to purchase, receive, assume, obtain, or
otherwise come into possession or control of.
(2) "Affected distribution rights" means the distribution rights
to the product held by the existing beer wholesaler prior to the
acquisition of the right to manufacture, import, or distribute the
product by the successor beer manufacturer.
(3) "Beer manufacturer" includes any holder of a beer manufacturer'
s license, any holder of an out-of-state beer manufacturer's
certificate, or any holder of a beer and wine importer's general
license.
(4) "Cancel" means to terminate, reduce, not renew, not appoint or
reappoint, or cause any of the same.
(5) "Existing beer wholesaler" means a beer wholesaler that
distributes a product at the time a successor beer manufacturer
acquires the rights to manufacture, import, or distribute that
product.
(6) "Fair market value" includes all elements of value, including,
but not limited to, goodwill.
(7) "Product" means a brand or brands of beer, as defined by
Section 23006.
(8) "Successor beer manufacturer" means a beer manufacturer that
acquires the rights to manufacture, import, or distribute a product.
(9) "Successor beer manufacturer's designee" means one or more
distributors designated by the successor beer manufacturer to replace
the existing beer wholesaler, for all or part of the existing beer
wholesaler's territory, in the distribution of the product.
(b) (1) Any successor beer manufacturer that acquires the rights
to manufacture, import, or distribute a product, and who cancels any
of the existing beer wholesaler's rights to distribute the product,
shall comply with this section.
(2) A successor beer manufacturer's designee shall comply with
this section.
(c) (1) The successor beer manufacturer shall notify the existing
beer wholesaler of the successor beer manufacturer's intent to cancel
any of the existing beer wholesaler's rights to distribute the
product.
(2) The successor beer manufacturer shall mail the notice by
certified mail, return receipt requested, to the existing beer
wholesaler. The successor beer manufacturer shall include in the
notice the name, address, and telephone number of the successor beer
manufacturer's designee or designees.
(d) The successor beer manufacturer's designee shall negotiate
with the existing beer wholesaler to determine the fair market value
of the affected distribution rights and, if the existing beer
wholesaler and the successor beer manufacturer's designee agree to
the fair market value of the affected distribution rights, shall
compensate the existing beer wholesaler in the agreed amount. The
successor beer manufacturer's designee and the existing beer
wholesaler shall negotiate in good faith.
(e) The existing beer wholesaler shall continue to distribute the
product to at least the same extent that it distributed the product
immediately before the successor beer manufacturer acquired rights to
the product until receipt of the payment of the compensation agreed
to under subdivision (d) is made or is awarded under subdivision (f).
The successor beer manufacturer and the existing beer wholesaler
shall act in good faith regarding the ongoing supply and distribution
of the product.
(f) If the successor beer manufacturer's designee and the existing
beer wholesaler are unable to mutually agree on the fair market
value of the affected distribution rights within 30 days of the
existing beer wholesaler's receipt of the successor beer manufacturer'
s notice pursuant to subdivision (c), the successor beer manufacturer'
s designee or the existing beer wholesaler shall initiate arbitration
against each other to determine the issue of compensation for the
fair market value of the affected distribution rights no later than
40 days after the existing beer wholesaler's receipt of the successor
beer manufacturer's notice pursuant to subdivision (c). Upon
submission to arbitration, the arbitration shall be the means of
determining compensation to the existing beer wholesaler for the fair
market value of the affected distribution rights, and the fair
market value of the affected distribution rights shall be the purpose
of the arbitration unless the parties agree otherwise.
(1) An arbitration held under this subdivision shall be held in
California through a private arbitration services provider with at
least three offices in California and a statewide roster of at least
70 neutral arbitrators, of which at least 30 have prior experience as
a sole arbitrator in franchise, distribution, or related business
litigation.
(2) The direct costs of the arbitration, including any fees
charged by the arbitrator, shall be borne equally by the parties
engaged in the arbitration. All other costs shall be paid by the
party incurring them.
(3) The parties shall mutually agree on an arbitrator. If the
parties cannot agree on the arbitrator, the arbitration provider
shall select an impartial arbitrator.
(4) (A) No later than 20 days after receipt of a notification to
arbitrate, the parties shall complete an initial exchange of all
nonprivileged documents and other information relevant to the fair
market value of the affected distribution rights in their possession
and control, including, without limitation, copies of all documents
and the names of individuals who may be called to testify at the
arbitration hearing. No later than 45 days after receipt of
notification to arbitrate, the parties shall complete an exchange of
the names of any experts who may be called to testify at the
arbitration hearing, together with each expert's report that may be
introduced at the arbitration hearing.
(B) The arbitrator may modify the requirements of subparagraph (A)
on a showing of good cause. The arbitrator shall permit third-party
discovery and additional discovery between beer wholesalers,
including depositions, which the arbitrator finds appropriate for a
period of time not to exceed 90 days after receipt of a notification
to arbitrate. No discovery shall be permitted against a beer
manufacturer.
(5) The decision of the arbitrator shall be final and binding on
the parties unless notice of appeal is filed, within 10 business days
after service of the arbitration award, with the superior court of
the county in which the hearing was held. Upon filing of the appeal,
the court shall review the arbitration award for errors of fact or
law by determining whether the award is supported by the sufficiency
of the evidence presented at the arbitration. This subdivision shall
further permit any other appeal or review that is authorized by the
California Arbitration Act (Title 9 (commencing with Section 1280) of
Part 3 of the Code of Civil Procedure).
(6) The arbitrator's award shall be monetary only and shall not
enjoin or compel conduct.
(7) The arbitration hearing shall conclude not more than 180 days
after receipt of a notification to arbitrate, unless the time period
is extended by mutual agreement of the parties or by the arbitrator.
(8) The arbitrator shall render a decision not later than 15 days
after the conclusion of the arbitration unless this time period is
extended by mutual agreement of the parties or by the arbitrator.
(9) A party who fails to participate in the arbitration hearings
waives all rights the party would have had in the arbitration and is
considered to have consented to the determination of the arbitrator.
(10) The Legislature finds and declares that several unique
factors in combination warrant the Legislature authorizing limited
mandatory arbitration between an existing beer wholesaler and a
successor beer manufacturer's designee solely to determine the issue
of compensation for the fair market value of the affected
distribution rights:
(A) On the issue of the fair market value of the affected
distribution rights, the parties are sophisticated and in an equal
position in their knowledge of this legal issue and understand the
law and their legal rights, including their jury trial rights.
(B) The parties desire a mandatory arbitration provision to
resolve the question of compensation for the fair market value of the
affected distribution rights if the parties are not able to reach a
mutual settlement so that product distribution can be continued in an
orderly manner and the determination of compensation can be made in
a timely manner.
(C) The state's regulatory interest in maintaining orderly markets
for the safe and efficient transportation, distribution, and sale of
beer within the state warrants the statutory authorization for
mandatory arbitration as provided in this section.
(g) If the existing beer wholesaler does not receive payment of
the compensation under subdivision (d) or (f) not later than 10
business days after the date of the settlement or service of the
arbitration award, and if there is no appeal or review filed under
paragraph (5) of subdivision (f), the existing beer wholesaler shall
remain the distributor of the product in the existing beer wholesaler'
s territory to at least the same extent that the existing beer
wholesaler distributed the product immediately before the successor
beer manufacturer acquired rights to the product, and the existing
beer wholesaler is not entitled to the settlement or arbitration
award.
(h) Nothing in this section shall be construed to limit or
prohibit good faith settlements voluntarily entered into by the
parties subsequent to the successor beer manufacturer's notice
pursuant to subdivision (c).

25000.5. (a) Every beer manufacturer, whether located within or
without the state, who sells and distributes beer in this state shall
designate territorial limits in the state within which the brands of
beer manufactured by him may be sold by wholesalers of beer to
customers.
(b) A wholesaler of beer shall not sell any brand of beer unless
the following conditions are met:
(1) The wholesaler has first entered into a written agreement,
with the manufacturer of that brand, which sets forth the territorial
limits within which the brand shall be distributed by the
wholesaler.
(2) A copy of the agreement, and any amendments thereto, has been
filed with the department.

25000.6. (a) A provision in an agreement between a beer
manufacturer and a beer wholesaler for the sale and distribution of
beer in this state, which restricts venue to a forum outside this
state, is void with respect to any claim arising under or relating to
the agreement involving a beer wholesaler operating within this
state.
(b) This section shall apply to any transaction or conduct
pursuant to an agreement described in subdivision (a) on or after the
effective date of this section.
(c) For purposes of the section, "beer manufacturer" includes any
holder of a beer manufacturer's license, any holder of an
out-of-state beer manufacturer's certificate, or any holder of a beer
and wine importer's general license.

25000.7. (a) Notwithstanding the provisions of any agreement for
the sale or distribution of beer between a beer manufacturer and beer
wholesaler, no sale or distribution agreement shall be terminated
solely for a beer wholesaler's failure to meet a sales goal or quota
that is not commercially reasonable under the prevailing market
conditions.
(b) For purposes of this section, "beer manufacturer" includes any
holder of a beer manufacturer's license, any holder of an
out-of-state beer manufacturer's certificate, or any holder of a beer
and wine importer's general license.

25000.9. (a) Any beer manufacturer who unreasonably withholds
consent or unreasonably denies approval of a sale, transfer, or
assignment of any ownership interest in a beer wholesaler's business
with respect to that manufacturer's brand or brands, shall be liable
in damages to the beer wholesaler. Recoverable damages under this
section shall not exceed the compensatory damages sustained by the
wholesaler and the wholesaler's costs of suit. The fair market value
of the beer wholesaler's business shall include, but is not limited
to, its goodwill, if any.
(b) If a beer wholesaler has been paid a consideration by a
successor wholesaler for the sale, transfer, or assignment of the
beer wholesaler's interest in the sale or distribution of the
affected brand or brands, the beer manufacturer shall be liable only
for compensatory damages in an amount reflecting the difference in
the amount already paid to the beer wholesaler, and the fair market
value of the beer wholesaler's business with respect to the affected
brand or brands.
(c) For purposes of this section, "beer manufacturer" includes any
holder of a beer manufacturer's license, any holder of an
out-of-state beer manufacturer's certificate, or any holder of a beer
and wine importer's general license.

25001. The schedule of prices filed may be changed or modified from
time to time by the licensee filing it by filing with the department
either a new and complete schedule of prices or an amendment thereto
of changed or modified prices, as the department may by rule
require.

25002. The first schedule of prices filed by a licensee shall be
effective immediately upon filing, but an amendatory schedule or
amendments to a prior filed schedule is not effective until ten (10)
days after the filing date thereof, except that if any licensee has
filed a new schedule or amendments to a prior filed schedule to meet
lower posted and filed competing prices in a trade area, and the
prices thus posted are not lower than the competing prices sought to
be met, the new schedule or amendments shall go into effect
immediately if the competing prices are already effective, or at the
same time as the competing prices become effective.

25003. Filed price schedules are subject to public inspection only
after they take effect. Each filing licensee shall retain in the
licensed premises a copy of his or her effective posted and filed
schedule.

25004. Upon the filing of an original schedule of prices and after
the effective date of any schedule of amendatory prices, all prices
therein stated shall be strictly adhered to by the filing licensee,
and any departure or variance therefrom by a licensee is a
misdemeanor, except that the transfer of beer between wholesalers who
sell the same brand in package is permitted without filing the
schedule of selling prices. Each sale or transaction involving a
violation of posted prices under this chapter is but a single offense
or violation of this chapter regardless of the number of articles
covered by the sale or transaction.

25005. Any director, officer, agent, or employee of any licensee
who knowingly assists or aids in the violation of this chapter or any
effective posted price or any rule of the department passed to carry
out the provisions of this chapter is guilty of the violation
equally with the licensee.

25006. The department may adopt such rules, including but not
limited to rules respecting beer price posting, as will foster and
encourage the orderly wholesale marketing and wholesale distribution
of beer, but no such action shall be taken by the department except
after public hearing and ten (10) days notice to all licensed
manufacturers of beer in California of the time and place of the
hearing and of the character of the action intended to be taken by
the department.

25007. Except as provided in Section 25000.5, no manufacturer,
importer, or wholesaler mentioned in this chapter is prohibited the
right of choice of customers.

25008. (a) Any trade association having as members licensed beer
manufacturers or licensed beer wholesalers representing more than
half of the volume of beer sold in California for three months prior
to the date of a filing of any suit authorized in this chapter may
maintain an action to enjoin a continuance of any act or acts in
violation of this chapter or any rule adopted pursuant thereto and,
if injured thereby, for the recovery of damages. If in the action the
court finds the defendant is violating or has violated any of the
provisions of this chapter or any rule adopted pursuant thereto, the
court shall enjoin the defendant from a continuance or further
violation thereof. It shall not be necessary that actual damages to
the plaintiff be alleged or proved in the action, and proof of a
violation of this chapter or any rule adopted pursuant thereto shall
be presumptive evidence of an intention to continue to violate this
chapter or any such rule.
(b) Any trade association having as members licensed beer
manufacturers or licensed beer wholesalers representing more than
half of the volume of beer sold in California for three months prior
to the date of a filing of a petition to intervene shall, upon the
filing of the petition, be permitted to intervene as a party in any
proceeding, whether before the department, any other administrative
agency, or any court, which involves, in whole or part, the validity
of any portion of the Alcoholic Beverage Control Act or of any rule
adopted pursuant thereto. Intervention shall be permitted, upon
petition, at any time before a final determination or adjudication
has been rendered in the proceeding. In the case of an adjudicatory
proceeding, an intervening trade association shall have the same
right to participate in discovery and trial as any other party.

25009. Any defendant in any action brought under this chapter or
any person who may be a witness therein under Title 4 (commencing
with Section 2016.010) of Part 4 of the Code of Civil Procedure or
Section 776 of the Evidence Code, and the books and records of the
defendant or witness, may be brought into court and the books and
records may be introduced by reference into evidence, but no
information so obtained may be used against the defendant or the
witness as a basis for a misdemeanor prosecution under this chapter.

25010. The department shall not suspend or revoke the license of
any licensee for a violation of the provisions of this chapter or a
rule adopted pursuant thereto unless he has committed, within a
period of one year, at least three separate violations of the
provisions of this chapter or of any rule adopted pursuant thereto,
and the violations have been proved by any of the following methods:
(a) A conviction for misdemeanor.
(b) A judgment in a civil suit for injunction as provided in this
chapter.
(c) A finding of the department, if a hearing is held in
accordance with Chapters 7 and 8 of this division.