M.S. WALKER LOSES EPIC 25E BATTLE WITH CONSTELLATION BRANDS AT ABCC

Law Offices of John P. Connell, P.C.: On February 11, 2016, the ABCC rendered its Memorandum And Order On Respondent’s Motion For Summary Judgment in the long-running litigation between M.S. Walker, Inc. and Constellation Brands, Inc., which seemingly has ended at the ABCC, anyway, M.S. Walker’s attempt to retain continued shipments of certain wine brands pursuant to Massachusetts General Law, Ch. 138, Sec. 25E. To read the full decision, click here.

In summary, however, back in 2012, M.S. Walker, a Massachusetts liquor wholesaler, filed a Petition pursuant to Section 25E with the ABCC alleging that Constellation Brands, a holder of an-out-state Certificate of Compliance manufacturer’s license, had wrongfully refused to fulfill its requests to purchase Mark West wine brands (the “Brands”). Constellation had purchased the Brands from its previous owner in 2012, but while Constellation assumed some of the seller’s contracts, it did not assume the liabilities of any of the seller’s distribution contracts, including the seller’s distribution arrangements with M.S. Walker. Because, however, Constellation also almost simultaneously entered into a separate contract with a principal of the seller of the Brands for that principal to store, blend and bottle the Brands for Constellation, M.S. Walker claimed there was a continuing affiliation between the seller and the buyer of the Brands, and therefore Constellation should be held to the same 25E requirements that would have required the seller to continue shipment of the Brands had no sale taken place.

In general, the 25E protections afforded wholesalers in Massachusetts cease to exist if a manufacturer of a particular brand sells that brand to another manufacturer; provided that transaction is indeed an “arms length” transaction. If one manufacturer seeks to evade the requirements of Section 25E so as to replace a distributor in Massachusetts, and enters into a “sale” of the brands with a new manufacturer for the “discrete purpose” of retaining control over the brands, Massachusetts law will imply “successor liability” to the new manufacturer and require that manufacturer to assume the liabilities of the former manufacturer under Section 25E. See Brown-Forman vs. ABCC, 65 Mass. App. Ct. 498 (2006).

In this case, M.S. Walker argued “successor liability” on the part of Constellation but came up short. This particular case generated many lengthy ABCC decisions resolving a myriad of discovery disputes between the parties and the production of thousands of documents over almost four years of hotly contested issues. M.S. Walker can now either seek reconsideration of the ABCC’s decision or it can seek to have the matter heard in Superior Court, where this dispute may continue to rage on for years to come.

© Law Offices of John P. Connell, P.C.

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