State Court Voids SLA Split Case Rule

In a decision earlier this month, State Supreme Court Judge Roger McDonough determined that the Liquor Authority’s regulation of split case fees exceeded the authority they’ve been given by the legislature making the rule null and void. The SLA regulation imposed a limit on split case fee of less than $8.00 per case after Empire and Southern failed to cooperate in an SLA inquiry seeking justification of split case fees of as much as $36.00 per case.

The wholesalers claimed in court that the legislature did not give the SLA the power to set prices, that the law only requires them to post a case price and a bottle price, and the legislature could prevent this if they didn’t want the wholesalers to act this way. These assertions by Empire and Southern were far less surprising than the judge’s view that they’re right. But the judge’s ruling is all that matters and we heard the judge – if the legislature doesn’t want the wholesalers to treat small business owners this way, they can do something about it. Or put another way – if we want this to stop, we have to get the legislature to take action.

So that’s what we’re doing. We’ve joined with other industry groups trying to break the liquor wholesalers’ stranglehold on the retail and manufacturing trades. Instead of clinging to outdated business models that only work when one tier exercises undue control over the others we need to change the model. Our surveys regularly find that the public can purchase products at retail from local liquor stores cheaper than our members can buy them at retail – usually 25% cheaper or greater. The combination of imposing split case fees and delivery charges on small operators and offering massive discounts on quantity purchases to large volume retailers has distorted the marketplace. Something needs to give or small restaurants, taverns, and bars won’t be able to survive.

And that’s where our proposal to allow on-premises retailers to make limited purchases from liquor stores comes in. Senator Skoufis and Assmeblyman Bronson sponsor a bill, S2853-A7540, that will permit restaurants, taverns, and bars to buy up to 12 bottles of wine and liquor each week from a liquor store. This will provide small operators a means to purchase products they don’t use in quantity without paying split case fees or delivery charges. It will also be a great relief to owners and managers when they run out of product on a Friday night and won’t get a delivery for several days.

You can help by speaking with your legislators, joining us for our lobby day in Albany on February 13th, or by talking to your local liquor store to make them aware of this opportunity. Let us know if you can join the fight!