Craft Beer to Appeal $2.6 Million Fine

Massachusetts beer wholesaler Craft Beer Guild announced that it would appeal a judge’s order that upheld a $2.6 million fine for breaking state laws prohibiting unfair trade practices and illegal “pay-to-play” activities.

Suffolk Superior Court Judge Douglas H. Wilkins denied a plea for relief from Craft Beer Guild, a Sheehan Family Companies subsidiary.

The case stems from an investigation into the wholesaler by the Massachusetts Alcoholic Beverages Control Commission (ABCC), which found that Craft Beer Guild had “engaged in a pervasive illegal enterprise involving numerous retailers and corporations that spanned at least five years.”

The ABCC hit Craft Beer Guild with a 90-day license suspension, but later agreed to a $2.6 million fine — the largest ever imposed on any Massachusetts alcoholic beverage license holder — in lieu of suspension. However, 10 days later, the company asked a Massachusetts Superior Court to determine that “the penalty, including the fine, was unlawful and require it to be reduced, refunded or, alternatively, recalculated and reduced.”

The case will now move forward on appeal.

As reported by the website, Brewbound, a different judge tossed out a lawsuit filed last November by beer importer Shelton Brothers against Craft Brewers Guild alleging the Everett, Mass.-based wholesaler’s “unfair and illegal” practices cost its company $1.7 million in potential sales.

Shelton Brothers had been seeking damages as well as the ability to sell its products through another wholesaler. However, Superior Court Judge John S. Ferrara ruled Wednesday that the statute of limitations on the importer’s claims — dating back to 2011 and earlier — had expired. The judge also ruled that the ABCC should decide whether Shelton Brothers can break its distribution deal with Craft Beer Guild.

Shelton Brothers had argued that its relationship with Craft Beer Guild, which started in 2009, began to sour in 2011 as sales via the wholesaler were in “steep decline” due to “discriminatory pricing” of Shelton’s products. Among Shelton’s claims against Craft Beer Guild were that the wholesaler priced the importer’s brands higher while paying bars to stock competing brands and the company reneged on a promise to dedicate salespeople to its products.

In a statement released to the media, Craft Beer Guild said it was “pleased with the Superior Court’s decision in the Shelton Brothers, Inc. vs Craft Beer Guild, LLC to dismiss on all counts of Shelton’s claims.”

An attorney for Shelton Brothers told the Boston Globe that the company would appeal the decision.

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