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4 N.J.A.R. 248

Royal Liquor v. Brown-Forman
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Citation: 4 N.J.A.R. 248
Decision Date: 1982
Synopsis: Petitioners, licensed alcoholic beverage wholesalers, claim that re- spondents' refusal to continue to permit their distribution of Southern Comfort liquor in New Jersey is discriminatory and thus illegal under N.J.S.,4. 33:1-93.6 et seq. Respondents contend that as new owners of Southern Comfort by virute of a stock acquisition, they have the right to establish their own group of 'authorized' wholesale dis- tributors in New Jersey and were not required to continue the whole- salers who were previously authorized to distribute Southern Comfort in New Jersey. Since respondents claim that petitioners were never authorized by them as distributors, they argue that N.J.S.,4.33:1-93.6 et seq. does not apply. Respondent also argue that if the statute is construed to require them to continue to supply Southern Comfort brand liquor, then the statute is unconstitutional. The administrative law judge found that peiitioners were for many years licensed alcoholic beverage wholesalers who were authorized by the licensed importer, Southern Comfort Corporation of Missouri, to distribute Southern Comfort liquor in New Jersey. On July 20, 1978, respondent Brown-Forman, a Delaware corporate importer, licensed to distribute liquor in New Jersey, obtained an option to purchase the stock of Southern Comfort and on February 12, 1979, respondent exercised this option. Pursuant to the option, on March 2, 1979, the Missouri corporation's stock was transferred to a Brown-Forman subsidiary, International Spirits Corp., and on March 13, 1979, Inter- national Spirits changed its Delaware corporate name to Southern State of New Jersey 249 Comfort Corporation. In the same month, International Spirits re- ceived from the Missouri corporation assignments of trademarks, labels and all remaining assets. Subsequently, petitioners were notified by respondents that their distributorship was terminated, even though respondents intended to continue other New Jersey wholesalers as distributors. Petitioners then filed two separate discrimination petitions under N.J.S.A. 33:1-93.6 et seq. On review of the administrative law judge's denial of a motion for summary judgement, the Director of the Division of Alcoholic Beverage Control issued a special ruling in which he determined that the only material fact to be determined was whether the petitioners have the ability to pay for deliveries. The Director based this de- termination on a conclusion that a successor-in-interest to the fights or privileges of a brand, product or label, is, as far as continued distribution to wholesalers in the State, bound as a supplier to the 'authorizations' made by its predecessor. Thus, the Director con- cluded that for purposes of N.J.S.A. 33:1-93.6 et seq. the 'new' Southern Comfort Corporation stands in the position of the 'old' Southern Comfort Corporation with respect to authorized dis- tributors. On the basis of the Director's ruling and the respondents' assertion that inability to pay was not contested in this case, the administrative law judge determined that the only remaining question was whether the statute, as construed by the special ruling, is unconstitutional as applied. The judge concluded that while facial constitutional attacks upon statutes are generally precluded in an administrative hearing, the exhaustion of remedies doctrine requires that when a claim is made that a statute is unconstitutional as applied, factual and legal de- terminations rest in the firts instance with the administrative official designated to hear the matter. Having made this jurisdiction determination, the administrative law judge concluded that the statute, as applied, did not violate the due process, commerce or contract clauses of the Constitution. Accordingly, the administrative law judge ordered that respondents continue to sell Southern Comfort liquor to petitioners. Edward G. D'A!essandro, Esq., for petitioners Royal Liquor and Importers and Dealers' Liquor Co. (D'Alessandro, Sussman, Jacovino & Dowd, attorneys) Joseph M. Jacobs, Esq., for petitioner Joseph G. Smith Alvin Weiss, Esq., for respondents (Riker, Danzig, Scherer and Hyland, attorneys)
Rule(s) Cited: 10:82-4.1 10:90-2.4 
Statute(s) Cited: 33:1-93.6