Miller Brands-Milwaukee, Inc. v. Case

EICH, C.J.

(dissenting). I agree with the majority that the affidavit supporting Miller's motion contains sufficient evidentiary facts, and that the case is ripe for declaratory judgment. I also agree that sec. 125.33(1)(a), Stats., is constitutional. My disagreement is with the majority's conclusion that Miller's activities as revealed by this record run afoul of the statute.

Considering the language of sec. 125.33(l)(a), Stats., in its entirety, I cannot accept the majority's conclusion that the phrase "thing of value" is plain and unambiguous. Were it so — were it as plain as the majority believes — almost any object of any size or nature, whether worth thousands or having the minimal value of a stick of gum or a matchbook, would, if given by a brewer or wholesaler to a retail customer, invoke the prohibitions and penalties of the statute. I believe such an interpretation does violence to the statute's language and purpose.

Looking to the statute itself, the language immediately preceding the phrase "or other thing of value," speaks of "furniture, fixtures, fittings, equipment [or] money," and the following language refers to guarantees of loans and fulfillment of the retailer's financial obligations.

The majority opinion, while concluding that the phrase is "unambiguous," does not undertake to state what it believes the phrase means. If purchasing a beverage — a beer, or perhaps a soda — for a retailer's customer is a thing of value to the retailer within the statute's purview, what about a stick of gum? A handful of peanuts? Given the title of the statute — it is stated to be a law placing restrictions on "dealings between brewers, wholesalers and retailers" — and its references to the former furnishing to the latter things such as furniture, equipment, money, relief from financial obligations or other forms of credit — leads me to conclude that, considered in context and in light of the purpose of the law as this court and others have described it, the phrase "thing of value" is reasonably capable of different interpretations. And many of those interpretations — including, in my opinion, the interpretation implemented by the majority in this case — have little to do with the evils the statute was enacted to counter.

Laws such as sec. 125.33(l)(a), Stats., exist to prevent "tied houses," which we have characterized as "an evil . . . formerly prevalent in the liquor industry," where "large liquor interests . . . exertfed] control over liquor retailers" to the extent of monopolizing them. State v. Black Steer Steak House, Inc., 102 Wis. 2d 534, 537, 307 N.W.2d 328, 330 (Ct. App. 1981). Tied-house laws "are aimed at preventing the integration of manufacturing, wholesale, warehouse, and retail outlets in the liquor industry," in order to avoid the anti-competitive, monopolistic effects of "concentrating] . . . liquor retailing in the hands of economically powerful [brewery and wholesaling] interests." Wis. Wine & Spirit Institute v. Ley, 141 Wis. 2d 958, 965, 416 N.W.2d 914, 917 (Ct. App. 1987). And they attempt to bar such monopolistic, anti-competitive practices by "keeping] the different levels of the liquor industry separate" and by prohibiting brewers and wholesalers from offering "financial inducement[s]" such as the extension of credit and other inducements which can "lead to monopolistic control." Black Steer Steak House, 102 Wis. 2d at 537, 307 N.W.2d at 330.

Tied-house laws are common in the United States. The Illinois Supreme Court, commenting on that state's version, discussed its purpose as follows:

[The statute] was intended to remedy a competitive abuse in the beer industry referred to as the "tied house." By the granting of gifts and loaning of money to retailers, distributors could effectively "tie" themselves to retailers to the point of excluding all competitors. This form of vertical integration between beer distributing and retailing allowed the distributor to exercise almost complete control over the retailers. T. Sharpenter, Inc. v. Liquor Control Com'n, 518 N.E.2d 128, 130-31 (Ill. 1987).

Given the purpose of tied-house laws, I agree with the analysis of Wisconsin's attorney general, who concluded in a 1979 opinion that the language of a predecessor statute containing the same language as sec. 125.33(1)(a), Stats., was "ambiguous as to the meaning of 'thing of value.' " 68 Op. Att'y Gen. 395, 396 (1979). The opinion goes on to quote an earlier opinion:

The object and intent of [the statute] is to prevent manufacturers and wholesalers from acquiring complete or partial control of specific class B retailers, directly by owning them or indirectly by creating financial or moral obligations. (Emphasis in original.)

Then, citing the "well-settled principle of statutory construction that statutes enacted as a legitimate exercise of the police power ought not be given a construction that is 'unnecessary to the furtherance of the main purpose of the statute,' " the attorney general noted that, with respect to the fact situation presented — a brewer's sponsorship of a bowling tournament in an establishment holding a Class B license — there was no indication of any "attempt by a brewer to buy or control a . . . retailer or to create a financial or moral obligation that would facilitate control by the brewer." Id. at 396. The attorney general concluded: "On the basis of the facts before me the benefit, if any, enjoyed by . . . retailers that participate in the bowling tournament, would be entirely too speculative and remote to constitute a violation of [the statute, and] the proposed promotion also lacks any of the evil that [the statute] was designed to control." Id. at 397.

Several courts have taken similar positions. In National Distributing Co. v. U.S. Treasury Dept., 626 F.2d 997, 1004 (D.C. Cir. 1980), the court considered whether the furnishing of wine to retailers below the wholesaler's cost was a "thing of value" within the meaning of a tied-house law. Concluding that it was not, the court first noted that that "primary purpose" of the law was to prevent "a form of vertical integration whereby wholesalers . . . might gain effective control of . . . independent retail outlets." It went on to state:

In the absence of any indication that [the] price cut had the purpose or effect of gaining control over retail outlets ... we doubt whether the Act can have any application.

We acknowledge that, taken by itself, the phrase "giving ... or selling . . . other thing[s] of value" is broad enough to include below-cost sales. But ordinary sales at or above cost must also be considered "giving ... or selling . . . other thing[s] of value": clearly an absurd result. . .. Applying ordinary principles of statutory construction, we must read the phrase ... in the light of the many specific enumerated examples in the text. Financing the license, property, or other capital assets of the retailer, or furnishing equipment, fixtures, signs, supplies, or advertising ... all involve a link or tie between the wholesaler or producer and the retailer. In contrast, a nondiscriminatory, unconditional low-priced sale such as in this case is a single, contained transaction; it involves no link or tie between the parties . . .. Id, at 1004 (emphasis in original; footnote omitted).

Other courts have similarly construed tied-house statutes in light of their purpose,^* and I find the reasoning of these cases and the attorney general's opinion persuasive. I have no quarrel with Wisconsin's tied-house law and I believe it may properly ban "trade spending" practices that have, or threaten to have, an anti-competitive or controlling effect on the retailer.

But, as the trial court noted, "the issue ... is not whether all forms of trade spending are permitted under sec. 125.33(l)(a), Stats., but [only] whether [Miller’s] particular type of periodic trade spending is permitted . . .." Like the trial court, I would answer that question in the affirmative.

Miller's actions here exhibit none of the evils the statute was designed to prevent. There is nothing in the record to indicate that Miller's activities created or tended to create any financial or moral obligation that could lead, directly or indirectly, to controlled or monopolized retail establishments.

To the contrary, Miller's spending has the obvious purpose of attempting to persuade customers' to sample its beers and, as I am sure Miller hopes, to switch their beer-drinking preferences to its brands. And while the customers are obviously encouraged to sample Miller's beers, the offer is not withdrawn if a customer chooses another brewer's product — or even a soft drink. I note, too, that Miller pays the same price for the beverages purchased as do the customers. It thus seems to me, as it did to the trial court, that "[t]his limited form of trade spending [appears to be] no more than a reasonable marketing device used to increase sales."

It may be that, because of their frequency or dollar volume or other factors not present here, practices similar to those Miller used in this case might be considered as tending or threatening to subject the retailer to control, or imposing some "moral obligation," or otherwise raising the dangers the tied-house law was properly enacted to prevent. But that case is not this case. I see no attempt on Miller's part to coerce or control retailers, or to create any financial or moral obligations that might open the door to such control. I would affirm the judgment.

* Hunter v. McKnight, 86 So. 2d 434 (Fla. 1956); Carling Brewing Co. v. Doyle Distributing Company, 353 N.E.2d 222 (Ill. App. Ct. 1976); Tom Boy, Inc. v. Quinn, 431 S.W.2d 221 (Mo. 1968); Burger Brewing Co. v. Thomas, 329 N.E.2d 693 (Ohio 1975); Dixie Distributors v. Lane, 211 S.W.2d 581 (Tex. Civ. App. 1948).