New Virginia Law Helps Industry Members Receive Declaratory Rulings Before Costly Litigation

Virginia recently passed a law that will provide clarity to both brewers and distributors alike.   Below is a summary of the bill provided by Walter Marston of Marston & McNally who represents the Virginia Beer Wholesalers Association:

An amendment to the Virginia Beer Franchise Act effective July 1 will enable breweries and beer wholesalers to head off potentially expensive and harmful legal fights through a new process at Virginia ABC which will now allow for declaratory judgment decisions under the Virginia Beer Franchise Act.

House Bill 1587, sponsored by Northern Virginia Delegate David Albo, authorizes ABC to act on petitions from either breweries or beer wholesalers who are concerned that the other side is considering or threatening actions which will violate Virginia law if carried out.  The petition must be against a named party and the result of the proceeding will be binding.  The petitioner must make a good faith effort to resolve the dispute before filing the petition and a legal controversy must exist– no hypothetical advisory opinion are contemplated under this law.

The legislation perhaps could have eliminated some of the issues that were involved in the recent Chesbay/MillerCoors litigation if Virginia ABC had been able to rule in 2009 on VBWA complaints lodged against ABI and MillerCoors standard distribution contracts.   However, MillerCoors and ABI persuaded Virginia ABC that it lacked the authority to issue declaratory rulings under the Beer Franchise Act.  That problem is now resolved going forward.   The VBWA anticipates that the legislation might be useful to craft breweries that find themselves on uncertain legal ground when dealing with some beer distributors.