Relating to wholesalers and brewers of beer.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI, AS FOLLOWS:

Section 1. As used in sections 1 to 14 of this act, the following terms mean:

(1) "Agreement", any contract, agreement, appointment or arrangement, whether express or implied, whether oral or written, for a definite or indefinite period between a brewer and a wholesaler pursuant to which a wholesaler has been granted the right to purchase, resell and distribute as wholesaler any brand or brands of beer offered by a brewer;

(2) "Beer", a beverage obtained by the alcoholic fermentation of an infusion or concoction of barley or other grain, malt, and hops in water and includes among other things, beer, ale, stout, lager beer and porter. The term beer shall include malt beverage products containing less than one-half of one percent of alcohol by volume and marketed for adult consumption as an alternative beverage to beer;

(3) "Brand", any word, name, group of letters, symbol or combination thereof that is adopted and used by a brewer to identify a specific beer product and to distinguish that beer product from another beer product;

(4) "Brand extension", any brand that incorporates all or a substantial part of the unique features of a preexisting brand of the same brewer and which relies on the goodwill associated with that preexisting brand;

(5) "Brewer", a person engaged in the business as a manufacturer of beer, a successor brewer as defined in this section, out-of-state solicitor of beer or a person who owns or controls the trademark, brand or name of beer, whose brands of beer are being distributed through duly licensed wholesalers in this state;

(6) "Good cause", failure by the wholesaler, without reasonable excuse or justification, to comply substantially with an essential, reasonable and commercially acceptable requirement imposed by the brewer under the terms of an agreement. The requirements may not be discriminating either by their terms or in the methods of their enforcement as compared with requirements imposed on other similarly situated wholesalers by the brewer. The requirements shall not be inconsistent with sections 1 to 14 of this act or in violation of any law or regulation. Good cause does not include the sale or purchase of a brewer. Good cause includes, but is not limited to, the following:

(a) Revocation of the wholesaler's license to sell beer in this state;

(b) The wholesaler's bankruptcy, dissolution or liquidation;

(c) A voluntary assignment of the wholesaler's assets for the benefit of creditors, or a similar disposition of substantially all of the assets of the wholesaler's business; or

(d) A failure by the wholesaler, without reasonable excuse or justification, to comply substantially with an essential, reasonable, and commercially acceptable requirement imposed by the brewer under the terms of an agreement, where the failure was discovered by the brewer not more than one year before the date on which the brewer gave notice to the wholesaler pursuant to section 3 of this act.

(7) "Good faith", honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade pursuant to section 400.2-103, RSMo, and consistent with the previous course of dealing between the wholesaler and brewer pursuant to section 400.1-205, RSMo;

(8) "Master distributor", a person who, in addition to being a wholesaler, acts in the same or similar capacity as a brewer or outside seller of one or more brands of beer to other wholesalers on a regular basis in the normal course of business;

(9) "Person", a natural person, corporation, partnership, limited liability company, trust, agency or other form of business enterprise. The term, person, also includes heirs, assigns, personal representatives and guardians;

(10) "Reasonable standards and qualifications", criteria applied by the brewer to similarly situated wholesalers during a period of twenty-four months prior to the proposed change in manager or successor manager of the wholesaler's business;

(11) "Successor brewer", any person who in any way obtains the rights that a brewer once had to manufacture or distribute a brand or brands of beer, whether by merger, purchase of corporate shares, purchase of assets or any other arrangement;

(12) "Territory" or "Sales territory", the geographic area of distribution and sale responsibility designated by an agreement between a wholesaler and brewer, as provided in sections 311.181 and 311.182, RSMo, for any brands of the brewer;

(13) "Wholesaler" or "beer wholesaler", any person licensed pursuant to sections 311.010 to 311.880, RSMo, to import or cause to be imported into the state or to purchase or cause to be purchased within this state, any beer for sale or resale to retailers or wholesalers, whether within or without this state.

Section 2. Notwithstanding the terms, provisions or conditions of any agreement, no brewer shall amend, cancel, terminate or refuse to continue to renew any agreement, or cause a wholesaler to resign from an agreement, unless the brewer does the following:

(1) Satisfies the notice and opportunity to cure requirements of section 3 of this act;

(2) Acts in good faith; and

(3) Has good cause for the cancellation, termination, nonrenewal, discontinuance or forced resignation.

Section 3. 1. Notwithstanding any provision to the contrary in any agreement between a brewer and a wholesaler, a brewer who intends to terminate, cancel, discontinue or refuse to renew any agreement with a wholesaler shall furnish written notice to that effect to the wholesaler not less than one hundred twenty days before the effective date of the intended action and shall provide the wholesaler with a bona fide opportunity to substantially cure any claimed deficiency within the one hundred twenty days.

2. The notice shall be sent by certified mail and shall contain at a minimum both the effective date or the intended action and a statement of the nature of the intended action containing the brewer's reasons therefor.

3. In no event shall a termination, cancellation, discontinuance or nonrenewal be effective until at least one hundred twenty days from the wholesaler's receipt of written notice pursuant to this section, unless the wholesaler has consented in writing to a shorter period.

4. Notwithstanding subsection 1 of section 2 of this act, a brewer may terminate or refuse to renew an agreement on not less than fifteen days' written notice to the wholesaler upon any of the following occurrences:

(1) The bankruptcy, dissolution or liquidation of the wholesaler;

(2) The voluntary assignment of the wholesaler's assets for the benefit of creditors or a similar disposition of substantially all of the assets of the wholesaler's business;

(3) The revocation of the wholesaler's license to sell beer in this state; or

(4) A felony conviction or a plea of guilty to a felony arising from a violation of a state or federal law relating to the wholesaler's business which materially and adversely affects the wholesaler's ability to continue in such business.

A notice under this subsection shall meet the requirements of subsection 2 of this section.

Section 4. No brewer shall do the following:

(1) Induce or coerce, or attempt to induce or coerce, any wholesaler to engage in any illegal act or course of conduct either by threatening to amend, modify, cancel, terminate or refuse to renew any agreement existing between the brewer and the wholesaler or by any other means;

(2) Require a wholesaler to assent to any unreasonable requirement, condition, understanding or term of an agreement prohibiting a wholesaler from selling the product of any other brewer or brewers;

(3) Fail to provide to each wholesaler of its brands a written contract which embodies the brewer's agreement with its wholesalers and conforms to the provisions of sections 1 to 14 of this act; or

(4) Require any wholesaler to accept delivery of any beer or any other item or commodity which shall not have been ordered by the wholesaler.

Section 5. 1. A brewer who assigns a brand extension to a wholesaler shall assign the brand extension to the wholesaler to whom the brewer granted the exclusive sales territory for the brand from which such brand extension resulted. This requirement shall not apply to assignments of brand extensions to wholesalers that were made by a brewer before the effective date of this section.

2. If prior to the effective date of this section a brewer assigned a brand extension to a wholesaler who was not the appointed wholesaler for the brand from which the brand extension was made, then any additional brand extension shall be assigned to the wholesaler who first had such brand.

Section 6. 1. No brewer shall unreasonably withhold or delay its approval of any assignment, sale or transfer of the stock of a wholesaler or all or any portion of a wholesaler's assets, wholesaler's voting stock, the voting stock of any parent corporation or the beneficial ownership or control of any other entity owning or controlling the wholesaler, including the wholesaler's rights and obligations under the terms of an agreement, whenever the person to be substituted meets reasonable standards imposed not only upon the wholesaler but upon all other wholesalers of that brewer of the same general class, taking into account the size and location of the sales territory and market to be served.

2. Upon the death of one of the partners of a partnership operating the business of a wholesaler, no brewer shall deny any surviving partner or partners of such partnership the right to become a successor-in-interest to the agreement between the brewer and such partnership, provided that any such survivor has been active in the management of the partnership or is otherwise capable of carrying on the business of the partnership.

3. Notwithstanding the provisions of subsections 1 and 2 of this section, upon the death of a wholesaler no brewer shall deny approval for any transfer of ownership to a surviving spouse or adult child of such wholesaler, provided however, that such subsequent transfers of such ownership by such surviving spouse or adult child shall thereafter be subject to the provisions of subsections 1 and 2 of this section.

Section 7. 1. Any brewer who without good cause cancels, terminates or fails to renew any agreement, or unlawfully denies approval of, or unreasonably withholds consent to any assignment, transfer or sale of a wholesaler's business assets or voting stock or other equity securities shall pay such wholesaler with whom it has an agreement pursuant to sections 1 to 14 of this act the fair market value of the wholesaler's business with relation to the affected brand or brands. In determining fair market value consideration shall be given to all elements of value including, but not limited to, goodwill and going concern value, future lost profits and add-on damages.

2. In the event that the brewer and the wholesaler are unable to mutually agree on whether or not good cause exists for cancellation pursuant to sections 1 to 14 of this act or on the reasonable compensation to be paid for the fair market value of the wholesaler's business the dispute may, at the option of the wholesaler, be submitted to a neutral arbitrator to be selected by the parties, or if they cannot agree, by the chief judge of the district court in which the wholesaler's principal place of business is located. Arbitration shall be conducted in accordance with the Missouri uniform arbitration act, sections 435.350 to 435.470, RSMo. Arbitration costs shall be paid

one-half by the wholesaler and one-half by the brewer. The award of the arbitrator shall be final and binding on the parties.

Section 8. 1. If a brewer fails to comply with sections 1 to 14 of this act, otherwise engages in conduct prohibited by sections 1 to 14 of this act, or if a brewer and wholesaler are not able to agree on reasonable compensation pursuant to section 7 of this act and the dispute is not submitted to arbitration, the aggrieved wholesaler may maintain a civil action in a court of competent jurisdiction in the county in which the wholesaler's principal place of business is located.

2. In any action pursuant to this section the court may grant any equitable relief the court determines necessary to remedy the effects of conduct found to exist which is prohibited by sections 1 to 14 of this act.

3. If the wholesaler prevails in any action pursuant to subsection 1 of this section such wholesaler shall be entitled to actual damages including the value of the wholesaler's business as specified in section 7 of this act, reasonable attorneys' fees and court costs.

Section 9. 1. No brewer by means of any term or condition of any agreement shall fix, maintain or establish the price at which the wholesaler sells any alcoholic beverage.

2. After a wholesaler has exceeded a resale price increase recommended by a brewer the brewer shall not raise the price it charges such wholesaler for the brewer's products within sixty days of the price increase or raise the price it charges the wholesaler in an amount proportionately larger than the amount the brewer raised the wholesaler's prices initially when compared to the resale price such brewer recommended to the wholesaler.

Section 10. A brewer shall not take retaliatory action against a wholesaler who files or manifests an intention to file a complaint of an alleged violation of state or federal law or regulation by the brewer with the appropriate state or federal authority. "Retaliatory action" includes, but is not limited to, any refusal without good cause to continue the agreement or a material reduction in the quality of service or quantity of products available to the wholesaler under the agreement.

Section 11. No brewer shall require or prohibit any change in the management or personnel of any wholesaler unless the current or potential management or personnel fails to meet reasonable qualifications and standards required by such brewer.

Section 12. No brewer shall require any wholesaler to waive compliance with any provision of sections 1 to 14 of this act. The provisions of sections 1 to 14 of this act shall not be construed to limit or prohibit good faith dispute settlements voluntarily entered into by the parties.

Section 13. Except for good cause, as defined in section 1 of this act, the purchase of a brewery, where the purchaser continues in business as a brewer, shall obligate the new brewer to all terms and conditions of the predecessor brewer's agreement in effect on the date of purchase. "Purchase", for the purposes of this section, includes but is not limited to, the sale of stock, sale of assets, merger, lease, transfer or consolidation.

Section 14. No brewer or wholesaler shall restrict or inhibit, directly or indirectly, the right of free association among brewers or wholesalers for any lawful purpose.