California Beer Wholesalers Assn., Inc. v. Alcoholic Bev. etc. Appeals Bd

In California Beer Wholesalers Assn., Inc. v. Alcoholic Bev. etc. Appeals Bd. (1971) 5 Cal.3d 402, the Supreme Court made clear that all "firms operating at one level of distribution were to remain free from involvement in, or influence over, any other level." ( California Beer Wholesalers, supra, 5 Cal.3d at p. 408.) An ongoing relationship between a winegrower and a retailer such as that between ZD and Wally's could easily lead to the kind of influence of a supplier over a retailer the statutes were intended to prevent, for example, by causing the retailer to favor or "push" the products of the wholesaler who chooses to pay for advertising in the retailer's catalog. " 'The tied-house prohibition . . . exists primarily to remove the influence by the manufacturer over the wholesaler and the wholesaler over the retailer, a practice which might result in preference for the manufacturer's or wholesaler's product. . . .' 32 Ops.Cal.Atty.Gen. 75, 76 (1958)." (Id. at p. 408, fn 8.) The Department denied the application of a licensed off-sale retailer for a wholesale liquor license as being a violation of the tied-house provisions of section 25502. The Board reversed the Department's decision, applying the following reasoning: Section 25502 provides that no wholesaler of beer, wine or distilled spirits may hold an interest in a retailer's off-sale liquor license. But section 25506 by its terms only prohibits a retailer from holding any interest in the business of a "distilled spirits wholesaler, . . . manufacturer, . . . or manufacturer's agent." Therefore, under the doctrine of inclusio unius est exclusio alterius a retailer is free to acquire a wholesaler's beer and wine license. ( California Beer Wholesalers, supra, 5 Cal.3d at pp. 405-406.) The court disagreed. "The attempt to use section 25506 to nullify the general prohibition of section 25502 would also nullify the Legislature's basic objective of erecting a triple-tiered system of distribution and licensing and would thereby weaken the entire framework of the statutory structure." ( Id. at p. 411.)