State Court of Appeals, Division I delivers multi-year lawsuit win dealing with liquor price regulations

State Court of Appeals, Division I delivers multi-year lawsuit win dealing with liquor price regulations https://wahospitality.org/wp-content/uploads/2019/09/shutterstock_1244050168.jpg

OLYMPIA – Division I of the Washington State Court of Appeals issued an opinion in favor of the Washington Hospitality Association and other plaintiffs dealing with regulations on the pricing of wine and spirits. This decision is a major win for the industry, who successfully defended its ability to negotiate with suppliers on price and customer service.

“This legal victory is a huge win for our members with liquor licenses,” said Anthony Anton, president and CEO of the Washington Hospitality Association. “This win was more than four years in the making as it worked its way through the courts. On principle, we fought for a solution and defended the rights of our members to let the free market decide the pricing of liquor, as the voters’ originally intended with 1183. This issue required our persistence and it’s paid off.”

In its Aug. 26, 2019, opinion the State of Washington Court of Appeals, District I, concluded the Liquor and Cannabis Board, “exceeded its authority” in creating the rules pertaining to pricing liquor because, “these rules expressly prohibit pricing differentials in the sale of wine and spirits that are authorized by RCW 66.28.170.”, and that “this section could not be clearer that it permits price differentials for wine and spirits” and further, “none of the Board’s arguments are meritorious.”

In 2011, Washington state voters passed Initiative 1183 which ended the state’s monopoly on the sale of spirits. As a result of the initiative, the Washington State Liquor Control Board (LCB) as it was known at the time, no longer had the ability to set the price of spirits. Those decisions were left to competitive market conditions and customer decisions. The market was working the way voter’s intended and restaurant licensees were able to negotiate competitive prices based on their value in the marketplace.

Some businesses objected to the end of uniform pricing and asked the Board to intervene. The Board ultimately adopted rules that drastically interfered with the industry’s ability to negotiate price differentials, causing financial harm to many small operators and liquor licensees. The Washington Restaurant Association, the Northwest Grocery Association, Costco Wholesale Corporation and the Washington Lodging Association collectively sought judicial review of the new rules.

This opinion represents the third major legal victory in two separate lawsuits the Washington Hospitality Association has brought against the LCB in defense the industry’s ability to use their consumer power to seek better price and customer service terms and end the state’s involvement in liquor sales.

The Liquor and Cannabis Board has less than three weeks to appeal this case to the Washington State Supreme Court.

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