Judge dismisses lawsuit over beer distributor’s ‘pay-to-play’ tactics

Under the state’s franchise law, alcohol suppliers such as brewers and importers are effectively bound to their distributors indefinitely after a six-month trial period.Shutterstock / Africa Studio/Africa Studio

A Massachusetts judge on Wednesday dismissed a beer importer’s lawsuit against the state’s largest distributor of craft beer, saying the importer waited too long to file its accusations of favoritism and underhanded business tactics.

Last year, Shelton Brothers Inc., a Belchertown firm that imports exotic beers from European breweries, sued Craft Brewers Guild, the Everett distributor implicated in the “pay-to-play” scandal roiling the state’s beer industry.

The importer alleged that Craft Brewers Guild raised the price of Shelton Brothers’ beers, letting them languish in its warehouse while illegally paying bars to stock other brews — and actively pushing competing European beers imported by another arm of Craft Brewers Guild’s parent company. Shelton Brothers also accused the wholesaler of reassigning salespeople it had promised would focus on Shelton Brothers products, and of harassing another wholesaler the importer started using when sales through Craft Brewers Guild fell.

But Hampshire Superior Court Judge John S. Ferrara ruled the statute of limitations had expired on the claims, which date to 2011 and earlier. He also said that Shelton Brothers’ request to sever its relationship with Craft Brewers Guild must first be adjudicated by the state Alcoholic Beverages Control Commission, or ABCC.

An attorney for Shelton Brothers said the importer would appeal the decision.

In addition to seeking $1.7 million in compensation for lost sales and permission to use another wholesaler, the complaint by Shelton Brothers doubled as a public indictment of the state’s controversial franchise law, under which alcohol suppliers such as brewers and importers are effectively bound to their distributors indefinitely after a six-month trial period.

Shelton Brothers and many brewers argue the system allows distributors to “hoard” suppliers without having to worry they will bolt for a competing wholesaler. Distributors believe the law protects their investments in promoting beer brands. The sides faced off last month at a State House hearing over proposed reforms to the law.

Mark Dickison, Craft Brewers Guild’s attorney, said his client was pleased with the outcome.

“Shelton Brothers was using Craft’s troubles with the ABCC to pile on and use as leverage in their relationship,” Dickison said. “The court correctly found that, if they really had this list of ills going on, they should have filed when it first occurred.”

On Monday, a state judge in Boston upheld the $2.6 million fine Craft Brewers Guild paid to avoid a three-month license suspension in the pay-to-play case.