NABCA’s 25th Annual Legal Symposium
Source: NABCA
March 20, 2018
Now in its 25th year, NABCA’s two-day Legal Symposium on Alcohol Beverage Law and Regulation provided participants with timely information and dialogue about crucial issues and challenges facing state regulators, industry officials and others impacted by beverage alcohol regulation. This year’s symposium provided for the first time, the option to participate in the full conference via webcast.
To follow are summaries of several of the presentations from day one of the event.
Here Comes the Judge
Themes discussed during this session provided practical insights from sitting judges, including the Hon. Selina Malherbe, administrative law judge with the North Carolina Office of Administrative Hearings, Mecklenburg County, the Hon. Marla Graff Decker with the Court of Appeals of Virginia, and former U.S. District Judge for the eastern district of Virginia, Walter Kelley who is now in private practice.
Participants were reminded of the importance of writing briefs clearly and concisely without legalese and to cite appropriate case law. Panelists discussed the pros and cons of oral arguments when given the chance, it can be a valuable tool to answer questions. Further, participants learned that getting a case before the appellate court is more about form than substance, but once before the court, the case needs the substance.
Turning focus to the federal level, panelists discussed current issues specific to alcohol advertising, the Commerce Clause, and antitrust concerns. There was a sentiment that the U.S. can anticipate more federal court cases challenging state regulatory schemes, primarily driven by aggressive sellers pushing boundaries, the craft alcohol movement, and the prevailing value of deregulation.
21st Century Technology Meets 20th Century Regulation
Nidhi Kumar, General Counsel at Drizly and moderator for this session began by sharing an interesting rumor about the potential use of Bitcoin to purchase alcohol, which shows how far innovation with alcohol technology has gone and where it can go in the future.
Patrick Cushing, attorney at Williams Mullen, spoke about the decentralization of manufacturing and retail, the change in customer trends, adoption of new technologies, and the change in ownership structure. The common triggers of regulatory movements are tragic events, consumer demand, and when new technology becomes an industry or business standard.
Skyler Genest, director of compliance and enforcement at the Vermont Department of Liquor Control, cited how technology and regulation have changed from the pre-prohibition era. Some states are hanging their hats on emerging business trends, while other “ready states” are innovative in modernizing regulations. He talked about the pros and cons of the 20th century standard regulation models, with one of the pros being that it was easy to enforce regulation during that time.
David Toomey, senior corporate counsel for the grocery delivery company Shipt, said that people today enjoy using delivery services, such as Amazon, and that alcohol delivery is an innovation that is either supported and opposed in different states.
Trade Practices: A Civil Matter?
In this session the panelists discussed cases currently in litigation where members of one tier are suiting members of another tier for damages and mandatory attorney fees, which can be hefty. They also explored unfair business practices affecting state and federal laws and more specifically the “thing of value” trade practice violation.
Robert Tobiassen, compliance consultant and former TTB staff, shared that the government agency has received funding and is beginning to work with the states to better investigate trade practice enforcement matters, which if violations are found, will result in an increase in TTB cases. The panel also discussed that retailers are looking for new avenues for consumer sales because of the change in the consumer marketplace led by players such as Amazon. It was stressed that lying to the government is not a good idea. What will occur over the next few years as TTB increases its investigations into alcohol business practices will lay the framework for the debate in civil court case matters.
John Hinman, founding partner at Hinman & Carmichael, LLP posed the question about how much competition will there be between the state investigators and the TTB. The reply was that these two government bodies will need to converse more as the state investigators know their laws and the TTB has nationwide jurisdiction.
Jim Webster, president, Webster Powell, P.C., talked about private party litigation and the causes of the shift toward it. The general feeling is that this trend will continue to increase.
Moderator for this session was Jessica Starns, founder and managing partner, Jessica Starns Law Firm.
Global Alcohol Distribution Systems
This session explored trade policy and its impact on the beverage alcohol industry. In 2017, there were $4 trillion in imports and exports in the U.S., with top trading partners being China, Canada, Mexico, Japan, Germany, South Korea, United Kingdom, and France.
Bennett Caplan, head of secretariat FIVS, provided a conceptual framework for attendees to think about trade, outlining different trade agreement levels: Multi-lateral, where there is no real action; a regional level, which have been less of an interest for the current administration; and bi-lateral agreements, where most of the trade negotiation action have been.
Panelist CJ Helie, the executive vice president of Spirits Canada, spoke about the strong business relationship between Canada and the U.S., and the efforts they are doing to ensure policymakers and stakeholders at the federal level understand the history and importance of this relationship as the uncertainty around trade agreements persist.
Matthew Weston-Dawkes, deputy general counsel of E & J Gallo Winery in California shared that they are concerned about disruption of the export business even though wine was not on the list of proposed tariffs, and shared the frustration among the other panelists regarding the lack of progress toward trade agreements in the U.S.
Moderator for this session was Arthur Decelle, counsel, McDermott, Will & Emery, LLP.
The Legal Relevance of “Toward Liquor Control”
What can a book about alcohol regulation over 80 years old bring to the table today? That was the topic of this session, moderated by Nicholas Capezza from NABCA. He provided an overview of the history leading to national prohibition under the 18th Amendment and the Volstead Act, and the history leading to their repeal. He noted that national prohibition was a popular decision but the unforeseen consequences of it led to the passage of the 21st Amendment, and the regulation of alcohol mostly left to the states. Toward Liquor Control came from a desire to implement the best regulatory methods possible in the post-prohibition world.
Kentucky’s Department of Alcohol Beverage Control’s General Counsel Stephen Humphress discussed how Toward Liquor Control continues to serve as a relevant resource for government regulators and attorneys. Among other things, the book explores alcohol license structures, the prevention of tied house situations, and outlet density issues. It has continually been cited in legal opinions up to the present day and provides insight for constitutional issues that have arisen including First Amendment and Commerce Clause challenges.
Professor Brannon Denning of Samford University’s Cumberland School of Law reviewed current matters facing the alcohol regulatory world including the rise of the craft alcohol industry and e-commerce. He suggested a “modest proposal” to update or rebrand the goals stated in Toward Liquor Control to make it more accessible for a modern world as well as look at the general goals that alcohol regulation should have moving forward.
The panel and session participants expressed a consensus that Toward Liquor Control remains relevant and an important tool for attorneys and regulators though the terminology and goals set forth may need an update.
ADA Digital Compliance
Kristina Perry Alexander, moderator, opened this session by introducing each speaker and provided an overview best practices for website compliance particularly in the area of alcohol.
Karen Elliott, partner at Eckert Seamans, discussed what compliance looks like as it relates to web accessibility. Karen explained how compliance laws apply to the federal government, federal contractors, private businesses and at the state level. Courts may require a website to be compliant if the website affects access to a physical place of accommodation. If a website is non-compliant, an advocate may file a lawsuit or send a demand letter on behalf of a person with disabilities because they were unable to freely move through a website based on their need.
Joel Erb, senior director of digital growth at Padilla talked about ADA web accessibility requirements. Accessibility ensures a digital experience is made easier for people with physical and/or mental disabilities. This is about 20% of the US population. To see if your website is compliant, one way to determine is to use POUR. POUR stands for Perceivable, Operable, Understandable, and Robust. Another is WCAG which are the web content accessibility guidelines. Both options can help to determine if a website is compliant. A person can use an online tool, i.e., Google Chrome which includes an add on that will perform a check on a website for any compliance issues. Joel also suggested hiring an outside company to perform an audit. Remember “accessibility means empathy.”
Background Checks: How Much is Too Much?
Kate Hardy, partner at Strike & Techel, was the moderator of this session. She talked about her firm, and asked the two panelists about their specific company and experiences with licensed background checks.
April Renée Randall, assistant general counsel at the Alcoholic Beverage Regulation Administration (ABRA) in the District of Columbia, provided insight into the agency, which issues and renews ABC licenses in the District. Categories and types include manufacturer’s licenses, wholesaler’s licenses, and off-premise and on-premise retailer’s licenses. The general applicant must meet seven qualifications, including being of good character and generally fit for licensure, at least 21 years of age, and cannot owe D.C. more than $100. There are many elements involved in receiving a license, including conflict of interest and special qualifications for wholesale and retail license holders.
Jill Valachovic, senior paralegal at Dave & Buster’s, offered her perspective about background checks and the required information licensees must provide. Her concern was the level of privacy when applying for licenses as the questions asked require divulging family details such as personal financial statements, fingerprinting, every address ever lived, and the social security numbers and dates of birth of children.
Ethics: Protecting Client Data in a Mobile Digital World
Neal Insley, moderator, opened the session by introducing Seth Guggenheim who is the assistant ethics counsel at the Virginia State Bar.
Mr. Guggenheim discussed the importance of and how to protect data. He provided examples of data that was leaked or hacked and said that law firms are desirable targets because they are “one stop shops” for high value information, with weak security. He also discussed basic terms and definitions such as cyber security, two-factor authentication, phishing, encryption and other terms. He explained that companies have a duty to safeguard confidential information and should make great effort in doing so.
Day two of the conference will wrap up tomorrow after several impactful morning sessions for which summaries will be available. Thank you for your interest in reading them.