Southern Glazer’s Class Action Settlement a Reminder to Comply with Maximum Late Payment Penalties on Retailers

A recent $5.5 million settlement payment from one of the country’s largest alcoholic beverage wholesalers serves as a good reminder that California law restricts the amount of late fees and interest that can be charged in connection with the purchase and sale of alcoholic beverages to retailers.

Cal. Bus. & Prof. Code § 25509 provides that various alcoholic beverage manufacturers and wholesalers who sell and deliver alcoholic beverages to a retailer and who did not receive payment for such alcoholic beverages within 42 days of delivery shall charge the retailer 1% of the unpaid balance on the 43rd day and an additional 1% for each 30 days thereafter.

In 2014, a Los Angeles-based retailer, Wiseman Park, LLC (“Wiseman”), brought an action against Southern Glazer’s Wine and Spirits, LLC (“Southern”) in connection with Southern’s attempt to collect not only the Section 25509 statutory late payment penalty, but also a 1% per month “carrying charge” included in the parties’ written agreement. Wiseman alleged that Southern’s imposition of the separate carrying charge violated Cal. Bus. & Prof. Code § 17200.

In 2021, the action was changed to a class action lawsuit so that other retailers subject to Southern’s carrying charge could join the lawsuit.  In early 2024, the court preliminarily approved the parties’ proposed settlement agreement whereby Southern would make a $5.5 million payment to resolve the class action lawsuit, write off $44.1 million carrying charges yet to be paid by the retailers, and agree not to impose the carrying charge going forward. The deadline for retailers to opt out of, or object to, the class action was March 1, 2024. The final approval hearing for the settlement is scheduled for April 16, 2024.

Industry members should take this opportunity to review their agreements with retailers, and ensure any interest or penalties imposed on retailers do not exceed the statutory limits imposed by the ABC Act.

For assistance with this or any other Alcohol Beverage Law & Compliance or Wine Law matters, email Bahaneh Hobel, John Trinidad, or Alexander Mau.

CA ABC Provides Additional Coronavirus Regulatory Relief; CA ABC and TTB Postpone Due Dates for Certain Payments and Filings

Over the past forty-eight hours, the California Department of Alcoholic Beverage Control (“CA ABC”) has provided additional regulatory relief to licensees, including information relevant to industry members engaged in fundraising in connection with Coronavirus-related charities.  In addition, CA ABC and the Alcohol Tobacco Tax and Trade Bureau (”TTB”) announced that industry members will be permitted to delay certain payments and filings.  We have summarized each of these notices below, but the full text of these notices can be accessed through the links below:

  1. CA ABC Second Notice of Regulatory Relief
  2. CA ABC Notice re Renewal Fees
  3. TTB Industry Circular re Postponement of Payments and Filings 

1. CA ABC Second Notice of Regulatory Relief

CA ABC issued a Second Notice of Regulatory Relief on April 1, 2020 (the “Second Notice”) temporarily loosening  it’s enforcement of certain regulations during the period that shelter-in-place restrictions are in place..  CA ABC had previously announced certain regulatory relief measures in its first Notice of Regulatory Relief (“First Notice”) on March 19, 2020 and we summarized that notice in this blog post.

Below is a summary of ABC’s Second April Notice.

FREE DELIVERY OF ALCOHOLIC BEVERAGES TEMPORARILY ALLOWED: ABC has temporarily provided licensees that can ship or deliver alcoholic beverages, whether pursuant to  the ABC Act or pursuant to the First Notice, the right to deliver or ship to consumers for free, without violating  Business and Professions Code Section 25600, which prohibits licensees from providing any “premium, gift, or free goods” in connection with the sale or marketing of alcoholic beverages.

DELIVERY HOURS OF ALCOHOL TO RETAILERS EXTENDED TO MIDNIGHT: Licensees (including manufacturers, winegrowers, and wholesalers) may now deliver alcoholic beverages to retailers between 12 AM and 8 PM (rather than starting at 3AM). The prohibition against Sunday deliveries remains in effect.  Note that if a retail licensee has a condition on its license limiting the hours during which it may allow deliveries, such condition shall remain in full effect.

CERTAIN CHARITABLE PROMOTIONS RELATED TO SALES OF ALCOHOL:  The CA ABC is relaxing its enforcement of restrictions on charitable promotions during this challenging time. Manufacturers, wholesalers, or other supplier-type licensees may advertise that a portion of the purchase price of the alcoholic beverages will be donated to a specified charitable organization related to Coronavirus-related relief, subject to the following limitations:

  1. The donation and promotion involve a bona fide charitable organization providing relief related to the COVID-19 pandemic;
  2. The promotion is in connection with the sale of sealed containers and does not encourage or promote the consumption of alcoholic beverages; and
  3. The donation and promotion do not identify, advertise, or otherwise promote or involve any retail licensee.

Any promotions under this provision must conclude no later than June 30, 2020. ABC has stated it will reassess this measure at that time and determine if it should be extended further.

ABC previously stated in its FAQs that donations to nonprofits benefiting restaurant and hospitality workers in general are permissible, so long as it is just a donation to an organization and does not identify or involve any quid pro quo with specific retailers. In addition, gifts or donations (such as meals or gift cards) may not be made directly to retailer employees.

DISTILLED SPIRITS MANUFACTURERS PROVIDING HIGH-PROOF SPIRITS FOR DISINFECTION PURPOSES: Licensed distilled spirits manufacturers (Type 04) and craft distillers (Type 74) may produce denatured high proof spirits if such distilled spirits are produced for use in accordance with guidance from the Food and Drug Administration, which may be found in the FDA’s Policy (PDF). Undenatured distilled spirits are not included in this relief as they are considered alcoholic beverages. Licensees may provide such distilled spirits for free to any person, including retail licensees, if they are not used to promote the manufacturer’s alcoholic beverage products and are not provided in exchange for an agreement to purchase anything produced or distributed by the manufacturer.


Licensees should note that all of the above changes are only temporary and ABC will provide the industry 10 days’ notice before these guidelines terminate.  And although these provisions relax ABC’s enforcement of certain provisions of the ABC Act, the ABC did remind industry members that “[a]ll provisions of the Alcoholic Beverage Control Act, including …tied-house and trade practice restrictions, remain in effect and subject to enforcement unless the Department has provided express notice that specific provisions will not be enforced.”

As we noted in our earlier post, local regulations and restrictions may restrict the ability of licensees to engage in these activities, so you should always confirm that any activity in which you engage is permitted by local zoning or use permits.

2. CA ABC Grants 30 Day Grace Period for License Renewal Fees and Penalties

The CA ABC is providing licensees a 30 day grace-period for paying their annual renewal fees.

For Licensees who have previously missed their license renewal deadline and owe penalties as a result of failing to pay their renewal fee in a timely manner, the ABC is also granting a 30 day grace period.

The ABC has provided helpful tables in its notice that lay out the exact deadlines that have been extended and new due dates for license renewals.

3. TTB Postpones Tax Payment and Filing Deadlines

To help ease the burden on the alcohol beverage industry dealing with the impact of COVID-19 the TTB is postponing several filing and payment due dates for 90days where the original due date falls on or after March 1, 2020, through July 1, 2020. The TTB’s relief actions include:

  1. Postponing tax payment due dates for wine, beer, distilled spirits, tobacco products, cigarette papers and tubes, firearms, and ammunition excise taxes.
  2. Postponing filing due dates for excise tax returns.
  3. Postponing filing due dates for submission of operational reports.
  4. Postponing filing due dates for claims for credit or refund by producers.
  5. Postponing filing due dates for claims by manufacturers of non-beverage products.
  6. Postponing due dates for submission of export documentation.
  7. Considering emergency variations from regulatory requirements for affected businesses on a case-by-case basis.
  8. Reviewing requests for relief from penalties based on reasonable cause.

For a list of Coronavirus related resources, please see our Resources Page.  

If you have any questions regarding alcohol beverage licensing, please contact John Trinidad or Bahaneh Hobel.


New Law on Winery Social Media Ads for Certain Retailer-Hosted Events

Governor Brown recently signed into law AB2452, a bill that grants wineries broader privileges in the use of social media to promote certain events held at retailer premises, such as winemaker dinners.  The bill was introduced by Assembly member Cecilia Aguilar Curry, co-authored by State Senator Bill Dodd, and sponsored by the Napa Valley Vintners.

The new law amends three tied-house exceptions in the California ABC Act that govern the organization and promotion of certain events held at on- and off-premise retailers that involve supplier-side licensees (ABC Act Sections 25503.4, 25503.56, and 25503.57).   Those laws restricted how the participating supplier could advertise and promote those events.  For example, the advertisement could only list the name and address of the retailer and expressly prohibited pictures or illustrations of the retailer’s premises.

The new bill allows suppliers (including wineries) to now include the following in their advertisements of those permitted retailer-hosted events:

 ADDITIONAL RETAILER INFORMATION – The supplier’s advertisement for the event can now include an expanded range of information about the host retailer (including the retailer’s website address and “other electronic media”) so long as such information is “relatively inconspicuous in relation to the advertisement as a whole.”

 PICTURES & ILLUSTRATIONS – The new bill allows participating suppliers to include “pictures, illustrations, and depictions of the retailer’s premises, personnel, and customers” in the event advertisements.  Videos, however, are expressly prohibited.

 REPOSTING OF SOCIAL MEDIA POSTS –   Participating suppliers are now allowed to repost social media posts that advertise the event, including posts by the host retailer, provided that the reposted advertisement complies with all other content restrictions in the ABC Act.

Wineries and  other suppliers should note that these expanded advertising privileges only allows them to advertise in connection with specific events governed by ABC Act Sections 25503.4 (wine-related events, including winemaker dinners), 25503.56 (instructional tasting event at off-sale retailer premises under a Type 86 license), and 25503.57 (instructional events at on-sale retailer premises).  It is not a blanket permission to begin photographing and posting about retailers on supplier social media accounts.

The new law goes into effect on January 1, 2019.

If you have any questions about the new law, tied-house issues, or winery use of social media, please contact John Trinidad.

DISCLOSURE:  DPF represents Napa Valley Vintners on a variety of matters, and advised on the proposed legislation. 


CA ABC Issues Warning About Potential Scam

The California Department of Alcoholic Beverage Control has issued a warning that licensees are being targeted by a possible scam.  Apparently, licensees have been receiving calls from someone claiming that, as a result of an ABC violation, the licensee must pay a fine.  In short, the ABC does not operate in this manner, and if you receive such a call, check in with your local ABC office before submitting any payment or credit card information.  Also, the ABC is asking licensees to help uncover these fraudsters.  If you are contacted by these scammers, asking for their name and contact information, and pass that information on to the ABC.

If you need to find the contact number for your closest ABC office, it is available at this link.

Avoid Penalty Flags from the ABC During Super Bowl 50

In anticipation of Super Bowl 50 on Sunday, February 7 in the Bay Area, and given the large number of both retail and supplier-side licensees that are participating at the Super Bowl, and in events and promotions in the week leading up to the game, the California Department of Alcoholic Beverage Control has issued an advisory providing guidance to licensees participating, selling and/or serving alcoholic beverages at Super Bowl related events.

The takeaway from ABC’s advisory? All the same rules apply.  If you were not permitted to do something before, you are not permitted to do it now just because it’s Super Bowl.

However, a little reminder from the ABC about the rules never hurts, so here is a brief summary of their do’s and don’ts to help you avoid penalty flags during Super Bowl week.


  • The Super Bowl is not a “time out” for licensees.  All current laws and regulations remain in effect during Super Bowl and no new laws have been passed regarding the sale, service, consumption, or marketing of alcoholic beverages for Super Bowl.



  • Just because it’s the Super Bowl doesn’t mean after parties are allowed at licensed locations. It is still illegal (a misdemeanor) to sell or serve alcohol between the hours of 2 a.m. and 6 a.m.  ABC guidelines also specifically say that purchasing alcohol ahead of time or in bulk to be served after 2 a.m. on a licensed premises is not permitted.



  • In case you forgot, it is unlawful to serve alcoholic beverages to minors under the age of 21 (even if they look like football players) and it is unlawful to serve alcoholic beverages to obviously intoxicated persons (even if they look like football players that just won the Super Bowl).  Make sure to keep checking IDs and monitor your customer’s behavior before selling or serving them any drinks.



  • All of your sales and service activities, and your location, need to be licensed, even though it might be a lot more fun to do something different “because its Super Bowl.”  You can only sell and serve alcoholic beverages in the areas covered by your existing licenses.  And you can only sell alcoholic beverages if you are licensed to do so.  This includes charging admission fees or pre-selling tickets that include alcohol in the admission or ticket price.



  • You can only sell what you are normally allowed to sell.   You are not permitted to sell an amazing Super Bowl inspired Vodka cocktail at your licensed premises if your license only permits you to sell wine or beer.


ABC is out and about, especially during big events like the Super Bowl, so just operate in accordance with the rules and regulations that are normally applicable to your license to ensure that you and your employees don’t fumble.

Super Bowl will bring a lot of business and potential new customers to industry members.  Keeping the above tips in mind will help ensure a winning Super Bowl for all involved (except maybe the losing team).

For more information on the rules and regulations governing the sales, service and distribution of alcoholic beverages, please contact Bahaneh Hobel via email.