Alberta faces $100M beer lawsuit over its brew policies
Alberta’s beer policies continue to leave taxpayers with a bitter aftertaste, amid mounting bills to fight lawsuits, trade disputes and a judge’s order to pay more than $2 million in restitution to out-of-province brewers.
But those expenses could be chump change in the bigger beer brouhaha.
Here’s a number that should catch the eye of Finance Minister Joe Ceci: $100 million.
Toronto-based law firm Rochon Genova LLP has filed a proposed class-action case in Calgary against the province, and the Alberta Gaming, Liquor and Cannabis Commission over its policies regarding craft beer.
It’s seeking $100 million in restitution.
A statement of claim filed in Court of Queen’s Bench in Calgary says the Notley government’s “discriminatory and unlawful price markups” for beer impaired the sale of Canadian suds manufactured outside Alberta but sold inside the province.
“Out-of-province craft beer producers and their agents … suffered economic deprivation from the illegal markups and related measures because they resulted in an effectively higher price for their beer in Alberta,” the document states.
Lawyer Ron Podolny, a partner with the Toronto firm, is seeking to certify the class-action case on the behalf of brewers from outside Alberta, as well as their agents, bars and restaurants in the province, and even local consumers who had to pay more for an imported 12-pack.
“There have now been a number of decisions both from courts and tribunals holding that these measures introduced by the Alberta government are unlawful,” Podolny said in an interview Wednesday.
Of course, a statement of claim contains allegations that have yet to be proven in court. And class-action lawsuits have to first be certified and can take years to wind their way through the legal system.
However, sitting in the plaintiff ’s favour is not one, not two, but three separate rulings that have gone against the Notley government since it began tinkering with beer markups (essentially a tax charged on liquor) in October 2015.
In an attempt to stimulate the domestic beer industry, the NDP went about it in the wrong way.
Ceci increased the graduated markup on craft beer to a $1.25 per litre, affecting 31 brewers outside Alberta, B.C., or Saskatchewan that sold product inside the province.
The hike added about $3 to the price of a six-pack of non-Alberta beer.
Facing a backlash, the finance minister changed course in August 2016, applying the higher rate to all Canadian small brewers.
But in a not-so-subtle move, the province created a subsidy program for only domestic brewers to essentially offset the higher levy.
Last year, an independent panel found Alberta’s moves contravened interprovincial trade policies contained in Canada’s Agreement on Internal Trade.
An appeal panel came to the same conclusion in June, saying the grant program “distorts the playing field.”
It all seems clear enough. In June, Alberta lost a separate legal case on its craft beer markups.
Court of Queen’s Bench Justice Gillian Marriott found Alberta’s policies created a trade barrier and violated the Constitution’s free-trade provisions between provinces.
A judge ordered the province to pay restitution of more than $1.9 million to Great Western Brewing of Saskatoon, and $164,000 to Toronto-based Steam Whistle Brewing.
Yet, Premier Rachel Notley said last month the province would appeal the ruling, explaining: “When you lose, you appeal.”
It makes one wonder if other small brewers across the country are eyeing the court decision, rubbing their hands, thinking they should seek compensation for the loss of market share and sales.
We’ll find out soon enough. The province notes there are now 91 small brewers in the province, a tripling of the domestic industry within three years.
Officials in the finance minister’s office wouldn’t comment on the class-action lawsuit but stressed the government will “have the backs” of craft brewers, and the province’s programs will be retooled before the end of November.
“We will continue to support our local craft industry and are not ruling out challenging other province’s restrictions on Alberta beer,” Ceci said in a statement.
That might work, but the reality is Alberta is staring at another lawsuit to defend its discriminatory policy.
One of the plaintiffs named in the class-action case is Calgarybased Artisan Ales Consulting, a beer-importing agency that has become a thorn in the side of Ceci since he introduced the new policies.
Artisan co-owner Mike Tessier said he decided to join the new lawsuit after initiating and winning the earlier trade panel dispute against the province, followed by Alberta’s loss in the recent Court of Queen’s Bench decision in June.
“They have lost three times. They have hurt my business and they shouldn’t have, so I figure I’ll be the biggest pain in the ass to them that I can be,” Tessier said.
“For the class-action suit, I don’t even care about the money. It’s that the government is wrong.”
Steam Whistle’s director of marketing Tim McLaughlin said he’s disappointed but not surprised the NDP government continues to fight over the matter.
The company isn’t interested in joining the class-action suit. McLaughlin simply hopes the government overhauls its program so that it doesn’t hurt out-of-province brewers.
With the latest appeal, it seems the Notley government hasn’t learned its lesson, he added.
“They are spending a lot of taxpayer dollars fighting a matter that was quite clear … was unconstitutional,” he said.
Unfortunately, that’s the way this issue has dragged on for more than two years, with the province throwing good money after bad.
Trying to diversify the economy makes sense. Finding creative ways to stimulate Alberta’s craft beer sector is laudable.
But we shouldn’t do it by trying to screw over our next-door neighbours in Canada.