Pabst Brewing v. Frederick P. Winner, LTD

Pabst Brewing Company v. Frederick P. Winner, Ltd., No. 8, September Term, 2021. Opinion by Biran, J. STATUTORY INTERPRETATION – SUCCESSOR BEER MANUFACTURER – Maryland’s Successor Manufacturers Law defines a “successor beer manufacturer” to include “a person or license holder who replaces a beer manufacturer with the right to sell, distribute, or import a brand of beer.” Md. Code Ann., Alco. Bev. § 5-201 (a)(5) (2016). The Court of Appeals held that, in order to qualify as a successor beer manufacturer, a “person or license holder” must replace a beer manufacturer as the license holder with respect to a beer brand.

Circuit Court for Baltimore County Case No. 03-C-15-004824 Argued: October 4, 2021 IN THE COURT OF APPEALS OF MARYLAND No. 8 September Term, 2021 PABST BREWING COMPANY v. FREDERICK P. WINNER, LTD. Getty, C.J. *McDonald Watts Hotten Booth Biran Wilner, Alan M. (Senior Judge, Specially Assigned), JJ. Opinion by Biran, J. Filed: March 25, 2022 *McDonald, J., now a Senior Judge, participated in Pursuant to Maryland Uniform Electronic Legal Materials Act the hearing and conference of this case while an (§§ 10-1601 et seq. of the State Government Article) this document is authentic. active member of this Court.

After being recalled 2022-03-25 pursuant to Md. Const., Art. IV, § 3A, he also 10:20-04:00 participated in the decision and adoption of this opinion. Suzanne C. Johnson, Clerk Beer and other alcoholic beverages are among the most highly regulated products sold in Maryland. As stated in the Alcoholic Beverages Article of the Maryland Code, “[t]o obtain respect and obedience to law and to foster and promote temperance, it is the policy of the State to regulate and control: (1) the manufacture, sale, distribution, and storage of alcoholic beverages in the State; and (2) the transportation and distribution of alcoholic beverages into and out of the State.” Md. Code Ann., Alco. Bev.

(“AB”) § 1-201(a)(1)(i).1 Indeed, the General Assembly has authorized “the exercise of the powers provided by [the Alcoholic Beverages Article] to displace or limit economic competition by regulating … the sale or distribution of alcoholic beverages.” Id. § 1-201(b)(1). One such regulation restricts the ability of a beer manufacturer to terminate its contractual relationship with an entity that distributes its beer brand(s) in Maryland. In general, a beer manufacturer may not terminate or refuse to renew a contract with a distributor without cause. An exception exists where a “successor beer manufacturer” inherits a contract between a beer brand’s previous manufacturer and the brand’s distributor.

Although a successor beer manufacturer is obligated under the terms of the pre-existing contract, the successor beer manufacturer may elect to terminate the contract without cause, in which case the distributor is entitled to receive the fair market value of the terminated distribution rights. In this case, we must decide who qualifies as a “successor beer manufacturer” under the pertinent Maryland statute, which is known as the Successor Manufacturers Law (the “SML”). See AB § 5-201. 1 Unless otherwise noted, we cite to the 2016 volumes of the Alcoholic Beverages Article. Pabst Brewing Company (“Pabst”), the Petitioner in this case, is one of the oldest beer manufacturers in the United States.

Beginning in 1994, Pabst maintained a contractual relationship for more than 20 years with Respondent Frederick P. Winner, Ltd. (“Winner”), under which Winner and its predecessor entity distributed Pabst beer brands in Maryland. In 2014, Blue Ribbon, LLC (“Blue Ribbon”) purchased 100 percent of the stock of Pabst’s parent entity. In 2015, Pabst terminated its contract with Winner. Pabst claimed that Winner’s termination was permitted under the SML.

Winner disputed that contention, and sued Pabst in the Circuit Court for Baltimore County. The circuit court agreed with Pabst that Blue Ribbon was a successor beer manufacturer under the SML, and that Blue Ribbon therefore was permitted to cause Pabst to terminate its contract with Winner without cause. The Court of Special Appeals disagreed with the circuit court’s reading of the SML, as do we. As discussed below, the SML applies only where the beer manufacturer that holds a Maryland license or permit to sell, distribute, or import a brand of beer is replaced by another as the license holder with respect to that brand.

In this case, Pabst held the pertinent Maryland permit both before and after Blue Ribbon acquired Pabst’s parent entity. Thus, neither Blue Ribbon, nor any person or entity affiliated with Blue Ribbon, qualifies as a successor beer manufacturer, and Pabst therefore did not have the right to terminate its contract with Winner without cause. 2 I Background A. The Statutory Scheme The General Assembly has created a multi-tier system for the sale of beer and other alcoholic beverages in Maryland. Manufacturers sell to wholesalers (also referred to as distributors), who sell to retailers, who sell to consumers. Manufacturers, wholesalers, and retailers all must hold government-issued licenses or permits.

See, e.g., AB § 2-124(b)(1) & (d) (non-resident dealer’s permit may be issued to a manufacturer, which allows the manufacturer to “sell beer … to license holders authorized to receive the beverages”); id. § 2-302 (Class 1 beer, wine, and liquor wholesaler’s license); id. §§ 9-601(b) (Class A beer license for retail sale in Allegany County) & 11-901(b) (Class A beer, wine, and liquor license for retail sale in Anne Arundel County). The Maryland Beer Franchise Fair Dealing Act (“BFFDA”) governs beer franchise agreements between manufacturers and distributors. See id. § 5-101 et seq. A “beer franchise agreement” is defined, among other things, as “a relationship in which a beer manufacturer grants a beer distributor the right to offer and sell the brands of beer offered by the beer manufacturer.” Id. § 5-101(c)(2) (Supp. 2021).

The BFFDA promotes temperance and respect for the laws that control the distribution and sale of beer by among other things: (1) prohibiting beer manufacturers from inducing or coercing beer distributors to accept delivery of alcoholic beverages the distributors did not order, or to perform illegal acts, id. § 5-104; (2) limiting the number of franchisees in a sales territory, id. § 5-105; and (3) prohibiting a franchisor from 3 terminating or refusing to continue or renew a beer franchise agreement without good cause, id. § 5-108 (Supp. 2021). The General Assembly concluded that, without these protections, a manufacturer could induce or coerce its distributor to unduly stimulate beer sales and consumption by threatening its distribution rights. Id. § 5-103(b). In 1990, the General Assembly enacted the SML.

See 1990 Md. Laws, ch. 281. The current version of the SML defines both a “[b]eer manufacturer” and a “[s]uccessor beer manufacturer.” AB § 5-201(a)(3) & (a)(5). A “‘[b]eer manufacturer’ means: (i) a brewer, fermenter, processor, bottler, or packager of beer located in or outside the State; or (ii) a person located in or outside the State that enters into an agreement with a beer wholesaler doing business in the State.” Id. § 5-201(a)(3). A “‘[s]uccessor beer manufacturer’ includes a person or license holder who replaces a beer manufacturer with the right to sell, distribute, or import a brand of beer.” Id. § 5-201(a)(5).

Under the SML, “[e]xcept for the discontinuance of a brand of beer or for good cause shown as provided under § 5-108 of this title, a successor beer manufacturer that continues in the business is obligated under all the terms and conditions of the agreement made between the previous beer manufacturer and the existing beer wholesaler that were in effect on the date of change of beer manufacturers.” Id. § 5-201(b). If a successor beer manufacturer “terminates any agreement provision required to be continued under subsection (b) of this section,” the successor beer manufacturer “shall remunerate the beer wholesaler a sum equal to the fair market value for the sale of the subject brand or brands of beer calculated from the date of termination.” Id. § 5-201(c). 4 The SML additionally provides that, before a successor beer manufacturer may terminate an agreement with a beer wholesaler “and designate another beer wholesaler to replace the existing beer wholesaler, the successor beer manufacturer shall give notice of termination to the beer wholesaler to be replaced.” Id. § 5-201(d)(1). On receipt of the notice, “the beer wholesaler to be replaced and the designated beer wholesaler shall negotiate in good faith to determine the fair market value of the affected distribution rights.” Id. § 5-201(d)(2). “Fair market value” is defined as “the price at which an asset would change hands between a willing seller and a willing buyer when neither is acting under any compulsion and when both have knowledge of all of the relevant facts.” Id. § 5-201(a)(4). If an agreement is reached, “the designated beer wholesaler promptly shall pay the fair market value as compensation to the beer wholesaler to be replaced.” Id. § 5-201(d)(3).

If an agreement is not reached within 30 days after the beer wholesaler to be replaced receives notice, “the designated beer wholesaler and the beer wholesaler to be replaced shall enter into nonbinding mediation.” Id. § 5-201(d)(4). And if an agreement is not reached within 45 days after mediation begins, “the beer wholesaler to be replaced shall within 90 days bring an action in a court of general jurisdiction against a successor beer manufacturer to determine and award fair market value of the terminated brand or brands.” Id. § 5-201(d)(5). Until a resolution regarding the fair market value of the terminated distribution rights for the brand or brands is reached under subsection (d), and the beer wholesaler to be replaced has received payment for that fair market value, “the beer wholesaler to be 5 replaced and the successor beer manufacturer shall support the brand to at least the same extent that the brand had been previously supported immediately before the successor beer manufacturer acquired rights to the brand” and “the beer wholesaler to be replaced shall continue to distribute the brand.” Id. § 5-201(e). B. The Relationship and Dispute Between Pabst and Winner Pabst currently is a Delaware limited liability company with its principal place of business in San Antonio, Texas.

Pabst’s roots in the beer business go back to 1844. Today, Pabst’s brands include Pabst Blue Ribbon, National Bohemian, Stroh’s, Old Milwaukee, and Colt 45. Winner, doing business as Chesapeake Beverage, is a Delaware corporation with its principal place of business in Baltimore County, Maryland. In 1994, Pabst and Winner’s predecessor entity entered into a “distributorship agreement” (the “1994 Agreement”).

On April 30, 2014, Pabst and Winner entered into a new “distributor agreement” (the “2014 Agreement”), which replaced the 1994 Agreement. The 2014 Agreement gave Winner the right to market various Pabst brands within a defined territory, which included various parts of Maryland. At the time the parties entered into the 2014 Agreement, Pabst was a Delaware corporation and a wholly-owned subsidiary of Pabst Holdings Inc. (“Pabst Holdings”), which, in turn, was a wholly-owned subsidiary of Pabst Corporate Holdings, Inc. (“PCH”), making PCH the grandparent corporation of Pabst. At this time, Pabst held Maryland Nonresident Dealer Permit ND-18627, which, as stated above, permitted Pabst to “sell beer … to license holders authorized to receive the beverages.” AB § 2-124(d). 6 On November 13, 2014, Dean Metropoulos, the owner of PCH, reorganized Pabst and Pabst Holdings into Delaware limited liability companies, and caused PCH to sell its 100 percent ownership interest in Pabst Holdings, through a securities purchase agreement, to Blue Ribbon, an entity controlled by Eugene Kashper.

According to the Senior Vice President and Chief Financial Officer of Pabst, Pabst Holdings, and Blue Ribbon, the new ownership structure of Pabst was created for “legal and tax purposes.” Blue Ribbon’s purchase of Pabst Holdings did not involve the sale of Pabst Holdings’ or Pabst’s assets. Nor did it involve any assignments of Pabst’s trademarks, or any assignments of contracts related to Pabst’s brands. After the closing of the transaction, Blue Ribbon replaced all of Pabst’s directors and officers, and Mr. Kashper assumed full control and decision-making authority over the Pabst brands. On November 13, 2014, Barbara J. Hruby, the Manager of Government Affairs for Pabst, sent a letter to the Office of the Comptroller of Maryland, Alcohol and Tobacco Tax Division, informing that body that, as of that date, “a new group of investors completed the purchase of all of the equity interests of Pabst Holdings, LLC, the parent of Pabst …, which holds [Maryland Nonresident Dealer Permit ND-18627].” Ms. Hruby further represented that Pabst … will continue to be the operating company doing business with the same Employer Identification Number (EIN).

For business tax planning purposes, the parties to the transactions did elect to be treated as a limited liability company immediately prior to closing, but no new entity was formed and all basic business functions will continue uninterrupted…. Pabst brands will remain the same after closing and distribution to retailers will continue through the three-tier system. 7 Following the change in control of Pabst’s operations from Mr. Metropoulos to Mr. Kashper, Pabst’s new management evaluated its distributors in Maryland and elsewhere. Eventually, Mr. Kashper decided to replace Winner with several other distributors. On March 9, 2015, Pabst informed Winner that it was terminating the 2014 Agreement, effective May 8, 2015.

Pabst referred to an obligation to compensate Winner for “the fair market value of the affected distribution rights after good faith negotiations between the parties.” In response, on March 12, 2015, Winner’s counsel sent a letter to Pabst asserting that the SML had no application to the relationship between Pabst and Winner, and that Pabst had no valid basis upon which to terminate the 2014 Agreement. Winner requested that Pabst rescind the notice of termination. Pabst refused to do so. C. The Litigation 1.

Initial Circuit Court Proceedings and Appeal On May 4, 2015, Winner filed a complaint in the Circuit Court for Baltimore County, seeking a declaration that Pabst had no right to terminate Winner’s distributorship, as well as injunctive relief and damages for breach of contract. This initial complaint erroneously referred to the 1994 Agreement, instead of the 2014 Agreement, as the operative contract between Pabst and Winner. In its Complaint, Winner asserted that Pabst had improperly invoked the SML as justification for terminating Winner’s distributorship. On January 27, 2016, Winner moved for partial summary judgment, and Pabst cross-moved for summary judgment.

On February 2, 2016, without leave of the circuit 8 court, Winner filed an Amended Complaint.2 In the Amended Complaint, Winner again sought declaratory and injunctive relief, as well as damages for Pabst’s alleged breach of contract. However, Winner referred to the 2014 Agreement as the basis for its breach of contract claim and requested as an alternative remedy – if Pabst were found to be a successor beer manufacturer – that the court award Winner the fair market value of its lost distribution rights. On February 4, 2016, Pabst moved to strike the Amended Complaint. On June 28, 2016, the circuit court granted Pabst’s motion to strike and motion for summary judgment.

In striking Winner’s Amended Complaint, the court ruled that the amended pleading introduced a new issue – the fair market value of Winner’s distribution rights – which would prejudice Pabst by requiring it to engage in further discovery. The circuit court then found that the initial Complaint’s request for declaratory judgment was moot and that the breach-of-contract claim failed because the 1994 Agreement was no longer in force. For these reasons, the court granted Pabst’s motion for summary judgment. The circuit court then considered and denied Winner’s motion for partial summary judgment, which it understood to be based on the breach-of-contract claim in the Amended Complaint.

The court concluded that Blue Ribbon was a successor beer manufacturer under the SML, and therefore, was entitled to terminate the 2014 Agreement. Further, the court ruled that Winner’s claim for the fair market value of its distributor rights was time-barred. 2 Winner’s counsel averred in the certificate of service that Winner served the Amended Complaint on Pabst on January 21, 2016. However, the Amended Complaint was not docketed in the Circuit Court until February 2, 2016. 9 Winner appealed and, on November 21, 2017, the Court of Special Appeals vacated the circuit court’s grant of summary judgment to Pabst. Frederick P. Winner, Ltd. v. Pabst Brewing Co., No. 1165, Sept. Term 2016, 2017 WL 5593529 (Md. Ct. Spec.

App. Nov. 21, 2017) (“Winner I”). The Court of Special Appeals concluded that the circuit court abused its discretion in striking Winner’s Amended Complaint, and that the court’s grant of summary judgment to Pabst necessarily was tainted by its erroneous striking of the Amended Complaint. Id. at ⁹ . The intermediate appellate court declined to rule on the questions presented in the parties’ competing summary judgment motions, including whether Blue Ribbon qualified as a successor beer manufacturer under the SML, and remanded the case to the circuit court for further proceedings.

See id. at ⁹-¹⁰. 2. Proceedings on Remand Following the remand to the circuit court, Winner filed a Second Amended Complaint on January 16, 2018. Count I of the Second Amended Complaint alleged a violation of the BFFDA and sought declaratory relief, an injunction reinstating Winner’s distribution rights, and damages. Count II realleged a breach of contract and sought damages.

On February 16, 2018, Winner filed a motion for partial summary judgment. On August 7, 2019, Pabst cross-moved for summary judgment. On November 22, 2019, the circuit court entered summary judgment in favor of Pabst and denied Winner’s motion for partial summary judgment. The court reasoned that Blue Ribbon now owned the Pabst brands and had complete control of all aspects of Pabst’s business.

In other words, according to the circuit court, Blue Ribbon “replaced the Old Pabst Brewing Company” and, therefore, qualified as a successor beer manufacturer under 10 the SML. Thus, the termination of Winner’s distribution rights without cause was permissible under the SML and did not constitute a breach of contract. Additionally, the court again concluded that Winner’s claim to receive the fair market value of its distribution rights was time-barred. 3. Second Appeal Winner again appealed, and the Court of Special Appeals reversed the circuit court’s grant of summary judgment to Pabst.

Frederick P. Winner, Ltd. v. Pabst Brewing Co., 249 Md. App. 402, 413, 416 (2021) (“Winner II”). The Court of Special Appeals based its ruling on the definition of “successor beer manufacturer” in the SML, which does not refer to an entity’s “control” of a beer manufacturer, but rather provides that a successor beer manufacturer includes “a person or license holder who replaces a beer manufacturer with the right to sell, distribute, or import a brand of beer.” Id. at 417 . The intermediate appellate court emphasized that Pabst expressly notified the Comptroller that, even though investors had purchased all the equity interests of Pabst Holdings, Pabst would “continue to be the operating company doing business with the same Employer Identification Number (EIN).” Id. at 419 . Therefore, the Court of Special Appeals held, when Blue Ribbon purchased Pabst Holdings’ interest in Pabst from PCH, this sale of the equity interests did not constitute a “replace[ment]” of Pabst within the meaning of the SML.

That is, the entity that had the “right to sell, distribute, or import a brand of beer” did not change. Id. For this reason, the Court of Special Appeals held that Pabst was not a “successor beer manufacturer” under AB § 5-201(a)(5), and that the circuit court therefore erred in granting summary judgment to Pabst. Id. at 419-20. 11 Pabst filed a petition for certiorari in this Court, seeking review of the following question: “When control of a beer brand changes hands through a sale of the stock of a beer manufacturer, is there a ‘successor beer manufacturer’ with the right to terminate a distribution agreement?” On May 11, 2021, we granted Pabst’s petition.

Pabst Brewing Co. v. Frederick P. Winner, Ltd., 474 Md. 631 (2021). II Discussion There are no material disputes of fact at this stage of the case. Rather, resolution of this appeal depends entirely on the proper interpretation of the SML, a question of law that we review de novo. Uthus v. Valley Mill Camp, Inc., 472 Md. 378, 385 (2021).

The goal of statutory interpretation is to “ascertain and effectuate the actual intent of the General Assembly in enacting the law under consideration.” Matter of Collins, 468 Md. 672, 689 (2020). In conducting this inquiry, “we begin with the plain language of the statute, and ordinary, popular understanding of the English language dictates interpretation of its terminology.” Blackstone v. Sharma, 461 Md. 87, 113 (2018) (internal quotation marks and citations omitted). If the statutory language is “unambiguous and clearly consistent with the statute’s apparent purpose, [the] inquiry as to legislative intent ends ordinarily and we apply the statute as written, without resort to other rules of construction.” Lockshin v. Semsker, 412 Md. 257, 275 (2010). We “neither add nor delete language so as to reflect an intent not evidenced in the plain and unambiguous language of the statute, and we do not construe a statute with forced or subtle interpretations that limit or extend its application.” Id.

(internal quotation marks and citations omitted). Rather, we construe the 12 statute “as a whole so that no word, clause, sentence, or phrase is rendered surplusage, superfluous, meaningless, or nugatory.” Mayor & Town Council of Oakland v. Mayor & Town Council of Mountain Lake Park, 392 Md. 301, 316 (2006). We do not “read statutory language in a vacuum, nor do we confine strictly our interpretation of a statute’s plain language to the isolated section alone.” Lockshin, 412 Md. at 275 . “Rather, the plain language must be viewed within the context of the statutory scheme to which it belongs, considering the purpose, aim, or policy of the Legislature in enacting the statute.” Id. at 276 . We presume “that the Legislature intends its enactments to operate together as a consistent and harmonious body of law, and, thus, we seek to reconcile and harmonize the parts of a statute, to the extent possible consistent with the statute’s object and scope.” Id.

To the extent there is ambiguity in statutory language, we strive to resolve it by “searching for legislative intent in other indicia, including the history of the legislation or other relevant sources intrinsic and extrinsic to the legislative process.” Id. We also often review legislative history to determine whether it confirms the interpretation suggested by our analysis of the statutory language. See, e.g., In re O.P., 470 Md. 225, 255 (2020). Further, we “check our interpretation against the consequences of alternative readings of the text,” Bell v. Chance, 460 Md. 28, 53 (2018), which “grounds the analysis.” In re O.P., 470 Md. at 255 .

Doing so helps us “avoid a construction of the statute that is unreasonable, illogical, or inconsistent with common sense,” Mayor & Town Council of Oakland, 392 Md. at 316 ; see also Bell, 460 Md. at 53 (explaining that, throughout the statutory interpretation process, “we avoid constructions that are illogical or nonsensical, or that render a statute meaningless”). 13 A. Interpretation of the SML 1. The Statutory Language The SML provides that a “‘[s]uccessor beer manufacturer’ includes a person or license holder who replaces a beer manufacturer with the right to sell, distribute, or import a brand of beer.” AB § 5-201(a)(5). Winner argues that the plain language of the SML requires the replacement of an existing beer manufacturer by another as the holder of the State-issued license or permit that allows the beer manufacturer to sell, distribute, or import a brand of beer in Maryland. Pabst disagrees, contending that the SML plainly encompasses the situation where a change of corporate control of a beer manufacturer occurs, but where no entity replaces the beer manufacturer as the holder of a State-issued license or permit with respect to a beer brand.

We agree with Winner. The key phrases in § 5-201(a)(5) are “replaces a beer manufacturer” and “with the right to sell, distribute, or import a brand of beer.” The verb “replace” means “to take the place of especially as a substitute or successor[,]” or “to put something new in the place of.” Replace, MERRIAM-WEBSTER DICTIONARY, available at https://perma.cc/FB7A- 9D7L. Thus, the plain language of § 5-201(a)(5) contemplates that a “successor beer manufacturer” takes the place of an existing “beer manufacturer.” This is confirmed by § 5-201(b), which provides that, “[e]xcept for the discontinuance of a brand of beer or for good cause shown as provided under § 5-108 of this title, a successor beer manufacturer that continues in the business is obligated under all the terms and conditions of the agreement made between the previous beer manufacturer and the existing beer wholesaler that were in effect on the date of change of beer manufacturers.” (Emphasis added.) This 14 language reflects the General Assembly’s intent to condition application of the SML on a “change” of beer manufacturers, whereby the “previous” beer manufacturer does not “continue[] in the business” of selling, distributing, or importing the brand of beer in Maryland, and its place in that “business” is taken (i.e., it is replaced in that business) by another beer manufacturer. Viewed in this context, it is plain that the phrase “with the right to sell, distribute, or import a brand of beer” in § 5-201(a)(5) refers to the right conferred by a State-issued license or permit to sell, distribute, or import the brand of beer in Maryland.

It is that license or permit that has allowed the “previous” beer manufacturer legally to be “in the business” of selling, distributing, or importing the beer brand in Maryland. To put a finer point on it, the license or permit has allowed the previous beer manufacturer legally to enter into a beer franchise agreement with a Maryland wholesaler under which the wholesaler distributes the beer manufacturer’s brand(s) of beer. Pabst makes several arguments in support of an alternative interpretation of the meaning of a “successor beer manufacturer” that turns on a person’s or entity’s control of a license or permit holder. First, Pabst focuses on the phrase “person or license holder”3 in 3 As relevant here, a “person” is defined in the Alcoholic Beverages Article as “an individual” or “an association, a partnership, a corporation, a trust, or any other entity, and the officers, directors, and other individuals in active control of the activities of the association, partnership, corporation, trust, or other entity.” AB § 1-101(y)(1) & (2) (Supp. 2021).

A “license holder” is defined as “the holder of a license issued or a permit granted under this article.” Id. § 1-101(q)(1). Prior to the recodification of the Alcoholic Beverages Article in 2016, Article 2B, § 1-102(a)(15)(i) (1957, 2011 Repl. Vol.) provided: “‘License holder’ or ‘licensee’ means the holder of any license or permit, issued under the provisions of this article or any other law of this State….” As part of the recodification, the definition was changed to delete “licensee.” A revisor’s note explained that “the former alternative 15 § 5-201(a)(5), arguing that because a “person” – in addition to a “license holder” – may be a successor beer manufacturer, a “person” need not hold a license or permit post- acquisition to qualify as a successor beer manufacturer. Pabst reasons that a contrary interpretation reads “person” out of § 5-201(a)(5).

We disagree with Pabst’s construction of “person or license holder.” First, it is Pabst that seeks to read a word out of the definition of a successor beer manufacturer, namely, the word “replaces.” In Pabst’s view, if a license or permit holder’s corporate parent changes as a result of a corporate transaction, it does not matter that the entity that held the license or permit prior to the corporate acquisition continues to do so after the acquisition. But § 5-201(a)(5) requires the “beer manufacturer” that had the right to sell, distribute, or import the beer brand to be “replace[d]” by the successor beer manufacturer. By failing to give effect to the word “replaces” in § 5-201(a)(5), Pabst renders that word “meaningless, surplusage, superfluous, or nugatory.” See Mayor & Town Council of Oakland, 392 Md. at 316 . In contrast to Pabst’s treatment of “replaces,” our interpretation of § 5-201(a)(5) does not read “person” out of that subsection.

Pabst construes “person or license holder,” as used in § 5-201(a)(5), as referring to such entities as they exist after a corporate acquisition. In our view, “person or license holder” refers to the successor before its replacement of a license holder. That is, “person or license holder” makes clear that the new holder of the right to sell, distribute, or import a beer brand may or may not be an defined term ‘licensee’ is deleted to avoid any confusion that might result from using two different defined terms with the same meaning.” 2016 Md. Laws 675 . 16 existing license or permit holder prior to becoming the license or permit holder with respect to the brand in question. This construction of “person or license holder” gives effect to that phrase as well as to the language that follows it (“replaces” a beer manufacturer “with the right” to sell, distribute, or import the beer brand).4 Second, we disagree with the unstated but necessary rationale underlying Pabst’s reading of “person or license holder” – that more than one person possesses the “right to sell, distribute, or import a brand of beer” for purposes of the SML after a corporate acquisition of an entity that holds a license or permit: (1) the acquired license or permit holder; and (2) any “person” that has acquired control of the operations of the license or permit holder.

Nothing in the language of the SML suggests that the General Assembly contemplated that, for purposes of triggering application of the statute, the “right to sell, distribute, or import” the same brand of beer might belong to two different persons following a corporate transaction. To the contrary, the language of the SML reflects that the General Assembly intended that, for purposes of the SML, there would be one person that would have the “right” at any given time “to sell, distribute, or import a brand of beer”: first, the beer manufacturer that has been “in the business” of selling, distributing, or importing the brand under the terms of an agreement with a beer wholesaler; and second, the beer manufacturer that “continues in the business” of selling, distributing, or importing the brand and is therefore “obligated under all the terms and conditions of the agreement 4 As noted below, the legislative history of the 1998 amendment to the SML, which added the definition of “successor beer manufacturer” to the statute, supports our interpretation of “person or license holder.” 17 made between the previous beer manufacturer and the existing beer wholesaler that were in effect on the date of change of beer manufacturers.” AB § 5-201(b) (emphasis added). The second beer manufacturer must “replace” the first beer manufacturer – which had “made” the “agreement”5 with the existing beer wholesaler – rendering the first beer manufacturer a “previous beer manufacturer” with respect to the brand in question. The SML does not contemplate that the beer manufacturer that made the operative agreement with the existing beer wholesaler will continue in the business alongside the successor beer manufacturer.

Rather, the SML contemplates a “change of beer manufacturers.” Next, Pabst argues that the phrase “with the right to sell, distribute, or import a brand of beer,” as used in § 5-201(a)(5), does not mean the acquiring entity must replace an entity that possesses a State-issued license or permit. Rather, according to Pabst, “the right to sell, distribute, or import” may also mean the right to control the operations of a subsidiary entity that holds the license or permit to sell, distribute, or import the beer brand in Maryland. In support of this contention, Pabst notes that the statute does not refer to the “replace[ment]” of a “license holder,” but rather to the replacement of a “beer manufacturer.” Pabst then points to the definition of “beer manufacturer” in § 5-201(a)(3), noting that it is broad enough to encompass entities that do not hold a Maryland license or permit. Relatedly, Pabst observes that, under the BFFDA, a “franchisor” is a “beer 5 Under AB § 5-201(a)(2), an “[a]greement” is “oral or written evidence between a beer manufacturer and a beer wholesaler granting the beer wholesaler the right to offer and sell the brands of beer offered by the beer manufacturer.” 18 manufacturer” that enters into a “beer franchise agreement” with a “beer distributor.”6 As the entity that contracts to sell a brand of beer to a wholesaler in Maryland, a franchisor – unlike other “beer manufacturers” – must hold a State-issued license or permit.

Pabst contends, therefore, that the General Assembly would have referred to replacement of a “franchisor,” rather than replacement of a “beer manufacturer,” if it had intended to require that the entity to be “replace[d]” be the holder of the license or permit that allows the manufacturer to sell its beer to a wholesaler. We are not persuaded. In defining a successor beer manufacturer, the SML nowhere refers to “control” of a beer manufacturer or its operations. To be sure, an entity does not need to hold a Maryland license or permit to be a “beer manufacturer” under § 5-201(a)(3).

However, § 5-201(a)(5) does not refer to a “beer manufacturer” in a vacuum. Rather, it conditions application of the SML upon the replacement of a beer manufacturer “with the right to sell, distribute, or import a brand of beer.” And, as discussed above, § 5-201(b) makes clear that the replaced “beer manufacturer” is the “previous beer manufacturer” that “made” an “agreement” with a beer wholesaler granting the wholesaler the right to distribute the beer manufacturer’s brand(s) of beer. A non-resident dealer’s permit issued under AB § 2-124 allows a “bottler, brewer, … [or] manufacturer” that holds such a permit to “sell beer … to license holders authorized to receive the beverages.” AB § 2-124(b)(1) & (d). Thus, the SML contemplates that the parties to an agreement between a beer 6 The BFFDA provides that a “franchisor” is a “beer manufacturer that: (1) enters into a beer franchise agreement with a beer distributor; or (2) is a party to a beer franchise agreement.” AB § 5-101(g) (Supp. 2021). 19 manufacturer and a beer wholesaler will both hold Maryland licenses or permits.

It follows that the entity being “replace[d]” under § 5-201(a)(5) must be a Maryland license or permit holder. Pabst’s distinction between a “beer manufacturer” and a “beer franchisor” also misses the mark. While the BFFDA refers separately to a “beer manufacturer” and a “beer franchisor,” the latter being a particular kind of “beer manufacturer,” the SML only refers to a “beer manufacturer” and does not mention a “franchisor.” As discussed above, § 5-201(b) refers to “the agreement made between the previous beer manufacturer and the existing beer wholesaler that [was] in effect on the date of change of beer manufacturers.” Thus, a “previous beer manufacturer,” as used in § 5-201(b), must be an entity that would qualify as a “beer franchisor” under the BFFDA and, therefore, is the holder of a license or permit. Given that the “previous beer manufacturer” referred to in § 5-201(b) must be a beer franchisor, it stands to reason that § 5-201(a)(5)’s “beer manufacturer with the right to sell, distribute, or import a brand of beer” must also be a “beer franchisor” within the meaning of the BFFDA.

Finally, Pabst points out that § 5-201(a)(5) uses the word “includes” rather than “means” in defining a successor beer manufacturer. Thus, according to Pabst, § 5-201(a)(5) does not limit a “successor beer manufacturer” to the person or entity that replaces a previous beer manufacturer with the right to sell, distribute, or import the beer brand. Pabst is correct that we ascribe significance to the General Assembly’s choice of “includes” in a statutory definition. Indeed, the General Assembly has defined “[i]ncludes or including” to mean “includes or including by way of illustration and not by way of 20 limitation.” Md. Code Ann., Gen.

Prov. § 1-110 (Supp. 2021). However, Pabst has not provided us with any basis to conclude that the General Assembly intended a corporate entity that purchases a controlling interest in a Maryland-licensed beer manufacturer – and the individual(s) who control the acquiring corporate entity – to qualify as successor beer manufacturers, without expressly saying so.7 To summarize,