One Brand, One Wholesaler: Arkansas Requires Shared-Brand Manufacturers to Use the Same Exclusive Distributor

1. Introduction

This decision establishes that Arkansas’s exclusive alcohol-distribution protections operate at the shared-brand level, rather than separately for each manufacturer’s distinct beverage. Under Arkansas Code Annotated section 3-2-403, manufacturers supplying different Kirkland Signature spirituous or vinous beverages must use the same designated Arkansas wholesaler.

The dispute arose within Arkansas’s three-tier distribution system: manufacturers supply alcoholic beverages, licensed wholesalers distribute them, and retailers sell them to consumers. Costco Wholesale Corporation, a retailer, owns the registered Kirkland Signature trademark. Several manufacturers supplied beverages bearing that trademark after Costco opened its first Arkansas location.

Arkansas Wine and Spirits Wholesale, LLC (AWS) challenged an administrative decision requiring two of those manufacturers to replace AWS with Moon Distributors, Inc. The appellees included the Arkansas Department of Finance and Administration, the Arkansas Alcoholic Beverage Control Division (ABC), its board members in their official capacities, Moon, and the affected manufacturers, Mach Flynt, Inc. and Levecke Corporation.

The central question was whether each manufacturer could select its own wholesaler for a different Kirkland Signature beverage, or whether the brand’s existing exclusive distribution designation controlled all manufacturers using that brand. Related questions concerned the justification for changing previously approved designations and the proper judicial treatment of agency statutory interpretations.

2. Background and Procedural History

The competing wholesale designations

ABC initially approved all four designations. It later concluded that registering Kirkland Signature beverages with multiple wholesalers violated the statutory requirement of brand exclusivity. The Director instructed Mach Flynt and Levecke to request changes to Moon because the relevant first registration had designated Moon. An earlier wholesaler had released its designation, so that historical assignment did not affect the court’s analysis.

Mach Flynt and Levecke submitted change requests but expressly stated that they preferred AWS. AWS objected. Following a hearing, the Director approved both requests, ending AWS’s distribution designation for those Kirkland Signature products.

Administrative and judicial review

The ABC Board upheld the Director’s decision after its own hearing. AWS then sought judicial review in the Pulaski County Circuit Court, which affirmed. The Arkansas Court of Appeals certified the subsequent appeal to the Supreme Court of Arkansas, which accepted certification and affirmed.

Justice Rhonda K. Wood wrote the majority opinion. Special Justice Cory Cox joined. Justices Shawn A. Womack and Nicholas J. Bronni filed separate dissents, addressing different objections. Justice Webb did not participate.

3. Summary of the Opinion

The majority resolved the appeal through four principal conclusions:

1. Kirkland Signature is one brand for section 3-2-403. The different manufacturers and beverage varieties did not create separate brands for wholesale-exclusivity purposes.
2. The exclusive designation follows the brand. Once a manufacturer selects a wholesaler for a brand, other manufacturers of that brand or its brand extensions must designate the same wholesaler.
3. Correcting statutory noncompliance supplied good cause. The Board could approve the changes to align the registrations with Arkansas’s exclusivity requirements.
4. The administrative decision satisfied factual and discretionary review. Substantial evidence supported the Board’s findings, and its hearing, consideration of testimony, and record review demonstrated a reasoned decision rather than arbitrary action.

The result was that Moon remained the exclusive wholesaler for the Kirkland Signature brand, including the Mach Flynt and Levecke beverages previously assigned to AWS.

4. Legal Reasoning

A. Legal interpretation and factual review remain distinct

The court reviewed the Board’s determination directly, not the circuit court’s reasoning. It then separated questions of statutory meaning from questions concerning administrative findings and discretion.

• Statutory interpretation: Reviewed de novo, without special weight or deference to the agency’s conclusion.
• Factual findings: Reviewed for substantial evidence.
• Administrative discretion: The decision had to be free from arbitrariness, capriciousness, and abuse of discretion.

This distinction matters because the agency could not conclusively determine what the statute meant. Nevertheless, once the court independently accepted the brand-level interpretation, the Board’s supporting findings and corrective action received the more restrained review applicable to administrative factfinding.

B. The competing statutory meanings of “brand”

Section 3-2-403(b)(1) requires manufacturers, importers, or producers to submit a federal Certificate of Label Approval (COLA) for each brand and brand-label extension first shipped into or within Arkansas. The registration must designate one licensed wholesaler:

“who shall be the exclusive distributor of such brand or label within the state.”

The difficulty was that the statutory terminology did not align neatly. Section 3-2-403(a) defines a “brand label” as a label carrying the distinctive design of a brand name. Yet section 3-2-412(c)(1), expressly applicable to the subchapter, defines “brand” as:

“the same product or substantially the same product as evidenced by the product label that must be filed with the division.”

AWS relied on the latter definition. In its view, Chianti, Sauvignon Blanc, and strawberry margarita are different products, not the same or substantially the same product merely because their labels share the Kirkland Signature name.

The majority found section 3-2-403 ambiguous and described the legislative language as unusually confusing and internally inconsistent. It therefore used several interpretive tools to reconcile the provisions.

C. Ordinary meaning, regulations, and statutory purpose

First, the court consulted The American Heritage Dictionary of the English Language and Black’s Law Dictionary. Both supported understanding a brand as a distinctive name, symbol, or trademark identifying goods and distinguishing them from competitors’ goods. That understanding favored treating Kirkland Signature as the relevant brand despite differences among its beverages.

Second, the court considered ABC regulation 3 Code Ark. R. 2-102. The regulation includes a registered product’s derivatives and subcategories within its brand. It also defines “product” broadly as brewed, fermented, or distilled liquor, rather than a particular liquor or beverage variety. For the majority, this undermined AWS’s argument that the statutory definition necessarily operated at the individual-beverage level.

The majority’s stated approach was to use the agency’s interpretation as an aid when addressing ambiguity, not to give it controlling authority. That distinction is important: the opinion did not expressly abandon independent judicial interpretation, although Justice Bronni disputed whether the majority actually maintained that independence.

Third, the court relied on section 3-2-401(1), which identifies protection against manufacturers’ “undue control” of wholesalers as a statutory objective. Brand-wide exclusivity was consistent with protecting a wholesaler’s established designation from fragmentation among multiple suppliers of the same brand.

AWS raised policy objections, including the possibility that an exclusive wholesaler might favor some manufacturers over others. The court treated those objections as matters for the legislature, rather than reasons to rewrite the statute. It noted that manufacturers retain a procedure for requesting a wholesaler change. That observation preserves access to the statutory process; it does not guarantee that an individual manufacturer may obtain a separate wholesaler for a shared brand.

D. The significance of “brand or label”

The majority emphasized the disjunctive wording “brand or label.” It concluded that allowing separate wholesalers for individual labels within the same brand would effectively substitute “brand and label” for the language enacted by the legislature.

Under this reasoning, a common brand independently triggers exclusivity even when the underlying beverages carry different product labels. The decisive unit is therefore not simply the manufacturer-product pairing.

E. Why the section 3-2-412 argument did not change the result

AWS separately argued that section 3-2-412’s prohibition on dual distributorships only prevents a single manufacturer from selecting multiple wholesalers for its own beverage. It did not, AWS maintained, prohibit different manufacturers from selecting different wholesalers for different Kirkland Signature products.

The court did not definitively reject that proposed limitation on section 3-2-412. Instead, it explained that the Board’s decision rested on section 3-2-403. Even if AWS’s reading of section 3-2-412 were correct, section 3-2-403 independently required one exclusive wholesaler for the shared brand.

This limits the holding’s doctrinal basis: the case principally establishes the reach of section 3-2-403, rather than comprehensively resolving every aspect of the dual-distributorship prohibition.

F. Good cause and correction of initially approved registrations

A designated wholesaler cannot be changed without a hearing and a finding of good cause. Here, the Board found that the labels belonged to the same brand and that compliance with sections 3-2-401 and 3-2-403 supplied good cause for the changes.

The court accepted that justification. It also observed that the considerations listed in section 3-2-404(5)(B)(iv) do not exhaust the grounds the Director may consider. Consequently, the requests did not require a showing that AWS had performed poorly: the identified statutory conflict itself justified correction.

The opinion also rejected the challenge to administrative discretion. The Board held a hearing, considered testimony, reviewed the record, and identified compliance with state law as its reason for affirming the Director. The initial approvals and the manufacturers’ preference for AWS did not require the Board to perpetuate what it had determined was an unlawful registration arrangement.

5. The Separate Dissents

A. Justice Womack: sovereign immunity foreclosed review

Justice Womack would have reversed the circuit court and dismissed the case without deciding the distribution statutes. His objection was jurisdictional: article 5, section 20 of the Arkansas Constitution prohibits the State from being made a defendant in its courts, except where another constitutional provision permits the proceeding.

He identified habeas corpus, illegal-exaction claims, and specified election-petition challenges as constitutionally authorized examples. In his view, no comparable constitutional authorization covered AWS’s suit, and statutory judicial-review provisions—including the Administrative Procedure Act—could not create one.

This dissent challenges the availability of the judicial forum, not the majority’s preferred wholesaler. The majority reached the merits without expressly analyzing this sovereign-immunity objection. Accordingly, the opinion should not be characterized as announcing a reasoned new exception to sovereign immunity.

B. Justice Bronni: the statutory definition requires product-level exclusivity

Justice Bronni would have reversed on the merits. He agreed that the drafting was difficult but rejected the conclusion that difficulty justified replacing the legislature’s express definition of “brand” with its ordinary dictionary meaning.

His interpretation linked three features of the statutory scheme:

1. Section 3-2-412(c) defines a brand by reference to the same or substantially the same product and its filed label.
2. COLAs are product-specific; the record contained multiple product approvals, not one general Kirkland Signature COLA.
3. Section 3-2-403(b)(1) requires an exclusive wholesaler for “such brand or label,” referring back to the product-based registration.

He also relied on section 3-2-412(c)(2), which treats identical or substantially identical labels as the same brand. In his view, this reinforced a product-and-label-centered scheme.

For Justice Bronni, the majority’s interpretation assigned “brand” one meaning when discussing the COLA requirement and another when discussing exclusivity within the same sentence. His alternative would prohibit multiple wholesalers for a product and its product-specific variants, while allowing distinct Kirkland Signature products to have different wholesalers.

He further criticized reliance on statutory purpose and agency regulations. Section 3-2-401 also expresses a commitment to “healthy competition,” which he considered inconsistent with expanding a wholesaler’s monopoly. More fundamentally, he viewed the majority’s use of ABC’s interpretation as improper agency deference and a threat to separation of powers. Those criticisms are the dissent’s characterization, not an express majority holding that agencies may override statutory definitions.

6. Precedents Cited and Their Role

A. Precedents supporting the majority’s framework

Moore v. Ark. Alcoholic Beverage Control Bd., 2016 Ark. 422, 503 S.W.3d 796

This case supplied the administrative-review framework. It supported reviewing the Board directly, evaluating factual determinations for substantial evidence, and sustaining agency action when it is supported by evidence and is not arbitrary, capricious, or an abuse of discretion. Its importance was procedural and evidentiary; it did not itself answer the shared-brand question.

Myers v. Yamato Kogyo Co., Ltd., 2020 Ark. 136, 597 S.W.3d 613

The majority relied on this decision for independent, de novo statutory interpretation without special deference to the agency. It also invoked the qualification that an agency’s interpretation may serve as one interpretive tool when statutory language is ambiguous. This precedent became a point of disagreement because the majority considered ABC’s regulations helpful, while the dissent considered that reliance an abdication of judicial responsibility.

Hudson v. Murphy Oil USA, Inc., 2024 Ark. 179, 700 S.W.3d 891

This decision supplied the majority’s statutory-construction principles: ordinary meaning, ambiguity where text supports more than one interpretation, consideration of legislative intent, and reconciliation of provisions into a coherent whole. It justified moving beyond an isolated reading of the product-based definition and considering the broader registration and exclusivity scheme.

B. Authorities cited in Justice Womack’s dissent

Thurston v. League of Women Voters of Ark., 2022 Ark. 32, 639 S.W.3d 319

Justice Womack cited his dissent in this case for his strict reading of sovereign immunity: absent constitutional authorization, the State cannot properly be a defendant. The cited discussion supported his position that the present case should end at the jurisdictional threshold.

Cherokee Nation Businesses, LLC v. Gulfside Casino P'ship, 2023 Ark. 153, 676 S.W.3d 368

He relied on his dissent there for the proposition that the General Assembly cannot enact an exception to constitutional sovereign immunity. This directly supported his objection to using statutory administrative-review provisions as authorization for AWS’s suit.

Rutledge v. Remmel, 2022 Ark. 86, 643 S.W.3d 5

His concurrence was cited alongside the constitutional provisions governing habeas corpus and illegal exactions. It helped illustrate his distinction between constitutionally permitted proceedings and exceptions purportedly created only by statute.

Kimbrough v. Grieve, 2024 Ark. 34, 685 S.W.3d 225

Justice Womack similarly cited his dissent in this decision when discussing constitutionally grounded exceptions. Its role was to reinforce his existing constitutional position, rather than to supply a rule about alcohol distribution.

Armstrong v. Thurston, 2022 Ark. 167, 652 S.W.3d 167

His concurrence supported the example of constitutionally authorized jurisdiction over specified initiative, referendum, and proposed-amendment challenges. He contrasted that express authorization with the absence of comparable constitutional language for AWS’s administrative-review action.

These citations must be read with their stated posture in mind: Justice Womack principally invoked his own separate writings, not majority holdings establishing that this particular suit was barred.

C. Authorities cited in Justice Bronni’s dissent

DePierre v. United States, 564 U.S. 70 (2011)

The dissent cited this case for the proposition that inartful drafting does not excuse courts from faithfully construing enacted text. It framed the difficulty of section 3-2-403 as a judicial interpretive task, not a reason to accept ABC’s preferred meaning.

Lamie v. U.S. Tr., 540 U.S. 526 (2004)

This authority supported the distinction between awkward or ungrammatical language and genuine ambiguity. Justice Bronni used it to challenge the majority’s threshold decision to treat the statutory scheme as ambiguous.

Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024)

The cited passages came from Justice Thomas’s concurrence. They supported Justice Bronni’s arguments that judges must resolve legal ambiguity and that agencies cannot dictate outcomes through erroneous interpretations. The dissent also invoked that concurrence’s separation-of-powers and individual-liberty concerns. These passages did not supply the majority’s governing Arkansas standard.

Myers v. Yamato Kogyo Co., 2020 Ark. 136, 597 S.W.3d 613

Using this shortened title, the dissent invoked the same Arkansas decision relied on by the majority. Justice Bronni emphasized its declaration that determining statutory meaning belongs to the court. The disagreement concerned whether the majority permissibly consulted an agency interpretation or effectively deferred to it.

Kisor v. Wilkie, 588 U.S. 558 (2019)

The dissent quoted Justice Gorsuch’s concurrence in the judgment to criticize judicial abdication of statutory interpretation. Its function was to reinforce the institutional objection to agency deference, not to provide a construction of Arkansas’s alcohol statutes.

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)

This case supported reading a statutory scheme as a consistent whole. Justice Bronni used that principle to connect the express definition of “brand,” product-specific COLAs, and the exclusive-distributor requirement.

Standridge v. Fort Smith Pub. Schs., 2025 Ark. 42, 708 S.W.3d 773

This Arkansas authority supplied a similar whole-statute principle. Together with the preceding federal case, it supported the dissent’s claim that product-level exclusivity was the more harmonious reading.

Bird v. Pan W. Corp., 261 Ark. 56, 546 S.W.2d 417 (1977)

This was central to the dissent’s criticism of the dictionary analysis. It states that courts are bound by legislative definitions regardless of a word’s ordinary meaning. Justice Bronni therefore considered section 3-2-412(c)’s express definition controlling throughout the subchapter.

Connecticut Nat'l Bank v. Germain, 503 U.S. 249 (1992)

The dissent cited the presumption that a legislature means what its enacted text says. That principle supported beginning with the statutory definition instead of generating uncertainty through an alternative ordinary meaning.

Meredith v. Fed. Mine Safety & Health Rev. Comm'n, 177 F.3d 1042 (D.C. Cir. 1999)

This authority distinguishes interpretive difficulty from ambiguity, particularly in agency-deference analysis. It reinforced the dissent’s position that a hard statutory question does not automatically enlarge the agency’s role.

Magwood v. Patterson, 561 U.S. 320 (2010)

Justice Bronni used this case to oppose replacing statutory text with speculation about legislative intent. It directly challenged the majority’s reliance on the legislature’s wholesaler-protection objective.

Sturgeon v. Frost, 587 U.S. 28 (2019)

This decision supported the proposition that statements of purpose cannot override operative statutory language. The dissent argued that protecting wholesalers from undue manufacturer control could not displace the enacted product-based definition.

D.C. v. Heller, 554 U.S. 570 (2008)

The dissent cited this case for the distinction between operative provisions and prefatory language. It reinforced the argument that general policy declarations must not control over specific statutory commands.

Justice Bronni also cited Scalia and Garner’s Reading Law concerning the limited circumstances in which a defined meaning may be displaced. His discussion of federal regulation 27 C.F.R. § 4.10 and TTB Form 5100.31 emphasized that COLA applications contain extensive product-specific information—not merely a brand-name field.

7. Impact and Limits of the Decision

A. Stronger brand-wide wholesaler protection

The decision strengthens the position of the designated wholesaler for a shared brand. Separate manufacturers cannot avoid that designation simply by supplying different spirituous or vinous beverages under the same brand name. A wholesaler’s protected distribution position may therefore extend beyond the products supplied by the manufacturer that originally selected it.

B. Registration history becomes commercially important

Manufacturers and wholesalers must investigate an existing brand designation before arranging distribution. A later manufacturer’s preference does not supersede the operative brand-wide assignment. The case also shows that agency approval of an inconsistent registration does not necessarily prevent later correction through the required hearing and good-cause process.

C. Compliance can justify a wholesaler change

The opinion establishes that correcting a conflict with the exclusivity statutes can supply good cause. Future change proceedings may therefore focus on statutory compliance rather than only on commercial dissatisfaction or wholesaler performance.

D. Agency interpretation remains persuasive, not expressly controlling

The majority reaffirmed de novo interpretation and the absence of special agency deference. Its practical contribution is to illustrate how agency regulations may influence a court’s effort to reconcile ambiguous legislation. Justice Bronni’s dissent identifies the unresolved methodological concern: when does consulting an agency’s interpretation become allowing that agency to determine the law?

E. Questions the opinion does not resolve

• It does not comprehensively define when other names, trademarks, or label arrangements constitute one brand.
• It does not establish a general rule for every alcoholic-beverage category; the holding concerns the spirituous and vinous beverage scheme before the court.
• It does not guarantee approval of future manufacturer-requested changes or explain every consequence of coordinating a change across multiple suppliers.
• It does not decide that broader exclusivity is economically preferable; the majority treated that policy choice as legislative.
• It does not expressly resolve Justice Womack’s constitutional objection to judicial review.

The sharply divided statutory analysis may encourage legislative clarification of “brand,” “brand label,” “brand name,” and “brand label extension,” particularly their relationship to product-specific federal approvals.

8. Complex Concepts Simplified

Three-tier system

A distribution structure separating manufacturers, wholesalers, and retailers. Costco’s ownership of the brand did not make it the manufacturer of every Kirkland Signature beverage.

Brand-level versus product-level exclusivity

Brand-level exclusivity assigns one wholesaler to all covered beverages using a shared brand. Product-level exclusivity assigns one wholesaler to a particular beverage and substantially similar variants. The majority adopted the former interpretation here.

COLA

A federal Certificate of Label Approval. Its product-specific nature was central to the dissent’s argument that Arkansas’s registration and distribution requirements should also operate at the product level.

De novo review

The court decides the legal question independently rather than accepting the agency’s answer as controlling.

Substantial evidence

Sufficient relevant evidence to support the agency’s factual determination. This is different from independently deciding what the statute means.

Good cause

A legally adequate justification for changing an existing wholesaler designation. Here, bringing registrations into compliance with the governing statutes qualified.

Arbitrary or capricious action

Administrative action lacking a rational, considered basis. The Board’s hearing, record review, and compliance rationale defeated that challenge.

Sovereign immunity

A constitutional protection against suits involving the State. Justice Womack considered it a complete barrier to this proceeding; the majority did not expressly analyze that position.

9. Conclusion

The controlling rule is that manufacturers sharing a covered brand must share its exclusive Arkansas wholesaler. Kirkland Signature’s different beverages and separate manufacturers did not permit separate wholesale designations under section 3-2-403.

The decision also confirms that correcting statutory noncompliance can justify changing an initially approved designation through the required administrative process. Its broader significance lies in the tension between brand protection, express statutory definitions, and judicial use of agency interpretations—a tension forcefully preserved in the separate dissents.