Monarch loses federal challenge seeking to wholesale liquor

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Indianapolis-based Monarch Beverage Co.’s attempt to obtain a wholesale liquor permit rests with the Indiana Supreme Court after its federal challenge to Indiana law was rejected by the 7th Circuit Court of Appeals Friday.

A panel of the 7th Circuit affirmed Senior Judge Sarah Evans Barker’s ruling that Indiana’s law prohibiting beer wholesalers like Monarch from holding an interest in a liquor-distribution permit does not violate the prohibited-interested law.

Monarch sued members of the state Alcohol and Tobacco Commission to invalidate the law that does not allow a beer wholesaler to acquire a liquor-wholesaling permit or a liquor wholesaler to obtain a beer-wholesaling permit. Monarch claims this facially discriminates against beer wholesalers in violation of the 14th Amendment’s equal-protection guarantee.

The state made three arguments in defense, with the federal appeals court focusing on its temperance rationale. The state says separating beer and liquor wholesaling rationally serves to discourage consumption of alcohol by making distribution more expensive, which in turn increases prices for consumers.

Judge Diane Sykes, writing for the majority, noted that the law is not the most direct way to achieve this aim (“a tax is the most direct way”), but “it’s hardly irrational to think that separating beer and liquor wholesaling is likely to impose higher distribution costs than if beer and liquor wholesaling were combined. That, in turn, keeps liquor prices higher, with the salutary corresponding effect of reducing consumption,” she wrote.

“The Supreme Court has never invalidated an economic regulation on rational-basis review because a more direct or effective policy alternative was available. Neither have we, and Monarch has given us no reason to change course.

“Indiana’s law separating beer and liquor wholesaling is rationally related to the state’s interest in encouraging temperance; that it serves this purpose indirectly does not make the law irrational,” Sykes wrote.

Judge Frank Easterbrook concurred with the judgment in a separate opinion, basing his decision not on a standard under the Equal Protection Clause, but instead as a substantive objection that fails under The Slaughter-House Cases, 83 U.S. (16 Wall.) 36 (1873) and Washington v. Glucksberg, 521 U.S. 702 (1997).

Phil Terry, CEO of Monarch Beverage, said Wednesday in an email that the company is disappointed in the decision and understood it had a very heavy burden of proof in that “we had to show that no real or imagined purpose for the ban on beer and liquor at the wholesale level was rational.

“The court held that we did not meet that burden as to the regulator’s imagined purpose of creating an inefficient and anti-competitive distribution system which would cause higher prices to consumers and thereby promote temperance.”

Terry said the company hasn’t decided whether it will appeal.

The Wine & Spirits Distributors of Indiana and the Indiana Beverage Alliance released a statement after the decision praising the ruling.

“This is a victory for Hoosiers in many ways. First, it's a win in the fight against monopolies in the alcoholic beverage industry.  Second, it proves that non-stop bullying of regulators in this state doesn't work. Finally, we would hope that this would be the end of Monarch’s wasteful lawsuits against the State of Indiana because Hoosier taxpayers have long been footing the bill for Monarch’s unrelenting efforts.”

The case is Monarch Beverage Co. Inc. v. David Cook, et al., 15-3440.

Monarch has a separate challenge to the law pending before the Indiana Supreme Court. A Marion County judge ruled last year that Monarch’s affiliate Spirited Sales LLC is entitled the liquor-wholesaler permit. The state appealed and sought to stay the ruling pending appeal, but both the Indiana Court of Appeals and Supreme Court denied the request.

The Supreme Court heard arguments in the case in February. Justice Robert Rucker has since retired and Justice Mark Massa, who previously chaired the Alcohol and Tobacco Commission before becoming a justice, did not participate in oral arguments. The high court has not yet ruled on the case.


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  1. He TIL team,please zap this comment too since it was merely marking a scammer and not reflecting on the story. Thanks, happy Monday, keep up the fine work.

  2. You just need my social security number sent to your Gmail account to process then loan, right? Beware scammers indeed.

  3. The appellate court just said doctors can be sued for reporting child abuse. The most dangerous form of child abuse with the highest mortality rate of any form of child abuse (between 6% and 9% according to the below listed studies). Now doctors will be far less likely to report this form of dangerous child abuse in Indiana. If you want to know what this is, google the names Lacey Spears, Julie Conley (and look at what happened when uninformed judges returned that child against medical advice), Hope Ybarra, and Dixie Blanchard. Here is some really good reporting on what this allegation was: Here are the two research papers: 25% of sibling are dead in that second study. 25%!!! Unbelievable ruling. Chilling. Wrong.

  4. Mr. Levin says that the BMV engaged in misconduct--that the BMV (or, rather, someone in the BMV) knew Indiana motorists were being overcharged fees but did nothing to correct the situation. Such misconduct, whether engaged in by one individual or by a group, is called theft (defined as knowingly or intentionally exerting unauthorized control over the property of another person with the intent to deprive the other person of the property's value or use). Theft is a crime in Indiana (as it still is in most of the civilized world). One wonders, then, why there have been no criminal prosecutions of BMV officials for this theft? Government misconduct doesn't occur in a vacuum. An individual who works for or oversees a government agency is responsible for the misconduct. In this instance, somebody (or somebodies) with the BMV, at some time, knew Indiana motorists were being overcharged. What's more, this person (or these people), even after having the error of their ways pointed out to them, did nothing to fix the problem. Instead, the overcharges continued. Thus, the taxpayers of Indiana are also on the hook for the millions of dollars in attorneys fees (for both sides; the BMV didn't see fit to avail itself of the services of a lawyer employed by the state government) that had to be spent in order to finally convince the BMV that stealing money from Indiana motorists was a bad thing. Given that the BMV official(s) responsible for this crime continued their misconduct, covered it up, and never did anything until the agency reached an agreeable settlement, it seems the statute of limitations for prosecuting these folks has not yet run. I hope our Attorney General is paying attention to this fiasco and is seriously considering prosecution. Indiana, the state that works . . . for thieves.

  5. I'm glad that attorney Carl Hayes, who represented the BMV in this case, is able to say that his client "is pleased to have resolved the issue". Everyone makes mistakes, even bureaucratic behemoths like Indiana's BMV. So to some extent we need to be forgiving of such mistakes. But when those mistakes are going to cost Indiana taxpayers millions of dollars to rectify (because neither plaintiff's counsel nor Mr. Hayes gave freely of their services, and the BMV, being a state-funded agency, relies on taxpayer dollars to pay these attorneys their fees), the agency doesn't have a right to feel "pleased to have resolved the issue". One is left wondering why the BMV feels so pleased with this resolution? The magnitude of the agency's overcharges might suggest to some that, perhaps, these errors were more than mere oversight. Could this be why the agency is so "pleased" with this resolution? Will Indiana motorists ever be assured that the culture of incompetence (if not worse) that the BMV seems to have fostered is no longer the status quo? Or will even more "overcharges" and lawsuits result? It's fairly obvious who is really "pleased to have resolved the issue", and it's not Indiana's taxpayers who are on the hook for the legal fees generated in these cases.