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Liquor store owners argue state has Constitutional right to regulate cold beer

December 9, 2014

The Indiana Association of Beverage Retailers Inc., arguing that the state’s interest in regulating alcohol trumps an Equal Protection challenge, has filed an amicus brief in support of Indiana’s law prohibiting convenience stores and gas stations from selling beer cold.

The association, whose members are independently owned liquor stores in the state, filed the brief Dec. 8 in the case pending before the 7th Circuit Court of Appeals, Indiana Petroleum Marketers and Convenience Store Association, Thornton’s Inc., Ricker Oil Co., Inc., and Freedom Oil, Inc. v. David Johnson, in his official capacity as Interim Chairman of the Indiana Alcohol and Tobacco Commission, 14-2559.

In its 30-page brief, the IABR asserted the 21st Amendment gives all states, including Indiana, the power to control the sale of beer, wine and spirits within their borders. However, allowing more outlets to sell cold beer would undermine the Indiana Legislature’s regulatory scheme which makes cold beer available in a limited and controlled way.

The state has tempered the availability of alcohol in order to lower the incidents of underage drinking and alcohol-related accidents, according to the IABR. Indiana’s policy of maintaining “orderly markets” in order to curb excessive alcohol sales mirrors that of other states.

Conversely, the IABR charged the convenience stores are motivated by self-interests.

“Plaintiffs want to re-write Indiana public policy as expressed in the Indiana Liquor Control Code to fit their business model,” the IABR argued. “They want to draw more people into their stores, or to take advantage of spur-of-the-moment purchases, so that more beer can be sold to the citizens of Indiana.”

The dispute over Indiana’s beer law reached the 7th Circuit in July when convenience store retailers appealed a ruling from the District Court.

Store owners turned to the federal court after several failed attempts to convince the Indiana Statehouse to change the state statute. In 2013, the retailers filed in U.S. District Court for the Southern District of Indiana, arguing that Indiana’s limitation on cold beer sales violated the Equal Protection Clause of the U.S. Constitution.

Following a two-day hearing, the District Court granted the state’s motion for summary judgment.

The IABR acknowledged in its brief to the 7th Circuit that two provisions of the Constitution – the 21st Amendment and the Equal Protection Clause – are being highlighted by the challenge to Indiana’s beverage alcohol law.

However, the association argued the 21st Amendment, which gives states the primary responsibility for regulating traffic beer, wine and spirits within their borders, tops the Equal Protection Clause in this instance. Central to the state’s ability to regulate is the ability to determine who may be licensed to sell alcohol, the kinds of alcohol they can sell and the number of outlets for alcohol.

That regulation is still necessary, IABR continued, to curb excessive consumption, maintain order in the market and to ensure compliance with keeping alcohol from underage individuals.

“State laws regulating beverage alcohol must survive some form of Equal Protection rationality review,” the IABR maintained. “…Because the Equal Protection clause and the Twenty-first Amendment are parts of the same Constitution, the interests embodied by both provisions should be considered with due deference given to a State’s Twenty-first Amendment-recognized authority to determine how it wishes to structure its beverage alcohol distribution system.”

In addition, the IABR cited in its brief the District Court’s rational basis test as supporting Indiana’s cold beer statute. This test maintains that a law is given a strong presumption of validity and must be upheld if there is a rational reason for the disparity of treatment and the government’s legitimate purpose.

“Since it is possible to conceive of plausible rational reasons (e.g., more stringent regulations, minors prohibited access to the license premises, not selling products like gasoline to drivers, close connection to the community through the residency requirement, less change of shoplifting by minors, older and presumably more mature clerks who are less likely to sell to underage friends, etc.) for why the Indiana Legislature would allow package liquor states to sell cold beer while not allowing other permittees to do so, the statute withstands the equal protection challenge,” the IABR argued.

The 7th Circuit Court of Appeals has scheduled oral arguments in this case for Jan. 7.

 

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