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Supreme Court overturns grant of Monarch affiliate’s liquor permit

July 21, 2017

Editor's note: This article has been corrected to note the ruling was a 3-0 decision.

The Indiana Supreme Court has reversed a trial court’s order directing the Indiana Alcohol and Tobacco Commission to grant a liquor wholesaling license to an affiliate of a major Indiana beer and wine wholesaler, finding statutory language prohibits companies with overlapping ownership to hold interest in both liquor and beer wholesaler permits.

The decision, handed down Friday, comes after Spirited Sales LLC, an affiliate of Monarch Beverage, has been arguing for years that it should be allowed to hold a liquor wholesaling permit, despite its relationship to Monarch, which holds a beer and wine wholesaling permit. Spirited is owned by E.F. Transit Inc., which shares its five shareholders with Monarch.

Because of the overlapping ownership between the various companies, the commission denied Spirited Sales’ liquor wholesaling license in an attempt to avoid giving Monarch a monopoly over Indiana’s alcoholic beverage industry. But the Marion Superior Court reversed that decision and ordered the commission to issue the permit. Special Judge Heather Welch found the commission had cited to the doctrine of corporate separateness in previous cases in support of granting a permit to businesses whose owners held prohibited interests. Thus, the denial of Spirited Sales’ application was arbitrary and capricious, Welch ruled last August.

But in the 3-0 opinion written by Justice Steve David, the justices concluded the language of Title 7.1 in Indiana Code is clear, and the commission’s decision to deny the permit followed the unambiguous language. Justices Christopher Goff and Mark Massa did not participate in the decision.

“Here, ties between EFT and Monarch were so extensive that EFT could reasonably be deemed to hold an interest in a beer wholesaler’s permit – an interest prohibited by a combined reading of sections 7.1-5-9-6 and 7.1-1-2-5,” David wrote. “… Likewise, Monarch and Spirited’s overlapping ownership also bars Spirited from obtaining the sought-after permit.”

The trial court further found that Monarch was a “disfavored” wholesaler and the governor’s office interfered with permit applications it associated with Monarch. But the high court also rejected that argument, writing “the trial court’s factual findings fail to demonstrate that the Commission’s decision was made on political grounds of any kind.”

“(W)e have not measured any public policy considerations or assessed the efficacy of prohibited interest laws on the goals outlined by the statute – doing so would be inappropriate,” David wrote. “We recognize the businesses have long lobbied this very contentious point before our General Assembly, and will likely continue to do so, but deciding whether the regulatory scheme in place is still relevant or still necessary or in need of overhaul are matters to be resolved through the political process, which we trust would take into account the policy arguments made by opposing sides on this issue.”

The case is Indiana Alcohol and Tobacco Commission v. Spirited Sales, LLC, 49S00-1611-PL-614.

This story will be updated.

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