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Convenience stores prepare case to sell cold beer

February 13, 2014

The convenience stores that filed suit last year against the state in their efforts to sell cold beer are about to get their day in court.

The Indiana Petroleum Marketers and Convenience Store Association brought its suit against the state in federal court in May, arguing that Indiana’s law governing cold-beer sales violates the equal protection clause in the 14th Amendment of the U.S. Constitution by favoring one class of retailer over another.

In Indiana, grocery and convenience stores are only allowed to sell room-temperature beer, while liquor stores can sell it cold.

The association is seeking an injunction, asking Judge Richard L. Young to rule that the state statute is unconstitutional. A hearing on the injunction has been set for Feb. 20 in U.S. District Court in Indianapolis.

The hearing, which in this case acts as a trial, is expected to last two days, with the judge taking the matter under advisement and issuing a ruling at a later date.

But a glance at the court docket suggests the association of convenience stores might face an uphill battle in its quest to change state law.

The Indiana Beverage Alliance and the Indiana Association of Beverage Retailers, as well as the state’s largest beer wholesaler, Indianapolis-based Monarch Beverage Co., have filed briefs with the court opposing the convenience stores.

Monarch also is involved in its own federal court fight with the state, arguing that, besides beer, it should be able to supply liquor to bars, restaurants and retail outlets. State law prohibits alcohol wholesalers from supplying both beer and liquor.

Besides the three groups opposing the convenience stores, the 21st Amendment liquor store chain is expected to follow suit and file a brief, said its lawyer, Michael Wukmer, a partner at Ice Miller LLP.

“This is a challenge to the Constitution,” he said. “We think it has no merit and the judge should deny it.”

21st Amendment anticipates filing its opposing brief in response to the judge’s Feb. 6 ruling rejecting the locally based chain’s request to directly intervene in the case by interjecting its own claims and issues.

The association of convenience stores filed its suit only after attempts to get the General Assembly to change the law fell on deaf ears, said John Maley, a partner at Barnes & Thornburg LLP who is representing the convenience stores.

Maley is upbeat about his client’s chances of success, since the Indiana Supreme Court rejected Evansville’s amended smoking ban, which exempted the former Aztar riverboat casino, now known as Tropicana Evansville.

More than two dozen tavern and club owners, and several fraternal organizations, including Veterans of Foreign Wars Post 2953, challenged the city’s 2012 amendment to its smoking ban that carved out an exemption that permitted smoking at the casino.

By a 3-2 vote, the Supreme Court majority on Tuesday found the amended ordinance violated the equal privileges and immunities clause of the Indiana Constitution and voided the amendment, leaving in place the city’s 2006 smoking ban. It prohibits smoking in workplaces and other public places, but exempts bars, private clubs and riverboats.

“It’s a perfect example of one aspect of what our case is about, equal treatment of the law, and that occurred in the Evansville case—preferential treatment being given to one business group [the casino],” Maley said.

But liquor stores argue that, if convenience stores are allowed to sell cold beer, the value of their permits will decline greatly. Liquor stores pay substantially more for a liquor dealer’s permit—between $144,000 and $475,000—than grocery and convenience stores, which pay about $6,000, and are held to stricter regulations.

The liquor stores also say in their opposing brief that the convenience and grocery stores chose to establish their businesses in a heavily regulated industry and knew the rules.

“Plaintiffs desperately want to sell more beer,” the Indiana Association of Beverage Retailers said in its filing. “But that does not justify eliminating a long-standing state policy decision on how to balance competing public interests in making beverage alcohol available, yet not so available as to stimulate its overconsumption and abuse.”
 

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