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7th Circuit Court SealIN Petroleum Mkters & Convenience Store Ass’n v. Cook

No. 14-2559 (7th Cir. 2015)

Appeal from District Court for Southern District of Indiana, Indianapolis Division

No. 1:13-cv-00784-RLY-DML — Richard L. Young, Chief Judge

Argued Jan.07, 2015  Decided Dec.14, 2015

This case raises the issue of equal protection under the 21st Amendment to the Constitution. An association of convenience stores filed suit against the State of Indiana in the Federal District Court seeking to invalidate a state law restricting the sale of cold packaged beer. Their suit contended that the law violated the Equal Protection Clause of the Constitution because certain stores were permitted to sell cold beer while grocery and convenience stores were not. District Court upheld the law and entered judgment for the State of Indiana, and the 7th Circuit affirmed.

A threshold question before the Court was the extent to which the 21st Amendment affected this case. Indiana argued that it had “nearly absolute” authority to regulate alcohol sales under that Amendment and that no further analysis was necessary. While the 7th Circuit disagreed with that analysis, it found that the District Court was right to uphold the law because Indiana’s cold-beer statute was only subject to “rational-basis” review and survived analysis under that standard

Factual Background

The Indiana Petroleum Marketers and Convenience Store Association, which serves gas stations and convenience stores, along with 3 members and a consumer, filed suit in Federal Court challenging the constitutionality of SS.7.1-5-10-11 of the Indiana Code, which prohibits holders of a beer-dealer permit from selling cold packaged beer, contending that the statute reduces beer sales. The complaint named the chairman of the Indiana Alcohol and Tobacco Commission; the Commission itself; and the State of Indiana. The Commission and State were dropped from the suit, so the chair of the Commission was the sole remaining defendant.

District Court Opinion

The Complaint alleged that the cold-beer statute violated the Commerce Clause, the Equal Protection Clause, and Due Process Clause of the 14th Amendment, as well as parallel provisions in the Indiana Constitution. The Equal-Protection claim rested on 2 separate theories:

That the Indiana statutory scheme permits cold-beer sales by grocery and convenience stores in unincorporated towns but prohibits sales at stores in incorporated municipalities; and

That the Indiana statutory scheme impermissibly discriminates between package liquor stores, which are permitted to sell cold beer, and grocery and convenience stores, which are not

The District Court resolved the case on cross-motions for Summary Judgment; rejecting the first equal protection argument, granting the second, and rejecting the remaining challenges as well. By separate Order, the District Court denied the Association’s motion and entered final judgment in favor of the State of Indiana. The Association appealed, focusing on the equal protection claim.

7th Circuit Opinion

The Association attacked the Indiana legislative choice with several policy arguments. However, under the standard of “rational-basis” review – applicable to such health and safety laws – in order to succeed the Association must “negative every conceivable basis which might support” the statutory scheme. Ultimately, the 7th Circuit held that the Association’s policy arguments for allowing cold-beer sales by grocery and convenience stores were matters best taken up by the Indiana legislature, not Federal Courts, and upheld the denial of relief by the District Court.

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