Indiana Court Upholds C-Store Cold Beer Restrictions

Rejects Hoosier convenience stores' compliance, other arguments

Published in CSP Daily News

Indiana (CSP Daily News / Convenience Stores / Beverages / Beer)

INDIANAPOLIS -- Executives and members of the Indiana Petroleum Marketers & Convenience Store Association (IPCA) vowed to continue to seek fairness in the marketplace regarding the sale of cold beer after a U.S. District Court ruling on Tuesday upheld an Indiana law that they say favors one class of retailer over another.

Other plaintiffs included Thorntons Inc., Ricker Oil Co., Freedom Oil and consumer Steven E. Noe.

IPCA challenged a state law that regulates the sale of beer based on temperature, allowing only the carryout market the exclusive right to sell beer cold. Under current law, convenience stores, grocery stores and pharmacies must sell beer at room temperature.

Indiana remains the only state in the country that regulates beer sales based on temperature.

"Our members and Hoosiers are disappointed that the court did not rule to end an irrational, discriminatory and outdated law," said IPCA executive director Scot Imus. "There is wide-support to modernize Indiana's alcohol laws, and we will continue to fight for fairness in the marketplace."

IPCA and its members' filed a complaint in U.S. District Court in May 2013 that claimed Indiana's alcohol law violated the equal protection clause of the U.S. Constitution by favoring one class of retailer over another. The trial took place on Feb. 20 and 21.

The law does not apply to wine products, thus allowing convenience stores to sell these products cold. According to IPCA and its members, the law causes confusion among customers who are able to buy cold wine but are forced to purchase beer warm, even though wine products contain approximately double the amount of alcohol.

Proponents of regulating beer based on temperature claimed that liquor stores are better at preventing the sale of alcohol to minors; however, IPCA cited Indiana Excise Police compliance figures that show package liquor stores were 138% more likely to violate Indiana liquor laws between 2007 and 2012 than convenience stores, grocery stores and pharmacies. Similarly, restaurants and bars, which may also sell refrigerated beer, were 1,376% more likely to violate Indiana liquor law over the same period of time.

A look at the history of beer sales in Indiana shows a constantly changing regulatory environment. Coming out of Prohibition, only confectionary stores were allowed to sell cold beer. That practice ended when the General Assembly passed a law prohibiting such sales in 1941. Liquor stores could not sell beer--warm or cold--until 1953, and then, like other retailers, they were forced to sell it warm. A 1963 decision by the unelected three-member Indiana Alcoholic Beverage Commission granted liquor stores in metropolitan areas the right to sell cold beer. These changes were eventually codified into statute in 1979.

According to the Indiana Association of Beverage Retailers (IABR), representing the liquor stores, federal Judge Richard L. Young granted summary judgment to dismiss all counts in a challenge to the state's cold beer law, from federal and state constitutional challenges to an equal protection claim.

The 34-page ruling concluded that the plaintiffs "failed to establish a reasonable likelihood of success on the merits of their federal and state claims."

Young wrote: "The state has a legitimate interest in limiting the sale of alcohol and, more to the point, a legitimate interest in curbing the sale of immediately consumable beer to minors."

The judge said comparing compliance statistics was "problematic," "irrelevant" and "misplaced." He wrote that package stores are subject to much stricter regulations than the plaintiffs and it also costs a package store "far more" to enter the marketplace as a result.

IABR CEO Patrick Tamm said, "Many states have reasonable restrictions on the sale of alcohol and Indiana is no different. As the judge noted, this is a classic example of 'legislative line-drawing' in order to specifically limit the number of retail outlets that sell cold beer."

Plaintiffs had testified that as many as 80% of its 1,500 member stores would sell cold beer immediately if successful in this case, which testimony claimed would be a challenge to enforce.

The judge also denied a request for a preliminary injunction. The plaintiffs now have 30 days to notify the court of an appeal.

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