A U.S. District Court has upheld a state law that does not allow convenience, grocery and pharmacy stores to sell cold beer. The Indiana Petroleum Marketers and Convenience Store Association took the matter to court, claiming the law is unconstitutional because it favors one class of retailer over another. The organization says it will continue to fight for “fairness” in the marketplace. The Indiana Association of Beverage Retailers says package stores also operate under restrictive guidelines and are a product of sound public policy to restrict sales.

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June 16, 2014

News Release

INDIANAPOLIS, Ind. – Executives and members of the Indiana Petroleum Marketers and Convenience Store Association (IPCA) vowed to continue to seek fairness in the marketplace regarding the sale of cold beer, even after a U.S. District ruling today upholds an Indiana law that favors one class of retailer over another.

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, grocery and pharmacy stores must sell beer at room 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“Our members and Hoosiers are disappointed that the court did not rule to end an irrational, discriminatory and outdated law,” said IPCA Executive Director Scot Imus.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.

Indiana remains the only state in the country that regulates beer sales based on temperature. 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, Indiana Excise Police compliance figures show that package liquor stores were 138 percent more likely to violate Indiana liquor laws between 2007 and 2012 than convenience, grocery and pharmacy stores. Similarly, restaurants and bars, who may also sell refrigerated beer – were 1,376 percent 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.

Indiana Petroleum Marketers and Convenience Store Association (IPCA) is a nonprofit trade association that was formed in 1922 by Indiana wholesalers and retailers. Today, the IPCA has more than 250 members comprised primarily of small; to medium-sized, family owned businesses that own and operate convenience stores and supply petroleum (wholesale and retail), and related products and services throughout Indiana.

Source: The Indiana Petroleum Marketers and Convenience Store AssociationNews Release

Federal Judge Richard L. Young granted summary judgment to dismiss all counts in a challenge to the state’s cold beer law Monday – from federal and state constitutional challenges to an equal protection claim. Most notably, the judge said Indiana law restricting the sale of cold beer to package stores was rational and not unconstitutionally vague.

The 34-page ruling concluded that the plaintiffs, including a Hoosier consumer that lacked standing in the case, “failed to establish a reasonable likelihood of success on the merits of their federal and state claims.”

Judge 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.”

Even citing compliance statistics, as plaintiffs attempted to do a number of times to discredit package stores, was a shaky step in the cold beer lawsuit filed against the state by the Indiana Petroleum Marketers and Convenience Store Association and its members, according to the ruling. Other plaintiffs included Thornton’s, Ricker Oil Company, Freedom Oil and Steven E. Noe.

The judge noted that 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 Indiana’s package stores, which must operate under restrictive guidelines and legislatively mandated business models, are a product of a legislature that enacted a sound public policy in restricting sales.

IABR, though not a party in the lawsuit, had filed an amicus brief with the court.

“Many states have reasonable restrictions on the sale of alcohol and Indiana is no different,” said Tamm. “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 percent of its 1,500 member stores would sell cold beer immediately if successful in this case – which testimony supported 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.

Source: Indiana Association of Beverage Retailers

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