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The state filed this brief in response to the plaintiff's allegations that the state's laws on cold beer sales violate the Equal Protection Clause.
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
INDIANA PETROLEUM MARKETERS )
AND CONVENIENCE STORE )
ASSOCIATION, et al., )
)
Plaintiffs, )
)
v. ) CAUSE NO: 1:13-CV-784 RLY-DML
)
ALEX HUSKEY, in his official capacity as )
Chairman of the Indiana Alcohol and )
Tobacco Commission, et al., )
)
Defendants. )
DEFENDANTS’ BRIEF IN OPPOSITION TO PLAINTIFFS’ MOTION FOR
PRELIMINARY INJUNCTION
Respectfully submitted,
GREGORY F. ZOELLER
Attorney General of Indiana
Attorney No. 1958-98
By: /s/ Kenneth L. Joel
Kenneth L. Joel
Attorney No. 30271-49
Deputy Attorney General
Indiana Government Center South – 5th Floor
302 W. Washington St.
Indianapolis, IN 46204-2770
Phone: (317) 233-8296
Fax: (317) 232-7979
Email: [email protected]
Case 1:13-cv-00784-RLY-DML Document 80 Filed 02/07/14 Page 1 of 62 PageID #: 4374
i
TABLE OF CONTENTS
INTRODUCTION .......................................................................................................................... 1
FACTS ............................................................................................................................................ 4
Parties .......................................................................................................................................... 4
Sellers of Take-Away Beer to Consumers in Indiana ................................................................. 9
Convenience Stores ................................................................................................................... 11
Package Liquor Stores .............................................................................................................. 14
Restaurants ................................................................................................................................ 15
Small Beer Brewers .................................................................................................................. 16
Ramifications If Plaintiffs Succeed .......................................................................................... 17
ARGUMENT ................................................................................................................................ 20
I. Preliminary Injunction Standard ................................................................................... 20
II. Plaintiffs Have Not Demonstrated That They Are Likely to Succeed on the Merits of
Their Constitutional Challenges ........................................................................................... 21
A. The Eleventh Amendment ...................................................................................... 21
B. Many of the Plaintiffs Lack Standing to Bring Many of the Challenges................ 22
C. Indiana Code § 7.1-5-10-11 and Indiana Code § 7.1-3-21-3 Through 6 Are
“Unquestionably Legitimate” Pursuant to the Twenty-First Amendment ........................ 24
1. Granholm v. Heald .............................................................................................. 24
2. Brooks v. Vassar .................................................................................................. 25
3. Arnold Wines, Inc. v. Boyle ................................................................................. 25
4. Southern Wine and Spirits v. Div. of Alcohol ...................................................... 26
5. This Reasoning Compels Rejection of Plaintiffs’ Challenges ............................ 28
D. Indiana Code § 7.1-5-10-11 Does Not Violate the Equal Protection Clause or
Article I, Section 23 of the Indiana Constitution -- Count I and Count V ........................ 28
1. Noe Is Not Treated Any Differently than Others ................................................ 28
2. Convenience Stores Are Not Similarly Situated to Businesses That Legally Sell
Cold Beer for Take-Away in Indiana............................................................................ 29
3. The Legislature’s Line-Drawing Is Rational ....................................................... 32
E. Indiana Code § 7.1-5-10-11 Does Not Violate Article I, Section 1 of the Indiana
Constitution ....................................................................................................................... 37
F. Indiana Code § 7.1-3-21-5 Does Not Violate the Dormant Commerce Clause ...... 38
G. Indiana Code § 7.1-5-10-11 Is Not Void for Vagueness ........................................ 39
H. Equity Precludes Plaintiffs’ Constitutional Challenges .......................................... 43
III. Plaintiffs Have Not Demonstrated That They Are Irreparably Harmed .................... 44
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ii
IV. Plaintiffs Have Not Shown an Immediate Need for an Injunction That Would Allow
Them to Immediately Begin Selling Cold Beer .................................................................... 48
CONCLUSION ............................................................................................................................. 50
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iii
STATEMENT OF THE ISSUES
I. Plaintiffs have not demonstrated that they are likely to succeed on the merits of their
constitutional challenges.
A. The Eleventh Amendment bars all claims against the State of Indiana and the
Indiana Alcohol and Tobacco Commission and also bars all state law claims
against Alex Huskey in his official capacity as Chairman of the Indiana Alcohol
and Tobacco Commission.
B. Plaintiffs lack standing to bring many of the challenges.
C. The provisions challenged are “unquestionably legitimate” pursuant to the
Twenty-First Amendment.
D. Indiana Code § 7.1-5-10-11 does not violate the Equal Protection Clause of the
United States Constitution or Article I, Section 23 of the Indiana Constitution.
1. Plaintiff Noe is not treated any differently than others.
2. Convenience stores are not similary situated to buisnesses that legally
sell cold beer for take-away in Indiana.
3. The line drawn by the General Assembly (allowing certain business to
legally sell cold beer for take-away in Indiana and imposing additional
restrictions on these businesses) is rationally related to legitimate public
purposes.
E. Indiana Code § 7.1-5-10-11 does not violate Article I, Section 1 of the Indiana
Constitution and this provision cannot be judicially enforced.
F. Indiana Code § 7.1-3-21-3 through 6 do not violate the dormant Commerce
Clause.
G. Indiana Code § 7.1-5-10-11 is not unconstitutionally vague.
H. Equity bars Plaintiffs’ constitutional challenges.
II. Plaintiffs have not demonstrated that they are irreparably harmed.
III. Plaintiffs have not shown an immediate need for a preliminary injunction that would
allow them to immediately begin selling cold beer without restriction.
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iv
TABLE OF AUTHORITIES
Page(s)
Cases
Abbott Labs v. Mead Johnson & Co.,
971 F.2d 6 (7th Cir. 1992) .......................................................................................................21
Aguayo v. Christopher,
865 F. Supp. 479 (N.D. Ill. 1994) ............................................................................................44
Alabama v. Pugh,
438 U.S. 781 (1978) .................................................................................................................22
Armour v. City of Indianapolis,
132 S.Ct. 2073 (2012) ..............................................................................................................32
Arnold’s Wines, Inc. v. Boyle,
571 F.3d 185 (2d Cir. 2009).........................................................................................25, 26, 28
In re Arthur Treacher’s Franchisee Litig.,
689 F.2d 1137 (3d Cir. 1982)...................................................................................................45
Bell v. Keating,
697 F.3d 445 (7th Cir. 2012) .............................................................................................40, 43
Beskind v. Easley,
325 F.3d 506 (4th Cir. 2003) ...................................................................................................31
Bd. of Regents of State Colls. v. Roth,
408 U.S. 564 (1972) .................................................................................................................40
Brokaw v. Mercer County,
235 F.3d 1000 (7th Cir. 2000) .................................................................................................22
Brooks v. Vassar,
462 F.3d 341 (4th Cir. 2006) ...................................................................................................25
Buquer v. City of Indianapolis,
797 F. Supp. 2d 905 (S.D. Ind. 2011) ................................................................................33, 47
Burgess v. Ryan,
996 F.2d 180 (7th Cir. 1993) ...................................................................................................29
Cal. Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc.,
445 U.S. 97 (1980) ...................................................................................................................25
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v
Campbell v. Miller,
373 F.3d 834 (7th Cir. 2004) ...................................................................................................46
Celebration Intern., Inc. v. Chosun Intern., Inc.,
234 F. Supp. 2d 905 (S.D. Ind. 2002) ......................................................................................48
Chicago Tribune Co. v. Bd. of Trs. of the Univ. of Ill.,
680 F.3d 1001 (7th Cir. 2012) .................................................................................................22
Chicago Untied Indus., Ltd. v. City of Chicago,
445 F.3d 940 (7th Cir. 2006) ...................................................................................................20
City of Chicago v. Morales,
527 U.S. 41 (1999) ...................................................................................................................43
Clinic for Women, Inc. v. Brizzi,
837 N.E.2d 973 (Ind. 2005) .....................................................................................................38
Collins v. Day,
644 N.E.2d 72 (Ind. 1994) .......................................................................................................37
Cooper v. McBeath,
11 F.3d 547 (5th Cir. 1994) .....................................................................................................39
Dandridge v. Williams,
397 U.S. 471 (1970) .................................................................................................................32
Doe v. O’Connor,
790 N.E.2d 985 (Ind. 2003) .....................................................................................................37
Does v. City of Indianapolis,
2006 WL 2927598 (S.D. Ind. Oct. 5, 2006) ............................................................................40
Doyle v. Clark,
41 N.E.2d 949 (Ind. 1942) ............................................................................................... passim
EEOC v. City of Janesville,
630 F.2d 1254 (7th Cir. 1980) .................................................................................................20
F.C.C. v. Beach Commc’ns, Inc.,
508 U.S. 307 (1993) ...........................................................................................................32, 33
Girl Scouts of Manitou Council, Inc. v. Girl Scouts of U.S. of America, Inc.,
549 F.3d 1079 (7th Cir. 2008) .................................................................................................20
Glazer’s Wholesale Drug Co., Inc. v. Kansas,
145 F. Supp. 2d 1234 (D. Kan. 2001) ......................................................................................39
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vi
Goodpaster v. City of Indianapolis,
2013 WL 838208 (S.D. Ind. March 6, 2013) .........................................................21, 36, 45, 46
Goodpaster v. City of Indianapolis,
736 F.3d 1060 (7th Cir. 2013) .....................................................................................21, 35, 36
Granholm v. Heald,
544 U.S. 460 (2005) ......................................................................................................... passim
Grayned v. City of Rockford,
408 U.S. 104 (1972) .................................................................................................................43
Grote Indus., LLC v. Sebelius,
914 F. Supp. 2d 943 (S.D. Ind. 2012) ......................................................................................42
Hans v. Louisiana,
134 U.S. 1 (1890) .....................................................................................................................22
Harvey v. Town of Merrillville,
649 F.3d 526 (7th Cir. 2011) .............................................................................................28, 29
Heckler v. Matthews,
465 U.S. 728 (1984) .................................................................................................................31
High Ol’ Times, Inc. v. Busbee,
673 F.2d 1225 (11th Cir.1982) ................................................................................................43
Hodel v. Indiana,
452 U.S. 314 (1981) .................................................................................................................32
Holder v. Humanitarian Law Project,
130 S. Ct. 2705 (2010) .............................................................................................................42
Horvath v. City of Chicago,
510 F.2d 594 (7th Cir. 1975) ...................................................................................................40
Ind. Civil Liberties Union v. O’Bannon,
259 F.3d 766 (7th Cir. 2001) ...................................................................................................20
Ind. High School Athletic Ass’n, Inc. v. Carlberg by Carlberg,
694 N.E.2d 222 (Ind. 1997) .....................................................................................................37
Ind. Voluntary Firemen’s Ass’n, Inc. v. Pearson,
700 F. Supp. 421 (S.D. Ind. 1988) ...........................................................................................31
Jelovsek v. Bredesen,
545 F.3d 431 (6th Cir. 2008) ...................................................................................................39
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vii
Kentucky v. Graham,
473 U.S. 159 (1985) .................................................................................................................21
Kolender v. Lawson,
461 U.S. 352 (1983) .................................................................................................................40
Kwik Shop, Inc. v. City of Lincoln,
498 N.W.2d 102 (Neb. 1993)...................................................................................................40
L.P. v. Ind. State Dep’t of Health,
2011 WL 255807 (S.D. Ind. Jan. 27, 2011) .................................................................33, 46, 47
Maxwell’s Pic-Pac, Inc. v. Dehner,
2014 WL 128129 (6th Cir. Jan. 15, 2014) .........................................................................36, 40
McIntosh v. Melroe Co.,
729 N.E.2d 972 (Ind. 2000) .....................................................................................................37
Meadows v. State of Indiana,
854 F.2d 1068 (7th Cir. 1988) .................................................................................................22
Michigan v. U.S. Army Corps of Eng’rs,
667 F.3d 765 (7th Cir. 2011) ...................................................................................................20
Minter v. Wells Fargo Bank, N.A.,
274 F.R.D. 525 (D. Md. 2011) .................................................................................................40
Missouri v. Fiske,
290 U.S. 18 (1933) ...................................................................................................................21
Morrison v. Sadler,
821 N.E.2d 15 (Ind. Ct. App. 2005)...................................................................................37, 38
Nordlinger v. Hahn,
505 U.S. 1 (1992) .....................................................................................................................33
North Dakota v. United States,
495 U.S. 423 (1990) (Scalia, J., concurring) ...........................................................................25
O’Sullivan v. City of Chicago,
396 F.3d 843 (7th Cir. 2005) ...................................................................................................23
Parker v. Levy,
417 U.S. 733 (1974) .................................................................................................................42
Pennhurst State Sch. & Hospital v. Halderman,
465 U.S. 89 (1984) .............................................................................................................21, 22
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viii
Peoples Super Liquor Stores, Inc. v. Jenkins,
432 F. Supp. 2d 200 (D. Mass. 2006) ......................................................................................39
Planned Parenthood of Ind. and Ky. v. Ind. State Dep’t of Health,
2013 WL 6181113 (S.D. Ind. Nov. 26, 2013) ...............................................................1, 33, 47
Plotkin v. Ryan,
239 F.3d 882 (7th Cir. 2001) ...................................................................................................23
Reget v. City of La Crosse,
595 F.3d 691 (7th Cir. 2010) ...................................................................................................29
River of Life Kingdom Ministries v. Vill. of Hazel Crest,
585 F.3d 364 (7th Cir. 2009) ...................................................................................................21
Roark & Hardee LP v. City of Austin,
522 F.3d 533 (5th Cir. 2008) ...................................................................................................42
Roland Mach. Co. v. Dresser Indus., Inc.,
749 F.2d 380 (7th Cir. 1984) ...................................................................................................20
Schmitt v. F.W. Cook Brewing Co.,
120 N.E. 19 (Ind. 1918) ...........................................................................................................38
Sidle v. Majors,
536 F.2d 1156 (7th Cir. 1976) .................................................................................................29
Simon v. Eastern Ky. Welfare Rights Org.,
426 U.S. 26 (1976) ...................................................................................................................23
Skilling v. United States,
130 S. Ct 2896 (2010) ..............................................................................................................43
Southern Wine and Spirits of America, Inc. v. Div. of Alcohol and Tobacco Control,
731 F.3d 799 (8th Cir. 2013) ........................................................................................... passim
Ty, Inc v. Jones Group, Inc,
237 F.3d 891 (7th Cir. 2001) .............................................................................................21, 48
United States v. Clark,
582 F.3d 607 (5th Cir. 2009) ...................................................................................................43
United States v. Lopez,
514 U.S. 549 (1995) .................................................................................................................29
United States v. Moore,
644 F.3d 553 (7th Cir. 2011) ...................................................................................................33
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ix
Univ. of Texas v. Camenisch,
451 U.S. 390 (1981) .................................................................................................................20
Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc.,
454 U.S. 464 (1982) ...........................................................................................................22, 23
Vill. of Hoffman Estates v. Flipside, Hoffman Estates, Inc.,
455 U.S. 489 (1982) ...........................................................................................................40, 42
VIP of Berlin, LLC v. Town of Berlin,
593 F.3d 179 (2d Cir. 2010).....................................................................................................42
Vision Church v. Vill. of Long Grove,
468 F.3d 975 (7th Cir. 2007) ...................................................................................................32
Williamson v. Lee Optical of Okla.,
348 U.S. 483 (1955) .................................................................................................................32
Wine Country Gift Baskets.com v. Steen,
612 F.3d 809 (5th Cir. 2010) ...................................................................................................39
Winter v. NRDC,
555 U.S. 7 (2008) .....................................................................................................................21
Wisconsin’s Envtl. Decade, Inc. v. State Bar of Wis.,
747 F.2d 407 (7th Cir. 1984), cert. denied, 471 U.S. 1100 (1985) ..........................................22
Wolverine Fireworks Display v. Towne,
2012 WL 2063608 (E.D. Mich. 2012) .....................................................................................29
Statutes
Cal. Bus. & Prof. Code § 23790.5(d)(4) ........................................................................................28
Ind. Code § 7.1-1-1-1 .....................................................................................................1, 31, 35, 44
Ind. Code § 7.1-1-2-5 .....................................................................................................................42
Ind. Code § 7.1-3-4-1 ...............................................................................................................14, 31
Ind. Code § 7.1-3-4-2(13) ........................................................................................................14, 31
Ind. Code § 7.1-5-10-11 ......................................................................................................... passim
Indiana Code § 7.1-3-4-4 ...............................................................................................................31
Indiana Code § 7.1-3-21-3 through 6 ..................................................................................... passim
Indiana Code § 7.1-3-21-5 .............................................................................................................38
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x
Indiana Code § 7.1-3-21-6 .........................................................................................................3, 38
Indiana Code § 7.1-5-10-11’s ........................................................................................................41
Md. Ann. Code art. 2B, § 15-203(d)(5)(i)(1) .................................................................................28
Okla. Stat. Ann. Tit. 37, § 534(C) ..................................................................................................28
Other Authorities
Fourth Amendment ..................................................................................................................46, 47
Eleventh Amendment.....................................................................................................................21
Twenty-First Amendment ..................................................................................................24, 25, 26
Article I, Section 1 of the Indiana Constitution ...................................................................3, 37, 38
Article I, Section 23 of the Indiana Constitution ...........................................................3, 28, 36, 37
U.S. Const. amend. XIV, § 1 .........................................................................................................28
U.S. Const., amend. XXI, § 2 ..........................................................................................................1
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1
INTRODUCTION
The Twenty-First Amendment provides that “[t]he transportation or importation into any
State, Territory, or possession of the United States for delivery or use therein of intoxicating
liquors, in violation of the laws thereof, is hereby prohibited.” U.S. Const., amend. XXI, § 2.
This constitutional provision gives states ‘“virtually complete control over whether to permit
importation or sale of liquor and how to structure the liquor distribution system’” within their
borders. Granholm v. Heald, 544 U.S. 460, 488 (2005) (quoting Cal. Retail Liquor Dealers
Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 110 (1980)). Indeed, “[s]tate policies are protected
under the Twenty-First Amendment when they treat liquor produced out of state the same as its
domestic equivalent.” Granholm, 544 U.S. at 489.
Indiana extensively regulates the alcoholic beverage industry within its borders, and has
done so for decades. Like many states, Indiana uses a three-tier system to regulate the alcohol
industry -- a framework that the Supreme Court has recognized is “unquestionably legitimate.”
Granholm, 544 U.S. at 489. The purpose of alcohol regulation in Indiana is, in part: (1) to
protect the economic welfare, health, peace, and morals of the people of Indiana; and (2) to
regulate and limit the manufacture, sale, possession, and use of alcohol and alcoholic beverages.
Ind. Code § 7.1-1-1-1 (emphasis added). And, at the selling alcohol to consumers tier -- which is
all this case involves -- Indiana law determines, among other things: (1) who can legally sell
alcohol and who can legally buy alcohol; (2) when alcohol may be legally sold; (3) where
alcohol may be legally sold; (4) what other products may (and may not) be legally sold at
locations that legally sell alcohol; and (5) how alcohol can be legally sold.
Beer is intended to be consumed cold and, as it specifically relates to this litigation,
Indiana has long limited the types of business that can sell cold beer for take-away. See Ind.
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2
Code § 7.1-5-10-11; Doyle v. Clark, 41 N.E.2d 949, 951 (Ind. 1942) (holding that it is rational to
restrict the sale of cold beer to certain types of businesses (restaurants and package stores) and
also holding that “the phrase ‘iced or cooled by such permit holder before or at the time of such
sale’ is not indefinite and there need be no uncertainty as to what is prohibited”). Thornton,
Ricker, Freedom, and IPCA members: (1) began operations well after Indiana Code § 7.1-5-10-
11 went into effect; (2) have been operating in Indiana for years; (3) have added stores in
Indiana; and (4) have been profitable.
In addition to the long-standing restriction on what businesses can sell take-away cold
beer, Indiana law imposes significant restrictions on businesses (like package liquor stores and
certain restaurants) that are permitted to legally sell cold beer for take-away. To highlight just a
few: (1) persons under the age of 21 cannot legally enter a package liquor store or the area of a
restaurant where take-away cold beer is sold; (2) a restaurant that sells cold beer for take-away
does not offer self-service to the customer; (3) the persons working at a package liquor store or
in the bar area of the restaurant must be at least 21 years of age, must be permitted by the ATC,
and must have completed server training; and (4) package liquor stores are limited in what other
products they may legally sell. These restrictions are not imposed on convenience stores and
cannot be imposed on convenience stores under current Indiana law. Moreover, the number of
package liquor store permits are far more limited than the permits that allow a convenience store
to sell beer; as a result, such package liquor store permits (if and when they become available)
can fetch hundreds of thousands of dollars whereas the cost of a permit for a convenience store is
typically less than a thousand dollars. Indeed, currently there are over 4,500 permits that are
available to convenience/grocery/drug stores.
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3
Plaintiffs acknowledge that Indiana has a legitimate interest in restricting -- or limiting or
making harder -- the purchase of alcohol including cold beer. If Plaintiffs succeed, significantly
more cold beer will be sold and purchased and it will be sold and purchased from potentially
thousands of more outlets -- hardly a way to limit the sale or use of alcohol.1 Further, if
Plaintiffs win these new outlets will sell cold beer without the same restrictions that the General
Assembly has imposed on other businesses that currently sell cold beer and without the costs
associated with selling this product -- not a way to “level [the] playing field.” Pl. Br. at 8.
To achieve their goal of selling cold beer to consumers without restriction and without
making the investment that other businesses do, Plaintiffs attack Indiana Code § 7.1-5-10-11
from several angles.2 First, Plaintiffs argue that Indiana Code § 7.1-5-10-11 violates their rights
to equal protection under either the U.S. Constitution or Article I, Section 23 of the Indiana
Constitution because this provision prevents convenience stores from selling cold beer for take-
away but other businesses are allowed to do so. Second, Plaintiffs assert that Indiana Code §
7.1-5-10-11 violates Article I, Section 1 of the Indiana Constitution because it deprives
1 IPCA represents Indiana convenience stores, Ricker, Thornton, and Freedom own/operated Indiana
convenience stores, and Noe is an Indiana resident. Nevertheless, if Plaintiffs succeed in invalidating Indiana Code
§ 7.1-5-10-11, other businesses (like Marsh, Kroger, CVS, Walgreen, Walmart, or Target) will be able to sell
immediately consumable cold beer without the restrictions imposed on package liquor stores and without the costs
faced by package liquor stores. 2 Plaintiffs have changed course several times during this case. First, they asserted four causes of action and
argued that Indiana Code § 7.1-5-10-11 was unconstitutional because it prevented Indiana convenience stores from
selling cold beer but Indiana package stores (and convenience stores in other states pursuant to those states’ laws)
could sell cold beer. See ECF 1, ¶¶ 79-81, 85-87, 92-93, 99. Plaintiffs then filed an Amended Complaint that did not
change any of Plaintiffs previous causes of action or underlying theories but that added a single claim that Indiana
Code § 7.1-3-21-3 through 6 violated the dormant Commerce Clause. See ECF 29, ¶¶ 97-99, 104-06, 113-15, 120-
21, 127. Plaintiffs then were granted leave to file yet another pleading, which added the “void for vagueness” due
process challenge and alleged new comparisons for the equal protection claim. See ECF 47, ¶¶ 132-33, 156-66.
Count III has been dismissed with prejudice and a Stipulation has been filed to dismiss the State of Indiana and the
ATC without prejudice. See ECF 68, 69, 73. Despite some recent narrowing, Plaintiffs’ scatter-shot approach still
misses the mark. For example, Noe has joined in the equal protection claims and the “void for vagueness” claim;
however, he has never owned or operated a convenience store and has no intent of doing so. As to the dormant
Commerce Clause theory, Indiana Code § 7.1-3-21-6 exempts Thornton from the residency requirements and
Thornton admitted that it has never applied for a package store permit and has no intention of doing so. As for
IPCA, it does not represent package liquor stores and its 30(b)(6) representative could identify no member that was
prevented by these provisions from obtaining a package liquor store permit.
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4
convenience stores of the right to sell cold beer for take-away. Third, Plaintiffs claim that the
use of the word “cooled” violates due process because it is vague. And, fourth, IPCA and
Thornton argue that Indiana Code § 7.1-3-21-3 through 6 violate the dormant Commerce Clause
because these provisions prevent an out-of-state corporation from obtaining a package liquor
store permit.
To support their Motion for Preliminary Injunction, Plaintiffs bombard this Court with
reams of materials -- all designed to justify their core position that they are responsible
businesses and that, because of this, they should be allowed to sell cold beer for take-away to the
public. Put simply, whether any IPCA member store, or any Thornton, Ricker or Freedom store
is in a safe neighborhood, or is well lit, or is clean, or employs specific business practices, or
serves free coffee to police, or fares better on one enforcement tool is meaningless; Defendants
cannot force the thousands of other Indiana convenience stores to adopt these practices and
Indiana law does not apply Plaintiffs’ practices onto other businesses. Indeed, such “facts”
(along with the opinions of various newspaper pundits) are constitutionally irrelevant given the
challenges that have been pressed.
In the end, the provisions challenged: (1) are “unquestionably legitimate” because of the
Twenty-First Amendment to the U.S. Constitution; (2) do not discriminate against inter-state
commerce; (3) are rationally related to the legitimate goals of Indiana’s alcohol regulations, and
(4) notify these businesses of what is proscribed. Plaintiffs’ harm is nothing more than potential
lost revenue and convenience. Given this long-standing law, the equities favor maintaining the
status quo until Defendants’ Motion for Summary Judgment can be resolved. Plaintiffs’ Motion
should be denied.
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5
FACTS3
Parties
IPCA is an Indiana trade association and its members are convenience stores that are
located in Indiana. Second Amended Complaint (“ECF 47”), ¶ 1 (Exhibit 1). IPCA has existed
since 1940s and, with the start of the convenience store industry in the mid-1970s, IPCA has
represented convenience stores in Indiana. Deposition of Scot Imus (“Imus Dep.”) at 45(1-11);
47(2-15) (Exhibit 2). IPCA does not advocate on behalf of, or otherwise represent, package
liquor stores or restaurants in Indiana. Imus Dep. at 39(23)-40(12). See also Imus Dep. at
31(15-23) (IPCA is participating in this litigation merely as a trade association representing
convenience stores in Indiana); 124(3-9) (IPCA does not have as members individual citizens,
unless the individual owns/operates a convenience store). IPCA current members are 115
convenience store entities and those entities own and operate some 1,000 convenience stores in
Indiana and about 70% to 80% of those stores sell beer. Imus Dep. at 32(8)-33(24). IPCA’s
function is to provide advice to, and advocate on behalf of, its Indiana convenience store
members. Imus Dep. at 30(7-13); 31(6-14); 176(10-20); ECF 47, ¶ 1.4 Because of Indiana Code
§ 7.1-5-10-11, which has been the law since about 1941, IPCA member stores that sell beer, sell
it neither iced nor cooled. Imus Dep. at 44(15-25); 47(16-21).
IPCA has never sought any formal guidance from the State of Indiana as to the meaning
of any provision of Indiana’s alcohol laws including those at issue in this litigation. Imus Dep. at
3 Defendants reserve the right to present further evidence and argument at the preliminary injunction hearing;
however, to assist this Court with assessing Plaintiffs’ Motion, Defendants set forth the following facts and
arguments that have been developed through discovery. The evidentiary materials supporting these facts have been
filed along with this Brief. Defendants reserve the right to object to the admission of Plaintiffs’ materials. 4 For example, IPCA has a referral arrangement with attorneys in Indianapolis to answer questions on behalf
of members as it relates to legal issues facing convenience stores. Imus Dep. at 17(12)-22(16). IPCA has lobbied
the Indiana General Assembly and other politicians (and has provided written materials to governmental officials)
pressing the interests of its members and, in the past few legislative sessions, IPCA has supported, on behalf of its
members, possible legislation to do away with the decades-old restriction embodied in Indiana Code § 7.1-5-10-11.
Imus Dep. at 9(7)-13(9); 14(8)-15(15); 69(2-10).
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9(2-18); 11(8-14); 50(12-18); 57(9-13); 125(9-16).5 Imus could identify no member that asked
IPCA (or the attorneys that are part of IPCA’s referral program) for any clarification as to the
meaning of the word “cooled” as used in Indiana Code § 7.1-5-10-11. Imus Dep. at 53(20)-
54(1). See also Imus Dep. at 125(17)-126(2); 155(25)-157(18) (noting no trouble in determining
what beer was warm and what beer was cooled during his package store survey). Until this
litigation IPCA never sought to challenge any provision of Indiana’s alcohol laws including
those at issue in this litigation. Imus Dep. at 54(12-16).
Thornton is a Delaware corporation and less than 60% of its shares are owned by Indiana
residents. ECF 47, ¶ 2; Deposition of Matthew Thornton (“Thornton Dep.”) at 16(18)-17(8)
(Exhibit 3). Thornton began in the convenience store business in the 1980s and from the 1980s
until about 2006, Thornton added locations in Indiana. Thornton Dep. at 24(1-5); 32(4-8);
32(13-20). Thornton presently owns and operates 175 convenience stores including,
approximately: (1) 50 in Kentucky; (2) 26 in Indiana; (3) 20 in Ohio; (4) 12 in Tennessee; (5) 60
in Illinois; and (6) six in Florida. Thornton Dep. at 28(14)-29(19); Deposition of Matthew
Dabulis (“Dabulis Dep.”) at 19(24-25) (Exhibit 4).
Of the 26 Indiana convenience store locations, Thornton sells beer at 18 of them. Dabulis
Dep. at 19(21-25). Thornton has never applied for a package store permit and has no intention of
doing so because being a package store is not Thornton’s business. Thornton Dep. at 99(22)-
102(13); Defendants’ Stipulation (“Def. Stip.”) ¶ 11 (Exhibit 5). At its Indiana convenience
store locations, Thornton sells beer that is neither iced nor cooled and, over the years, Thornton
has applied for (and received) permits from the State of Indiana allowing it to sell beer at these
Indiana locations. Thornton Dep. at 36(2-4); 36(11-22).
5 Given IPCA’s role, its failure to seek any guidance is curious since Imus testified that he admires Major
Poindexter and that Major Poindexter is easy to reach, forthcoming with information, responsive to IPCA’s
members who needed clarification or help. Imus Dep. at 15(25)-16(6).
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Thornton’s convenience store locations in other states sell beer that is cooled and
uncooled. Thornton Dep. at 40(14-18); 80(20-23). Some of Thornton’s locations in other states
are near the Indiana border; however, Thornton’s CEO/President testified that he cannot
“imagine there would be an incentive” for an Indiana resident to by-pass an Indiana package
store and cross state lines to come to one of his locations to purchase cold beer. Thornton Dep.
at 8(3-9); 27(2)-28(1); 120(3-5). Thornton has never sought any guidance from the State of
Indiana as to the meaning of any provision of Indiana’s alcohol laws. Thornton Dep. at 72(23)-
73(2). Until this litigation, Thornton has never challenged any provision of Indiana’s alcohol
laws. Thornton Dep. at 72(17-22).
Ricker is an Indiana corporation and 100% of its stock is owned by long-time Indiana
residents. ECF 47, ¶ 3; Deposition of Quinn Ricker (“Ricker Dep.”) at 35(8-18) (Exhibit 6).
Ricker began in the convenience store business in 1991. Ricker Dep. at 11(2-4); 12(4-6). From
1991 until about 2009, Ricker’s Indiana locations sometimes sold beer and sometimes did not;
however, in 2009, Ricker returned to selling beer. Ricker Dep. at 14(15)-15(2). Ricker currently
owns 49 stores, all of them are in Indiana, and 45 of them sell beer. Ricker Dep. at 8(3-10);
10(10-19). From 1991 until 2009, Ricker grew by acquiring 32 stores in Indianapolis and nine in
Ft. Wayne, and by building approximately eight stores from the ground up. Ricker Dep. at 20(6-
8). At the Indiana locations where Ricker sells beer, the beer that is sold is neither iced nor
cooled. Ricker Dep. at 17(24)-18(4); 23(6-11).
Ricker added locations understanding that it could not sell cold beer and the temperature
at which beer can be sold does not greatly influence Ricker’s business as the sale of cold beer
would only be an “added profit center.” Ricker Dep. at 65(24)-66(6). See also Ricker Dep. at
25(5-12); 67(13-23); 68(7-24) (Ricker continues to look for growth opportunities and that even
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since this litigation began it has pursued building three new locations from the ground up).
Ricker has never applied for a package store permit and has no intention of doing so because that
it is “not really our core competency.” Ricker Dep. at 30(17-25); 62(3-10); Def. Stip. ¶ 12.
Freedom is an Indiana limited liability company and 100% of its units are owned by
long-time Indiana residents. ECF 47, ¶ 4; Deposition of Gregory Cobb (“Cobb Dep.”) at 13(25)-
17(2) (Exhibit 7). Freedom started in approximately 2002 by acquiring four convenience stores
(none of which sold beer) and since then Freedom has added two more stores and currently has
six convenience stores. Cobb Dep. at 14(3-6); 24(6-10); 24(16)-25(6); 25(13-22). Of Freedom’s
six convenience store locations, three locations currently sell beer, and the beer that is sold is
neither iced nor cooled. Cobb Dep. at 26(21-24); 33(5-12); 67(8-17) (testifying that he
understands that a convenience store in Indiana can sell beer but must sell it warm); 107(4-11)
(Freedom’s three beer-selling stores “do not sell beer that has been iced or cooled before or at the
time of sale”). Freedom looks for opportunities to grow and is exploring a convenience store
acquisition of a store does not sell beer. Cobb Dep. at 34(4)-35(15).
Freedom has never applied for a package store permit or a permit like a restaurant has to
sell cold beer because neither is Freedom’s “business expertise.” Cobb Dep. at 56(24)-57(24);
Def. Stip. ¶ 13. Freedom has never sought any guidance from the State of Indiana as to the
meaning of any provision of Indiana’s alcohol law. Cobb Dep. at 58(14-18). Until this
litigation, Freedom has never challenged any provision of the Indiana alcohol laws. Cobb Dep.
at 57(25)-58(2).
Noe is an individual who resides in Wayne County, Indiana. ECF 47, ¶ 5. Noe was born
in 1964 and has continuously lived in Indiana since 1986. Deposition of Steven Noe (“Noe
Dep.”) at 7(10-14); 8(5-14) (Exhibit 8). Noe has never had a permit or license from the State of
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Indiana to sell beer, wine, or spirits; likewise, Noe has never applied for a permit or license from
the State of Indiana to sell beer, wine, or spirits; Noe has never owned or operated a convenience
store in Indiana; Noe has never owned or operated a package store in Indiana; and Noe has no
intention of every owning/operating a convenience store or grocery store in Indiana, or obtaining
any sort of alcohol permit in Indiana, because he has no interest in retail. Noe Dep. at 10(9-21);
31(25)-32(8); 44(18-23); 61(14-16).
For as long as Noe can remember, package stores in Indiana have been able to sell cold
beer while convenience stores have not been able to do so. Noe Dep. at 12(1-22). Noe admitted
that there is nothing in Indiana law that prevents him from buying beer at a convenience store or
grocery store or package store. Noe Dep. at 32(9-20). See also Noe Dep. at 50(20)-51(1)
(nothing in Indiana law prevents Noe from purchasing warm beer and nothing in Indiana law
prevents Noe from purchasing cold beer). Before this litigation, Noe has never challenged any
aspect of Indiana’s alcohol laws. Noe Dep. at 14(2-6).
Noe admitted that, in terms of where he can buy beer in Indiana, there is no difference
between him and any other person who is of legal drinking age. Noe Dep. at 33(10-22). See
also Noe Dep. at 43(21)-44(9) (the opportunities for him in terms of buying beer in Indiana are
the same as for any other person of legal drinking age: “we’re all paying more for a product that
we could buy cheaper”); 47(16)-48(8); 64(10-15).
Huskey is the Chair of the Indiana Alcohol and Tobacco Commission and has been sued,
in his official capacity, for declaratory and injunctive relief. ECF 47, ¶ 6.
Sellers of Take-Away Beer to Consumers in Indiana
Indiana Code § 7.1-5-10-11 provides: “Sale of Cold Beer Prohibited. It is unlawful for
the holder of a beer dealer’s permit to offer or display for sale, or sell, barter, exchange or give
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away a bottle, can, container, or package of beer that was iced or cooled by the permittee before
or at the time of the sale, exchange, or gift.” Ind. Code § 7.1-5-10-11. Indiana Code § 7.1-5-10-
11 has been the law in Indiana for decades. Imus Dep. at 44(20-25).
Since 2007, there have been citations issued for violating this provision. For example:
In 2007, Thornton placed various malt beverages in a cooler and was offering
these for sale. Thornton’s store manager was contacted by phone and stated that
they mistakenly believed that these products could be sold cold as they believed
them to be wine. Notably, the items in the cooler were not Bud Light, Coors,
Corona, or other beers. Thornton’s General Counsel assured Defendants that
“this mistake will not happen again.” The judgment was deferred for a year.
In 2008, Mt. Etna Bait was selling cold beer and, in fact, the store representative
confirmed that the business was selling cold beer. The store unplugged the cooler
that was cooling the beer and took down signs that were advertising cold beer.
In 2009, Speedway had attached beer to their cooler areas as a way of making the
beer cold. During the citation process, the manager told the officer that “he
thought that by attaching beers to their cooler doors that they would get cold.”
The fine was $150.00.
In 2010, Geist Market was advertising cold beer and the officer asked for a cold
12-pack of Coors Light and the employee retrieved the cold 12-pack of Coors
Light from a walk-in cooler area. The officers searched the walk-in cooler area
and discovered various brands of beer being stored there and all of the beer was
very cold. There was also a stand-alone glass front cooler in the back room that
was full of beer and the beer was very cold. There were 600 units of cold beer;
however, the total fine was only $250.00.
In 2010, Pappy’s was cooling and selling malt beverages other than beer. The
store believed that these products were wine and, thus, could be cooled. Notably,
beer was not being cooled. The judgment was deferred.
In 2011, JK Deli was cooling and selling malt beverages other than beer. The
store believed that these products were wine and, thus, could be cooled. Beer was
not being cooled. The fine was $150.00.
Declaration of Travis Thickstun (“Thickstun Decl.”), ¶ 4 (Exhibit 9).
Convenience stores that sell beer cannot sell that beer iced or cooled whereas package
stores that sell beer sell the beer iced or cooled as well as warm. Imus Dep. at 113(10-12);
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174(22)-175(2). In order to purchase cold beer for take-away in Indiana, a consumer must go to
either a package liquor store or a restaurant and, according to Plaintiffs, both of these businesses
charge more for cold beer and having to make a separate trip is less convenient. ECF 47, ¶¶ 122-
23, 125; Noe Dep. at 25(4-11) (if he wants cold beer he must make a trip to someplace where he
can buy it cold); 36(22)-37(3); Cobb Dep. at 76(18)-77(13) (“it definitely is a convenience issue”
because that is “the nature of the business that we’re in”); Imus Dep. at 81(14-24) (the cooled
beer costs, on average, about a dollar more than warm beer); 103(10-19) (package stores are not
convenient one-stop shopping locations); 123(25)-124(2) (for all practical purposes, if a
consumer wants to purchase cold beer for take-away he/she must go to a liquor store).
According to Plaintiffs, a demand exists to purchase cold beer from convenience stores in
Indiana and, given the nature of Plaintiffs’ “convenience” store businesses, the goal is to make
the purchase of cold beer more convenient for consumers. Cobb Dep. at 76(18)-77(13) (“it
definitely is a convenience issue” because that is “the nature of the business that we’re in”); Noe
Dep. at 39(13)-40(16) (testifying that he wants to purchase cold beer from a convenience/grocery
store because it is “more convenient for me” and typically it “would be cheaper”); 63(13)-64(3).
Convenience Stores
Convenience stores are businesses that offer one-stop shopping for various basic items
such as gas, groceries, candy, soda, bread, milk, eggs, and meat. Imus Dep. at 45(20)-46(4);
Thornton Dep. at 121(4-20); Cobb Dep. at 30(3-6); 30(12-25); Noe Dep. at 39(19)-40(10).
Many Indiana convenience stores are open 24/7. Ricker Dep. at 30(5-8); Thornton Dep. at
47(15-21). See also Def. Stip. ¶¶ 19-22. The turnover rate for staff in the convenience store
industry is about 200% annually. Imus Dep. at 131(4-15); Cobb Dep. at 42(5-18).6
6 Plaintiffs make much of how they fare on a single compliance program. See, e.g., Pl. Br. at 9-13. Beyond
being irrelevant, the fact is that this single program has limitations like the fact that the underage person seeking to
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Convenience stores (which are classified as grocery stores for permitting purposes) that
sell beer do so pursuant to a “dealer permit” and there are four types: (a) a permit type of sell
beer only at a grocery store located in an incorporated area; (b) a permit type of sell beer only at
a grocery store located in an unincorporated area; (c) a permit type to sell beer and wine at a
grocery store located in an incorporated area; and (d) a permit type to sell beer and wine at a
grocery store located in an unincorporated area. Thickstun Decl., ¶ 5.
All permits under which convenience stores can operate are issued with the following
conditions: (a) all beer and malt products must be sold and stored non-cooled, non-chilled, and
non-iced; (b) no alcohol may be sold on Sunday; (c) no state or local licensing is required for
individual clerks to sell alcohol; (d) no specialized server training is required for individual
clerks by the state in order to sell alcohol; (e) clerks must be 19 years of age to sell alcohol; (f)
on-premise consumption is forbidden; (g) alcohol is not allowed to be sold through a window or
outside of the building; and (h) there is no age limit on individuals to enter the premises.
Thickstun Decl., ¶ 6. See also Def. Stip. ¶¶ 1-4 (employees who sell beer at convenience stores
do not need to successfully complete server training and do not need to be permitted by the ATC
and do not need to be 21 years of age or older to complete the sale of beer to customers);
Poindexter Dep. at 181(5)-182(25) (Exhibit 10); Def. Stip. ¶¶ 6-9 (persons who are younger than
21 years of age can legally enter convenience stores).7
Indiana imposes no restrictions on the amount of area that convenience stores can
dedicate for the display or sale of beer. Ricker Dep. at 64(3)-65(23); Cobb Dep. at 92(11-14);
buy alcohol cannot lie about his/her age and cannot present any identification. Thickstun Decl., ¶ 20. In fact,
Thickstun has experienced times where a convenience/grocery/drug store “passed” the test -- simply because it
asked the minor for identification -- but then asked the next person in line to purchase the alcohol for the minor. Id.
Thickstun also has made far more cases (in terms of minors trying to purchase alcohol) in grocery/convenience/drug
stores than he has in package stores and in convenience stores the product involved has been beer. Id., ¶¶ 18, 20. 7 Plaintiffs conceded many of these points during deposition. See Deposition of Karen Mitchener
(“Mitchener Dep.”) at 26(8-11); 28(11-14); 29(9-11); 35(14-17); 39(13-23) (Exhibit 11); Cobb Dep. at 54(9-15);
54(23)-55(1); 56(7-23); Imus Dep. at 60(3-9); 61(13-20); 63(5-9).
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Imus Dep. at 63(10-14). In convenience stores, a customer can go to the beer aisle and pick up
the beer and take it to the register for purchase. Ricker Dep. at 34(21)-35(4); Noe Dep. at 49(12-
25); 51(8-15); Imus Dep. at 63(15-20). See also Poindexter Dep. at 173(14-20).
Convenience stores are different businesses than restaurants or package liquor stores.
Thornton Dep. at 101(23)-102(13) (the convenience store business model is different than either
a package liquor store or a restaurant); Ricker Dep. at 30(17-25) (Ricker has never applied for a
permit to be a package store or a restaurant because it is “not really our core competency”); 62(3-
10) (Ricker has no intention of applying for such permits because it is not our business); Cobb
Dep. at 56(24)-57(24) (Freedom has never applied for a package store permit or a permit like a
restaurant has to sell cold beer because neither is Freedom’s “business expertise”); Imus Dep. at
103(10-19) (package stores are different, in terms of the business model, than convenience
stores). See also Poindexter Dep. at 177(20)-178(12); 184(4)-185(17).
Poindexter testified that in his 27 years with the State, he is unaware of a single instance
of a grocery store or drug store (in an unincorporated area) obtaining a beer retailer permit to
legally sell cold beer and, in fact, he testified about one instance where a convenience store asked
about getting such a permit and was told that it was not allowed. See Poindexter Dep. at
185(24)-188(5). See also Poindexter Dep. at 41(23)-42(19) (he has cited convenience stores in
unincorporated areas for selling cold beer); 43(2-4) (testifying that it is a “beer retailer permit”
that allows the sale of beer for on-premise consumption); 43(15)-44(12); Thickstun Decl., ¶ 7 (he
is aware of convenience/grocery/drug stores in unincorporated areas that sell beer pursuant to a
beer dealer permit and, thus, the beer is not iced or cooled and that he is aware of no
convenience/grocery/drug store in an unincorporated area that sells beer pursuant to a beer
retailer permit or that legally sells the beer iced or cooled).
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Indiana law disqualifies a grocery store or drug store from receiving a beer retailer permit
unless it is a restaurant, hotel, or club. See Ind. Code § 7.1-3-4-2(13); Ind. Code § 7.1-3-4-1.
Plaintiffs admitted that they have no examples of grocery stores or drug stores in unincorporated
areas that are legally selling cold beer or that have a beer retailer permit; Plaintiffs also admitted
that they have no evidence to dispute Poindexter’s testimony on these points. See Imus Dep. at
55(23)-57(8).8 Indeed, JK Deli is in an unincorporated area; however, it has a beer dealer permit
and was cited for cooling malt beverages and not for cooling beer. Thickstun Decl., ¶ 8. And,
even if such a business existed, it would be required to abide by the restrictions imposed on those
with beer retail permits including: employees must be 21 years of age or older; employees must
be permitted by the ATC; employees must complete server training; there can be no self-service
of beer; and the area for the sale of cold beer must be limited. Thickstun Decl., ¶ 9.
Package Liquor Stores
Package liquor stores sell cold beer for take-away pursuant to a “dealer permit” and there
is one type: a permit to sell beer, wine, and liquor for locations in incorporated areas Thickstun
Decl., ¶ 10. A package liquor store that sells take-away beer can operate under the following
conditions: (a) all alcohol may be served cooled, iced, or chilled or non-cooled, non-iced, or
non-chilled; (b) state licensing is required for individuals to sell alcohol; (c) specialized server
training is required for individuals to sell alcohol; (d) clerks must be 21 years of age to sell
alcohol; (e) anyone under the age of 21 is not allowed to enter the premises; (f) alcohol may not
be sold on Sunday; (g) on-premise consumption is not allowed; (h) a limited type of non-
alcoholic commodity may be sold; (i) alcohol may not be sold outside of the building. There is a
maximum quota of the number of these permits are issued. Id.
8 Given what Plaintiffs believe to be the significant market for cold beer being sold at convenience stores,
one would think that if convenience stores or grocery stores or drug stores were legally able to sell cold beer in
unincorporated areas, there would be multiple examples to which the Executive Director of IPCA could point.
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Package liquor stores are not legally allowed to sell many of the goods that convenience
stores sell. Def. Stip. ¶¶ 15-18; Noe Dep. at 39(19)-40(10). See also Poindexter Dep. at 176(3)-
177(14). Package liquor stores cannot be open on Sundays and may not be legally open 24
hours/day. Def. Stip. ¶ 23. Employees who sell beer at package liquor stores must be 21 years
of age or older, must be permitted by the ATC, and must have successfully completed server
training. Def. Stip. ¶ 5. Persons who are younger than 21 years of age cannot legally enter
package liquor stores. Def. Stip. ¶ 10; Imus Dep. at 58(7-12).
Restaurants
Some restaurants sell cold beer for take-away pursuant to a “retailer permit” and there
are seven types: (a) a permit type to sell beer only for locations in incorporated areas; (b) a
permit type to sell beer only for locations in unincorporated areas; (c) a permit type to sell beer
and wine for locations in incorporated areas; (d) a permit type to sell beer and wine for locations
in unincorporated areas; (e) a permit type to sell beer, wine and liquor for locations in
unincorporated areas; (f) a permit type to sell beer, wine and liquor for locations in incorporated
areas that allows for take-away; and (g) a permit type to sell beer, wine and liquor for locations
in incorporated areas that does not allow for take-away. Thickstun Decl., ¶ 11.
All permits under which a restaurant that sells take-away beer can operate with the
following conditions: (a) all alcohol may be served cooled, iced, or chilled or non-cooled, non-
iced, or non-chilled; (b) facility must provide food for sale and have a minimum of 25 seats; (c)
state licensing is required for individuals to sell alcohol; (d) specialized server training is
required for individuals to sell alcohol; (e) if the premises contains a bar, it must be properly
sectioned off from the family dining area; (f) anyone under the age of 21 is not allowed in the bar
area; (g) waiters must be 19 years of age to sell alcohol in the family area of a restaurant and 21
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years of age to work in the barroom or act as the bartender; (h) on-premises consumption is
allowed; (i) restaurants which sell beer, wine, and liquor in unincorporated areas must meet an
average food sales quota of $100,000 annually over the three years immediately preceding its
application for a permit (a lower amount is required if the restaurant operates for six months or
less per year). There is a maximum quota of the number of these permits is designated by
Indiana Code and the quota varies according to type of license. Thickstun Decl., ¶ 12.
Persons who are younger than 21 years of age cannot legally enter the area of a restaurant
or tavern where cold beer is sold for take-out. Poindexter Dep. at 171(23)-172(10). For
restaurants and taverns that sell cold beer for take-away, there is no self-service option. Imus
Dep. at 63(21-25). See also Poindexter Dep. at 173(7-13); 173(21)-174(25).
Small Beer Brewers
A small beer brewer that brews less than 30,000 barrels per year can sell cold take-away
beer pursuant to a “small brewer permit” and there is one type: a permit type to brew less than
30,000 barrels per year and sell the beer that the brewer brews. Thickstun Decl., ¶ 13. A small
beer brewer that sells take-away beer can operate under the following conditions: (a) all alcohol
may be served cooled, iced, or chilled or non-cooled, non-iced, or non-chilled; (b) state licensing
is required for individuals to sell alcohol; (c) specialized server training is required for
individuals to sell alcohol; (d) clerks must be 19 years of age to sell alcohol; (e) anyone under the
age of 21 is not allowed to enter the premises; and (f) alcohol may not be sold outside of the
building. Id.9
9 Regardless of the business, those individuals who are required to have ATC permits to sell alcohol can
have those permits revoked for any violation of the Alcoholic Beverage Code or rules adopted by the Alcohol and
Tobacco Commission and this could result in the individual losing their job. Thickstun Decl., ¶ 14. Moreover, it is
a Class B misdemeanor to act as a clerk in a package store, or as a bartender, waiter, or manager for a retailer
permittee unless the individual has applied for and has been issued a servers permit by the Alcohol and Tobacco
Commission. Id.
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Ramifications If Plaintiffs Succeed
Beer is intended to be consumed iced or cooled and, thus, when sold cold it can be
immediately consumed. Thornton Dep. at 71(19)-72(15); Imus Dep. at 70(22-25); Ricker Dep.
at 33(8-22); 53(24)-54(3). See also Poindexter Dep. at 179(3-8); Noe Dep. at 24(8-9) (he
purchases cold beer so that “when I get home I can have one immediately”); 45(7-13). Plaintiffs
cannot presently sell iced or cooled beer. Poindexter Dep. at 179(9-18). Plaintiffs’ goal is to be
able to sell cold beer to the public at, or buy cold beer from, Indiana convenience stores. Imus
Dep. at 57(14-17). See also ECF 47, ¶ 100 (under “current regulations, the IPCA Member Stores
are able to sell beer … only if it is not refrigerated”); ¶¶ 107-09 (IPCA Member Stores lose
revenue because they cannot sell “cold beer”); ¶ 111 (Thornton has not constructed new stores
since 2006 because of Indiana’s “restriction on cold beer sales”); ¶¶ 120-26, 128-29 (Noe can
buy cold beer in Indiana package stores and in convenience stores in Ohio but not in Indiana
convenience stores); Imus Dep. at 106(24)-107(7) (equating the term “refrigerated” to “cooled or
iced” as used in Indiana Code § 7.1-5-10-11).
Currently, there are 2,801 convenience/grocery/drug stores in Indiana that are permitted
to sell beer for off-premise consumption and there are 1,044 package stores that sell cold beer for
take-away. Thickstun Decl., ¶ 15. And there are 4,583 more permits that are available to
convenience/grocery/drug stores that would allow the sale of beer for off-premise consumption.
Id. If allowed to do so, Indiana convenience stores will sell cold beer at their locations to the
public. Imus Dep. at 71(16)-72(6) (approximately 700-800 member stores will sell cold beer and
that the hundreds of other convenience stores (that are not members of IPCA) will do so also);
118(15-23); Thornton Dep. at 52(4-7); 54(2-6) (if allowed to sell cold beer, all Thornton
locations that currently sell beer in Indiana will sell that beer cold and that Thornton will attempt
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to obtain permits to sell beer for those locations that do not currently sell beer); Ricker Dep. at
36(6-20) (if allowed to sell cold beer, the 45 Ricker locations would sell the beer cold); Cobb
Dep. at 100(2-6); 103(23)-104(22) (if allowed to sell cold beer Freedom will do so at the three
stores that currently sell beer).
If allowed to sell cold beer in Indiana, Thornton will build 12-15 new stores in the
Indianapolis area and 5-10 new stores in Lake County. Thornton Dep. at 52(20)-53(5); 78(14)-
80(9). If allowed to sell cold beer in Indiana, Thornton will dedicate more floor space to the sale
of beer at their Indiana locations. Thornton Dep. at 51(20)-52(3). If allowed to sell cold beer in
Indiana, Thornton will sell single cans and bottles of cold beer and Thornton expects that its sale
of beer in Indiana would dramatically increase and that its Indiana locations would sell single
cans/bottles (which it presently does not sell at all) and that its Indiana locations would sell more
6-packs. Thornton Dep. at 63(1)-64(24); 70(9)-71(4). See also Thornton Dep. at 88(3-5) (he
expects the mix of products sold to be the same as in the locations where cold beer is sold). In
short, if allowed to sell cold beer, convenience stores will sell more beer and there will be more
outlets for the sale of cold beer. Thornton Dep. at 71(15-18); Ricker Dep. at 36(6-20); Cobb
Dep. at 105(4-8); Imus Dep. at 64(9-11); 71(6-11).
Presently, ATC has 58 officers assigned to law enforcement on a daily basis; however,
these officers also conduct other tasks including inspections and many of these officers currently
already work overtime to complete their duties. Thickstun Decl., ¶ 16. Moreover, since persons
under the age of 21 can legally enter convenience stores and grocery stores, it would be much
harder to enforce the alcohol laws because reasonable suspicion to stop a young looking person
carrying a paper bag out of such a store may not as easily exist -- at least as compared to a young
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looking person leaving a package liquor store with a paper bag. Poindexter Dep. at 15(16-18);
29(21-23); Thickstun Decl., ¶ 16.
Plaintiffs admitted that the State of Indiana has a legitimate interest in restricting (and
making harder) the sale of cold beer. Imus Dep. at 70(1-21); Thornton Dep. at 98(2-19); Ricker
Dep. at 54(4-12); Cobb Dep. at 105(13-16). Plaintiffs admitted that if Indiana Code § 7.1-5-10-
11 is eliminated, convenience stores and grocery stores will be allowed to sell cold beer but will
not have the restrictions imposed on them that package stores and restaurants have. Imus Dep. at
128(24)-129(25). See also Imus Dep. at 126(18)-127(22); 128(16-23) (package stores and
restaurants that sell take-away cold beer have restrictions imposed on them that convenience
stores do not). The majority of seizures and destructions made by the ATC involving minors are
for the possession and/or consumption of cold beer. Poindexter Dep. at 83(11-23); Thickstun
Decl., ¶ 17. Thickstun has been in the field for years and has made far more cases (as it relates to
underage purchase of alcohol) in grocery/convenience/drug stores than in package stores.
Thickstun Decl., ¶ 18.
Governmental studies (and other studies) reflect that there are significant and negative
societal consequences associated with the consumption of alcohol (by minors and others) and
these costs increase with increased alcohol consumption. See U.S. September 2012 Department
of Justice Study (Exhibit 12) (also available at http://www.ojjdp.gov/pubs/237145.pdf and last
visited February 3, 2014). Such issues include, but are not limited to, developmental and
neurological issues with immature brains; $68 billion in costs ($1.00 for every drink consumed)
including costs of medical care, loss of income, and pain and suffering; automobile accidents
including those resulting in death; and risky sexual behavior. Id. See also Report Sunday
Sales/Cold Beer Sales (Exhibit 13); Miller, et al., Societal Costs of Underage Drinking (Exhibit
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14); Underage Drinking in Indiana (Exhibit 15); CDC Fact Sheets -- Age 21 Minimum Legal
Drinking Age (Exhibit 16) (also available at http://www.cdc.gov/alcohol/fact-sheets/mlda.htm
and last visited February 3, 2014); CDC Fact Sheets -- Alcohol Use and Health (Exhibit 17) (also
available at http://www.cdc.gov/alcohol/fact-sheets/alcohol-use.htm and last visited February 3,
2014); CDC Fact Sheets -- Underage Drinking (Exhibit 18) (also available at
http://www.cdc.gov/alcohol/fact-sheets/underage-drinking.htm and last visited February 3,
2014).10
ARGUMENT
I. Preliminary Injunction Standard
“[A] preliminary injunction is an exercise of a very far-reaching power, never to be
indulged in except in a case clearly demanding it.” Roland Mach. Co. v. Dresser Indus., Inc.,
749 F.2d 380, 389 (7th Cir. 1984) (further quotations omitted). See also Girl Scouts of Manitou
Council, Inc. v. Girl Scouts of U.S. of America, Inc., 549 F.3d 1079, 1085 (7th Cir. 2008) (further
quotations omitted). This extraordinary remedy is meant to preserve the status quo until the
merits of a case may be resolved. Ind. Civil Liberties Union v. O’Bannon, 259 F.3d 766, 770
(7th Cir. 2001); see also Michigan v. U.S. Army Corps of Eng’rs, 667 F.3d 765, 783 (7th Cir.
2011) (“[t]he preliminary injunction, after all, is often seen as a way to maintain the status quo
until the merit issues can be resolved at trial”); Chicago Untied Indus., Ltd. v. City of Chicago,
445 F.3d 940, 945-46 (7th Cir. 2006). Put another way, the function of a preliminary injunction
“is merely to preserve the relative positions of the parties until a trial on the merits can be held.”
Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981); see also EEOC v. City of Janesville, 630
F.2d 1254, 1259 (7th Cir. 1980) (“[t]he purpose of a preliminary injunction is to preserve the
object of controversy in its then existing condition, i.e., to preserve the status quo”).
10
More information from the CDC and the US DOJ is publicly available. See www.cdc.gov; www.ojjdp.gov.
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In order to obtain this extraordinary relief, Plaintiffs must establish that: (1) they have a
reasonable likelihood of success on the merits of their underlying claims; (2) they will suffer
irreparable harm in the interim period prior to final resolution of their claims if the preliminary
injunction is denied; and (3) traditional legal remedies will be inadequate. Goodpaster v. City of
Indianapolis, 2013 WL 838208, at *5 (S.D. Ind. March 6, 2013) (citing Girl Scouts of Manitou
Council, Inc. v. Girl Scouts of U.S.A., 549 F.3d 1079, 1085-86 (7th Cir. 2008)).11
If Plaintiffs
fail to satisfy any of these elements, this Court must deny their Motion. Goodpaster, 2013 WL
838208, at *6. See also Abbott Labs v. Mead Johnson & Co., 971 F.2d 6, 11 (7th Cir. 1992).
If, however, Plaintiffs succeed in establishing all of these elements, this Court must then
balance the harm to Plaintiffs (and the public) from denying the preliminary injunction with the
harm to Defendants (and the public) of granting the preliminary injunction. Goodpaster, 2013
WL 838208, at *6. See also Winter v. NRDC, 555 U.S. 7 (2008); River of Life Kingdom
Ministries v. Vill. of Hazel Crest, 585 F.3d 364, 369 (7th Cir. 2009); Ty, Inc v. Jones Group, Inc,
237 F.3d 891, 895 (7th Cir. 2001).
II. Plaintiffs Have Not Demonstrated That They Are Likely to Succeed on the Merits of
Their Constitutional Challenges
A. The Eleventh Amendment
The Eleventh Amendment bars all claims against the State of Indiana and its agencies.
Kentucky v. Graham, 473 U.S. 159, 167 (1985); Pennhurst State Sch. & Hospital v. Halderman,
465 U.S. 89, 100 (1984); Missouri v. Fiske, 290 U.S. 18, 27 (1933) (“[e]xpressly applying to
suits in equity as well as at law, the [Eleventh] Amendment necessarily embraces demands for
the enforcement of equitable rights and the prosecution of equitable remedies when these are
11
Goodpaster, which was a constitutional challenge to a smoking ban ordinance, denied Plaintiffs’ Motion
for Preliminary Injunction and Motion for Permanent Injunction and entered final judgment in favor of Defendants.
Plaintiffs appealed to the Seventh Circuit, which affirmed this Court and held that Plaintiffs’ constitutional
challenges failed. Goodpaster v. City of Indianapolis, 736 F.3d 1060 (7th Cir. 2013).
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asserted and prosecuted by an individual against a State”); Hans v. Louisiana, 134 U.S. 1, 10
(1890); Brokaw v. Mercer County, 235 F.3d 1000, 1009 (7th Cir. 2000); Meadows v. State of
Indiana, 854 F.2d 1068, 1069 (7th Cir. 1988).
Notwithstanding the doctrine of Ex parte Young, this bar extends to state-law claims
brought against Huskey:
This need to reconcile competing interests is wholly absent, however, when a
plaintiff alleges that a state official has violated state law. In such a case the
entire basis for the doctrine of Young and Edelman disappears. A federal court’s
grant of relief against state officials on the basis of state law, whether prospective
or retroactive, does not vindicate the supreme authority of federal law. On the
contrary, it is difficult to think of a greater intrusion on state sovereignty than
when a federal court instructs state officials on how to conform their conduct to
state law. Such a result conflicts directly with the principles of federalism that
underlie the Eleventh Amendment. We conclude that Young and Edelman are
inapplicable in a suit against state officials on the basis of state law.
Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 106 (1984) (emphasis added). See
also Alabama v. Pugh, 438 U.S. 781, 782 (1978); Chicago Tribune Co. v. Bd. of Trs. of the Univ.
of Ill., 680 F.3d 1001, 1002-03 (7th Cir. 2012) (“it is not possible to sue an arm of state
government in federal court to vindicate a claim under state law”). Plaintiffs cannot succeed on
their state-law challenges.
B. Many of the Plaintiffs Lack Standing to Bring Many of the Challenges
Article III limits the “judicial power” of the United States to the resolution of “cases” and
“controversies.” Valley Forge Christian Coll. v. Americans United for Separation of Church &
State, Inc., 454 U.S. 464, 471 (1982). While courts have the power to determine whether a
statute is constitutional, this power arises only when the question is presented in an actual case or
controversy between parties; courts do not have the power to issue advisory opinions.
Wisconsin’s Envtl. Decade, Inc. v. State Bar of Wis., 747 F.2d 407, 410 (7th Cir. 1984), cert.
denied, 471 U.S. 1100 (1985) (citing Muskrat v. United States, 219 U.S. 346, 361-62 (1911)).
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To bring a claim, a plaintiff must demonstrate that he/she/it has standing. Valley Forge, 454
U.S. at 471.
Standing turns on whether the plaintiffs have a personal stake in the controversy and
“whether the dispute touches upon the ‘legal relations of the parties having adverse legal
interests.’” O’Sullivan v. City of Chicago, 396 F.3d 843, 853 (7th Cir. 2005) (quoting Baker v.
Carr, 369 U.S. 186, 204 (1962)). Such considerations are especially important when state laws
are at stake because the federal courts must ensure that the principles of federalism are not
contravened. Id. at 854. To have standing a plaintiff must demonstrate: 1) a personal injury; 2)
fairly traceable to the defendant; 3) that is likely to be redressed in the event of a favorable ruling
from the Court. Plotkin v. Ryan, 239 F.3d 882, 884 (7th Cir. 2001). The second and third
elements of standing require that “a federal court act only to redress injury that fairly can be
traced to the challenged action of the defendant.” Simon v. Eastern Ky. Welfare Rights Org., 426
U.S. 26, 41-42 (1976).
Counts I and V allege a violation of convenience stores’ purported equal protection rights
to sell cold beer and Count IV asserts a violation of convenience stores’ due process rights
because the word “cooled” is allegedly vague. Noe, however: (1) is an individual; (2) has never
had a permit or license from the State of Indiana to sell alcohol; (3) has never applied for a
permit or license from the State of Indiana to sell alcohol; (4) has never owned or operated a
convenience store in Indiana; (5) has never owned or operated a package store in Indiana; and (6)
has no intention of every owning/operating a convenience store or grocery store in Indiana, or
obtaining any sort of alcohol permit in Indiana. Count II asserts a dormant Commerce Clause
challenge to residency requirements but convenience stores are exempt from these requirements,
IPCA does not represent package stores and could identify no member that has been prevented
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from obtaining a package store permit because of these requirements, and Thornton has never
sought a package store permit and has no intention of doing so. Standing is lacking.
C. Indiana Code § 7.1-5-10-11 and Indiana Code § 7.1-3-21-3 Through 6 Are
“Unquestionably Legitimate” Pursuant to the Twenty-First Amendment
Plaintiffs’ challenge provisions that apply only to the retail tier of Indiana’s three-tier
framework. This reality dooms Plaintiffs’ challenges because such provisions are
“unquestionably legitimate” pursuant to the Twenty-First Amendment.
1. Granholm v. Heald
In Granholm v. Heald, 544 U.S. 460 (2005), the Supreme Court invalidated two state
laws that “permit[ted] in-state wineries directly to ship alcohol to consumers but restricts the
ability of out-of-state wineries to do so.” Granholm, 544 U.S. at 471. The Court found that the
Michigan law was discriminatory because while in-state wineries (the producers of the wine)
could sell directly to consumers, out-of-state wineries (the producers of the wine) had to pass
through an in-state wholesaler and in-state retailer before reaching consumers. Id. at 473. These
extra costs, as well as the chance that a wholesaler for small shipments may not be available,
meant that certain out-of-state producers could effectively be banned from the Michigan market.
Id. at 474. The New York law required out-of-state wineries to establish an in-state distribution
operation in order to gain the privilege of direct shipment. Id. at 474. The Court found that
requiring a “bricks and mortar” operation in New York would significantly increase costs for
out-of-state producers while other provisions prohibited out-of-state producers from obtaining
the most common type of direct-shipment license. As such, the Court had “no difficulty in
concluding that New York . . . discriminates against interstate commerce.” Id. at 475-76.
Nevertheless, the Court made the following point crystal clear: ‘“The Twenty-first
Amendment grants the States virtually complete control over whether to permit importation or
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sale of liquor and how to structure the liquor distribution system.” [Cal. Retail Liquor Dealers
Ass’n. v. Midcal Aluminum, Inc., 445 U.S. 97, 110 (1980).]….We have previously recognized
that the three-tier system itself is ‘unquestionably legitimate.’ North Dakota v. United States,
495 U.S. 423, 432 (1990) (Scalia, J., concurring).” Granholm, 544 U.S. at 488-89. In sum,
“[s]tate policies are protected under the Twenty-first Amendment when they treat liquor
produced out of state the same as its domestic equivalent.” Id.
2. Brooks v. Vassar
In Brooks v. Vassar, 462 F.3d 341 (4th Cir. 2006), a Virginia statute that provided for a
personal import exception to Virginia’s three-tier system was challenged. The Fourth Circuit
analyzed Granholm and noted that the three-tier system is unquestionably legitimate unless the
law provides differential treatment of in-state and out-of-state producers. Id. at 352. As such,
the plaintiffs’ argument that “compares the status of an in-state retailer with an out-of-state
retailer -- or that compares the status of any other in-state entity under the three-tier system with
its out-of-state counterpart -- is nothing more than an argument challenging the three-tier system
itself. As already noted, this argument is foreclosed by the Twenty-first Amendment and the
Supreme Court’s decision in Granholm, which upheld the three-tier system as ‘unquestionably
legitimate.’” Id. at 352.
3. Arnold Wines, Inc. v. Boyle
In Arnold’s Wines, Inc. v. Boyle, 571 F.3d 185, 187 (2d Cir. 2009), the challenged
provision allowed New York-licensed retailers to obtain off-premises licenses, which permitted
them to deliver alcohol directly to consumers’ homes; however, out-of-state retailers without an
in-state operation could not obtain this off-premises license. Id. at 188. In other words, New
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York-licensed retailers could deliver liquor directly to New York residents but out-of-state
retailers could not, and this distinction allegedly violated the dormant Commerce Clause. Id.
The District Court granted the motion to dismiss and the Second Circuit affirmed. In so
doing, the Second Circuit recognized that the Granholm Court had “repeatedly emphasized that
the three-tier systems … did not themselves violate the Constitution. Specifically, the
[Granholm] Court stated that it is ‘unquestionably legitimate’ for a state to bar the importation of
alcoholic beverages if it bans the sale and consumption of alcohol altogether, or to ‘funnel sales
through the three-tier system.’” Id. at 190. As such, “Granholm validates evenhanded state
policies regulating the importation and distribution of alcoholic beverages under the Twenty-first
Amendment. It is only where states create discriminatory exceptions to the three-tier system,
allowing in-state, but not out-of-state, liquor to bypass the three regulatory tiers, that their laws
are subject to invalidation based on the Commerce Clause.” Id. at 190.
Turning to the challenged provision, the Second Circuit held that treating in-state retailers
differently than out-of-state retailers was permissible under Granholm “because in-state retailers
make up the third tier in New York’s three-tier regulatory system” and the plaintiffs’ attack is
“therefore directly foreclosed by the Granholm Court’s express affirmation of the legality of the
three-tier system.” Id. at 190-91. In sum, since “New York’s three-tier system treats in-state and
out-of-state liquor the same, and does not discriminate against out-of-state products or producers,
we need not analyze the regulation further under Commerce Clause principles” and the
challenged provisions were held to be constitutional. Id. at 191-92.
4. Southern Wine and Spirits v. Div. of Alcohol
In Southern Wine and Spirits of America, Inc. v. Div. of Alcohol and Tobacco Control,
731 F.3d 799 (8th Cir. 2013), the challenged provision required wholesalers of alcohol
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containing more than 5% alcohol to be a “resident corporation” and to be a “resident
corporation” the “corporation must be incorporated under the laws of Missouri, all of its officers
and directors must be qualified legal voters and taxpaying citizens of the county … in which they
reside and have been bona fide residents of Missouri for at least three years” and all “resident
stockholders … shall own, legally and beneficially, at least sixty percent of all the financial
interest in the business.” Id. at 802-03 (citations and quotations to statute omitted). It was
alleged that this residency requirement violated the dormant Commerce Clause and the Equal
Protection Clause.
The Eighth Circuit recognized that Granholm “did not ‘call into question the
constitutionality of the three-tier system.’” Id. at 806 (quoting Granholm, 544 U.S. at 488).
Indeed, the Eighth Circuit acknowledged that while a state could not pass laws to discriminate
against out-of-state goods, state laws are protected from constitutional attack by the Twenty-First
Amendment when they treat liquor produced out-of-state the same as liquor produced in-state.
Id. at 806-07 (citing Granholm, 544 U.S. at 484-85, 489); see also id. at 809 (“state policies that
define the structure of the liquor distribution system while giving equal treatment to in-state and
out-of-state liquor products and producers are ‘protected under the Twenty-first Amendment’”
against constitutional challenges) (quoting Granholm, 544 U.S. at 489).
Turning to the Missouri residency requirement at issue, the Eighth Circuit -- based on
Granholm -- concluded that the wholesaler residency requirement merely “defines the extent of
in-state presence required to qualify as a wholesaler in the three-tier system….The rule does not
discriminate against out-of-state liquor products or producers. If it is beyond question that States
may require wholesalers to be ‘in-state’ without running afoul of the Commerce Clause,
Granholm, 544 U.S. at 489 (internal quotation omitted), then we think States have flexibility to
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define the requisite degree of ‘in-state’ presence to include the in-state residence of wholesalers’
directors and officers, and a super-majority of their shareholders. Id. at 809-10.
5. This Reasoning Compels Rejection of Plaintiffs’ Challenges
Applying this reasoning compels the conclusion that Plaintiffs cannot succeed on the
merits of their constitutional challenges. Unlike Granholm, Plaintiffs have not challenged any
provision of Indiana’s alcohol framework on the basis that it treats out-of-state producers or out-
of-state products differently than in-state producers or in-state products. Rather, Plaintiffs
challenge a provision that restricts certain Indiana stores from selling cold beer to consumers and
Plaintiffs challenge a provision that has a residency requirement for some of the shareholders of
a corporation that seeks a package liquor store permit. Both provisions squarely apply only to
the “retail” level of Indiana’s three-tier framework. As such, the provisions challenged are
“unquestionably legitimate” pursuant to the Twenty-First Amendment. See Arnold’s Wines, 571
F.3d 185; Southern Wine, 2012 WL 1934408, aff’d, 731 F.3d 799.
D. Indiana Code § 7.1-5-10-11 Does Not Violate the Equal Protection Clause or
Article I, Section 23 of the Indiana Constitution -- Count I and Count V
1. Noe Is Not Treated Any Differently than Others
Noe admitted that Indiana law treats him no differently -- as it relates to where he can
purchase beer (cold or warm) in Indiana -- than any other person who is 21 years of age or older.
Harvey v. Town of Merrillville, 649 F.3d 526, 531 (7th Cir. 2011) (the “equal protection clause
requires similar treatment of similarly situated persons”).12
Noe, therefore, cannot succeed on
any equal protection claim.
12
Plaintiffs incorrectly argue that Indiana stands alone in its regulation of cold beer. See, e.g., Cal. Bus. &
Prof. Code § 23790.5(d)(4); Md. Ann. Code art. 2B, § 15-203(d)(5)(i)(1); Okla. Stat. Ann. Tit. 37, § 534(C). But
even if true, basing an equal protection claim on what another state may do is not supported by the text of the
Constitution. See U.S. Const. amend. XIV, § 1 (Equal Protection Clause prescribing that no state may “deny to any
person within its jurisdiction the equal protection of the laws”) (emphasis added). Indeed, such a concept flies in the
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2. Convenience Stores Are Not Similarly Situated to Businesses That
Legally Sell Cold Beer for Take-Away in Indiana
Because the “equal protection clause requires similar treatment of similarly situated
persons” it “does not require things which are different in fact or opinion to be treated in law as
though they were the same.” Harvey, 649 F.3d at 531. And while the similarly situated analysis
is not a precise formula, demonstrating that one is similarly situated to another group is
“essential to the success” of an equal protection claim and the groups must be “very similar
indeed.” Id. at 531 (further quotations and citations omitted). See also Reget v. City of La
Crosse, 595 F.3d 691, 695 (7th Cir. 2010) (“the persons alleged to have been treated more
favorably must be identical or directly comparable to the plaintiff in all material respects”).
Plaintiffs admitted that convenience stores (in terms of the business operations) are not
the same as package liquor stores. Convenience stores offer one-stop shopping for various basic
items such as gas, groceries, candy, soda, bread, milk, eggs, and meat. Package liquor stores, on
the other hand, do not. Many Indiana convenience stores are open 24/7. Package liquor stores,
on the other hand, are not. Thornton, Ricker, and Freedom have never sought to become a
package liquor store because it is not their business plan and IPCA does not represent package
face of federalism because requiring Indiana to mimic other states is to deny our vital “role as [a] laborator[y] for
experimentation to devise various solutions.” United States v. Lopez, 514 U.S. 549, 581 (1995). See also Sidle v.
Majors, 536 F.2d 1156, 1157 (7th Cir. 1976) (affirming that “[i]n the realm of social and economic regulation, the
states are free to experiment and are given great latitude in determining who shall benefit from a particular
enactment”). The Seventh Circuit has already made short work of this “inter-state” argument. See Burgess v. Ryan,
996 F.2d 180, 185 (7th Cir. 1993) (rejecting the plaintiff’s suggestion that “under the Constitution all states must
employ the same rules” because federalism is one of the “features” of the Constitution that gives individuals the
“[f]reedom to move from one state to another in search of a preferable legal system” and that the Constitution “does
not require homogenous state laws” and that laws in one state “need not match” those of any other state). See also
Wolverine Fireworks Display v. Towne, 2012 WL 2063608, *21 (E.D. Mich. 2012) (reasoning that “states have
taken a variety of approaches” to the regulation of “consumer fireworks” and the fact “[t]hat other states have
adopted different minimum levels” of insurance “demonstrates not a flaw in Michigan’s statute, but rather a strength
of our system of government” -- “[a] state is not required to enact the same laws as its sister states” but “may
calibrate its economic regulations to reflect the particular values of its citizens”).
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liquor stores. Restaurants that sell cold beer for take-away also are not the same business as a
convenience store and IPCA does not represent restaurants.13
Employees who sell beer at package liquor stores must be 21 years of age or older, must
be permitted by the ATC, and must have successfully completed server training. Employees
who sell beer at restaurants and taverns that sell cold beer for take-away must be 21 years of age
or older, must have a permit from the ATC, and must successfully complete server training.
Employees who sell beer at convenience stores, on the other hand, do not need to successfully
complete server training and do not need to be permitted by the ATC and do not need to be 21
years of age or older in order to complete the sale of beer to customers. Persons who are
younger than 21 years of age cannot legally enter a package liquor store. Persons who are
younger than 21 years of age cannot legally enter the area of a restaurant or tavern where cold
beer is sold for take-out. Persons who are younger than 21 years of age can legally enter
convenience stores. Indiana imposes no restrictions on the amount of area that a convenience
store can dedicate for the display or sale of beer. For restaurants and taverns that sell cold beer
for take-away, there is no self-service option. In a convenience store, a customer can go to the
beer aisle and pick up the beer and take it to the register for purchase.
Perhaps recognizing that convenience stores are different than other businesses that sell
cold beer for take-away, Plaintiffs now argue that grocery stores and drug stores in
unincorporated areas can obtain a beer retailer permit and can sell cold beer for take-away.
Plaintiffs have not identified a single example of a grocery store or drug store in an
unincorporated area that has ever legally sold cold beer pursuant to such a permit. Indeed,
13
As for the other “comparators,” convenience stores are different than temporary events, sporting events,
festivals, micro-breweries, etc. Further, Plaintiffs’ reference to the ability to sell wine or wine-coolers is immaterial
since convenience/grocery/drug stores are treated no differently than package liquor stores in terms of the ability to
sell such products.
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Poindexter testified that in his 27 years with the State, he is unaware of a single instance of a
grocery store or drug store obtaining a beer retailer permit and legally selling cold beer and
Thickstun has testified that in his 12 years with the State is unaware of a single
convenience/grocery/drug store in an unincorporated area that sells beer under a beer retailer
permit and sells cold beer even though he is aware of convenience/grocery/drug stores in
unincorporated areas that sell beer pursuant to a beer dealer permit. Poindexter testified about
one instance where a convenience store asked about getting a beer retailer permit and was told
that it was not allowed. Poindexter testified that convenience stores in unincorporated areas have
been cited for cooling beer and Thickstun has provided this Court with a citation for JK Deli,
which is located in an unincorporated area.
Plaintiffs have offered no evidence to dispute this and Indiana law disqualifies a grocery
store or drug store from receiving a beer retailer permit unless it is a restaurant, hotel, or club.
See Ind. Code § 7.1-3-4-2(13); Ind. Code § 7.1-3-4-1. Further, even if a grocery store or drug
store could qualify for the beer retailer permit, it would have to abide by the restrictions imposed
on restaurants -- including the limitation on area from which cold beer could be sold, the
restriction on self-service, the age and permitting and training requirements for employees. In
other words, Plaintiffs would not be able to sell cold beer under their current business model.14
14
In assessing Plaintiffs’ “unincorporated area” argument, this Court must interpret statutes to not create
constitutional issues and to uphold as much of a law as possible and to further the legislative intent. See also Ind.
Voluntary Firemen’s Ass’n, Inc. v. Pearson, 700 F. Supp. 421, 448 (S.D. Ind. 1988) (internal citation omitted)
(noting that a court should invalidate a statute no “further than necessary to dispose of the case before it”). Striking
Indiana Code § 7.1-5-10-11 -- based on the never-applied Indiana Code § 7.1-3-4-4 -- would inappropriately
increase the availability and sale of immediately consumable cold beer even though a stated purpose of Indiana’s
law is to limit the same. See Ind. Code § 7.1-1-1-1; Heckler v. Matthews, 465 U.S. 728, 740 (1984) (“when the right
invoked is that of equal treatment, the appropriate remedy is a mandate of equal treatment, a result that can be
accomplished by withdrawal of benefits from the favored class”); Beskind v. Easley, 325 F.3d 506, 519 (4th Cir.
2003) (upholding the district court’s judgment that the law was unconstitutional but reversing the remedy by noting
that “it causes less disruption to [the state’s alcoholic beverage] laws to strike the single provision”).
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3. The Legislature’s Line-Drawing Is Rational
“[E]qual protection is not a license for courts to judge the wisdom, fairness, or logic of
legislative choices. In areas of social and economic policy, a statutory classification that neither
proceeds along suspect lines nor infringes fundamental constitutional rights must be upheld
against equal protection challenge if there is any reasonably conceivable state of facts that could
provide a rational basis for the classification.” F.C.C. v. Beach Commc’ns, Inc., 508 U.S. 307,
313 (1993) (collecting cases). “This standard of review is a paradigm of judicial restraint.” Id.
at 314. Those “attacking the rationality of the legislative classification have the burden ‘to
negative every conceivable basis which might support it.’” Id. at 315 (quoting Lehnhausen v.
Lake Shore Auto Parts Co., 410 U.S. 356, 364 (1973)). See also Armour v. City of Indianapolis,
132 S.Ct. 2073, 2080-81 (2012) (squarely putting the burden of negating “every conceivable
basis which might support” the law on the challenger); Hodel v. Indiana, 452 U.S. 314, 331-32
(1981); Vision Church v. Vill. of Long Grove, 468 F.3d 975, 1000 (7th Cir. 2007) (the challenger
“must demonstrate ‘governmental action wholly impossible to relate to legitimate governmental
objections’”) (quoting Patel v. City of Chicago, 383 F.3d 569, 572 (7th Cir. 2004)).
The legislature is free to deal with perceived problems in a piecemeal fashion and need
not craft its distinctions with mathematic precision. See Williamson v. Lee Optical of Okla., 348
U.S. 483, 488-89 (1955) (collecting cases) (the “problem with legislative classification is a
perennial one, admitting of no doctrinaire definition” and that “[e]vils in the same field may be
of different dimensions and proportions, requiring different remedies” or “so the legislature may
think” and, thus, legislation may reform “one step at a time, addressing itself to the phase of the
problem which seems most acute to the legislative mind” and, in sum, the “legislature may select
one phase of the field and apply a remedy there, neglecting others”). See also Dandridge v.
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Williams, 397 U.S. 471, 485 (1970) (collecting cases) (in “the area of economics and social
welfare, a State does not violate the Equal Protection Clause merely because the classifications
made by its laws are imperfect” or merely because the “classification is not made with
mathematical nicety or because in practice it results in some inequality” because the “problems
of government are practical ones and may justify … rough accommodations -- illogical, it may
be, and unscientific”).
Further, “it is entirely irrelevant for constitutional purposes whether the conceived reason
for the challenged distinction actually motivated the legislature.” Beach Commc’ns, 508 U.S. at
315. Thus, the “absence of legislative facts explaining the distinction on the record has no
significance in rational-basis analysis.” Id. at 315. Equal protection “does not demand for
purposes of rational-basis review that a legislature of governing decision maker actually
articulate at any time the purpose or rational supporting its classification.” Nordlinger v. Hahn,
505 U.S. 1, 15 (1992). “In other words, a legislative choice is not subject to courtroom fact-
finding and may be based on rational speculation unsupported by evidence or empirical data.”
Id. at 315. In sum, these “restraints on judicial review have added force where the legislature
must necessarily engage in a process of line-drawing.” Id. at 315 (further citation and quotation
omitted).15
15
Plaintiffs ignore these cases and focus on equal protection challenges to “laws” that are not classic
economic legislation. See Planned Parenthood of Ind. and Ky. v. Ind. State Dep’t of Health, 2013 WL 6181113
(S.D. Ind. Nov. 26, 2013) (equal protection challenge to a law that was targeted at a single abortion clinic and
imposed standards on this clinic but exempted physician offices that performed the exact same service from the
standards); L.P. v. Ind. State Dep’t of Health, 2011 WL 255807 (S.D. Ind. Jan. 27, 2011) (equal protection challenge
where certain United States citizens born in Indiana were allowed to use paternity affidavits to establish legitimacy
but others were not and the distinction was based on the immigration status of the child’s parents; the Court rejected
the rationales given because the State’s position actually conflicted with federal law and also reduced the number of
children qualifying for benefits, which contradicted the purpose of the law). Further, while mentioning equal
protection, Buquer v. City of Indianapolis, 797 F. Supp. 2d 905 (S.D. Ind. 2011) did not focus on that theory and, in
any event, singling out this particular form of identification for punishment (but allowing other less reliable forms to
be used) was not rational. Id. at 924. Likewise, Plaintiffs’ citation to United States v. Moore, 644 F.3d 553 (7th Cir.
2011) is of no help. Not only did that case involve a criminal statute, but it also made clear that the “changed
circumstance” argument fails where it is “even debatable that the classification is rational, because, where that is the
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Beer is intended to be consumed cold and cold beer can be immediately consumed. As
Noe put it, he purchases cold beer so that “when I get home I can have one immediately.”
Convenience stores cannot currently sell cold beer. Plaintiffs argue that consumers demand the
ability to purchase cold beer from convenience stores in Indiana and Plaintiffs want to make the
purchase of cold beer more convenient for consumers. Cobb Dep. at 76(18)-77(13) (“it
definitely is a convenience issue” because that is “the nature of the business that we’re in”); Noe
Dep. at 39(13)-40(16) (testifying that he wants to purchase cold beer from a convenience/grocery
store because it is “more convenient for me” and typically it “would be cheaper”); 63(13)-64(3).
Currently, Indiana allows only certain businesses to sell cold beer for take-away and
those businesses have added restrictions imposed on them. If Plaintiffs succeed, there will be far
more outlets selling far more cold beer. See Imus Dep. at 64(9-11); 71(6-11); 71(16)-72(6)
(testifying that approximately 700-800 member stores will begin selling cold beer and that the
hundreds of other convenience stores (that are not members of the IPCA) will do so also);
118(15-23); Thornton Dep. at 52(4-7); 54(2-6) (admitting that if allowed to sell cold beer, all
Thornton locations that currently sell beer in Indiana will sell that beer cold and that Thornton
will attempt to obtain permits to sell beer for those locations that do not currently sell beer);
Ricker Dep. at 36(6-20) (admitting that if allowed to sell cold beer, the 45 Ricker locations
would sell the beer cold); Cobb Dep. at 100(2-6); 103(23)-104(22); 105(4-8) (admitting that if
allowed to sell cold beer Freedom will do so at the three locations that currently sell beer).
Beyond this, Thornton admitted that, if they are successful, it will construct dozens more
convenience stores and it will dedicate more floor space to the sale of cold beer. Thornton Dep.
case, the decision is one for” the legislature. Id. at 556. In any event, these cases do not control the outcome here as
Plaintiffs are not similarly situated to other businesses that sell cold beer for take-away and limiting the sale of this
immediately consumable product to certain businesses with additional restrictions is certainly rational.
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at 51(20)-52(3); 52(20)-53(5); 78(14)-80(9). See also Thickstun Decl., ¶ 15 (over 4,500 beer
dealer permits are currently available). In these stores, Thornton expects to not only sell more
beer but also expects that it will sell far more single cans and bottles of immediately consumable
cold beer. See Thornton Dep. at 63(1)-64(24); 70(9)-71(4); 71(15-18); 88(3-5). And this beer
will be sold by an industry that has an annual turnover rate for staff of about 200%. Beyond the
increase in cold beer sales and cold beer outlets, the fact is that these new sellers of cold beer will
not be subject to the restrictions that currently exist for sellers of cold beer.
Restricting the sale of cold beer to certain businesses and restricting the sale of cold beer
only in businesses that have more restrictions placed on them is a classic example of legislative
line-drawing and Indiana’s decision furthers the legitimate goals of Indiana’s alcohol laws while
opening this market to others without restriction does not. Plaintiffs concede that Indiana has a
legitimate interest in making it harder to purchase immediately consumable cold beer. See also
Baude, 538 F.3d at 614-15 (discussing that removal of restrictions, which lowers the costs to
consumers, will make it easier for minors to get alcohol and noting that “keeping alcohol out of
minors’ hands is a legitimate, indeed, a powerful interest”); Ind. Code § 7.1-1-1-1 (setting forth
purposes of Indiana’s alcohol laws).16
And limiting the outlets for this product and placing
restrictions on the businesses that can sell this product are rationally related to this goal.
In many ways, this case is reminiscent of Goodpaster v. City of Indianapolis, 736 F.3d
1060 (7th Cir. 2013). There, bars constitutionally challenged an ordinance enacted by the City of
16
The issue in this case is whether limiting the sale of immediately consumable cold beer to certain
businesses -- and placing additional restrictions on those businesses -- is rational. Thus, whether minors can see
alcohol at various venues utterly misses the point. Likewise, while convenience stores may fare better in one
enforcement tool, this particular program has limitations and far more cases are made against minors purchasing
alcohol in convenience/grocery/drug stores than in package liquor stores. Moreover, whether a particular store is
well-lit or is a “good corporate citizen” is of no moment because current Indiana law does not allow imposition of
these business practices on the thousands of convenience/grocery/drug stores in Indiana. Finally: Noe paying more
for beer; Thornton deciding not to build more stores to sell cold beer; it being less convenient for consumers to buy
cold beer in Indiana; higher costs for permits that allow the sale of cold beer all support Defendants’ position
because all of these “facts” act to limit the sale of alcohol.
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Indianapolis that banned smoking in certain businesses but allowed smoking in other businesses.
736 F.3d at 1071. The Goodpaster plaintiffs -- like Plaintiffs in this case -- argued that the
ordinance violated their equal protection rights under the U.S. Constitution and Article I, Section
23 of the Indiana Constitution. This Court rejected the Goodpaster plaintiffs’ claims (and denied
the request for preliminary injunctive relief) and the Seventh Circuit affirmed.
In so doing, the Court concluded that it was not irrational to ban smoking in bars but
allow smoking in tobacco specialty bars:
Illogical reasons for a distinction, however, will not doom a classification
supported by other rational reasons. In this case, the City could have been trying
to protect public health by decreasing secondhand smoke exposure but
simultaneously trying not to close all businesses where tobacco was sold or used.
This was rational. . . . The City thus drew a line between traditional bars, for
whom tobacco sales and usage are incidental to their primary business of alcohol
and food sales, and tobacco specialty bars, whose business models depend on
tobacco sales. The bar owners essentially argue that the line was drawn
incorrectly because it does not include their businesses, which also depend
significantly upon on-site tobacco usage. But legislation does not violate the
Equal Protection Clause merely because the classifications [it makes] are
imperfect….A law can be underinclusive or overinclusive without running afoul
of the Equal Protection Clause.
Id. at 1072 (further citations and quotations omitted); id. at 1075-76 (rejecting Article I, Section
23 claim because a rational basis existed for where the General Assembly drew the line). See
also Doyle, supra (Indiana Supreme Court finding it to be constitutionally rational to limit the
sale of cold beer to certain types of businesses); Maxwell’s Pic-Pac, Inc. v. Dehner, 2014 WL
128129, at *3-*4 (6th Cir. Jan. 15, 2014) (reversing district court’s equal protection decision and
holding that restricting the sale of a particular alcoholic commodity to a certain type of business
was constitutional because the Kentucky legislature could rationally believe that grocery stores
and convenience stores are more frequented than other types of businesses (because they sell
necessities and staples) and that grocery stores and convenience stores are more likely to employ
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minors and have more traffic (so that it may be easier to steal alcohol) -- “Kentucky … can also
reduce access by limiting the types of places that supply it”) (emphasis in original).
Plaintiffs cannot succeed on their equal protection claims.17
E. Indiana Code § 7.1-5-10-11 Does Not Violate Article I, Section 1 of the
Indiana Constitution
Indiana Courts have strongly suggested that this provision of the Indiana Constitution is
not capable of judicial enforcement. See Doe v. O’Connor, 790 N.E.2d 985, 991 (Ind. 2003) (as
a general rule, provisions similar to Article 1, Section 1 in other states had not been interpreted
“to provide a sole basis for challenging legislation since the language is not so complete as to
provide courts with a standard that could be routinely and uniformly applied”).
The Indiana Court of Appeals in Morrison v. Sadler, 821 N.E.2d 15, 31 (Ind. Ct. App.
2005), concluded that “even if the language in Doe was dicta, it is a good indicator of the court’s
current thinking regarding Article 1, Section 1 and that it is inclined to hold that particular
constitutional provision not to be judicially enforceable.” The Morrison court went on to review
cases where Article 1, Section 1 had been judicially enforced and rejected the plaintiff’s
invitation to judicially enforce Article I, Section 1: “[W]e are not inclined to accept this
argument, given the recent dicta in Doe, the fact that no statute has been invalidated under
Article 1, § 1 for over fifty years, and that prior cases that did invalidate statutes under Article 1,
§ 1 did so using a now-discredited view of the scope of the government’s police power to
regulate business.” Id. at 32; see also McIntosh v. Melroe Co., 729 N.E.2d 972, 975 (Ind. 2000).
17
The same basic standard is used for the Article I, Section 23 claim. See Ind. High School Athletic Ass’n,
Inc. v. Carlberg by Carlberg, 694 N.E.2d 222, 239-40 (Ind. 1997) (noting that “legislative classification becomes a
judicial question only where the lines drawn appear arbitrary or manifestly unreasonable” and noting that the Court
will not substitute “our judgment for that of the legislature; nor will we inquire into the legislative motives
prompting such classification”) (citing and quoting Collins v. Day, 644 N.E.2d 72 (Ind. 1994)). Plaintiffs admitted
that convenience stores are different businesses than other business that sell cold beer for take-away. This Court
must “[p]resum[e] the statute to be constitutional” and Plaintiffs must “negative every conceivable basis which
might have supported the classification.” Collins, 644 N.E.2d at 80. Limiting the sale of this immediately
consumable product to certain businesses and imposing additional restrictions on those businesses is rational.
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And even if judicially enforceable, constitutional challenges to Indiana statutes invoking
Article I, Section 1 are limited to “fundamental rights” or “core values.” Morrison v. Sadler, 821
N.E.2d 15, 32 (Ind. Ct. App. 2005). Here, the ability to purchase cold beer at a convenience
store in Indiana is simply not a “fundamental right” or “core value” that the framers intended to
protect. See Schmitt v. F.W. Cook Brewing Co., 120 N.E. 19, 21 (Ind. 1918). In any event,
under this provision, Plaintiffs need to demonstrate that the challenged provision imposes a
“substantial burden” on a “fundamental right” that constitutes a “core constitutional value” of the
Indiana Constitution. Clinic for Women, Inc. v. Brizzi, 837 N.E.2d 973, 982-83 (Ind. 2005). As
shown above, Plaintiffs complain about convenience and/or paying a bit more for cold beer.
Neither is a substantial burden on a fundamental right.
Plaintiffs cannot succeed on this claim.
F. Indiana Code § 7.1-3-21-5 Does Not Violate the Dormant Commerce Clause
IPCA and Thornton assert that Indiana Code § 7.1-3-21-3 through 6 violates the dormant
Commerce Clause. Of course, the text of the statute does not differentiate between “in-state”
entities and “out-of-state” entities. See, e.g., Ind. Code § 7.1-3-21-5.18
Thus, the challenge must
be to the residency requirements imposed on shareholders. Convenience stores, however, are not
subject to the shareholder residency requirements. Ind. Code § 7.1-3-21-6. IPCA does not
represent package stores and Thornton is not a package store.
The residency requirement does not violate the dormant Commerce Clause. In Southern
Wine, the Eighth Circuit reasoned that Missouri’s residency requirement was constitutional
because “state policies defining the three-tier system are subject to deferential scrutiny” and,
accordingly, “Missouri’s law passes muster” because the “legislature legitimately could believe
18
Indiana Code § 7.1-5-10-11 does not differentiate between “in-state” and “out-of-state” and Thornton (out-
of-state), Ricker (in-state), and Freedom (in-state) all own/operate convenience stores in Indiana that are subject to
this provision.
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that a wholesaler governed predominantly by Missouri residents is more apt to be socially
responsible and to promote temperance, because the officers, director, and owners are residents
of the community and thus subject to negative externalities -- drunk driving, domestic abuse,
underage drinking -- that liquor distribution may product.” 731 F.3d at 810-11. Put another
way, “Missouri residents, the legislature sensibly could suppose, are more likely to respond to
concerns of the community, as expressed by their friends and neighbors whom they encounter
day-to-day in ball parks, churches, and service clubs” and the “legislature logically could
conclude that in-state residency facilitates law enforcement against wholesalers, because it is
easier to pursue in-state owners, directors, and officers than to enforce against their out-of-state
counterparts.” Id.
The same is truer at the retail level where beer is sold to the consumer. Put simply,
limiting the businesses that sell immediately consumable beer for take-away, and requiring
businesses that sell immediately consumable cold beer for take-away be controlled by Indiana
residents, logically further the General Assembly’s purpose of protecting the health, peace, and
morals of Indiana citizens and regulating and limiting the sale, possession, and use of alcohol.19
G. Indiana Code § 7.1-5-10-11 Is Not Void for Vagueness
Indiana Code § 7.1-5-10-11 provides that it is prohibits “the holder of a beer dealer’s
permit to offer or display for sale, or sell, barter, exchange or give away a bottle, can, container,
or package of beer that was iced or cooled by the permittee before or at the time of the sale,
exchange, or gift. Ind. Code § 7.1-5-10-11 (emphasis added). Violation of this provision
19
Plaintiffs’ cases do not change this conclusion. For example, Cooper v. McBeath, 11 F.3d 547 (5th Cir.
1994) and Glazer’s Wholesale Drug Co., Inc. v. Kansas, 145 F. Supp. 2d 1234 (D. Kan. 2001) pre-date Granholm.
In Jelovsek v. Bredesen, 545 F.3d 431 (6th Cir. 2008), the challenged legislation was specifically enacted to benefit
local concerns. The residency requirement was not appealed in Wine Country Gift Baskets.com v. Steen, 612 F.3d
809 (5th Cir. 2010). And, the case out of Massachusetts is against the great weight of authority cited above. See
Peoples Super Liquor Stores, Inc. v. Jenkins, 432 F. Supp. 2d 200 (D. Mass. 2006).
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requires intentional/volitional conduct (offering, selling, displaying, bartering, exchanging,
giving away, cooling, icing) by the permitee. Over 70 years ago, the Indiana Supreme Court
concluded that this provision is not vague. Doyle v. Clark, 41 N.E.2d 949, 951 (Ind. 1942).20
This provision does not affect a liberty interest or property interest. Accordingly, this
provision does not violate the void for vagueness doctrine of the Due Process Clause. See
Maxwell’s Pic-Pac, 2014 WL 128129, at *5 (rejecting due process void for vagueness challenge
to alcohol regulation and noting that reliance on cases addressing the “vagueness” of criminal
statutes is inappropriate where the statute does not affect a liberty interest) (citing Bd. of Regents
of State Colls. v. Roth, 408 U.S. 564, 569-71 (1972)); Horvath v. City of Chicago, 510 F.2d 594,
596 (7th Cir. 1975) (vagueness challenge to a state’s regulation of commercial activity, is hard
indeed: “if such a challenge is available, surely it would succeed in only the most extreme
case”).21
Plaintiffs want to sell refrigerated beer but they cannot do so pursuant to this provision.
See, e.g., ECF 47 ¶ 100 (“current regulations” that allow convenience stores to “sell beer … only
if it is not refrigerated”); ¶¶ 107-09 (IPCA Member Stores lose revenue because they cannot sell
“cold beer”); ¶¶ 120-26, 128-29 (Noe can buy cold beer at an Indiana package store or an Ohio
20
Since volitional/intentional conduct is required, Plaintiffs’ argument regarding not knowing what
temperature constitutes “cool” or how “cool” is measured completely misses the mark. 21
This “economic regulation is subject to a less strict vagueness test [than criminal law or laws narrowing
other substantive rights] because its subject matter is often more narrow, and because businesses, which face
economic demands to plan behavior carefully, can be expected to consult relevant legislation in advance of action.”
Vill. of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498 (1982). See also Minter v. Wells
Fargo Bank, N.A., 274 F.R.D. 525, 545 (D. Md. 2011) (finding a law “clear enough” for the “seasoned”
businessperson to whom it was meant to apply even if it would “not be immediately clear to a layperson”). To that
end, Plaintiffs’ new claim of confusion is belied by the fact that this has been the law for decades and Plaintiffs
never sought any guidance from the State as to what it means. Thus, cases like Kolender v. Lawson, 461 U.S. 352
(1983) and Does v. City of Indianapolis, 2006 WL 2927598 (S.D. Ind. Oct. 5, 2006) are inapposite because the laws
at issue there were penal. Likewise, in Does, the Court found the terms “accompanied” and “public” to be vague
and in Bell v. Keating, 697 F.3d 445 (7th Cir. 2012) the terms at issue were “serious inconvenience” and “alarm”
and “annoyance” -- here Plaintiffs have admitted that they know that refrigerating beer for sale violates Indiana
Code § 7.1-5-10-11. Finally, Kwik Shop, Inc. v. City of Lincoln, 498 N.W.2d 102 (Neb. 1993), dealt with the
standard that was to be assessed for reviewing whether a license should be issued and the decision coupled the “void
for vagueness” challenge with a separation of powers argument. That is not the case here.
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convenience store but not at an Indiana convenience store). Plaintiffs’ knowledge of what is
prohibited is confirmed by their admissions.
Imus equated the term “refrigerated” to Indiana Code § 7.1-5-10-11’s term “cooled or
iced.” Cobb testified that three of his six stores currently sell beer that is neither iced nor cooled
but, if the restriction were lifted, he would begin selling cold beer. Ricker testified that his
company has 49 stores in Indiana and 45 of them currently sell beer but that the beer is neither
iced nor cooled. Thornton testified that: (1) his company owns/operates convenience stores in
various states including Indiana; (2) the convenience stores in other states sell cold beer (and also
sell warm beer) but the Indiana locations do not sell cold beer because of Indiana Code § 7.1-5-
10-11; and (3) this restriction has caused the company to not build a new store in Indiana for
seven years. Thornton also testified that if allowed to sell cold beer he would do so, he would
build more stores in Indiana, he would have more beer offered for sale, he would sell more beer,
and the mix of beer sold would be like it is in other states.
Noe testified that (for as long as he can remember) he has not been able to buy cold beer
at an Indiana convenience store but that he has been able to buy cold beer in an Indiana package
store and in convenience stores in Ohio. Imus acknowledged that about 70%-80% of IPCA
member stores sell beer that is neither iced nor cooled and he further testified that Indiana Code
§ 7.1-5-10-11 prevents the convenience stores in Indiana from selling cold beer and that if lifted
these stores (and many others) would begin selling cold beer. Imus also testified that there are
several convenience store entities that have locations in Indiana and other states and that the
Indiana locations sell beer that is warm while the other states sell beer that is cold.
Plaintiffs have never sought any clarification or guidance on what the word “cooled”
means. Ricker and Freedom have never been cited for violating Indiana Code § 7.1-5-10-11. In
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2007, Thornton was cited violating Indiana Code § 7.1-5-10-11; however, Thornton’s violation
was because it placed malt beverage in a refrigerator thinking that it was wine -- Thornton had
not placed beer in the refrigerator. Along with their admissions, these facts demonstrate that
Plaintiffs know that what they want to do -- sell cooled beer -- is not allowed.22
Plaintiffs cannot succeed since Indiana Code § 7.1-5-10-11 is “clear in [its] application to
plaintiffs’ proposed conduct.” Holder v. Humanitarian Law Project, 130 S. Ct. 2705, 2720
(2010) (emphasis added); Parker v. Levy, 417 U.S. 733, 756 (1974) (even an otherwise vague
law’s failure to give “fair warning with respect to other conduct which might be within its broad
and literal ambit” is irrelevant because “[o]ne to whose conduct a statute clearly applies may not
successfully challenge it for vagueness”); VIP of Berlin, LLC v. Town of Berlin, 593 F.3d 179,
189 (2d Cir. 2010) (“in the context of an as-applied vagueness challenge, a court’s analysis
should be confined to the litigant’s actual conduct, and a court should not analyze whether a
reasonable person would understand that certain hypothetical conduct or situations violate the
statute”); Grote Indus., LLC v. Sebelius, 914 F. Supp. 2d 943, 956 (S.D. Ind. 2012) (plaintiffs
“are not suffering from any misapprehensions as to the meaning of the [law] or what the [law]
requires of them”). Further, Indiana law provides that they cannot do indirectly what they are
directly prohibited from doing. See Ind. Code § 7.1-1-2-5. Put another way, Plaintiffs cannot
22
This provision has been consistently enforced. See Roark & Hardee LP v. City of Austin, 522 F.3d 533,
554 (5th Cir. 2008) (citing the government’s history of “progressive” and “standardize[d]” enforcement of an
ordinance). See also Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498 (1982)
(“economic regulation is subject to a less strict vagueness test” because its “subject matter is often more narrow, and
because businesses, which face economic demands to plan behavior carefully, can be expected to consult relevant
legislation in advance of action”). Further, a permittee has the right to challenge citations and this process
(including judicial review by a Marion County Court) provides ample due process. And, the fines imposed are
typically no more than a few hundred dollars.
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use the “void for vagueness” concept to allow them to refrigerate beer by claiming that they do
not know if far-fetched hypotheticals constitute cooling.23
H. Equity Precludes Plaintiffs’ Constitutional Challenges
Indiana Code § 7.1-5-10-11 has been the law for decades. The rationality of limiting the
sale of cold beer to certain businesses has been the law for over 70 years as has the conclusion
that the phrase “iced or cooled” is not vague. See Doyle v. Clark, 41 N.E.2d 949, 951 (Ind.
1942). IPCA, Thornton, Ricker, and Freedom have been operating in Indiana for years and
applied for (and received) permits allowing them to sell beer. Since 1986, Noe has purchased
beer in Indiana convenience stores (uncooled) and has purchased beer in Indiana package stores
(cooled). Plaintiffs have never challenged this provision, Plaintiffs have never sought any
clarification as to the meaning of this provision, and the executive director of the IPCA can
identify no member who ever asked for clarification as to the meaning of this provision.
Indiana has allocated its resources based on this long-standing regulatory framework and
currently there are about 58 officers covering the State of Indiana. There are currently 2,801
convenience/grocery/drug stores that sell beer in Indiana but, if Plaintiffs succeed, the number of
outlets selling immediately consumable cold beer will dramatically increase. Package stores
cannot legally be open on Sundays but convenience stores can. And, while it is illegal for
persons under the age of 21 to enter package stores, persons of any age can and do enter
convenience stores. Plaintiffs’ success, therefore, will significantly alter the carefully balanced
23
This Court must “avoid constitutional difficulties by adopting a limiting interpretation if such a
construction is fairly possible.” Skilling v. United States, 130 S. Ct 2896, 2930 (2010) (internal quotations and
alterations omitted). The construction of a state law is limited first of all by that state court’s authoritative
interpretation. City of Chicago v. Morales, 527 U.S. 41, 61 (1999). Not only did the Indiana Supreme Court
validate this regulation 70 years ago, any construction is also aided by the usual interpretive tools, including
dictionaries, Bell v. Keating, 697 F.3d 445, 458 (7th Cir. 2012), the law’s purpose, Grayned v. City of Rockford, 408
U.S. 104, 110 (1972), words’ “common and ordinary meaning[s],” High Ol’ Times, Inc. v. Busbee, 673 F.2d 1225,
1229 (11th Cir.1982), and rules of statutory construction such as ejusdem generis, United States v. Clark, 582 F.3d
607, 613 (5th Cir. 2009), the doctrine that the meaning of a general word is limited by its specific neighbors.
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framework established by the General Assembly to fulfil the goals of Indiana Code § 7.1-1-1-1
and will strain the resources of the State of Indiana. Given this reality, and the long delay in
bringing this challenge, equity should preclude Plaintiffs’ constitutional challenged. See Aguayo
v. Christopher, 865 F. Supp. 479 (N.D. Ill. 1994) (analyzing constitutional challenge under the
laches doctrine but holding that there had been no unreasonable delay because the challenge was
brought soon after a change in the law).
III. Plaintiffs Have Not Demonstrated That They Are Irreparably Harmed
The “harm” to Plaintiffs is economic or convenience-related. For example, Ricker
admitted that the sale of cold beer is nothing more than an “added profit center.” Ricker Dep. at
65(24)-66(6). Both Ricker and Freedom admitted that they continue to look for opportunities to
add locations even ones where beer is not currently sold. Ricker Dep. at 25(5-12); 67(13-23);
68(7-24) (since this litigation began Ricker has pursued building three new locations from the
ground up); Cobb Dep. at 34(4)-35(15). Thornton admitted that its stores are profitable but that
it wants to sell cold beer to reap thousands of dollars more in revenues. Thornton Dep. at 42(10-
21); 57(20)-58(7) (in Indiana, Thornton’s stores average about $2,000/month in beer sales but in
other states Thornton’s stores average between $20,000 and $25,000 per month in beer sales);
ECF 47, ¶¶ 107-09 (Plaintiffs allegedly lose revenue because of the inability to sell cold beer);
Noe Dep. at 39(13)-40(16) (he wants to purchase cold beer from a convenience store because
typically it “would be cheaper”).
Plaintiffs also admitted that they wanted to sell cold beer to provide a convenience for
their customers. See, e.g., Cobb Dep. at 76(18)-77(13) (“it definitely is a convenience issue”
because that is “the nature of the business that we’re in”); Imus Dep. at 103(10-19) (package
stores are not convenient one-stop shopping locations); 123(25)-124(2) (for all practical
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purposes, if a consumer wants to purchase cold beer for take-away he/she must go to a liquor
store). The desire to have it be easier to purchase cold beer (so that it can be immediately
consumed) is a sentiment echoed by Noe. Noe Dep. at 24(8-9) (Noe purchases cold beer so that
“when I get home I can have one immediately”); 25(4-11) (if he wants to buy cold beer he must
make a trip to someplace where he can buy it cold); 36(22)-37(3); 39(13)-40(16) (he wants to
purchase cold beer from a convenience store because it is “more convenient for me”); 45(7-13);
63 (13)-64(3). In sum, the “harm” that Plaintiffs purportedly suffer is nothing more than
“economic” and “convenience” -- and neither can justify the issuance of a preliminary
injunction. In re Arthur Treacher’s Franchisee Litig., 689 F.2d 1137, 1145 (3d Cir. 1982) (“we
have never upheld an injunction where the claimed injury constitutes a loss of money”).
Indeed, just last year, this Court presided over the Goodpaster case. In Goodpaster, bars
(and their owners) challenged a City of Indianapolis ordinance that banned smoking in their
establishments. Plaintiffs raised several constitutional challenges including, as relevant here,
state and federal equal protection claims, both of which were premised on the argument that it
was irrational to prohibit smoking in their establishments but allow smoking in other
establishments. 2013 WL 838208, at *10-*13, *15. Plaintiffs filed for a preliminary injunction
and, after concluding that the bars and taverns could not succeed on the merits of their
constitutional claims, this Court also found that “[a]t most, the bars and taverns have suffered
lost profits. The court therefore finds that Plaintiffs have not established irreparable harm.”
2013 WL 838208, at *15-*16.
The same is true here. Plaintiffs’ convenience stores are profitable and Plaintiffs have
grown their businesses in Indiana despite the existence of Indiana Code § 7.1-5-10-11. Plaintiffs
admitted that being able to sell immediately consumable cold beer would add a profit center or
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otherwise increase revenue and potential profits. These “harms” -- like the “inconvenience” of
buying cold beer at an Indiana package store -- are not irreparable. See also Pl. Br. at 29
(referencing economic and convenience “harms”).
Plaintiffs fall back to the familiar argument that irreparable harm always exists in
constitutional cases. Of course, this Court’s own reasoning in Goodpaster disproves Plaintiffs’
adage and Plaintiffs’ reliance on cases from other Courts in the Southern District of Indiana do
not compel the absolute conclusion that Plaintiffs seek. See also Campbell v. Miller, 373 F.3d
834 (7th Cir. 2004) (affirming denial of preliminary injunction in a Fourth Amendment case).
L.P. v. Ind. State Dep’t of Health, 2011 WL 255807 (S.D. Ind. Jan. 27, 2011) was a class
action constitutional challenge brought by two children against a new interpretation of a statute
that had been issued by the Commissioner. Specifically, for purposes of establishing paternity of
children born out-of-wedlock, the Commissioner had previously accepted paternity affidavits
that did not include the social security numbers of the parents. Id. at *1. In July of 2010,
however, the Commissioner unilaterally and abruptly changed positions and began refusing to
accept paternity affidavits that did not include the social security numbers of both parents. Id.24
The class action asserted a violation of equal protection because, as United States citizens born in
Indiana, the children were being denied the right to be legitimated through a paternity affidavit
because of the immigration status of their parents. Id. As it relates to the irreparable harm
element, Judge Pratt noted that “Plaintiffs will continue to bear the consequences of the
Commissioner’s new interpretation by being denied child support, visitation, custody, and
24
Typically, the reason that persons could not provide social security numbers was because of his/her
immigration status. Id. at *1. Given that the classification was based on an immutable characteristic -- akin to race,
alienage, or gender -- the Court noted that “some scrutiny more discerning than rational basis is warranted.” Id. at
*2.
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inheritance rights” and that alternative means of legitimization -- through the Indiana court
system -- is “sometimes maddening” and, to “put it charitably, burdensome.” Id. at *4.
In Planned Parenthood of Ind. and Ky. v. Ind. State Dep’t of Health, 2013 WL 6181113
(S.D. Ind. Nov. 26, 2013), the equal protection challenge was based on the legislative change to
the definition of abortion clinic. Specifically, legislation went into effect on July 1, 2013
providing that, effective January 1, 2014, an abortion clinic would include a “freestanding entity
that ‘provides an abortion inducing drug for the purpose of inducting an abortion’” but would
exempt a physician’s office so long as ‘“abortion inducting drugs are not the primarily dispensed
or prescribed drug at the physician’s office.”’ Id. at *2 (quoting, in turn, Ind. Code § 16-18-2-
1.5(a)(2) and Ind. Code § 16-18-2-1.5(b)(3)(B)). The Court found it to be a fair inference that
the legislative change was targeted at the plaintiff’s location in Lafayette. Id. at *9.
Additionally, the State denied the Lafayette clinic’s request for a waiver and the Court noted that
without a preliminary injunction, the Lafayette clinic at issue would have to “meet surgical
abortion requirements even though no surgical abortions, or any other surgical procedures, are
provided.” Id. at *4.
In Buquer v. City of Indianapolis, 797 F. Supp. 2d 905 (S.D. Ind. 2011), a class action
was brought on behalf of individuals who were citizens of other countries that challenged parts
of an Indiana statute. On May 26, 2011, the plaintiffs sought to block new the law from going
into effect on July 1, 2011. The new law allowed for a warrantless arrest for non-criminal
conduct and created a new infraction for offering or accepting a consular identification card as a
valid form of identification. Id. at 909. The provisions were primarily challenged on Fourth
Amendment, preemption, and due process grounds.
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These cases, then, all involved immediate legal changes that, if not preliminarily
enjoined, would have altered the status quo and the relationship between the parties. Here, by
contrast, Indiana Code § 7.1-5-10-11 has been in effect for decades. Convenience stores began
operating in Indiana knowing that this was the law and knowing that they could not sell cold
beer. Convenience stores have grown their respective businesses and have profited despite this
provision. Until now, Plaintiffs never challenged this provision.
IV. Plaintiffs Have Not Shown an Immediate Need for an Injunction That Would Allow
Them to Immediately Begin Selling Cold Beer
Indiana Code § 7.1-5-10-11 has been the law in Indiana for over 70 years and the
rationality of allowing only certain businesses to sell cold beer and the clarity of the provision
challenged was made clear decades ago. See Doyle v. Clark, 41 N.E.2d 949, 951 (Ind. 1942).
IPCA, Thornton, Ricker, and Freedom have been operating in Indiana for years and
applied for (and received) permits allowing them to sell beer and have grown and profited
despite this provision. Noe has been buying beer at Indiana convenience stores (and cold beer at
Indiana package stores) since 1986. The law was in effect well before Plaintiffs began
operations or began buying beer. Plaintiffs have never challenged this provision, Plaintiffs have
never sought any clarification as to the meaning of this provision, and the executive director of
the IPCA can identify no member who ever asked for clarification as to the meaning of this
provision.
In light of such facts, there is no compelling need for preliminary injunctive relief
especially where, as here, Defendants have already moved for summary judgment. See Ty, 237
F.3d at 903 (noting that “[d]elay in pursuing a preliminary injunction may raise questions
regarding the plaintiff’s claim that he or she will face irreparable harm if a preliminary injunction
is not entered”); Celebration Intern., Inc. v. Chosun Intern., Inc., 234 F. Supp. 2d 905, 920-21
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(S.D. Ind. 2002) (denying preliminary injunction because the plaintiff offered no good reason for
the delay in seeking the remedy).25
Indiana has allocated its resources based on this long-standing regulatory framework and
currently there are about 58 officers covering the State of Indiana. There are currently 2,801
convenience/grocery/drug stores that sell beer in Indiana but, if Plaintiffs succeed, the number of
outlets selling immediately consumable cold beer will dramatically increase because there are
4,583 permits that are currently available. Package stores cannot legally be open on Sundays but
convenience stores can. Moreover, while it is illegal for persons under the age of 21 to enter
package stores, persons of any age can and do enter convenience stores. Plaintiffs’ success,
therefore, will significantly strain the resources of the State of Indiana and will dramatically alter
the carefully structured and long-standing three-tier framework of alcohol regulation.
25
Enjoining Indiana Code § 7.1-3-21-3 through 6 will not allow convenience stores to sell cold beer. Thus,
there is no need to enjoin this provision.
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CONCLUSION
For the reasons above, and for those advanced at the hearing, Plaintiffs’ Motion for
Preliminary Injunction must be denied.
Respectfully submitted,
GREGORY F. ZOELLER
Attorney General of Indiana
Attorney No. 1958-98
By: /s/ Kenneth L. Joel
Kenneth L. Joel
Attorney No. 30271-49
Deputy Attorney General
Indiana Government Center South – 5th Floor
302 W. Washington St.
Indianapolis, IN 46204-2770
Phone: (317) 233-8296
Fax: (317) 232-7979
Email: [email protected]
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CERTIFICATE OF SERVICE
I hereby certify that on February 7, 2014, a copy of the foregoing was filed electronically.
Service of this filing will be made on all ECF-registered counsel by operation of the Court’s
electronic filing system. Parties may access this filing through the Court’s system.
John R. Maley
BARNES & THORNBURG LLP
Mark J. Crandley
BARNES & THORNBURG LLP
/s/ Kenneth L. Joel
Kenneth L. Joel
Deputy Attorney General
Office of the Indiana Attorney General
Indiana Government Center South – 5th Floor
302 W. Washington St.
Indianapolis, IN 46204-2770
Phone: (317) 233-8296
Fax: (317) 232-7979
Email: [email protected]
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