The long and winding trip of the Maxwell’s Pic Pac v. Dehner lawsuit seeking to expand liquor sales outlets is finally settled- at least for now. The 90 days for plaintiffs to seek United States Supreme Court review has passed without an appeal. Judge Heyburn signed the order dismissing the matter with prejudice. The plaintiffs tried to seek clarification that the federal court matters only dealt with federal equal protection claims. Judge Heyburn disagreed to an extent and noted that the state equal protection claim under Kentucky Constitution was addressed below. However, he left open the discussion of the proper standard and noted a new party may not be precluded from bringing a state constitutional claim. He noted, “Again, the Court notes that the Sixth Circuit reversed this Court’s findings only insofar as Kentucky’s laws satisfied the rational basis standard; it did not decide the standard applicable to Plaintiffs’ state equal protection claim. For this reason, the preclusive effect of the Sixth Circuit’s decision on any subsequent state equal protection claim is unclear. Therefore, this Court’s present dismissal of Plaintiffs’ claims with prejudice does not necessarily bar another party from pursuing a similar state equal protection claim in state court.”
In the past I have used the analogy of a “Hail Mary” pass to describe this litigation. Occasionally the ball is caught. Also, the referees reviewing the video (6th Circuit) occasionally overrule the ruling on the field and waive off the touchdown. It is expected that the plaintiffs will continue to attempt to address this legislatively and presumptively via the courts if possible so perhaps this matter may return to the state courts some day.
(earlier post) 6th Circuit Rejects Rehearing in Challenge to Kentucky Liquor Sales Laws
The 6th Circuit has denied the rehearing of the decision upholding Kentucky alcohol regulation banning grocery and convenience stores from selling hard liquor. The 6th Circuit reversed a district court decision. The order denying rehearing can be found here. The plaintiffs will need to decide whether to appeal to the United States Supreme Court or drop the matter. They have 90 days to file an appeal. And presumably, they will seek a legislative solution again.
(earlier post) – Responses to Petition for Rehearing Filed
On February 21, the court directed the State to respond to the petition for rehearing en banc.
The State responded on March 7 stating that the petition for rehearing en banc does not meet the standards required for such hearing. The brief continues to counter the argument that Grocery Stores and Pharmacies are equally situated stating “[w]hen families prepare the weekly grocery list, the aisles of food product in the mind’s eye are those of a grocery not a drugstore. This is because while a drugstore may carry some food stuff for convenience of its shoppers, it does not have a produce aisle, fresh meat, poultry or fish counter. It does not have flour, powdered sugar, or anything like the variety of all types of food goods that a grocery has. It is the ubiquitous nature of the grocery that distinguishes it from other retailers as the primary and “go-to” place for Kentucky citizenry.”
The Party Source responded as an intervening defendant seconding that Maxwell’s Pic Pac and the Food with Wine Coalition’s petition does not satisfy the IOP Standard requiring a rehearing en banc be based upon errors made in determining the facts; the panel’s rejection of Appellees’ factual arguments did not overlook the record and common experience; and lastly, the panel was not required to apply a heightened equal protection standard of remand the case to the lower court for such consideration.
The brief argues that the Appellees used the petition for rehearing to present expended factual rearguments and uses a detailed chart to compare the rearguments to the facts already presented.
In response the Appellee’s argument that the Panel overlooked “common experience,” the appellant counters that “suggest[ing] that a drug store or package retailer that sells five loaves of bread or ten bottles of milk is in competition with any behemoth grocery store is factually unsupportable.” The brief concludes that the court should deny the Petition in its entirety.
The American Beverage Licensees also responded bolstering the 6th Circuits opinion that the challenged law continues to serve a rational purpose of limiting the number of outlets selling beverage alcohol, especially high alcohol volume products.
(earlier post) Plaintiffs Seek Rehearing In 6th Circuit Wine/Liquor Fight
The plaintiffs have filed a petition with the 6th Circuit to rehear their Equal Protection challenge to get a court order to allow grocery and convenience stores to sell wine and liquor. It its brief in support of rehearing the plaintiffs state:”Rehearing or rehearing en banc is necessary because this matter raises an issue that is of exceptional importance.” It alleges that the 6th Circuit panel that decided the case did not follow the proper legal standards and did not use the proper facts. A central theme seems to be their assertion that a grocery store (Kroger) is the exact same retailer as a drug store (Walgreens). Rehearings are rarely granted. The defendants will not be given an opportunity to do a response brief unless the court asks for it. As the court rules note, if rehearing is granted, the court will usually make a final disposition without additional briefing or reargument. It may instead: allow additional briefing; restore the case to the calendar for reargument or resubmission; or enter other appropriate orders. The 6th Circuit appeal procedures can be found at this link.
(earlier post) 6th Circuit Rules For Kentucky In Equal Protection Challenge. Reverses District Court.
The 6th Circuit reversed the district court and upheld Kentucky laws regulating which businesses can sell liquor and wine. In a unanimous decision written by Circuit Judge Deborah Cook, the court noted that the district court had misapplied the appropriate standard for an equal protection challenge. The opinion noted the very high burden the plaintiffs had to prove – that there was no rational basis by the state. The opinion noted that “the state indisputably maintains a legitimate interest in reducing access to products with high alcohol content.” The opinion further noted that the public policy rationales provided by the state were reasonable and the court disputed that drug stores and grocery stores are simply interchangeable. The decision noted that this was a straight-forward rational-basis review case under a 14th Amendment Equal Protection challenge and it did not even need the 21st Amendment but the court did note the express grant of authority to the states, “if it means anything in this context, provides legitimacy to the state’s interest in restricting access to alcohol.”
The opinion also discusses the history of alcohol regulation in the United States and Kentucky. There are several references to Toward Liquor Control by Raymond Fosdick and Albert Scott. This book is available for purchse from the Center for Alcohol Policy or here.
(Earlier Post) Oral Argument Held in 6th Circuit
The Court held oral argument sby telephone on the Equal Protection Challenge to Kentucky’s liquor laws by grocery stores. Listen here.
(earlier post) Briefing Almost Finished in 6th Circuit’s Equal Protection Challenge
The initial briefings for the appeal to the 6th Circuit in the Maxwell’s Pic Pac lawsuit regarding hard liquor and wine in grocery stores in Kentucky have been filed. Actually, the court recently issued an expedited briefing schedule to finalize the briefing and this was later amended. As a result the final brief for the appellants is due February 19 and the final response brief of appellees is due 17 days after the state’s final brief. Click here for the briefing schedule.
The state filed its brief with a heavy emphasis on the 21st Amendment as giving the state plenty of latitude to legislate in this area of non suspect classification. Moreover, the state finds error with the district judge’s approach to rational basis review noting; “The district court?s analysis is internally inconsistent. On the one hand, the court accurately stated that states may constitutionally classify and treat businesses differently so as to permit certain kinds of alcohol sales at one type of business, but not another. The district court also acknowledged that states may constitutionally classify and treat alcohol businesses differently, based on their sales of one product as a percentage of their total gross sales. On the other hand, the court ultimately, and inconsistently held, that Kentucky cannot prohibit hard liquor and wine sales at certain types of businesses based on their sales of one product as a percentage of their total gross sales.” The state also pointed out that the federal government has recognized regulation of alcohol outlets/density as an important issue and wondered why Kentucky’s efforts in this area are nto given proper deference.
The intervening defendant/Appellant Party Source’s brief contained similar arguments as the state but much more detail on the national and Kentucky specific development of alcohol law post Prohibition and how it has been modified to this date. Any brief that cites to Toward Liquor Control gets my attention.
An amicus brief was also filed by the American Beverage Licensees, the nation’s largest independent alcohol retailer organization. The brief argues that the district court erred in applying the rational basis review and also that the KY statute at question survives that test whether evaluated at the time the law was made or the present time.
In response to the three briefs above, the appellees/plaintiffs filed a brief rejecting all of the above arguments and supporting the trial court’s decision. The brief argues that arbitrary classifications do not survive equal protection claims. They also highlight one segment of the drug store segment, the modern day Walgreen’s and CVS business model and argue these are substantially similar to grocery stores. Less analysis is given to the gas stations being the same as grocery stores and drug stores. The brief also contains recent newspaper articles suggesting that the citizens of Kentucky support the changes the judge made to the state alcohol laws.
We will post the last rounds of briefing as well as potential oral argument dates when received.
(earlier post) Court Grants Stay of Order Pending Appeal of Kentucky Lawsuit to the 6th Circuit
The district court in Kentucky granted a stay to his earlier ruling that Kentucky’s alcohol law violated the Equal Protection Clause. In his order, Judge Heyburn noted; “Though the Court held in their favor in the Order, the Court does not believe that Plaintiffs can demonstrate a compelling interest in the immediate enforcement of its decision.” He also noted; “It is important to remember that the Court did not decide that Plaintiffs have a right to sell package liquors, only that the current statutory scheme regulating the licensing of package liquors or wine sales violates the Equal Protection Clause.” He suggests that the Legislature may change the laws while the appeal is pending.
(earlier post) Kentucky Files Appeal to 6th Circuit and Motion to Stay
Kentucky has filed its notice of appeal to the 6th Circuit as well as a motion to stay the district court judgment pending appeal. In its district court filings it noted three main areas of concern. 1)the trial court does not attempt to balance the “core powers” reserved to the Commonwealth in the 21st Amendment against the least demanding equal protection standard of the 14th Amendment; 2) the opinion appears to invert the burden of proof to the defendants to demonstrate a rational basis for the statute (which is presumed constitutional) when the law requires that the plaintiffs demonstrate that there is no conceivable basis for the statute; and 3) the trial court’s analysis seems to test plausible rationales for the statute against some hard data or logic standard, when the rationales “may be based on rational speculation unsupported by evidence or empirical data.”
The 6th Circuit will set up a briefing schedule later this month
(earlier post: Court Finds KY Statute Violates Equal Protection Clause
Under the category, “something must be up because this court is sure taking a long time on this”…Federal District Judge John Heyburn today issued an order declaring, “Ky. Rev. Stat. § 243.230(5) and its accompanying regulation, 804 Ky. Admin. Regs. 4:270 (1982) violate the Equal Protection Clause of the United States Constitution to the extent the Statute prohibits certain grocery stores, gas stations and others, as the Statute defines them, from obtaining a license to sell package liquor and wine.” He rejected the state’s motion for summary judgement and has stayed the enforcement of his order until a further court hearing.
The judge’s opinion wades through standing and ripeness issues before deciding the state failed to prove that the laws that allow convenience and drug stores to sell all forms of wine and liquor but does not allow grocery stores to do so. It noted most state alcohol laws are upheld under rational basis review, but not all of them.
It is unclear what the next steps are here as the state may disagree with the court’s finding that there was no rational basis for this statute and regulation. Also, the court stayed his opinion so a future status conference will be needed. Perhaps this will be kicked to the next legislative session.
(Previous Post) Kentucky Litigation Slowly Moving Towards Closure
Recall the challenge by grocery stores to Kentucky Law banning wine and spirits sales in their stores. An article at the time of the complaint can be found here. The lawsuit alleges that this Kentucky law violates the equal protection clause of the Kentucky and US constitutions. The plaintiffs were unsuccessful convincing the Kentucky legislature to change the law, now they are trying to make a federal judge change the law.
Motions for summary judgment have been filed and a recent status conference produced potentially a last ditch grasp to breathe life into this complaint as stories have reached me of a large turnout of plaintiff lawyers and retailer operatives for this conference. Due to this conference with the court, it appears one of the defendants felt compelled to file a letter clarifying the applicable standards for reviewing the rational basis standard for an equal protection challenge.
The court has had summary judgment briefs for several months and should be able to rule on this matter in short order.
(earlier post) -An Equal Protection Challenge to Kentucky Alcohol Law
For once we are not talking about the Commerce Clause (positive or dormant) as part of alcohol litigation. After losing for some time in the state legislature, it appears some Kentucky retail interests have run to federal court to challenge the state’s laws regulating who can sell what type of alcoholic beverages and under what terms. The four count complaint challenges a Kentucky law and administrative regulation under the equal protection clauses of both the United States and Kentucky constitutions.
I would expect Kentucky to have a strong defense of this matter since equal protection challenges only require the state to rationally relate their statute to its state interest. Many facts to support the state here.
This case is another attempt by special interests to have the federal court system create alcohol law instead of letting state legislatures using their 21st Amendment authority to create the law for a state.
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