state brief in cold beer lawsuit

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


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 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


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


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.


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


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


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


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


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


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


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


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.


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.


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.


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.


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).


6

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).


7

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


8

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


9

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


10

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);


11

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


12

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).


13

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).


14

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.


15

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


16

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.


17

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


18

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


19

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


http://www.ojjdp.gov/pubs/237145.pdf

20

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.


http://www.cdc.gov/alcohol/fact-sheets/mlda.htm

http://www.cdc.gov/alcohol/fact-sheets/alcohol-use.htm

http://www.cdc.gov/alcohol/fact-sheets/underage-drinking.htm

http://www.cdc.gov/

21

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).


22

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)).


23

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


24

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


25

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


26

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


27

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


28

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


29

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”).


30

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.


31

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”).


32

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.


33

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


34

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.


35

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.


36

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


37

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.


38

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.


39

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).


40

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.


41

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


42

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.


43

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.


44

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


45

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


46

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.


47

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.


48

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


49

(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.


50

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


By: /s/ Kenneth L. Joel

Kenneth L. Joel






Phone: (317) 233-8296

Fax: (317) 232-7979



51

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

[email protected]

Mark J. Crandley

BARNES & THORNBURG LLP

[email protected]

/s/ Kenneth L. Joel

Kenneth L. Joel


Office of the Indiana Attorney General




Phone: (317) 233-8296

Fax: (317) 232-7979



state brief in cold beer lawsuit

Documents

indiana code

indiana alcohol

joel attorney

plaintiffs motion

plaintiffs lack

joel kenneth

convenience stores

rlydml document