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Nature of Suit Code: 950
Nature of Suit: Constitutionality of State Statutes
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 14-2559

INDIANA PETROLEUM MARKETERS AND

CONVENIENCE STORE ASSOCIATION, et al.,

Plaintiffs-Appellants,

v.

DAVID COOK, in his official capacity 

as Chairman of the Indiana Alcohol 

and Tobacco Commission,

Defendant-Appellee.

____________________

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:13-cv-00784-RLY-DML — Richard L. Young, Chief Judge.

____________________

ARGUED JANUARY 7, 2015 — DECIDED DECEMBER 14, 2015

____________________

Before RIPPLE, WILLIAMS, and SYKES, Circuit Judges.

SYKES, Circuit Judge. An association of Indiana convenience stores filed this lawsuit seeking to invalidate a state 

law that restricts the sale of cold packaged beer. The suit

claims the law violates the Equal Protection Clause because 

some kinds of stores may sell cold beer but grocery and 

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convenience stores may not. The district court upheld the 

law and entered judgment for Indiana.

We affirm. A threshold question is the extent to which the 

Twenty-first Amendment affects this case. Indiana argues it 

has “nearly absolute” authority to regulate alcohol sales 

under the Twenty-first Amendment and no further analysis 

is necessary. That’s not correct. But the district court was 

right to uphold the law. Indiana’s cold-beer statute is subject 

to rational-basis review and survives that lenient standard.

I. Background

The Indiana Petroleum Marketers and Convenience Store 

Association is a trade association that serves the interests of 

gas stations and convenience stores located in the state. The 

Association, together with three of its members and an 

individual consumer, filed suit in federal court challenging

the constitutionality of section 7.1-5-10-11 of the Indiana 

Code, which prohibits holders of a beer dealer’s permit from 

selling cooled packaged beer. The suit contends that the

statute substantially reduces the beer sales of the Association’s members and diverts those sales elsewhere.

The defendants named in the complaint are the chairman 

of the Indiana Alcohol and Tobacco Commission, sued in his 

official capacity; the Commission itself; and the State of 

Indiana. The Commission and Indiana were dropped from 

the suit by stipulation, so the Commission chairman is the 

sole remaining defendant.1 Because he is sued in his official 

 1 We’ve changed the case caption to reflect the name of the current 

Commission chairman.

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No. 14-2559 3

capacity, we’ll refer to the defendant as “Indiana.” We’ll refer 

to the plaintiffs collectively as “the Association.”

The complaint alleges that the cold-beer statute violates 

the Commerce Clause, the Equal Protection and Due Process 

Clauses of the Fourteenth Amendment, and parallel provisions in the Indiana Constitution. The equal-protection claim 

rests on two separate theories. First, the Association contends that the Indiana statutory scheme permits cold-beer 

sales by grocery and convenience stores located in unincorporated towns but prohibits the sale of cold beer at like stores in 

incorporated municipalities. Second, the Association contends

that the statutory scheme impermissibly discriminates 

between package liquor stores, which are permitted to sell 

cold beer, and grocery and convenience stores, which are 

not.

The district judge resolved the case on cross-motions for 

summary judgment. He rejected the first equal-protection 

theory because the statutory scheme does not actually allow 

grocery and convenience stores in unincorporated towns to 

sell cold beer, as the Association contended. On the second

equal-protection theory, the judge held that Indiana has a 

rational basis for prohibiting grocery and convenience stores

from selling cold beer. The judge also considered and rejected the other constitutional challenges and granted Indiana’s 

motion for summary judgment in its entirety. By separate 

order the judge denied the Association’s motion and entered 

final judgment for Indiana.

The Association appealed, focusing solely on the equalprotection claim.

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II. Discussion

A. Twenty-first Amendment

Indiana argues that the plaintiffs’ equal-protection challenge is “doomed” because state authority to regulate how 

alcoholic beverages are sold is “nearly absolute” under the 

Twenty-first Amendment. That’s a considerable overstatement.

The Twenty-first Amendment ended Prohibition and restored the regulatory authority of the States over the transportation and importation of alcoholic beverages within

their borders. More specifically, § 2 of the Amendment

provides: “The 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

(emphasis added). As the Supreme Court has explained, § 2 

of the Twenty-first Amendment restored state regulatory 

authority as it existed prior to the ratification of the Eighteenth Amendment, but it did not immunize state alcohol 

laws from challenge under other parts of the Constitution.

Granholm v. Heald, 544 U.S. 460, 484–88 (2005).

Granholm was a Commerce Clause challenge to laws in 

Michigan and New York prohibiting out-of-state wineries 

from selling directly to consumers in those states. Id. at 465–

66. The Court invalidated the two laws, holding that the 

dormant Commerce Clause “does not allow States to ban, or 

severely limit, the direct shipment of out-of-state wine while 

simultaneously authorizing direct shipment by in-state 

producers.” Id. at 493. 

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Along the way to this holding, the Court explained that 

“state laws that violate other provisions of the Constitution 

are not saved by the Twenty-first Amendment.” Id. at 486. To 

illustrate the point, the Court cited several of its cases applying other constitutional provisions to state alcohol regulation, including challenges under the First Amendment, the 

Establishment Clause, the Equal Protection Clause, the Due 

Process Clause, the Import-Export Clause, Congress’s Commerce Power, and the dormant Commerce Clause. Id. at 486–

87.

Indiana points to other language in Granholm that in its 

view supports expansive state power to regulate alcohol 

without the usual constitutional limits. The Court said that

“[t]he Twenty-first Amendment grants the States virtually 

complete control over whether to permit importation or sale 

of liquor and how to structure the liquor distribution system.” Id. at 488 (quoting Cal. Retail Liquor Dealers Ass’n v. 

Midcal Aluminum, Inc., 445 U.S. 97, 110 (1980)). This passage 

cannot be read in isolation. What comes next in the opinion 

clarifies the Court’s point: “A State which chooses to ban the 

sale and consumption of alcohol altogether could bar its 

importation; and, as our history shows, it would have to do 

so to make its laws effective.” Id. at 488–89. In other words, 

the States have the power under the Twenty-first Amendment to ban the importation of alcohol, but to avoid transgressing the limits of the dormant Commerce Clause, they 

may do so only if they also ban the intrastate sale and consumption of alcohol.

The Court also said that the three-tier distribution alcohol 

system in use in many states—a system that requires the 

separation of producers, distributors/wholesalers, and

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retailers—is “unquestionably legitimate” as state policy. Id.

at 489. This statement, too, must be understood in context. 

The Court explained that “[s]tate policies [like the three-tier 

distribution system] are protected under the Twenty-first 

Amendment when they treat liquor produced out of state 

the same as its domestic equivalent.” Id. That is, the dormant 

Commerce Clause isn’t violated by a three-tier distribution 

system that treats all alcohol sales equivalently regardless of 

origin.

These passages from Granholm make it clear that the regulatory power of the States under the Twenty-first Amendment remains subject to other constitutional limits, including 

the limits imposed by the Equal Protection Clause. See Craig 

v. Boren, 429 U.S. 190, 209 (1976) (holding that “the Twentyfirst Amendment does not alter the application of equal 

protection standards that otherwise govern this case” and 

striking down a law that permitted women aged 18–21 to 

buy beer while denying men the same right). That the States 

have broad authority under the Twenty-first Amendment to 

design their regulatory systems for the transportation, 

importation, and distribution of alcohol doesn’t mean they 

can ignore the rest of the Constitution. In short, the Twentyfirst Amendment doesn’t immunize Indiana’s cold-beer 

statute from equal-protection challenge.

B. Equal Protection 

Moving to the merits, because the cold-beer statute 

doesn’t involve a suspect classification, rational-basis review

applies. FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 313 (1993).

This is a heavy legal lift for the challengers. Under rationalbasis review, a statutory classification comes to court bearing

“a strong presumption of validity,” and the challenger must 

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“negative every conceivable basis which might support it.” 

Id. at 314–15 (quotation marks omitted). “To uphold a legislative choice, we need only find a ‘reasonably conceivable 

state of facts that could provide a rational basis’ for the 

classification.” Goodpaster v. City of Indianapolis, 736 F.3d 

1060, 1072 (7th Cir. 2013) (quoting Heller v. Doe, 509 U.S. 312, 

320 (1993)). 

To carry its burden, the Association must establish that

Indiana’s cold-beer regulatory scheme treats its members

differently than others similarly situated and the difference 

in treatment is not rationally related to a legitimate state 

interest. Srail v. Village of Lisle, 588 F.3d 940, 943 (7th Cir. 

2009). As we’ve noted, the Association claims that the Indiana law treats grocery and convenience stores differently in 

two respects: (1) it permits grocery and convenience stores to 

sell cold beer if they’re located in unincorporated towns but 

not if they’re located in incorporated municipalities; and (2) it 

permits package liquor stores to sell cold beer but not grocery and convenience stores. We’ll address each argument in 

turn. Before we do, however, a more complete explanation of

the regulatory scheme is necessary.

1. Indiana’s Permitting Statutes for Beer Sales

As relevant here, Indiana issues two types of permits authorizing the sale of beer. The first is a “beer dealer’s” permit, which may be issued “to a person who desires to sell 

beer to customers for consumption only off the licensed 

premises.” IND. CODE § 7.1-3-5-1 (emphasis added). The 

holder of this kind of permit “may not sell beer by the drink 

nor for consumption on the licensed premises nor shall a 

beer dealer allow it to be consumed on the licensed premises.” Id. § 7.1-3-5-3(c). A beer dealer’s permit is available “only 

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to an applicant who is the proprietor of a drug store, grocery 

store, or package liquor store.” Id. § 7.1-3-5-2(a). Convenience stores are included within the definition of grocery 

stores as long as alcohol sales represent no more than 25% of

their annual gross sales. Id. § 7.1-1-3-18.5.

With one notable exception, holders of a beer dealer’s

permit cannot sell “beer that was iced or cooled by the

permittee before or at the time of the sale.” Id. § 7.1-5-10-

11(a). The exception is for package liquor stores, which are

allowed “to sell and deliver warm or cold beer for carry-out.”

Id. § 7.1-3-5-3(d) (emphasis added). We’ll return to package 

liquor stores in greater detail later.

The second type of permit is a “beer retailer’s” permit, 

which may be issued “to a person who desires to sell beer to 

customers for consumption on the licensed premises.” Id. § 7.1-3-

4-1 (emphasis added). A beer retailer’s permit may not be 

issued to “[a] person who is not the proprietor of a restaurant ... , or of a hotel, or of a club.” Id. § 7.1-3-4-2(a)(13)

(emphasis added). Beer retailers may serve beer for consumption on the licensed premises and sell packaged beer

(warm or cold) for consumption elsewhere. Id. § 7.1-3-4-6(a), 

(c).

2. Incorporated vs. Unincorporated Towns

The Association’s first equal-protection argument is that 

grocery and convenience stores in unincorporated towns are 

permitted to sell cold beer but grocery and convenience 

stores in incorporated municipalities are prohibited from 

doing the same. This difference in treatment, the Association 

argues, lacks a rational basis because none of the reasons for

restricting sales of cold beer are any stronger in unincorpoCase: 14-2559 Document: 37 Filed: 12/14/2015 Pages: 13
No. 14-2559 9

rated, unpoliced towns than in incorporated, policed municipalities. Indiana responds that the Association has misunderstood the statutory scheme: grocery and convenience 

stores located in unincorporated towns are not allowed to 

sell cold beer, so there’s no difference in treatment in the first 

place.

We agree with Indiana: The Association’s argument rests 

on a misreading of the regulatory system. As we’ve explained, a grocery or convenience store holding a beer 

dealer’s permit is not allowed to sell cold beer regardless of 

where the store is located. The Association’s argument relies 

on a provision in the statute governing the issuance of a beer 

retailer’s permit:

Premises Outside Corporate Limits: Persons 

Eligible. The commission may issue a beer retailer’s permit as authorized by IC 1971, 7.1-3-

4-3, only to an applicant who is the proprietor 

of a drug store, grocery store, confectionery, or 

of a store in good repute which, in the judgment of the commission, deals in other merchandise that is not incompatible with the sale 

of beer.

IND. CODE § 7.1-3-4-4. The cross-referenced provision, section 7.1-3-4-3, allows the Commission to issue a beer retailer’s permit “within, or in immediate proximity to, an unincorporated town,” provided that certain criteria are met. As 

noted above, however, another statute imposes an important

restriction on the issuance of a beer retailer’s permit, one that 

has special relevance here: “[E]xcept as otherwise authorized 

in this title,” the Commission may not issue a beer retailer’s 

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permit to anyone who “is not the proprietor of a restaurant[,] ... hotel, or ... club.” § 7.1-3-4-2(a)(13).

The Association seizes on the “except as otherwise authorized” language and points to sections 7.1-3-4-3 and 7.1-

3-4-4, mentioned above, which authorize the Commission to 

issue a beer retailer’s permit to grocery and convenience 

stores in unincorporated towns, at least in theory. But this 

theoretical possibility is difficult to square with the general 

provision limiting beer retailers’ permits to “person[s] who 

desire[] to sell beer to customers for consumption on the 

licensed premises,” § 7.1-3-4-1 (emphasis added), which

obviously doesn’t describe grocery and convenience stores.2

We don’t need to untangle this statutory thicket to resolve this case. As a practical matter, grocery and convenience stores can only sell beer under a beer dealer’s permit; 

their business model would have to shift considerably to 

secure a retailer’s permit. For starters, to be eligible for a 

retailer’s permit, a grocery or convenience store would need 

to alter its operations to serve alcohol to customers inside the 

store. Id. Self-service selection of beer from the shelf or cooler 

would be prohibited. 905 IND. ADMIN. CODE 1-29-2 (“Package 

alcoholic beverages shall be sold by a retail permittee only in 

... the room where alcoholic beverages are stored, prepared, 

 2 Other provisions in the statutory scheme also suggest that entities 

serving alcohol in-house are expected to hold a beer retailer’s permit and 

those selling alcohol for consumption elsewhere—like grocery and 

convenience stores—are expected to hold a beer dealer’s permit. To take 

one example, the term “alcohol servers” is defined to mean managers, 

bartenders, and waiters and waitresses for purposes of beer retailers, but

for beer dealers the same term is defined to mean managers and sales 

clerks. See IND. CODE § 7.1-3-1.5-1.

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or dispensed ... . There may not be a separate cash register 

for package sales. There shall be no self-service.”). Instead of 

having sales clerks and store managers sell alcohol, only 

bartenders, wait staff, and managers would be permitted to

do so, and they would need additional “employees’ permits”

from the Commission. See IND. CODE § 7.1-3-1.5-1 (defining 

“alcohol servers”); id. § 7.1-3-18-9(a), (c) (listing when an 

employee’s permit is required for alcohol sales). Employees

under 21 years of age would be ineligible to serve or sell 

beer. Id. § 7.1-5-7-12, -13(3) (exceptions allowed only for 

service “in a dining area or family room of a restaurant or 

hotel”).

This litany of requirements for the issuance of a beer retailer’s permit exposes the fundamental flaw in the Association’s argument. Grocery and convenience stores throughout 

Indiana—whether in unincorporated towns or incorporated 

municipalities—simply don’t operate in the manner required 

for a beer retailer’s permit. So it’s no surprise that the Association hasn’t found any evidence that a grocery or convenience store located anywhere in Indiana has a beer retailer’s 

permit. To the contrary, there is evidence in the record that 

officers of the Indiana Excise Police have issued citations to 

grocery and convenience stores in unincorporated towns for 

unlawfully selling cold beer in violation of the statutes 

governing their beer dealers’ permits.

Indeed, there’s no evidence that the Association and its 

members even want a retailer’s permit, which is wholly

inconsistent with the business model of a grocery or convenience store. Instead, the Association’s members want to sell 

cold beer within their current business model; that’s why 

they’re asking us to invalidate the cold-beer sales restriction 

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on the beer dealer’s permit. Id. § 7.1-5-10-11. But the statutory 

scheme that governs beer dealers doesn’t distinguish between grocery and convenience stores in incorporated and 

unincorporated areas. All are treated the same.

3. Grocery Stores, Convenience Stores, and Pharmacies 

vs. Package Liquor Stores

The Association’s second equal-protection argument is 

that package liquor stores are permitted to sell cold packaged beer but grocery and convenience stores are not. See

§§ 7.1-5-10-11, 7.1-3-5-3(d). Indiana defends this distinction 

by noting that package liquor stores are subject to stricter 

regulations designed to enhance the State’s ability to limit 

and control the distribution of alcohol. For instance, no one 

under the age of 21 is permitted on the premises of a package liquor store. Compare IND. CODE § 7.1-5-7-10 with id. § 7.1-

5-7-11(a) (listing exceptions not applicable here). Sales clerks 

must be at least 21 years old. See id. § 7.1-5-7-12 (prohibiting 

the sale of alcohol by minors); see also id. § 7.1-5-7-13 (establishing a limited exception for 19- and 20-year-old servers in 

restaurants and hotels, provided that they have special 

training and are supervised by a trained employee over the 

age of 21). Hours and days of operation are restricted. See, 

e.g., id. § 7.1-5-10-1 (requiring licensed premises to close 

during times that alcohol sales are unlawful “to the extent 

that the nature of the business ... permits”); id. § 7.1-3-1-14(a) 

(providing that alcohol sales are lawful Monday through 

Saturday from 7 a.m. to 3 a.m. the following day).

Indiana explains that the goal of this regulatory scheme 

is to curb underage beer consumption by limiting the sale of 

immediately consumable cold beer. Restricting the sale of 

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No. 14-2559 13

cold beer to stores that are more rigorously regulated is 

rationally related to that legitimate goal. 

The Association attacks this legislative choice with several policy arguments: beer is beer, and grocery and convenience stores already sell it, just not cold; grocery and convenience stores are permitted to sell chilled drinks with higher 

alcohol content (like wine coolers) so why not chilled beer; 

grocery and convenience stores have a better record of 

compliance with state alcohol laws than liquor stores; grocery and convenience stores are frequented by police officers 

and other adult customers, deterring underage persons from 

trying to buy alcohol there; and selling beer in refrigerators

makes it less accessible than selling it warm.

This mode of argument doesn’t suffice under rationalbasis review. To succeed on its claim, the Association must

“negative every conceivable basis which might support” the 

statutory scheme. Armour v. City of Indianapolis, 132 S. Ct. 

2073, 2080–81 (2012) (quotation marks omitted). The Association’s policy arguments for allowing cold-beer sales by 

grocery and convenience stores are matters for the Indiana 

legislature, not the federal judiciary.

For the foregoing reasons, the Association has failed to 

carry its burden of demonstrating that Indiana’s cold-beer 

statute violates the Equal Protection Clause.

AFFIRMED.

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