Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-03045/USCOURTS-ca10-91-03045-0/pdf.json

Parties Involved:
Larco Distributing, Inc.
Appellant
Latrobe Brewing Company
Appellee

Document Text:

.. 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

AUG 15 1991 

ROBERT L. HOEC~:.iP 

Clerk 

LARCO DISTRIBUTING, INC., 

Plaintiff-Appellant, 

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) 

) 

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) 

) 

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v. No. 91-3045 

LATROBE BREWING COMPANY, 

Defendant-Appellee. 

(D. C. No. 90-1462-K) 

(D. Kan.) 

ORDER AND JUDGMENT* 

Before ANDERSON, TACHA, and BRORBY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The cause is therefore ordered 

Larco Distributing, Inc. (Larco) appeals the district court's 

dismissal of its complaint for failure to state a claim upon which 

relief could be granted. 

* be 

for 

res 

This order and judgment has no precedential value and shall not 

cited, or used by any court within the Tenth Circuit, except 

purposes of establishing the doctrines of the law of the case, 

judicata, or collateral estoppel. 10th Cir. R. 36.3. 

Appellate Case: 91-3045 Document: 010110132085 Date Filed: 08/15/1991 Page: 1 
Larco, a Kansas wholesale beer distributor, and Latrobe 

Brewing Company (Latrobe), a Pennsylvania brewer, entered into a 

written agreement whereby Larco had the exclusive right to 

distribute Latrobe's beer within a specified area of Kansas. 

In 1986, when the parties entered into this beer distribution 

agreement, Kansas law failed to specify a standard for the 

termination of a beer distribution agreement. The district court 

found, and no one disputes, this contract could then be terminated 

at will. 

Thereafter, Kansas twice amended its laws to provide a 

standard to be followed by a supplier in terminating a franchise 

beer distribution agreement. These amendments provided that no 

franchise agreement for the distribution of beer could be 

terminated "except for reasonable cause. 111 

Larco, after unsuccessfully pursuing administrative relief, 

commenced this action based upon the newly enacted Kansas law. 

The gravamen of the complaint was that termination of the beer 

distribution agreement would be improper without "reasonable 

cause." 

Latrobe filed a motion to dismiss the complaint for failure 

to state a claim upon which relief could be granted. The district 

1 Kan. Stat. Ann. § 41-410(f) (Supp. 1990). 

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Appellate Case: 91-3045 Document: 010110132085 Date Filed: 08/15/1991 Page: 2 
court granted this motion after concluding that the current 

version of Kansas law, with its limitation upon the right of 

termination, clearly worked an impairment of the parties' rights 

under a valid prior contract. The district court reasoned that 

Kansas law should be interpreted to apply prospectively only and 

did not apply to beer distribution agreements in existence prior 

to its effective date thereby relieving the district court of the 

burden of declaring the new Kansas law violative of Art. I, Sec. 

10 of the United States Constitution. 

Laree first contends that because the Twenty-First Amendment 

gives to the states the power to regulate the importation of 

alcoholic beverages, Kansas may regulate liquor, and therefore the 

Kansas Supreme Court would undoubtedly rule that Kansas could 

exercise its police power over alcoholic beverages unfettered by 

the Contracts Clause. We disagree. As aptly stated by the 

district court when presented with the same argument in this case: 

None of the cases cited by Laree provide support 

for the notion that constitutional guarantees fly out 

the window whenever liquor is mentioned.... [T]he 

constitutional prohibition on the impairment of 

contracts is [not] rendered meaningless because the 

contract involves the distribution of beer. 

It has long been basic law that the laws that exist at the 

time and place of the making of the contract enter into and form a 

part of it and any impairment of the obligation of a contract is 

within the prohibition of the Constitution. Walker v. Whitehead, 

83 U.S. (16 Wall.) 314, 317-18 (1872). 

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Appellate Case: 91-3045 Document: 010110132085 Date Filed: 08/15/1991 Page: 3 
Larco also argues the statute in question was intended to 

have retrospective effect in order to apply to beer distribution 

agreements. Again, this argument has no merit. Absent clear 

language to the contrary, a statute should be applied 

prospectively to avoid constitutional violation. The plain 

language of the statute in question fails to reveal any 

legislative intent for this new law to operate retrospectively. 

Larco cites legislative history; however, even if we were to hold 

the legislative history somehow overcomes the statutory language, 

Larco's recitation of legislative history fails to persuade us 

this was the legislative intention. It is for the legislature to 

clearly specify its intent to have the law operate retroactively 

and this the Kansas legislature has not done. De Vargas v. Mason 

& Hanger-Silas Mason Co., 911 F.2d 1377, 1388 (10th Cir. 1990), 

cert. denied, 111 S. Ct. 799 (1991). 

Larco next raises a number of arguments including its 

contentions that Kansas is merely exercising its police power to 

protect a basic interest and public policy considerations exist 

that allow Kansas to avoid a strict interpretation of the 

Contracts Clause, and that the Contracts Clause is inapplicable to 

the liquor industry as it is a highly regulated industry. Such 

arguments merit little discussion. It is sufficient to note that 

all authorities cited in support of these arguments are either 

distinguishable or fail to support their arguments. 

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Appellate Case: 91-3045 Document: 010110132085 Date Filed: 08/15/1991 Page: 4 
The judgment of the district court is AFFIRMED. 

Entered for the Court: 

WADE BRORBY 

Circuit Judge 

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Appellate Case: 91-3045 Document: 010110132085 Date Filed: 08/15/1991 Page: 5