Opinion ID: 3162278
Heading Depth: 3
Heading Rank: 2

Heading: Incorporated vs. Unincorporated Towns

Text: 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 unincorpoNo. 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 re- tailer’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 judg- ment of the commission, deals in other mer- chandise 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 10 No. 14-2559 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. No. 14-2559 11 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 12 No. 14-2559 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 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.