E.F. Transit, Inc. v. Indiana Alcohol and Tobacco Co
878 F.3d 606
| 7th Cir. | 2018Background
- E.F. Transit, an Indiana motor carrier that warehouses and delivers beer, wine, and liquor, shares common ownership, management, address, and most employees with Monarch Beverage, a licensed beer and wine wholesaler, though they are separate corporate entities.
- E.F. Transit negotiated agreements (2009 and 2012) to warehouse, transport, and deliver liquor for Indiana Wholesale & Liquor Co.; both deals required or sought Indiana Alcohol and Tobacco Commission approval because of permit/warehouse-location rules.
- The Commission twice flagged potential violations of Indiana’s prohibited-interest statutes (which bar holding interests across beer and liquor wholesaling), concluding E.F. Transit’s ties to Monarch could constitute an interest in Monarch’s beer permit.
- Because of the Commission’s concerns, Indiana Wholesale withdrew and the deals collapsed; E.F. Transit sued the Commission and individual commissioners claiming federal preemption under the FAAAA.
- The district court dismissed E.F. Transit’s claim against the individual defendants as unripe; while the appeal was pending, the Indiana Supreme Court in Spirited Sales held E.F. Transit and Monarch are essentially the same for purposes of the prohibited-interest laws, affirming that E.F. Transit could be deemed to hold a prohibited interest.
- The Seventh Circuit held that Spirited Sales removed any ripeness barrier, reversed the dismissal for lack of ripeness, and remanded for further proceedings (without deciding the merits of preemption).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ripeness of preemption claim | E.F. Transit argued it need not violate the law to bring a preemption suit; credible threat of enforcement based on Commission actions makes claim ripe. | Defendants argued the claim was unripe because no definitive Commission ruling occurred and parties abandoned the deals. | Court held claim ripe: state high-court decision confirming prohibited-interest application creates a credible threat of prosecution, so plaintiff need not risk violation. |
| Applicability of FAAAA preemption (threshold) | E.F. Transit contended enforcement of prohibited-interest statutes would regulate its prices, routes, or services and so is preempted. | Defendants maintained the state alcohol laws concern licensing/regulatory interests, not transportation services, so FAAAA does not preempt. | Not decided on merits; court remanded for further proceedings after resolving ripeness. |
| Whether plaintiff must expose itself to prosecution to sue | E.F. Transit argued plaintiffs need not break the law; a credible threat suffices. | Defendants argued absence of enforcement action and final ruling meant no credible threat. | Court agreed a credible threat exists once state supreme court confirmed prohibited-interest application; no self-harm required. |
| Effect of state-court interpretation on federal case | E.F. Transit asserted state interpretation could render its planned services unlawful and thus relevant to federal preemption analysis. | Defendants argued uncertainty remained until regulators acted. | Court found state-court ruling resolved the antecedent state-law question and removed regulatory uncertainty for ripeness purposes. |
Key Cases Cited
- Spirited Sales, LLC v. Ind. Alcohol & Tobacco Comm’n, 79 N.E.3d 371 (Ind. 2017) (state supreme court held E.F. Transit and Monarch are "practically one in the same" under Indiana’s prohibited-interest statutes)
- Monarch Beverage Co. v. Cook, 861 F.3d 678 (7th Cir. 2017) (describing Indiana’s three-tier alcohol regulation and prohibited-interest framework)
- Babbitt v. United Farm Workers Nat’l Union, 442 U.S. 289 (1979) (plaintiff need not violate law to challenge it; credible threat of enforcement suffices for ripeness)
- Nat’l Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803 (2003) (ripeness requires fitness of the issue for judicial decision and hardship to the parties)