INDIANA FINE WINE & SPIRITS, LLC v. COOK, 459 F.Supp.3d 1157

Background

Plaintiff Indiana Fine Wine & Spirits, LLC (IFWS), a Maryland-resident‑owned LLC doing business as Total Wine, contracted to buy an Indiana package‑store permit and leased a 26,000 sq. ft. store location in Indianapolis contingent on transfer approval.
Indiana Code § 7.1‑3‑21‑5.4(b) bars issuance of a package‑store dealer's permit to an LLC unless ≥60% of membership interests are owned by persons who have been continuous, bona fide Indiana residents for five years and that ownership constitutes a controlling interest.
The Indiana Alcohol and Tobacco Commission (ATC) denied IFWS’s permit transfer application at a public hearing solely because IFWS’s owners are not Indiana residents for five years; IFWS then filed a § 1983 suit challenging the statute under the dormant Commerce Clause and moved for a preliminary injunction.
ATC argued IFWS should exhaust state administrative and judicial remedies and defended the statute as promoting oversight, tax collection, and public health; IFWS argued Granholm and Tennessee Wine foreclose protectionist residency requirements and that federal § 1983 suit need not await state remedies.
The court found IFWS likely to succeed on the merits, had no adequate remedy at law (sovereign immunity bars damages), would suffer irreparable harm, and that the balance of harms and public interest favored injunctive relief.
The court granted a preliminary injunction barring enforcement of the residency requirements of Ind. Code § 7.1‑3‑21‑5.4(b) and required no bond.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 7.1‑3‑21‑5.4(b) violates the dormant Commerce Clause	The statute facially discriminates against out‑of‑state economic interests; Granholm and Tennessee Wine require invalidation absent nondiscriminatory alternatives	The Twenty‑First Amendment and state interests in oversight, tax collection, and public health justify or permit the statute	Court: statute likely violates dormant Commerce Clause; Twenty‑First Amendment does not save protectionist residency requirement
Whether IFWS must exhaust state administrative/judicial remedies before a federal § 1983 suit	§ 1983 plaintiffs need not exhaust state remedies; denying now would be futile because ATC denial rested on the statute's plain terms	IFWS should have pursued administrative appeals and state court review first; state courts may construe statute narrowly	Court: exhaustion not required; federal challenge ripe because ATC’s denial was final and statutory
Whether IFWS has shown irreparable harm and lack of adequate remedy at law	Continuing constitutional violation, unrecoverable business costs, risk of losing lease/purchase; sovereign immunity precludes full money damages	Any harm is speculative and can be avoided by pursuing state remedies; delay stems from federal filing	Court: irreparable harm established; no adequate remedy because damages unavailable against state officials in federal court
Whether injunction’s balance of harms and public interest favor relief	No harm in preventing enforcement of an unconstitutional statute; public benefits from allowing IFWS to open store	Public policy and State interests favor enforcing statute	Court: balance and public interest favor IFWS; injunction granted without bond

Key Cases Cited

Winter v. Natural Resources Defense Council, 555 U.S. 7 (injunction standard)
Granholm v. Heald, 544 U.S. 460 (state alcohol laws that discriminate against out‑of‑state interests violate dormant Commerce Clause)
Tennessee Wine & Spirits Retailers Ass'n v. Thomas, 139 S. Ct. 2449 (facial residency requirements for liquor licenses not saved by Twenty‑First Amendment)
Philadelphia v. New Jersey, 437 U.S. 617 (virtually per se rule against economic protectionism)
Wyoming v. Oklahoma, 502 U.S. 437 (dormant Commerce Clause discrimination principle)
D.C. Court of Appeals v. Feldman, 460 U.S. 462 (state court adjudication considerations)
Knick v. Township of Scott, 139 S. Ct. 2162 (§ 1983 plaintiffs need not exhaust state remedies before federal suit in non‑takings contexts)
GEFT Outdoors, LLC v. City of Westfield, 922 F.3d 357 (Seventh Circuit outlining injunction factors)
Stuller, Inc. v. Steak N Shake Enters., Inc., 695 F.3d 676 (sliding‑scale balancing for injunctions)
Turnell v. CentiMark Corp., 796 F.3d 656 (clarifying sliding‑scale approach for preliminary injunctions)