Monarch Beverage Co., Inc. v. Dale Grubb
2017 U.S. App. LEXIS 11766
| 7th Cir. | 2017Background
- Indiana law separates alcohol distribution by tiers (producers, wholesalers, retailers) and by beverage type (beer, wine, liquor); permits are required for each activity.
- Indiana allows some wholesaler combinations (beer+wine; liquor+wine) but bars beer wholesalers from holding liquor-wholesaling permits and vice versa (unique feature challenged here).
- Monarch Beverage, a beer-and-wine wholesaler, sued the Indiana Alcohol & Tobacco Commission seeking to invalidate the statute that forbids beer wholesalers from acquiring liquor-wholesaling permits as violating the Equal Protection Clause.
- The district court granted summary judgment to Indiana, holding Monarch’s equal-protection claim failed both because no similarly situated comparator class was identified and because the statute survives rational-basis review; Monarch appealed.
- The state defended the law primarily with three rationales: (1) temperance (discourage liquor consumption by raising distribution costs), (2) preserving excise-tax revenue via independent liquor wholesalers, and (3) protecting market stability/incumbents.
- The Seventh Circuit affirmed, applying rational-basis review and finding the temperance rationale sufficiently plausible to uphold the statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Indiana’s prohibition on beer wholesalers holding liquor-wholesaling permits violates Equal Protection | Monarch: the statute facially discriminates against beer wholesalers and lacks a rational basis | Indiana: statute is a neutral regulatory classification justified by temperance, tax revenue, and market-stability interests; plaintiff must identify similarly situated comparators | Court: No comparator requirement when statute itself classifies; applied rational-basis review and held the law is rationally related to temperance interest; affirmed |
| Whether Monarch must identify a similarly situated comparator (class-of-one theory) | Monarch: not required because statute by its text singles out beer wholesalers | Indiana: class-of-one doctrine bars review absent a comparator; Monarch voluntarily assumed beer-wholesaler status so cannot complain | Court: Comparator not required for facial statutory classifications that treat a class differently; Monarch may challenge statute on rational-basis grounds |
| Whether availability of more direct means (e.g., higher taxes) defeats rational basis | Monarch: existence of more direct alternatives shows irrationality or arbitrariness | Indiana: existence of alternative means does not invalidate a statutory classification under rational-basis review | Court: Alternatives do not defeat rational basis here; Moreno is exceptional and does not control; law survives |
| Whether the legislative history (possible patronage motives) dooms the statute | Monarch: history shows improper motives, so statute is arbitrary | Indiana: motive irrelevant under rational-basis review; state need not produce empirical proof | Court: Legislative motive irrelevant; challenger must negative every conceivable rational basis, which Monarch failed to do |
Key Cases Cited
- FCC v. Beach Commc’ns, 508 U.S. 307 (1993) (under rational-basis review challenger must negative every conceivable basis for the law)
- City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432 (1985) (Equal Protection concerns require similar treatment of similarly situated persons)
- United States Department of Agriculture v. Moreno, 413 U.S. 528 (1973) (invalidating statute where available provisions targeted asserted problem, used as an extraordinary rational-basis decision)
- Indiana Petroleum Marketers & Convenience Store Ass’n v. Cook, 808 F.3d 318 (7th Cir. 2015) (Seventh Circuit applying rational-basis review to Indiana alcohol regulation)
- Village of Willowbrook v. Olech, 528 U.S. 562 (2000) (class-of-one equal-protection theory concerns selective or arbitrary execution of laws)
- Nordlinger v. Hahn, 505 U.S. 1 (1992) (classifications protecting reliance or legitimate expectations can satisfy Equal Protection)
- Tuan Anh Nguyen v. INS, 533 U.S. 53 (2001) (availability of better alternatives is not dispositive under rational-basis review)
- Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356 (1973) (rational-basis precedents and burden on challenger)