Equal Protection of Grocery Stores in the Sale of Alcoholic Beverages
Kentucky has had, since the end of Prohibition, a statute providing, inter alia, that a package license for the sale of wine and spirits may not be issued to any retailer whose business is otherwise comprised primarily of the sale of either staple groceries or gasoline and lubricating oil. KRS § 274.230(7). The effect of this statute is that while grocery stores and gas stations/convenience stores may sale beer, they are precluded from selling wine and spirits. It is because of this statute that you all can see, for example, a Kroger grocery store immediately adjacent to a Kroger wine and spirits shop, they each having separate entrances. In that the separate store does not derive a significant portion of its sales from staple groceries, the separate store being considered distinct from the grocery store, this statutory prohibition is satisfied.
In 2011 Maxwell’s Pic-Pac, a Louisville based grocery store and the Wine With Food Coalition asserted that this statutory distinction lacks a “rational basis,” and as such violates the Equal Protection rights of the impacted groceries and gas stations. In 2012 Judge Heyburn issued his ruling on that challenge, determining that, irrespective of distinctions that may have existed shortly after the repeal of Prohibition between grocery stores and pharmacies (during Prohibition, pharmacies were still allowed to distribute “medicinal” alcohol), those distinctions have long since ceased. Rather, today, grocery stores often contain pharmacies while pharmacies often sell staple groceries. His decision was in turn appealed to the Sixth Circuit.
On January 15, 2014, the Sixth Circuit issued its decision in this case, reversing the determination of Judge Heyburn and finding that the statute satisfied the Equal Protection clauses rational basis standard. The basis of this determination is not, however, entirely clear. With respect to grocery stores, the Court noted that certain individuals have objections to either alcoholic beverages in general or to, in particular, wine and spirits. Reasoning that everyone is obligated to regularly purchase groceries, the Court found that precluding grocery stores from selling wine and spirits preserves that environment as one in which Kentuckians with those objections are not forced to confront wine and spirits. As to gas stations/convenience stores, the court’s reasoning is even less clear, never really explaining how they are distinct from other retailers who are permitted to sell wine and spirits.
Ultimately, the decision of the Sixth Circuit Court of Appeals is rather unsatisfactory. Judge Heyburn’s decision contained a detailed analysis of Equal Protection law and a careful review of each of the proffered basis that would support the existence of a rational basis for the statute. The Sixth Circuit neither explained its rational basis analytic paradigm nor detailed exactly what theory or theories applied to distinguish grocery stores and gas stations/convenience stores from other retailers. As of this writing a motion for reconsideration or rehearing en banc is pending before the Sixth Circuit.
My law partner Stacy Kula and I have written an article reviewing this decision and in particular criticizing the analysis (or specifically, the lack of analysis) utilized by the Sixth Circuit. That article has been accepted for publication by The Kentucky Law Journal Online and is available on both SSRN and on the SKO website. Here is a LINK to the article.