United Beverage Co. of South Bend, Inc. v. Indiana Alcoholic Beverage Commission

760 F.2d 155
Court of Appeals for the Seventh Circuit·Decided April 22, 1985·No. No. 83-2635·Published·Cited by 2 cases

Opinion

POSNER, Circuit Judge.

This is not an antitrust case, but it has its roots in antitrust law. In United States v. Arnold, Schwinn & Co., 388 U.S. 365, 375-80, 87 S.Ct. 1856, 1863-66, 18 L.Ed.2d 1249 (1967), the Supreme Court held that a manufacturer who limited the territories in which his dealers could resell goods bought from him committed a per se violation of the Sherman Act. But manufacturers could still assign “areas of primary responsibility” to their dealers and require a dealer to cultivate his area of primary responsibility, albeit the dealer could not be forbidden to sell outside the area. Ten years later the Court overruled Schwinn and held that prohibitions imposed by manufacturers against dealers’ selling outside of assigned territories were unlawful only if unreasonable. Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). Indiana’s Alcoholic Beverage Commission, apparently unhappy with Sylvania, in 1979 promulgated a rule, “Rule 28” as it is called, which in subsection (3) forbids the producers of such beverages to “restrict by agreement or otherwise, the sale or resale of liquor, wine, beer or malt beverages to a given geographical area or to permittees, who are otherwise entitled to buy, within a given geographical area. This section shall not be deemed to prohibit the designation of an ‘area of primary responsibility’, however, efforts to restrict sales to only the designated area of primary responsibility are deemed to be prohibited.” 905 Ind.Adm. Code 1-28-1.

United Beverage Company, an Indiana beer wholesaler, and the trade association to which it belongs brought this suit in a federal district court against the Commission and its members to enjoin the enforcement of Rule 28(3) as contrary both to the United States Constitution and to state law. The district court granted summary judgment for the defendants and the plaintiffs appeal. 566 F.Supp. 650. The nature of the association’s interest in this case is unclear, but if its member, United Beverage, has standing, so, under current con[157] ceptions of standing, does it. Sierra Club v. Morton, 405 U.S. 727, 739, 92 S.Ct. 1361, 1368, 31 L.Ed.2d 636 (1972). United Beverage’s interest is based on its uncontradicted allegation that Anheuser-Bush would give it an exclusive territory in Indiana but for Rule 28(3); it therefore has something tangible to gain if it can get the rule enjoined.

Apart from two frivolous contentions (that the term “area of primary responsibility” — long a term of art in antitrust law, see, e.g., White Motor Co. v. United States, 372 U.S. 253, 270-72 and n. 12, 83 S.Ct. 696, 705-07 and n. 12, 9 L.Ed.2d 738 (1963) (concurring opinion) — is unconstitutionally vague and that the case should not have been resolved at the summary-judgment stage), United Beverage argues only that the Alcoholic Beverage Commission exceeded its authority under Indiana law, which, so far as relevant to this case, empowers the Commission to issue rules governing “the conduct of the business of a permittee” and “the prevention of fraud, evasion, trickery, or deceit____” Indiana Code §§ 7.1-2-3-7(c), (g). United Beverage casts this argument as both a federal and a state claim. (We need not consider the wholesalers’ association — a “silent partner” in United’s suit — separately.) The state claim is that Rule 28(3) exceeds the Commission’s statutory powers and, alternatively, that for the legislature to delegate such vaguely defined powers to an administrative agency violates the Indiana constitution. The federal claim is that an uncanalized delegation of legislative power to an administrative agency violates the Fourteenth Amendment.

The usual sequence in considering issues of state law and of federal constitutional law is to address the former first, in the hope of avoiding having to decide the latter. In this case, however, the federal constitutional issues are easier than the state law issues; a decision on the state law issues would entangle us in delicate questions of internal state governance; and we shall see that once United’s federal grounds are rejected, the entire case must be dismissed, leaving United free if it wants to pursue the state law issues in state court, where they belong.

United assumes that there is a general federal constitutional doctrine limiting a state legislature’s delegation of legislative authority to an administrative agency. There is not.

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United Beverage Co. of South Bend, Inc. v. Indiana Alcoholic Beverage Commission, 760 F.2d 155 (7th Cir. 1985).

760 F.2d 155 (United Beverage Co. of South Bend, Inc. v. Indiana Alcoholic Beverage Commission) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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