Years ago, when distilled spirits producers were pulling lines from wholesalers, a Connecticut wine and spirits wholesaler told me he had been giving thought to what he would do if that happened to him.
“Our business is essentially warehousing and trucking,” he said. “If we lost all our lines, we wouldn’t go out of business. We’d find other commodities to represent.”
In so many respects, that’s the nub of the nearly decade-long dispute between the owners of Monarch Beverage and the Indiana Alcohol Beverage Commission: Is trucking an essential part of distributing alcohol beverages? Or is a spirits wholesaler really a broker who happens to own an integrated trucking company.
Monarch Beverage’s owners want to be involved in the liquor business in Indiana. They tried through creating a services contract with Indiana Wholesale, a liquor distributor. When that was rejected, they created Spirited Sales, an entirely separate corporation – except that Spirited Sales had the same owners as Monarch and would use Monarch’s trucking company, EF Transit. They got rejected again.
Monarch’s owners essentially want the courts to ignore the common ownership of Monarch and EF Transit, arguing that they are legally separate persons. Monarch is arguing that the Indiana statute is preempted by a federal statute intended to deregulate the trucking industry.
The Indiana ABC says it has pierced the corporate veil, and the common ownership means the trucking company can’t deliver liquor regardless of what legal fictions are used to “separate” EF Transit and Monarch Beverage.
The dispute is back in the Federal courts. Now, the Center for Alcohol Policy, an affiliate of the National Beer Wholesalers Association, has sought to intervene in the case with an Amicus brief, telling the 7th Circuit Court of Appeals “the result could adversely impact the ability of states to effectively regulate the consumption of alcohol beverages within their borders.”
Phillip Terry, ceo of Monarch Beverage and ET Transit, is a former NBWA chairman.