United States District Court, W.D. Oklahoma
RETAIL LIQUOR ASSOCIATION OF OKLAHOMA, an Oklahoma non-profit corporation; and JOSEPH P. RICHARD, an individual, Plaintiffs,
OKLAHOMA ALCOHOLIC BEVERAGE LAWS ENFORCEMENT COMMISSION; and KEITH A. BURT, in his official capacity as Director of Oklahoma Alcoholic Beverage Laws Enforcement Commission, Defendants.
MEMORANDUM OPINION AND ORDER
J. CUTHRON, UNITED STATES DISTRICT JUDGE.
the Court is Defendants' Motion for Summary Judgment
(Dkt. No. 20). Plaintiffs have responded and the Motion is
now at issue.
27, 2016, the Oklahoma Legislature passed Senate Joint
Resolution 68, which placed a proposition on the November 8,
2016, general election ballot called State Question 792
(“S.Q. 792”). S.Q. 792 reformed Oklahoma's
alcohol regulatory framework by repealing Article 28 of the
Oklahoma Constitution and replacing it with Article 28A.
Plaintiffs circulated an initiative petition for another
proposed constitutional amendment, State Question 791, but it
did not receive enough support to be placed on the ballot.
S.Q. 792 passed with 65.6% of the votes in favor of the
measure and 34.4% against. Article 28A will become effective
October 1, 2018.
December 19, 2016, Plaintiffs filed suit in the District
Court of Oklahoma County to request injunctive and
declaratory relief. Plaintiffs argued Article 28A is
unconstitutional because it violates the Equal Protection
Clause of the Fourteenth Amendment of the United States
Constitution. Defendants removed the case to this Court,
which then denied a pending motion for temporary injunction
(Mem. Op. & Order, Dkt. No. 15) and directed Defendants
to file the present Motion (Order, Dkt. No. 14). A review of
Oklahoma's alcohol regulatory framework and each proposed
change is relevant to the subsequent arguments of both
follows a three-tier alcohol regulatory system. Manufacturers
of alcohol are required to sell their product at the same
price to each Oklahoma wholesale distributor that wishes to
purchase it. These wholesalers supply Oklahoma's retail
package stores and establishments offering alcohol for
on-premises consumption. Currently, Article 28 of the
Oklahoma Constitution regulates those who wish to sell
alcoholic drinks containing more than 3.2% of alcohol by
weight (“ABW”). The sale of beverages 3.2% ABW
and below is not restricted by location or license.
See Okla. Const. Art. 28 § 2; 37 Okla. Stat.
§ 163.1 (defining “low-point beer” as
containing .5% - 3.2% ABW and setting out its regulation in
the Oklahoma Alcoholic Beverage Control Act).
Package Licenses are available for retailers wishing to sell
beverages above 3.2% ABW. Wholesale distributors must also
obtain licenses through the state. Retail Package Licenses
for the sale of alcoholic beverages and Wholesale
Distributor's Licenses may only be issued to an
individual or general limited partnership; these entities are
without limited liability protections. See Okla.
Const. Art. 28 §§ 4, 10. Applicants for Retail
Package Licenses and Wholesale Distributor's Licenses
must have lived in Oklahoma for at least ten years
immediately preceding the date of license application and
felons may not obtain a license. See Okla. Const.
Art. 28 § 10. A person or partnership may only hold one
Retail Package License and only alcoholic beverages may be
sold on the premises. See Okla. Const. Art. 28
28 permits winemakers to sell wine to a licensed wholesale
distributor or directly to consumers present in the winery or
at festivals and tradeshows. Winemakers who produce less than
ten thousand gallons of wine per year may elect to ship their
product directly to licensed retail package stores and
restaurants within Oklahoma, but making the election prevents
them from also using a licensed wholesale distributor.
See Okla. Const. Art. 28 § 3(A).
28A makes several changes to the regulatory system, beginning
with the sale of alcohol. The state will issue Retail Spirits
Licenses, allowing the sale of all refrigerated and
non-refrigerated alcohol and any grocery store items, so long
as the sale of nonalcoholic items does not exceed 20% of the
store's monthly sales. See Okla. Const. Art. 28A
§ 3(A)(1). These licenses have a reduced five-year
residency requirement and a person or partnership may hold
two licenses. See Okla. Const. Art. 28A § 4(A).
Beer Licenses and Retail Wine Licenses will permit
supermarkets, grocery stores, convenience stores, drug
stores, warehouse clubs, and supercenters to sell
refrigerated and non-refrigerated wine and beer. See
Okla. Const. Art. 28A § 3(A), (B). Retail Wine Licensees
may make agreements with corporations or other business
entities if the corporation does not own more than 50% equity
in the business. See Okla. Const. Art. 28A §
4(C). Winemakers may ship the wine they produce directly to
consumers and the production restriction for direct shipment
to retail stores and restaurants will be raised from ten
thousand gallons to fifteen thousand gallons produced
annually. See Okla. Const. Art. 28A § 2(A)(4).
Wine and Spirits Wholesaler's Licenses will have a
five-year residency requirement and the entity restrictions
are similar to Retail Wine Licenses. Beer wholesalers will
have no residency requirement or entity restrictions.
See Okla. Const. Art. 28A § 4(D).
Motion for Summary Judgment Standard
standard for summary judgment is well established. Summary
judgment may only be granted if the evidence of record shows
“there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a). The movant bears the initial
burden of demonstrating the absence of material fact
requiring judgment as a matter of law. Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986). A fact is material
if it is essential to the proper disposition of the claim.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). If the movant carries this initial burden, the
nonmovant must then set forth specific facts outside the
pleadings and admissible into evidence which would convince a
rational trier of fact to find for the nonmovant.