A federal appeals court just upheld one of the craziest drinking laws in the country: Indiana’s ban on selling cold beer at drug, grocery and convenience stores. Under Indiana law, any beer sold by these businesses must be warm. Selling cold beer in violation of the law has actually led to some businesses paying hundreds of dollars in fines.
But the cold-beer ban does not apply to the state’s roughly 300 liquor stores, many of which even tack on an additional $1 surcharge for refrigerating beer. An Indiana association of convenience stores and gas stations sued the state, challenging the ban as irrational and therefore unconstitutional. By allowing liquor stores to sell chilled suds, but not grocery stores and gas stations, the Association argued that Indiana law violates the Equal Protection Clause of the Fourteenth Amendment.
In her opinion upholding the law, Seventh Circuit U.S. Court of Appeals Judge Diane Sykes summarized the Association’s arguments:
The Association attacks this legislative choice with several policy arguments: beer is beer, and grocery and convenience stores already sell it, just not cold; grocery and convenience stores are permitted to sell chilled drinks with higher alcohol content (like wine coolers) so why not chilled beer; grocery and convenience stores have a better record of compliance with state alcohol laws than liquor stores; grocery and convenience stores are frequented by police officers and other adult customers, deterring underage persons from trying to buy alcohol there; and selling beer in refrigerators makes it less accessible than selling it warm.
Unfortunately, following the U.S. Supreme Court’s lead, federal courts have sharply stacked the deck against entrepreneurs since the New Deal. Laws that impact supposedly “nonfundamental” rights (including the right to earn an honest living) are subject to “rational-basis review.” As Sykes explains:
Under rational-basis review, a statutory classification comes to court bearing “a strong presumption of validity,” and the challenger “must negative every conceivable basis which might support it.” To uphold a legislative choice, we need only find a “reasonably conceivable state of facts that could provide a rational basis’ for the classification.”
Since the convenience store association did not rebut every “conceivable” rationale for the ban (which even a moment’s reflection will show is impossible), the appellate court unanimously upheld the law as constitutional. By failing to subject the government justifications to any meaningful scrutiny or base its decision on actual evidence, the 7th Circuit abdicated its role as an impartial adjudicator—albeit at the Supreme Court’s insistence.
While rational-basis review is certainly a scourge for entrepreneurship, it’s not insurmountable: The Institute for Justice has won several cases under this flimsy form of scrutiny. As one federal judge once wrote, rational-basis review “allows the legislature free rein to subjugate the common good and individual liberty to the electoral calculus of politicians, the whim of majorities, or the self-interest of factions.”
For more information about how courts can act as “bulwarks of liberty,” check out the Center for Judicial Engagement at the Institute for Justice.
Hat tip to IJ’s Short Circuit newsletter and podcast.