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Federal judge dismisses Utah hospitality industry's liquor suit

Published March 27, 2012 9:04 am

Alcohol • Group has 20 days to show how businesses are harmed.
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

A federal judge on Monday dismissed a lawsuit brought by a Utah hospitality trade group seeking to overturn state liquor laws that outlaw drink specials and a license formula that has created a backlog for club permits.

Judge Bruce Jenkins, however, gave the Utah Hospitality Association 20 days to amend the lawsuit in order to describe specific harm to restaurant and bar owners.

Hospitality attorney Lisa Marcy said the lawsuit will be revised, focusing on how the state has violated antirust laws in fixing liquor prices and on ambiguities in SB314, passed in 2011, which she contends has unfairly limited the number of available liquor licenses.

In another aspect of the lawsuit, Jenkins brushed aside claims by the association that officials from The Church of Jesus Christ of Latter-day Saints had unduly influenced state lawmakers in passing restrictive liquor laws, saying Mormons have a right to consult with legislators.

The suit asserted that two unnamed lobbyists from the state's dominant religion had warned lawmakers "of repercussions" if they did not pass SB314. Utah Assistant Attorney Kyle Kaiser told Jenkins Monday that the LDS Church has the right to offer its views on liquor laws to the Legislature, whose majority is made up of members of the church, which teaches its adherents to eschew alcohol. He called laws "religiously neutral, which don't advance or inhibit a particular religion."

In his ruling from the bench, Jenkins said that "since territorial days in Utah, there has always been an interest in alcohol," noting that Mormon colonizer Brigham Young pushed for an inspector of spirits to ensure quality controls in the manufacture of alcohol.

Allen Whittle, owner of Bogey's Club in Clearfield, said he hopes the lawsuit is not totally dismissed because key lawmakers should be put under oath to explain their connection to the LDS Church as they, in his opinion, continually pass unreasonable and unfair liquor laws, without public input or discussion.

"We've seen fair and reasonable laws never make it out of committee, while restrictive laws do," he said. "We want a fair system."

Liquor-control commissioner Richard Sperry, who is a defendant in the lawsuit and was in the courtroom Monday, lamented that the suit was an expensive and cumbersome way to bring up concerns about Utah's state-run liquor monopoly. He pointed to SB66, signed by Herbert on Monday after being passed in the recent legislative session, which creates a committee of licensees that will advise the alcohol board.

At the heart of the hospitality association's lawsuit is a claim that the state has illegally restrained trade under the federal Sherman Antitrust Act by outlawing drink specials.

But attorneys for the state pointed to a 2005 report by the National Highway Traffic Safety Administration, which they said showed a correlation between lower drink prices and higher rates of binge drinking.

Kaiser said that even if state alcohol laws had violated the Sherman Antitrust Act, that law is trumped by the 21st Amendment, which repealed Prohibition and gave states broad powers to regulate intoxicating liquors. He noted that Utah's power over alcohol is so comprehensive that the state could outlaw all liquor sales.

The lawsuit, filed last July, also challenged the state's license formula, based on Utah's population, which has effectively created a moratorium of up to two years before any more liquor licenses become available.

Kaiser defended quotas on the number of bar and restaurant licenses as legal because the law is enforced uniformly. Eighteen applicants have been waiting for more than a year for permits.

In addition, the complaint challenged a part of state law that adds another hurdle to obtaining a liquor license. Beginning in July, the number of licenses allocated by the state also will depend on the number of public safety officers available to enforce laws. Even if licenses become available, permits cannot be awarded unless the Department of Public Safety hires additional officers.

Kaiser said criteria for the alcohol-enforcement officers is being developed. But Jenkins questioned why the state imposed the restriction last year without being clear on the officers' exact duties — while still tying license numbers to the additional officers.

dawn@sltrib.com

Twitter: @DawnHouseTrib —

Utah's liquor monopoly

Control states • Utah is one of 18 states that has some control over the sale of liquor.

Comprehensive control • Utah is one of five states overseeing all aspects of liquor sales.

Liquor agency • The Utah Department of Alcoholic Beverage Control was created in 1935.

Alcohol profits • They bring in more than $100 million each year to state and local treasuries.