Indiana Alcoholic Beverage Commission v. Osco Drug, Inc.
| Decision Date | 18 February 1982 |
| Docket Number | No. 1-1180-A-318,1-1180-A-318 |
| Citation | 431 N.E.2d 823 |
| Parties | INDIANA ALCOHOLIC BEVERAGE COMMISSION, Appellant (Respondent Below), Indiana Liquor Stores Association, Inc., Appellant (Remonstrator-Amicus Curiae Below), Marion County Chapter of the Indiana Liquor Stores Association, Appellant(Remonstrator-Amicus Curiae Below), v. OSCO DRUG, INC., Appellee (Petitioner Below), Indiana Retail Council, Inc., Appellee (Amicus Curiae Below). |
| Court | Indiana Appellate Court |
Linley E. Pearson, Atty. Gen., David A. Arthur, Deputy Atty. Gen., Indianapolis, for appellant.
J. B. King, Virgil L. Beeler, Francina A. Dlouhy, Baker & Daniels, Indianapolis, Robert F. Wernle, Wernle, Ristine & Ayers, Crawfordsville, for appellee.
The Indiana Alcoholic Beverage Commission (ABC) appeals from the trial court's judgment that the ABC's decision to deny the renewal of eight beer, liquor, and wine drugstore dealer permits, held by Osco Drug, Inc., (Osco) was contrary to law. We find no reversible error.
The findings of fact and conclusions of law from which the ABC appeals, omitting formal parts, read as follows:
I.
1. On November 1, 1979, petitioner, Osco Drug, Inc., (Osco), pursuant to IC 7.1-3-23-11, filed its petition in these proceedings for judicial review of an order ("Order") of the respondent, Indiana Alcoholic Beverage Commission ("Commission"), dated October 31, 1979, denying Osco's applications for the renewal of eight Type 208 beer, liquor and wine drugstore permits (the "Permits") for petitioner's drugstore located in Marion County, Indiana, as follows:
Osco
Drugstore
Permit No. Location No
---------- -------- ---------
DL49-00132 8902 E. 38th St. 761
DL49-17158 3902 S. Madison Avenue 762
DL49-00145 2902 E. 46th Street 763
DL49-17159 1107 N. Arlington Avenue 764
DL49-00492 6935 Lake Plaza 765
DL49-00496 7803 E. Washington St. 766
DL49-17120 8040 South U.S. 31 767
DL49-00223 6205 W. 38th Street 768
2. The eight Osco Permits which are the subject of these proceedings were originally granted and issued by the Commission in December, 1977, and the Osco applications for renewal of the Permits were filed with the Commission on October 17, 1978.
3. Osco's applications for renewal of the eight Permits were initially referred by the Commission to the Marion County Alcoholic Beverage Board (the "Local Board") for its recommendation.
4. An investigation before the Local Board, pursuant to IC 7.1-3-19, was commenced on December 6, 1978. Additional information was received December 20, 1978 and January 17, 1979. During these open investigations, documentary and oral evidence was presented by both Osco and the Remonstrators and cross examination of witnesses was permitted.
5. On February 7, 1979, three (3) members of the four-member Local Board voted to recommend that the Permits not be renewed. One (1) member of the Local Board abstained from the voting since, as a recent appointee, he had not participated in the complete investigation.
6. On February 8, 1979, Osco requested in writing that the Commission hold a hearing to consider the propriety of renewing the Permits. Following the submission of briefs by Osco and the Remonstrators and oral argument held on April 17, 1979, the Commission determined on May 1, 1979, that a hearing would be held before the full Commission so that the commission could determine the fitness and qualifications of the applicant and the propriety of issuing the Permits applied for at each of the eight (8) named premises. The motion was made and adopted with the understanding that the hearing would be de novo and that the Commission would consider all reliable and relevant information which may be presented by the applicant, the Remonstrators or members of the general public, to the end that the public interest would be served best; and that the Commission could render a decision contrary to the Local Board's negative determination.
7. On May 21, 1979, the Commission notified Osco and the Remonstrators in writing that commencing on July 17, 1979, and continuing until completed, a hearing would be held before the Commission to determine the fitness and qualifications of the applicant and propriety of issuing the renewal Permits.
8. On July 17, 18, 19 and 20, 1979, the Commission held its hearing to determine the propriety of renewing the Permits. Only the Indiana Package Liquor Stores Association and its Marion County Chapter (Remonstrators) appeared at the Commission's hearing in opposition to the renewal of the Osco Permits.
9. On October 31, 1979, the Commission issued its Findings of Fact, Conclusions of Law and Adjudication and Order denying the renewal of Osco's Permits. In its Adjudication and Order, the Commission deferred to the negative recommendation of the Local Board.
10. At the Commissioner's hearing, the following facts regarding the negative recommendation of the Local Board were established by uncontradicted evidence:
(a) The negative recommendation of the Local Board was based upon each Local Board member's interpretation and application of IC 7.1-3-1-19 () and the Commission's Regulation 41.
(b) Two members of the Local Board interpreted and applied IC 7.1-3-1-19 as requiring Osco to have more than 50% of its sales attributable to the main business function of a drugstore.
(c) The third voting Local Board member stated that, based upon the alcoholic beverage "laws and regulations," IC 7.1-3-1-19 could require that something more than 50% or something less than 50% of an applicant's sales be attributable to the main business function of a drugstore.
(d) In applying the statutory character of business test to Osco, two Local Board members did not define what they had concluded to be the "main business function of a drugstore".
(e) The third voting member defined the main business function of a drugstore to be "over-the-counter drugstore items (aspirin, Prescriptions, cough medicine, etc.)"
11. At the Commission's hearing, the following facts regarding the interpretation and application of IC 7.1-3-1-19 were established by uncontradicted evidence.
(a) In 1935, when the statutory "character of business test" found at IC 7.1-3-1-19 was first enacted, sales of prescription and proprietary drugs would have ranged from 5% to 20% of a typical Indiana drugstore's total sales and total sales of a typical drugstore in Indiana in 1935 would have ranged as follows:
Percentage
of Gross Sales
--------------
Drugs (Rx & Proprietary) 5 - 20%
Cosmetics and Toiletries 20 - 25%
Tobacco Products 20 - 25%
Candy 5 - 10%
Fountain Sales 20 - 25%
Other 0 - 30%
(b) The typical products of an Indiana drugstore to-day are as follows: Prescription Drugs, Proprietary Items, Cosmetics, toiletries, Stationery, Greeting Cards, Toys and Games, Cameras and Film, Appliances, Tobacco Products, Household Items, Soft Drinks, Beer and Alcoholic Beverage, Soft Goods, Paper Goods, Candy, Electronics and Seasonal Items.
(c) Except for specialty pharmacies associated with hospitals and clinics and other special situations, a typical Indiana drugstore to-day would have prescription drug sales ranging from 10% to possibly as high as 30% of its total gross sales.
12. At the Commission's hearing, the following facts concerning the operations of the eight Osco drugstores and comparing the Osco drugstores to the operations of typical Indiana drugstores were established by uncontradicted evidence:
(a) Pharmacy licenses for each of the eight Osco drugstores had been duly issued by the Indiana State Board of Pharmacy on January 9, 1978, with a December 31, 1979, expiration date.
(b) During the time Osco had operated under the Permits Osco has never had a citation issued by the Commission against any of its eight Marion County drugstores.
(c) Each of the eight Osco drugstores has greater than 50% of its sales attributable to sales of typical products of a drugstore in Indiana to-day.
(d) The annualized dollar volume of prescription sales, the annualized number of prescriptions filled and the percentages of prescription sales to gross sales for each Osco drugstore were as follows:
% of Total Sales
Prescription Prescriptions Attributable to
Store No. Sales Filled Prescription
--------- ------------ ------------- ----------------
761 $231,584 35,628 10.7
762 266,349 40,977 12.5
763 213,422 32,834 13.66
764 260,459 40,071 11.7
765 315,077 48,473 11.6
766 188,855 29,055 11.8
767 219,308 33,740 11.1
768 233,683 35,951 10.8
Avg. $241,092 37,091
(e) The annual dollar volume of prescription sales, the annual number of prescriptions filled and the percentages of prescription sales to total sales were for each Osco drugstore within the ranges of prescription sales data for typical Indiana drugstores in all three categories, viz., annual dollar volume of prescription sales, number of prescriptions annually filled and percentages of prescription sales to total sales.
13. At the Commission's hearing the following facts regarding the interpretation and application of the Commission's Regulation 41 were established by uncontradicted evidence:
(a) Regulation 41, as recognized in the Commission's Brandon circular, imposed upon county alcoholic boards a mandatory 50% test in applying the statutory "character of business" test.
(b) The ...
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