Parks v. Allen

• Decision Date: 14 May 1970
• Docket Number: No. 28815.,28815.
• Parties: Raymond Edward PARKS, Plaintiff-Appellant, v. Ivan ALLEN, Jr., Mayor of the City of Atlanta, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

426 F.2d 610 (1970)

Raymond Edward PARKS, Plaintiff-Appellant, v. Ivan ALLEN, Jr., Mayor of the City of Atlanta, et al., Defendants-Appellees.

No. 28815.

United States Court of Appeals, Fifth Circuit.

May 14, 1970.

Wesley R. Asinof, Atlanta, Ga., for plaintiff-appellant.

Thomas Choyce, Henry L. Bowden, Atlanta, Ga., for defendants-appellees.

Before JOHN R. BROWN, Chief Judge, and BELL and INGRAHAM, Circuit Judges.

PER CURIAM.

This is the second appeal of this case, and reference is made for a statement of the case to Parks v. Allen et al., 409 F.2d 210 (5th Cir. 1969), wherein another panel of this court reversed and remanded the case to the district court for further development of the record on the reasonableness of limiting liquor licenses to two to a family.

In obedience to the remand, the district court conducted a full hearing, considered the evidence and the law and entered judgment for the defendants. Findings of Fact and Conclusions of Law entered by the district court are set out in full in the appendix hereto. The Findings of Fact and Conclusions of Law are supported by the evidence and the law, and the judgment of the district court is affirmed.

APPENDIX

FINAL ORDER DENYING INJUNCTION AND ORDERING JUDGMENT ENTERED FOR DEFENDANTS

(Number and Title Omitted)

Filed: Sep. 11, 1969

This case involves an attack by plaintiff, an unsuccessful applicant for a retail liquor license in the City of Atlanta, on the reasonableness of the City ordinances which deny him the right to obtain a license when another member of his family already holds two such licenses.¹

In its initial appearance, the court granted summary judgment to the defendants on uncontraverted affidavits submitted in support of the motion. On appeal, the case was remanded "for further development of the record on the reasonableness of limiting liquor licenses to two to a family." Parks v. Allen, 409 F.2d 211 (1969). Upon remand, the court conferred with counsel and set such a hearing which was continued by agreement until August 11th at which time evidence was presented on which the court makes the following

FINDINGS OF FACT

Prior to 1964, the retail liquor industry in the City of Atlanta was considered by all knowledgeable people to be monopolistic and was sustained in such fashion primarily by two factors: the minimum price floor established by the State Revenue Department and the so-called "ward courtesy" system of licensing in effect within the city. The former prohibited pricing below a certain level, which guaranteed each retail license holder a 21% gross profit. In the latter system one city alderman in the ward concerned could prevent the issuance of a retail license in the ward by a negative vote. This lead to so-called "politic licensing" within the city with claims of extraordinary political contributions to the aldermen concerned. At the time, state law allowed only two licenses to each person, but through "ward courtesy", a few persons were able to obtain inordinate control over the retail liquor business by obtaining two licenses in their own names, two in the names of a spouse, son or daughter, (in or out of the household), or two in the name of a lessee or employee, over whom financial pressure was exerted through rentals or salaries. With the help of the noncompetitive state pricing system, such preferred persons reaped huge profits. This in fact was the evil sought to be removed by Hornsby v. Allen, 326 F.2d 605 (1964).

Public dissatisfaction with the system arose and newspaper editorials and public opinion demanded action. Studies were undertaken by various public bodies recommending drastic changes. See Ex. # 1, Attorney General's report of Fulton County liquor investigation, particularly at pages 7, 8; Ex. # 2, Fulton County Grand Jury presentments, May-June Term 1963, particularly at pages 1-5. (Independent studies indicated that 10 to 15 families controlled 75% of the retail liquor industry in Atlanta under the system).

As seen, family connections formed an integral part of the abuse and it was determined that limitations on licenses to members of one family was a means to break up the existing concentrated control. The reasonableness of such action is the central question now before the court. Since its adoption, the problem has greatly improved due to the abolition of the state pricing system in 1965 and the adoption of general licensing standards over the past five years in conformance with Hornsby under persistent prodding by the reformists and the courts. However, all abuses are not yet removed.

Evidence produced at the hearing shows that there is no city regulation governing discrimination in pricing and/or brand preferences. But, in spite of state-prohibitions on the subject, there exist preferential pricing in favor of large retailers usually in the form of discounts or "extras," i.e. a 13th bottle to the case, etc. Also, scarce preferred brands are often "paired" with volume purchases of common brands. Moreover, again in spite of state prohibitions to the contrary, "split deliveries" exist wherein a discount is granted for large purchases delivered to two or more locations. Small single-location licensees have found it difficult to survive under such circumstances and, in some instances, have been driven out of business.

While "bigness" itself can produce such abuses the concentration of numbers of licenses in one family can and does create additional opportunities to nullify competition. Thus, volume could be built up by combined purchases between family licensees and "split deliveries" could easily be arranged under such circumstances. Moreover, such concentration of licenses in one geographical area could itself facilitate retail price-fixing, even under a competitive system.

The petitioner here is 36 years old, married with three children, and lives separate and apart from his father, who already holds the two licenses permitted. His parents separated while he was a small child and he has spent virtually no time in his father's home since the separation. If granted a license he would finance his business with his own and borrowed funds. He asserts that his father would have no interest in or control of such businesses.

CONCLUSIONS OF LAW

It is firmly established that the state through the 21st Amendment has a broad right to regulate traffic in intoxicating liquors in the valid exercise of its police power. Crowley v. Christensen, 137 U.S. 86, 11 S.Ct. 13, 34 L.Ed. 620 (1890); Joseph E. Seagram & Sons, Inc. v. Hostetler, 384 U.S. 35, 86 S.Ct. 1254 (1966); Hornsby v. Allen, 326 F.2d 605 (1964). Moreover, the Fourteenth Amendment admits of the exercise of a wide scope of discretion in this regard. It only prohibits what is done when it is without any reasonable basis and therefore is purely arbitrary. E.g., Block v. Hirsh, 256 U.S. 135, 41 S.Ct. 458, 65 L. Ed. 865 (1920); Mestre v. City of Atlanta, 255 F.2d 401 (5th...