Attachment 16xAttachment #16-x
Valerian L. POLMAN, et al., petitioners, Appellants, v. CITY OF ROYALTON, et al.,
Respondents.
Supreme Court of Minnesota.
January 7, 1977.
Rinke, Noonan, Grote & Smoley and William A. Smoley, Sauk Rapids, for appellants.
Gordon Rosenmeier and John E. Simonett, Little Falls, for respondents.
Considered and decided by the court without oral argument.
PER CURIAM.
Valerian and Patricia Polman seek review of the order of the District Court, Morrison
County, which denied their petition for writ of mandamus directing the city of Royalton to
issue to them an off -sale liquor license. It is conceded that they were in all matters
qualified for the license and that the city of Royalton had authority under Minn.St.
340.11, subd. 13, to issue the license.
By affidavit, the city averred that the license application was denied for the good of the
city because, in the judgment of the majority of the city council members, the three
existing establishments with liquor licenses fulfilled the need of the community and
overtaxed the city's limited traffic and law enforcement facilities.
*467 A city council is vested with broad discretion in determining whether to issue a
liquor license. Wajda v. City of Minneapolis, Minn., 246 N.W.2d 455 (1976); 10 Dunnell,
Dig. (3 ed.) § 4911. The decision to grant or refuse an application for a liquor license
cannot be controlled by mandamus unless the city council has acted arbitrarily,
capriciously, or unreasonably. Wajda v. City of Minneapolis, supra.
A city council has the power to refuse a license or to limit the number of licenses to be
granted, when, in the judgment of the council, the welfare of the city suggests such
action. State ex rel. Howie v. Common Council of City of Northfield, 94 Minn. 31, 101
N.W. 1063 (1904). The city council's action in denying the Polmans' application was
reasonable under the standards set forth in our decisions.
Ohy shouldn't alcohol be sold 'in a free market?
Source: Public Action Management
By Pamela Erickson
June 16, 2015
Advocates who want to loosen oreliminate various alcohol regulations claim our laws are "antiquated,
Byzantine or from the Prohibition era." Their conclusion is that alcohol should be sold in our free
market system just like any other legal product. How do we answer such claims? We need to help clarify
the issue by stating that all products sold for human consumption must be regulated for public health
and safety; that the US markets are highly regulated; that government interference is often needed to
keep markets competitive and free of monopolistic domination. Finally we must be clear that some
marketing practices can foster social problems. Here are some points that can help clarify these issues:
1.One way oranother, all food, drink, drug, and tobacco commodities are regulated for public
health and safety. Food, drugs and tobacco are all regulated by the federal Food and Drug
Administration. Alcohol isregulated differently because after Prohibition, the 21 Amendment to the US
Constitution gave states the responsibility to regulate alcohol. It is inconceivable that a commodity sold
for human consumption would be completely unregulated. Safety of alcohol products is achieved
through e three-tier system of licensing and sale. All manufacturers must be licensed and sell only to a
licensed vvho|esa|ervvho, in turn, can only sell to a licensed retailer. The wholesaler tracks all bottles and
cans which enable them to act very quickly when there is a problem with a particular product.
2.The United States does not have afree market inthe sense that anyone can sell anything,
anywhere, atany time orplace. The free market idea is a commercial system where prices are set by
supply and demand, there are few barriers for new businesses to enter the market and there is no
government interference via taxes, price controls or barriers to market entry such as licensing. Clearly,
our commercial markets have substantial government interference: taxes are levied by all levels of
government on various products, many segments of business require some kind of license and often a
government agency is designated to monitor compliance with a myriad of regulations. Just think about
the banking, insurance and automobile industries. There are many regulations designed to protect the
consumer from dishonest practices and to ensure safety. If alcohol were to become unregulated, it
would be completely unique in our commercial environment.
3. Non-alcoholic drink products are often sold in situations that cannot be considered "free market
operations. Exclusive agreements are common for soft drink products. Arestaurant will gain certain
be sold in the same place as Pepsi products. In grocery stores, a supplier will generally pay "slotting
fee" for being on the shelf; and, the best locations cost more (i.e. the shelves at eye level). These
practices impact prices and restrict market entry for new products or products from evariety of
companies. Exclusive arrangements and slotting fees are illegal for alcohol products by federal law and
many state laws aswell.
4` Government interference is often required to maintain some of the elements ofa "free market"
system. Our marketplaces dooperate inanenvironment designed toallow supply and demand 1oset
prices and to allow new businesses into a market. Hovveve� itoften takes "government interference"
for that tohappen. For example, laws prevent price fixing arrangements. The United States has abody
ofmarket place regulations designed 10prevent monopolies, fraud and unfair operations. Many ofthese
regulations come under the heading of Anti-trust laws. They came about after the recognition that free
markets often became dominated by one or more large organizations that would then have the ability
to control price and access to market.
5. Regulations governing the alcohol market are designed toprevent business practices which
create social problems. There are special problems with marketing alcohol that can create problems.
Marketplace regulations help prevent these. Pricing is critical because deep discounts increase sales and
consumption. While taxes keep the price reasonably high; other regulations reduce the opportunities to
lower prices. These regulations include laws that prevent the sale of alcohol below cost, restrictions on
coupons or other marketing devices designed to promote high volume drinking. Many states require all
distributors tosell all products atthe same price toall. This reduces the incentive todrastically lower
prices to sell more products. It also makes it less likely that big operators can undercut small operators
and eventually dominate the market.
Current Problems with Market Regulations:
l.Illegal payments: Despite the prohibitions against payment for things of value, shelf space and
exclusive arrangements,, these things do go on. Sometimes the supplier representative will find creative
ways iodisguise the payment. /\ few years ago, Arizona had amajor prob|emwithe|coho|company
representatives offering large sums of money to carry their products and not others. Payments were
made by giving away things of value (gift cards, furniture, free cases, etc.). After a major investigation,
things changed. Currently, there is an investigation in Massachusetts. These practices seem to go on for
a|ong time before something happens.
2. Co|La�seofthethree-�ersy�t�m�Th�dornimantbe�rcomp�nyintheU�h�sbeent��n�tobuy
up retailers and distributors in several states. This would eliminate parts of our three-tier
system. Anheuser-Busch |nBevmakes nosecret about the fact that they would like todotheir own
distribution and currently own several distributorships. They have been thwarted in a few states which
have passed laws prohibiting such ownership. But they also are buying up craft breweries, some of
which have retail operations such as brew pubs.
3. Lack of enforcement: Most alcohol regulatory agencies have endured budget cuts and reduced
enforcement resources. The federal TTB has also had staff reductions. Thus, violations go on for some
time and sometimes have to get so notorious that they cannot be ignored.
4. Failure to understand and value market regulations: A poor understanding of marketplace
regulations and naivete' about the "free market" can lead to loss of valuable regulation. The regulations
discussed inthis newsletter are poorly understood and there are few good explanations inreadily
understood terms. It can be easy to buy into the "free market" argument.
The typical "free market" arguments just don't add much tothe debate over alcohol regulation. This is
especially true because some free market advocates support government interference for other
purposes such aseconomic development projects invok/ingtaxincen1ivesendutherbenefitsforafevv
businesses. Perhaps by noting other instances of government interference in the free market, there will
be greater understanding of the need for government action when there is an important public purpose
such as preventing alcohol harm.