Commonwealth Journal

News Live

November 14, 2013

ABC responds to city’s lawsuit

Somerset — The next step in the ongoing chess match between the state alcohol control agency and the City of Somerset has been made, and it could put the case in an appellate court room.

The Kentucky Department of Alcoholic Beverage Control (ABC) has filed a motion with the Kentucky Court of Appeals for relief in regards to the legal action taken against it by Somerset officials, and has petitioned for a writ of prohibition.

The ABC has asked “to prohibit the Pulaski Circuit Court from acting outside its subject matter jurisdiction,” which, it’s claimed, would “cause immediate irreparable harm” to the state.

 “In the underlying action, the City of Somerset is asking the court to let it set its own quota for package liquor licenses,” reads the motion for relief. “(Kentucky Revised Statutes) grants the ABC the exclusive authority to establish the number of quota licenses in a given territory. Thus, the only remedy sought be the City would require the trial court to usurp the Department’s statutory executive function and substitute the trial court’s judgment on the number of quota licenses available in Somerset.”

The petition for writ of prohibition was filed “to prohibit the continued prosecution of an action in the Pulaski Circuit Court,” following Pulaski Circuit Judge David Tapp’s decision earlier this month to let the case continue here in Somerset rather than in Frankfort, where the ABC’s offices are located.

“If a writ is not issued prohibiting the trial court’s continued and erroneous exercise of jurisdiction, ABC will suffer immediate and irreparable harm,” reads the petition. “Because the constitutional prohibition on separation of powers is absolute, ABC is entitled to be free even from the necessity of defending itself through a trial. The remedy of appeal cannot cure the loss that will be caused by the trial court’s continued erroneous conduct.”

Both documents were dated November 8, 2013, and both were signed by the ABC’s counsel, Peter F. Ervin and Noelle Bailey of the Public Protection Cabinet in Frankfort.

Somerset City Attorney Carrie Wiese said that these actions were the “only possible” option they had to keep the case from going forward, in asking the Court of Appeals to put a stop to Tapp’s orders.

“Since Judge Tapp had ordered that the case wouldn’t be dismissed, they (the state) have to comply with discovery,” said Wiese, referencing the process by which available evidence is made accessible to the other party in a legal matter. “... I think it was their last-ditch effort to not have to answer discovery, which will require them to reveal what they took into consideration and who they talked to when they made the decision to award (liquor store quota) licenses as they did. Obviously, they don’t want to do that.”

Wiese added that “all we’ve done is simply ask them why they made the decisions they made. We’re not saying they didn’t have the right to make those decisions, just asking why they made them the way they did.”

Last year, following the vote by Somerset citizens to go “wet,” Somerset officials presented a comprehensive economic study to the ABC, outlining the city’s projections for alcohol revenue impact. In that forecast, the city was counting on the state awarding licenses to at least some larger-volume retailers rather than smaller ones, including regional business Liquor World, which was prepared to make a $5 million investment to renovate the North Plaza shopping center.

Instead, the ABC issued licenses to three smaller-inventory stores — Apple’s Wine and Spirits, First Stop Party Supply, and Wildcat Beer, Wine and Spirits (though the city has noted that the latter was more in line with their expectations) — and two pharmacy chains with a limited supply, Rite-Aid and Walgreens.

The city felt that the ABC didn’t take their needs into consideration, calling the licensing decisions “arbitrary and capricious,” and even held up issuing licenses to some of the above businesses while they tried a two-fold approach to working out a deal for more licenses — both through the courts and more directly.

Somerset officials contended that the state had failed to follow Kentucky statutes in the application of the city’s ordinance, and that the existing quota system had no current regulations to limit the numbers beyond the guidelines of county population. The ABC had used Somerset’s population to arrive at the figure of five, based on a calculation of one liquor store for ever 2,300 residents. If they had gone by county population, Somerset could have qualified for over 25 such licenses, which allow for the operation of retail stores that sell distilled spirits and wine, rather than just beer.

Somerset Mayor Eddie Girdler felt like the two entities had reached a deal to grant Somerset five more potential licenses. However, when the subcommittee — of which Somerset’s own state representative Tommy Turner was a part — ruled the ABC’s regulations deficient, the agency went back to the drawing board.

In August, the City of Somerset re-filed its complaint against the ABC in an attempt to “(ask) the judge to clarify the law,” according to Girdler.

Earlier this month, Tapp denied a motion by the ABC to dismiss the City of Somerset’s complaint, and ruled that Somerset has done everything it can to resolve the situation through the administrative process. He also determined that the case should stay in the Pulaski court system, rather than moving to ABC’s home turf in Franklin County Circuit Court.

Wiese said that the City of Somerset’s legal counsel has an opportunity to file a reply to ABC’s appeal within 10 days, and is in the process of doing so right now.

“(The appellate court) could make a decision based on law without any oral arguments and kick it back out,” said Wiese. “If they do, we can go forward with the case in (Pulaski) Circuit Court. If they do take up (the appeal) and allow ABC to make arguments, then the case in Circuit Court will have to sit in abeyance until the Court of Appeals make a decision. It kind of ... stops the process.”

However, Wiese said that the city is “confident” in their case and believes ABC won’t be successful in their appeal.

“We look forward to going ahead with the case in Circuit Court and hope for the best,” she said. “... I anticipate (the appellate court) will be able to rule quickly on it and we’ll be able to move forward by the first of the year with the discovery portion of the case.”

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