SCOTUS to Hear Midtown Case

Here’s proof that what happens in Washington can reach down to any individual and impact his or her life.

When the fight over Brett Kavanaugh’s nomination to the Supreme Court occurred, the politically astute realized how important it was. As it turns out, the Kimbrough Liquor store in our own Central Gardens will be directly effected by justices such as Kavanaugh.

Wayne Risher writes the story at the Daily Memphian:

Doug and Mary Ketchum would rather be getting to know their Central Gardens neighbors, hosting Sunday afternoon wine tastings and tracking down rare Beaujolais and bourbon.

Instead they’re front and center in a Supreme Court case that could change the competitive landscape for liquor and wine retailers in Tennessee and beyond.

The Ketchums moved from Utah to Memphis in 2016 and sank their life savings into buying Midtown’s Kimbrough Fine Wine & Spirits, only to land on the wrong side of a dispute with the Tennessee Wine and Spirits Retailers Association.

The association, a lobbying and advocacy group for more than 500 independent package stores, opposed liquor store licenses for the Ketchums and another applicant, Total Wine, because they hadn’t met a residency requirement.

The Ketchums won their license after lower-court rulings found the residency rule unconstitutional, but the association appealed to the U.S. Supreme Court. Oral arguments are scheduled to be heard Wednesday, Jan. 16.

The court is expected to rule later this year, at which time the Ketchums hope they’ll finally be able to breathe easier about the decision to buy the 80-year-old store at 1483 Union.
David vs. Goliath?

The litigation has put the Ketchums on the same footing as national mega-retailer Total Wine & Spirits, which used the ruling to break into the Tennessee market. Total Wine opened a store in Knoxville and has been working on a second Tennessee location.

While the Ketchums are literally a mom-and-pop business, the involvement of Total Wine gives the proceedings more of a David vs. Goliath feel.

Some observers believe the court ruling could hasten the entry of big national retailers into competition with small, independent stores in Tennessee and elsewhere.

State law says people must live in Tennessee for two years to obtain a liquor store license and 10 years to renew the license. Since licenses are granted for a year at a time, a newcomer would have to live in the state nine years before he or she could get a license and then renew it.

The Ketchums said they didn’t learn about the residency rule until after they struck a deal to buy the Kimbrough store from previous owners and committed to moving to Memphis.

Tennessee attorneys general had twice opined earlier this decade that the residency requirement was unconstitutional, prompting the Tennessee Alcoholic Beverage Commission to quit enforcing the rule for a time, the Ketchums’ attorney said.

But with the Ketchum and Total Wine applications pending before the commission, the retailers association forced the issue.

“We didn’t pick the fight. It got picked for us,” said Doug Ketchum.

“(The commission) told us, ‘The retailers association says if we give you a license, they’re going to sue us. We’re worried if we don’t give you a license, you’re going to sue us. We don’t want to be stuck in the middle, so we’re going to let the court decide,’ and they filed the lawsuit,” he said.

Michael Bindas, the Ketchums’ lawyer, said the residency rule violates the Constitution’s Commerce Clause, which protects against state laws that disrupt interstate trade, and the 14th amendment, a Reconstruction-era measure intended to prevent states from depriving new residents of citizenship privileges.

“The problem here is Tennessee has chosen to discriminate, including against its own residents, folks like Doug and Mary, and it’s done so not to protect the public but to protect incumbent businesses from competition,” said Bindas, senior attorney of the Institute for Justice, a libertarian-leaning organization that fights what it believes are instances of government overreach.

In recent years the institute has intervened in cases ranging from lifting restrictions on ride-sharing services to educational choice to reining in government use of eminent domain.
Institute decries ‘bottleneckers’

“I think the association is trying to protect its own members,” Bindas said. “It’s doing what all bottleneckers do: It’s trying to use government power to restrict the ability of newcomers to enter an industry in order to protect the association’s own members.”

The retailers association’s case rests on the 21st Amendment, which repealed Prohibition and granted states the right to regulate trade in alcoholic beverages.

The Nashville-based association’s lawyer and executive director and a board member from Memphis, Josh Hammond of Buster’s Liquors & Wines, declined comment.

Bindas said, “Our position is no, the 21st Amendment is not a blank check, and it cannot save a law that violates some other provision of the Constitution, like the Commerce Clause or the privileges and immunities clause (of the 14th Amendment).”

The case has drawn national attention, including an article in the University of Cincinnati Law Review, which suggested that fear of Total Wine and other large interests is driving the retailers association’s objections.

If the Supreme Court rules against the association, “it would change the landscape of the wine and spirits industry,” the law review stated. “Companies such as Total Wine would be empowered to enter markets which were once hostile to them. Issues such as direct-to-consumer delivery of wine, beer and spirits by retailers instead of producers would likely be re-litigated under its holding.”
One retailer’s view

A member of Tennessee’s retailers association, Kirby Wine and Liquor owner Phil Woodard, said he believes Total Wine’s expansion in Tennessee would be enabled by the court case.

Woodard said he visited Total’s 50,000-square-foot Knoxville store and found it “awesome, really nice.”

“Mostly they sell their own brands. They have their own brands and that’s where they have the markup to be able to make up for the other stuff,” which is sold at a deep discount, Woodard said.

“If they change this, are they going to change other state laws?” Woodard asked. “The states are supposed to have rights, back when our founding fathers wanted states to be able to control states, no matter how backward.”

Bindas agreed the case could have far-reaching impact, but he and Ketchum disagreed with the claim it would unleash unbridled competition on Tennessee’s independent stores.

“The case absolutely has implications beyond Tennessee and that is because the right to move to a state and earn an honest living in it is one that all Americans enjoy, whether they’re residents of Tennessee like Doug and Mary or residents of other states in the nation,” Bindas said.

Market disruption downplayed

Bindas suggested Tennessee still has ample leeway to regulate retail package stores, such as a limitation on a single entity owning more than two stores.

Doug Ketchum said he doesn’t see the fairness of the residency rule. The state doesn’t have a similar requirement for restaurant and bar owners who serve alcohol, and it allows non-resident retailers such as grocery stores to sell wine.

“We’re not Total Wines,” he said. “We’re a mom-and-pop, so we’re not a big threat. When they (the association) are saying, ‘This isn’t personal against you,’ it sure seems like it is,” Doug Ketchum said.

The Ketchums are looking forward to attending the Supreme Court arguments.

“They forced us into the movie, so we’re going to play the part,” she said.

“We figured if we’re going to be part of this thing, we want a ticket to the show,” Doug Ketchum added. “It’s kind of a rare opportunity. I don’t know of too many people who ever get the opportunity to go to the Supreme Court for something that involves them.”

“The whole prospect is scary,” he added. “It’s very intimidating. The thought of the potential outcome could be devastating.

“At the same time there’s a little excitement in it because if we prevail, we will have made a difference for a lot of people, not only here but across the country, because it will have far-reaching impact, other states as well as this,” he said.
Geographic cure was original goal

The Ketchums are also looking forward to getting back to the reason they decided to leave Utah in the first place: his daughter Stacie, 32, who has cerebral palsy. It was her health problems, aggravated by air pollution in the Salt Lake basin, that prompted a doctor to recommend they move somewhere with cleaner air.

“We wanted to move here so we could spend more time with Stacie. We thought if we had a place we could run that had a good enough income, we didn’t need full-time jobs and we’d have the flexibility to spend time with her,” he said.

Back in Utah, Doug Ketchum, 63, was a network engineer for a pathology lab for 16 years, and Mary Ketchum, 56, was a telephone company linewoman for 30 years. They have been married 8½ years and have a dozen children between them.

They found out the Kimbrough store was for sale through a Memphis business broker that also offered an online seminar on how to invest one’s retirement nest egg in a business.

They received their store license in April 2017, after initially applying in the summer of 2016. The store was formerly owned by Roy and Kathleen Z. Patterson.
Business as usual

Mary Ketchum manages the store’s seven employees, and Doug Ketchum has taken a job as a network engineer with an elevator company. The couple is trying to pay off debt from legal expenses and not having an income for several months after moving to Memphis.

The Institute for Justice offered to represent the couple after the case was chosen for review by the Supreme Court.

“When the Institute for Justice called us, honestly, we thought it was a prank,” Doug Ketchum said. “You want to represent us pro bono? It took a little bit of research and we looked them up to see who they really were and realized ‘Oh, these guys are for real. They’re legitimate.’”

Mary Ketchum said after the institute took the case, “That first weekend that they told us, I could sleep. I hadn’t slept for almost a whole month because I was so freaked out.”

She said, “We had rolled all our retirement money into the store. If we couldn’t get another license, we could lose the store, our retirement money, they might need our house for the remainder of the loans. We could literally lose everything.”

Doug Ketchum said, “I’m fairly confident in the point of view our attorneys are taking, that we at least aren’t going to lose our store. I feel very confident about that. But anything’s possible.”

The Kimbrough’s previous owner was a member of the Tennessee Wine & Spirits Retailers Association. The Ketchums found that out when they received a mail solicitation from the association. “They wanted donations to fight us in court,” he said.

Once the dust settles from the court case, the Ketchums plan to resume making improvements such as replacing sales counters and hardwood floors. They’ve added coolers for wine storage and plan to bring in more when the budget allows.

“Our plan is we want to run this business and be part of the community and give back to the community and support community functions,” he said.

... Leave a Reply