Sheetz Ponders Next Move Following Beer Ruling

Judge says takeout-only sales infringe on niche legislatively carved for distributors

ALTOONA, PA. -- Following a ruling Monday by the Pennsylvania Supreme Court ending Sheetz Inc.'s takeout-only beer policy at its convenience store/restaurant in Altoona, Pa., it is not clear whether beer sales will stop at the store, said The Altoona Mirror. Sales continued late Monday afternoon, the report said.

The justices, by a 5-1 vote, said the Pennsylvania Liquor Control Board improperly granted an eating place malt license to Ohio Springs Inc., a Sheetz-related company, because the license requires beer and malt products to be served for onsite consumption.[image-nocss]

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"It's not clear to me at this point whether we can sell under the existing license," Sheetz vice president and general counsel Mike Cortez told the newspaper. "We will need to comply with the court's decision. The real issues for me are: What did the court mean and how do we comply?"

Sales will have to stop "in the very near future" as Sheetz determines its next step, Cortez added.

The court upheld a Commonwealth Court ruling in February 2007, which overturned the state's decision to transfer an eating place malt license to Ohio Springs. Eating place licensees, both courts found, must sell beer for on-premise consumption as a prerequisite for selling for takeout.

Otherwise, wrote Justice Max Baer in the majority opinion, a c-store "can act as a distributor by solely offering beer for carryout purchase, yet not be burdened with the restriction of selling beer only by the case." He added, "Such interpretation infringes upon the market niche legislatively carved for the distributor."

Only the General Assembly can craft an exception that allows a takeout-only policy, the court ruled. "While a policy determination in this regard may well be accomplished by our legislature, it is not our role to sanction such a momentous transformation. ... Again, such a sea change in the sale of alcoholic beverages in this Commonwealth must be sanctioned by the Legislature," wrote Baer.

The MBDA welcomed the court's decision to bar the Sheetz store from selling beer solely for off-premise consumption. "We see today's ruling as a vote of confidence in the alcoholic beverage regulation and distribution system as written into law by the General Assembly and a strong defense of the rights of licensed beer distributors to a secure place within that system," David Shipula, MBDA president said.

Robert Hoffman of Eckert Seamans Cherin & Mellott, who argued the case before the Supreme Court for MBDA, said, "The ruling draws a clear distinction between the administrative role of the Pennsylvania Liquor Control Board in granting liquor licenses and the legislative drafting and policy role of the General Assembly."

He called attention to Baer's specific language: "While a policy determination in this regard may well be accomplished by our legislature, it is not [the court's] role to sanction such a momentous transformation" in the manner in which beer is sold.

"The members of the Malt Beverage Distributors Association are heartened by today's ruling and believe the current law - although written more than 40 years ago - sets reasonable restrictions to protect consumers and the general public." Shipula said.

MBDA also has challenged restaurant liquor licenses granted to several supermarket chains to sell beer in areas of supermarkets licensed as restaurants, a practice MBDA contends is prohibited by existing state law.

Hoffman said he believes Sheetz will have to go back to square one if it wants to sell beer because the license was improperly granted. "Sheetz is going to close down [beer sales] and reapply and have to do a couple of different things [with the configuration of the building]. There're still questions about whether it is proper to have a convenience store attached to a restaurant," he told the Morror.

Cortez said the company is disappointed for its customers. "They clearly wanted to buy beer at a convenient location at our convenience restaurant in Altoona. We're disappointed that did not happen," he told the paper.

Justice Michael Eakin issued the lone dissent, according to the report. "The characterization of the ability to sell beer for takeout as a 'privilege' in no way suggests that, should a retail dispenser choose not to sell beer for onsite consumption, such 'privilege' is lost.... There is no transformation of the system here, much less a momentous one," he wrote.