Judge rules for state in liquor store competition fight

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — Michigan liquor store owners could face new competition next door as a result of a court ruling allowing the state to act on plans to lift a longstanding rule prohibiting licensees from operating within a half-mile of each other.

Michigan Court of Claims Judge Stephen Borrello on Monday dismissed a lawsuit filed by an association representing existing liquor store owners, who argued they paid to buy their businesses and licenses with the expectation the proximity rule would stay in place.

“There is no property right to be free from increased competition,” Borrello wrote in a summary opinion and order siding with the Michigan Liquor Control Commission. “Nor can plaintiff claim a property right in the continuation of an existing law or rule.”

The ruling is the latest development in a prolonged fight over the 1968 rule, which generally limits liquor stores from operating within 2,640 feet of each other. The Michigan Liquor Control Commission began efforts to rescind the law in 2017, calling it “protectionist and anti-competitive.”

Borrello temporarily blocked those plans in January after the Associated Food and Petroleum Dealers sued the state for a second time.

The Liquor Control Commission was “confident that the judge would agree with our arguments, and we are pleased with the decision today,” said spokesman David Harns.

“We are now taking the necessary steps for final rescission of this rule and we look forward to working with all of our licensees to continue to ensure the health, safety, and welfare of the public.”

Liquor store owners have flooded recent commission and legislative hearings in protest. Association attorneys argued they would face “irreparable harm” after investing substantial “sums, time and sweat” into their businesses.

Auday Arabo, president of the Associated Food and Petroleum Dealers, said his group plans to file a motion to reconsider and appeal Monday's ruling.

"We're a long way from giving up," he said. "We're going to continue to fight and make sure small business owners around the state are treated fairly."

The lawsuit asked Borrello to keep the rule in place while the Michigan House of Representatives considers a Senate-approved bill that would write the distance rule into state law. But passage of that legislation “is far from guaranteed,” Borello wrote.

“At most, plaintiff has called into question the advisability of the rescission,” he said. “The apparent wisdom (or lack thereof) of the MLCC’s action is not a matter for this Court. It is, however, a matter for the Legislature, where apparently, plaintiff’s fate lies.”

State Sen. Rick Jones, a Grand Ledge Republican who sponsored the bill that would keep the half-mile rule in place, said Monday he continues to push for action in the House Regulatory Reform Committee. The panel has not yet taken up the measure the upper chamber approved 27-9 in December.

“Most cities would prefer that they don’t have four liquor stores on a corner. They would prefer that they’re evenly spaced,” Jones said. Changing a rule owners have operated under for years is “an extremely bad way to treat people who have invested their life savings in a store,” he added.