The sandwich board that sat in front of Jackalope Lounge, a popular Salt Lake City watering hole that sits about a block away from Utah's U.S. District Court, used to advertise a variety of daily specials. The bar hosted "Tequila Tuesdays" and $2.50 tall-can specials on Thursdays. Unfortunately for the patrons of this establishment, and many others across the state of Utah, June 30 was the final day that any establishment serving alcohol was allowed to offer discounted drink specials. Under Utah's SB 314, which Governor Gary Herbert signed into law last March, drink specials are now illegal in the state of Utah.
In addition to eliminating drink specials, SB 314 allows the governor to appoint the chairman of the liquor commission, bans minikegs and ties the number of liquor licenses to population quotas and public-safety officers. The latter part of the law does not go into effect until July 1, 2012, but it will then become even more difficult to obtain a liquor license in Utah. Prior to the passage of SB 314, the state-controlled Department of Alcoholic Beverage Control (DABC) requested that Herbert veto the bill, but the appeal was ignored. SB 314 marks the most substantial change to Utah liquor laws in recent years. Across the nation, Utah has a reputation for being a notoriously dry state. Liquor and beer over 4% alcohol by volume have to be purchased at state-owned liquor stores, which are closed on Sundays; any beer sold in a Utah grocery store or gas station must contain only 3.2% alcohol, which is measured by weight and not volume; and, until 2009, if a bar or club sold liquor or beer over 4% they were labeled a private club, requiring would-be patrons to purchase a temporary "membership" card in order to enter the establishment. On July 1, 2009, then governor Jon Huntsman eliminated the private-club requirements, slightly relaxing state liquor laws.
Fed up with being excluded from discussions and ignored by the legislature, on June 30 the Utah Hospitality Association, a Utah nonprofit corporation representing bars, taverns, dining clubs and anyone with "a stake in liquor," which helped eliminate private clubs in 2009, filed a lawsuit in U.S. District Court against Utah legislators including Herbert and Attorney General Mark Shurtleff. The lawsuit came the day before the first pieces of the law went into effect in Utah and the last day that Utahns were permitted a discounted drink. "We feel like these laws keep being written for an industry that most legislators don't [know anything] about. They've never even seen the inside of a bar," says Dave Morris, owner of Utah bar Piper Down and a board member of the hospitality association. He was referring to the pious teetotaler reputation of Utah's overwhelmingly Mormon lawmakers. "They won't take any input from us, and as an industry we are ignored and vilified. We'd like to be taken a little more seriously and this [lawsuit] is a way to make [ourselves] a little more known." Kenneth Wynn, who was the director of the DABC for 30 years and is currently a board member of the hospitality association, confirms the sentiment: "We got tired of being walked all over and decided it was time to take a stand."
The lawsuit states that the system of fixed pricing for alcohol under SB 314 is a violation of the Sherman Antitrust Act as it "deprives the benefits of free, open and unrestricted competition in the market" from the plaintiffs. The lawsuit also states that the extreme scarcity of available liquor licenses which the DABC claimed in its spring 2011 newsletter was zero to one license for every five applicants per month creates an unreasonable restraint on trade. Wynn says he thinks the failure of the legislature to act on increasing the licenses is "utterly ridiculous." His estimate of the applicants-per-license ratio is much higher than the DABC's. "You go to a commission meeting every month and you'll see anywhere from 15 to 22 applicants applying for a social-club license and there are none available," says Wynn. "The legislature knew that going into the session. The governor knew that going into the session. Yet they just ignored that. Didn't do anything about it."
The law was proposed as a way to curb overconsumption problems in Utah, but Wynn takes issue with the evidence used to support the major overhaul to liquor laws. "As far as I know they have absolutely no statistics that indicate that discounted drinks are creating a problem," says Wynn. "They say it increases overconsumption, but what facts do they have to support that?" Last January when state senator John Valentine was drafting his bill, he told the Salt Lake Tribune that discounted drinks should have already been illegal under current liquor laws and SB 314 just clarified the issue, leaving no wiggle room. He also stated that he believed serving alcohol was better if it was served with food than served alone and that he had been meeting with leaders of the Church of Jesus Christ of Latter-day Saints seeking approval of his bill. Some legal professionals in the state wonder if the hospitality industry would have a better chance at winning the lawsuit on different grounds. "The hospitality industry's best legal angle, which they won't pursue, is that the liquor law in question was enacted by a legislature which was proportioned on the basis of religion and therefore perpetuates religious discrimination in the market place," says Patrick Shea, a local attorney who specializes in business, development and government law.
The lawsuit requests that SB 314 be dissolved and an unspecified amount of damages be paid to the plaintiffs to cover costs from lost revenue and to cover the cost of the suit. Shea believes the case will have a difficult time standing up in court. "The case law in the area is very deferential to states' rights," says Shea. "The federal government is given great latitude in regulating the production and transportation of alcohol, but not its consumption."
Although some local legal experts are unconvinced that the suit has a chance, Wynn is certain that the lawsuit is a step in the right direction. "Our attorney is very confident that it will succeed," he says. Regardless of whether they win or lose, the board members hope that the lawsuit will be a way to bring Utah lawmakers to the table when it comes to regulating their industry.