1
1 STATE OF INDIANA
BEFORE THE
2 ALCOHOL AND TOBACCO COMMISSION
3
IN THE MATTER OF: )
4 )
SOUTHERN WINE & SPIRITS OF )
5 INDIANA, INC. ) PERMIT NO.
121 HAUSFELDT LANE ) w 22-25148 & w 22-25149
6 NEW ALBANY, IN 47150-2264 )
)
7 PERMIT APPLICANT )
8
* * * * *
9
TRANSCRIPT FROM ALCOHOL AND
10 TOBACCO COMMISSION HEARING
NOVEMBER 3, 2009, 10:00 a.m.
11 INDIANAPOLIS, INDIANA
12 * * * * *
13
Council Members Present:
14
P. Thomas Snow, Chairman
15 Frank Guthrie
Dale Sturtz
16 David Johnson
17
Present for Southern Present for National Wine &
18 Wine & Spirits of Spirits:
Indiana, Inc.:
19
Byron E. Leet, Esq. Steven M. Badger, Esq.
20 WYATT, TARRANT & COMBS BOSE McKINNEY & EVANS
500 W. Jefferson St. 111 Monument Cir, Ste. 2700
21 Louisville, KY 40202 Indianapolis, IN 46204
22
23 TAMARA S. DUVALL, CCR, RPR
DUVALL REPORTING, INC.
24 2035 WEST BOBWHITE DRIVE
SCOTTSBURG, IN 47170
25 (812) 754-1554
2
1 MR. SNOW: Regarding W 22-25148 and
2 W 22-25149, Southern Wine Spirits of Indiana. This
3 matter is set today, public forum, pursuant to Indiana
4 Code 7-1-3-23-33 I believe, that is correct. We did
5 send -- the Commission did send out pursuant to the
6 statutory framework on September 23, 2009, a notice of
7 proposed action. Today is the day according to the
8 statutory framework wherein Southern would have the
9 opportunity to make its record regarding our notice of
10 proposed action.
11 For record purposes I do note the receipt and
12 review of Southern's summary of evidence in support of
13 Southern Wines and Liquor's wholesaler permit, which
14 consists of 18 pages of memorandum and then a huge
15 Exhibit A, which I have carefully reviewed, and
16 re-reviewed, and re-re-reviewed. Also that document
17 has been sent -- I think I was the only commissioner
18 here Friday. I know that our executive secretary
19 provided copies to our commissioners, who I trust have
20 had an opportunity to review that same document.
21 Also for record purposes I do note that
22 yesterday, November 2, 2009, National Wine and Spirits
23 filed a written statement regarding today's hearing,
24 November 3, 2009, public hearing, which I did review
25 yesterday evening and took another look at yet again
3
1 this morning before actually coming to work. I know
2 my commissioners -- I know my commissioners have
3 received a copy of this, because you good people were
4 in and out of the office I know yesterday, and I think
5 Mr. Dunsmore -- Ed, did you give each commissioner a
6 copy of National's?
7 MR. DUNSMORE: I did.
8 MR. SNOW: Very well, so we know that's been
9 distributed. So pursuant to the statutory scheme it's
10 Southern's opportunity to present evidence. You may
11 rest assured, Southern, that we've looked at your
12 written submission. That should not foreclose you in
13 any way from going forward, presenting what you want
14 us to know either by way of summary of your written
15 submission, if you have other matters to present, I
16 want you -- the same rule applies today that did when
17 we had our last hearing, I want everybody to be as
18 comfortable as humanly possible.
19 We want to make a reasoned and proper ruling
20 and with that we need all the information we can get.
21 There will be no final vote on this today. After
22 Southern is finished with their presentation I will
23 allow some public comment, and I'll be firm but fair
24 on the length of that. Because it is no secret that
25 this matter has received the closest possible scrutiny
4
1 I can imagine. I've only been here seven months, but
2 if a commission has ever looked at any case more
3 thoroughly I would be shocked. And that's the way I
4 want to do things. Though I will have public comment,
5 but I will hold it to something within reason, because
6 this is, after all, the statutory framework,
7 Southern's opportunity to come in and talk to us about
8 our proposed action.
9 There will be a final vote on this. I think
10 final action by my view should be done in a public
11 forum. And I think we're working, Mr. Dunsmore, on
12 setting a special meeting.
13 MR. DUNSMORE: Tentatively set for 2 p.m.,
14 Thursday, November 5th.
15 MR. SNOW: Say again
16 MR. DUNSMORE: 2 p.m. this Thursday, November
17 5th.
18 MR. SNOW: That will be a hearing, a public
19 hearing, and it will basically -- there will be no
20 public comment, it will be our vote and maybe some
21 discussion as to how we're getting what we're getting.
22 So thank you for doing that so quickly, Ed, that's
23 amazing, very good.
24 That having been said, Southern may go
25 forward. When you come up be sure to identify
5
1 yourself for record purposes and I'll give you the
2 time you need.
3 MR. LEET: Good morning, sir.
4 MR. SNOW: Good morning.
5 MR. LEET: My name is Byron Leet, I'm with
6 the law firm of Wyatt, Tarrant and Combs. And along
7 with my partners, Rick Northern and Rebecca Bennett
8 Howard, we represent Southern Wine and Spirits,
9 Southern Wine and Spirits of Indiana.
10 I want to begin initially by thanking the
11 Commission for the opportunity to be heard here today.
12 We certainly appreciate, Mr. Chairman, that this
13 matter has received a tremendous amount of attention,
14 and that is to say a tremendous amount of your time.
15 And I can assure the Commission I have no intention of
16 reading to you that substantial submission that's in
17 front of you. I know that all of the Commission
18 members have read it and have taken this entire matter
19 seriously. I only want to sort of hit the high spots
20 if you will.
21 But before I do that I would like to make a
22 couple of introductions. We have with us today Mr.
23 Steven Becker, who is Executive Vice President of
24 Southern Wine and Spirits of Indiana, and also Mr. Jim
25 Webster, who is an attorney in Illinois who has
6
1 handled regulatory matters.
2 As the chairman indicated we're here today
3 because on September 23rd the Commission proposed in
4 writing to deny the wine and liquor wholesale permits
5 that Southern has applied for, permits that Southern
6 applied for in July of 2008. The submission that we
7 received suggested, if I can break them down into
8 categories, that there are three primary concerns that
9 the Commission had.
10 First, the Commission had concerns with the
11 proposed joint venture that Southern was proposing to
12 enter into with Glazer's. Second, generally speaking
13 the Commission expressed concerns with issues that
14 have arisen in other states in which Southern does
15 business. And third, the Commission expressed some
16 concern with Southern's failure to disclose
17 prohibitive interests to this Commission in connection
18 with these permit applications.
19 Taking them in that order first, the Glazer's
20 joint venture. It is a fair statement that that issue
21 has received a lot of attention over the course of the
22 last months and it has been subject to much discussion
23 by Southern's competitors, who have come before the
24 Commission with lengthy submissions trumpeting the
25 great horrors that will ensue if Southern and Glazer's
7
1 enter into this joint venture.
2 Well, this is an easy issue for this
3 Commission, because there is no joint venture between
4 Southern and Glazer's. Those talks have been called
5 off and there is no intention whatsoever to pursue
6 this joint venture with Glazer's. Mr. Becker can
7 discuss that issue further, but that's all I really
8 can say about it is that it is off the table, those
9 talks have ended and there is no intention whatsoever
10 of pursuing that.
11 Which turns us then to the second issue. I
12 categorized it, described it as issues that have
13 arisen in other states. I think that's a fair
14 statement of what the Commission expressed concern
15 with and they really fall into two categories. The
16 first relates to trade practice investigations in
17 Illinois and New York, and then the second relates to
18 some litigation that's been filed involving Southern.
19 First let's talk about the trade practice
20 investigations. It's very important to note as it
21 relates to these trade practice charges, that these
22 were not investigations of Southern Wine and Spirits
23 as such. These were industrywide investigations that
24 in some instances went back decades, many, many years
25 before Southern was even doing business in the
8
1 relevant states of Illinois and New York.
2 In both instances, both in Illinois and New
3 York, Southern had actually been doing business in
4 that state for a relatively short period of time when
5 the investigation came to light. But in both
6 instances the investigation looked at activity that
7 had been going on a long time, activity that was
8 certainly not appropriate and that Southern, when it
9 learned about it, put an end to it and fully
10 cooperated with both of those investigations.
11 In connection with both of those matters,
12 there was never a judicial or quasi judicial finding
13 of illegal trade practices on behalf of Southern or
14 anyone else for that matter. But Southern did agree
15 because it had acquired businesses, come into those
16 jurisdictions, taken on businesses that had previously
17 been involved and had continued to engage in some
18 practices, Southern agreed to make -- to make a
19 settlement and compromise in those two instances.
20 That is absolutely a fair statement.
21 But I think what's most important about those
22 trade practice issues is that they were industrywide
23 investigations that long preceded any involvement by
24 Southern in the respective jurisdictions and that
25 Southern resolved them, cooperated and moved on. I
9
1 would also point out, because I think it's relevant,
2 that those issues in those two states of Illinois and
3 New York have not served as a basis for any of the
4 other 27 states in which Southern does business to
5 come back and take action against Southern, because
6 Southern was involved in troubles in another state.
7 And I realize that Indiana is not one of
8 those other 27 states, I recognize that, but I think
9 it is worth mentioning that in those other states no
10 commission that had the same kind of jurisdiction that
11 this Commission would enjoy over Southern if Southern
12 is fortunate enough to receive permits, took action
13 against Southern because of what was alleged and what
14 played out in Illinois and New York.
15 The other part of the -- this second issue,
16 the issues in other states, relates to litigation.
17 And it's been identified in the submission that there
18 were a total of three lawsuits is what we're talking
19 about, the Eber Brothers case in New York, the Charmer
20 case in New York, and then a case that National was
21 itself involved in with Southern in the State of
22 Illinois.
23 As the Commission knows, Southern is the
24 largest liquor distributor in the United States. We
25 are going to submit today a map that includes
10
1 Southern's footprint in the country. And I will show
2 the Commission a somewhat larger version of it here.
3 This is a -- this is a map that shows Southern's
4 footprint in the United States, the 29 states in which
5 Southern does business.
6 It is inconceivable, virtually, that any
7 company that is the largest in anything and that does
8 business in some 60 percent of the states in the union
9 would not get involved in some litigation from time to
10 time. I guess I would submit to the Commission that
11 the Commission members may have in their own minds the
12 idea of who they think some of the good corporate
13 citizens are in this country in whatever industry,
14 whoever you think it is, whether it's General
15 Electric, General Motors, Wal-Mart, whoever, I would
16 respectfully submit that if you pick whichever company
17 you think is a good corporate citizen you will find,
18 if you do a search, that that company has been
19 involved in a lot of litigation.
20 This is no secret to the lawyers in the room.
21 Litigation is what happens in the business world and
22 certainly when you are the largest in any industry
23 you're going to attract some attention in that regard.
24 So I don't say this to minimize the filing of the