                                                                     Mar 19 2015, 9:42 am




ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Gregory F. Zoeller                                         Matthew Price
Attorney General of Indiana                                Karl L. Mulvaney
                                                           Margaret M. Christensen
Kristin Garn                                               Bingham Greenebaum Doll, LLP
Deputy Attorney General                                    Indianapolis, Indiana
Indianapolis, Indiana


ATTORNEYS FOR AMICUS CURIAE
BIG RED LIQUORS INC.
John B. Herriman
Michael P. Maxwell, Jr.
Clark Quinn Moses Scott & Grahn, LLP
Indianapolis, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

Indiana Alcohol and Tobacco                               March 19, 2015
Commission,                                               Court of Appeals Case No.
                                                          49A02-1408-MI-529
Appellant-Respondent,
                                                          Appeal from the Marion Superior
        v.                                                Court
                                                          The Honorable Robert R. Altice, Jr.,
                                                          Judge
Lebamoff Enterprises, Inc.,
                                                          Trial Court Cause No. 49D11-1202-
Appellee-Petitioner                                       MI-8272




Bradford, Judge.



Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015                    Page 1 of 28
                                           Case Summary
[1]   Title 7.1 of the Indiana Code sets forth statutory restrictions relating to the sale

      of alcoholic beverages within the State of Indiana. Title 7.1 differentiates

      between the available permits for the sale of liquor, beer, and wine. With

      respect to the sale of wine, Title 7.1 further differentiates between various types

      of available permits. The General Assembly has crafted different rules and

      regulations for each of the available permits. These rules and regulations allow

      the permit holder to complete certain actions and restrict the permit holder from

      completing certain actions. The General Assembly has stated that the

      classifications and differentiations made in Title 7.1 are real and are

      substantially related to the accomplishment of the purposes of this title. As

      such, one can reasonably presume that the level of care undertaken by the

      General Assembly in differentiating between the rules and regulations that

      apply to the different types of permits indicates that the General Assembly

      intended for the rules and regulations relating to each individual type of permit

      to be read alone, and not for any differences between the rules and regulations

      relating to the different types of permits to be harmonized with each other upon

      review.


[2]   In the instant matter, Appellant-Respondent the Indiana Alcohol and Tobacco

      Commission (the “ATC”) determined that Appellee-Petitioner Lebamoff

      Enterprises, Inc. (“Lebamoff”), which holds a liquor dealer’s permit, had

      violated the applicable rules and regulations relating to the home delivery of

      wine. Lebamoff sought judicial review of the ATC’s interpretation in the trial

      Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015    Page 2 of 28
      court which, upon review, held in favor of Lebamoff. The ATC appealed.

      Concluding that the ATC’s interpretation of the applicable rules and regulations

      was reasonable and did not amount to an improper exercise of the ATC’s

      rulemaking function, we reinstate and affirm the ATC’s final order.



                             Facts and Procedural History
[3]   Our decision in the parties’ prior appeal of the matter to this court provides the

      following:

              Lebamoff is an Indiana corporation that operates liquor stores in
              northern Indiana and holds a liquor dealer[’s] permit, the scope of
              which is detailed at Indiana Code section 7.1-3-10-7. Beginning in
              2008, the [ATC] issued six citations to Lebamoff alleging violations of
              its permit, stemming from Lebamoff’s use of common carriers to
              transport product to customers for sales generated through fulfillment
              companies.[1]
              Lebamoff appealed the citations. Following a hearing in November
              2011, [an Administrative Law Judge (“ALJ”)] issued findings of fact
              and conclusions of law on January 18, 2012, concluding that Lebamoff
              had violated the statute by using common carriers. The ALJ
              recommended that Lebamoff be fined one thousand dollars for each
              violation and that Lebamoff’s permit be suspended for sixty days, with
              the suspension to be deferred for one year on the condition that all
              fines were paid and Lebamoff did not accrue any further violations
              during the deferral period. The ATC approved the recommendations
              and issued its final order on February 7, 2012.




              1
                On at least one occasion, the wine at issue was signed for and taken into possession by the
      nineteen-year-old daughter of the intended recipient. Neither the intended recipient nor his nineteen-
      year-old daughter were ever asked to provide identification or to show proof that they were of legal
      age before purchasing or accepting possession of the wine in question.

      Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015                  Page 3 of 28
      Lebamoff Enterprises, Inc. v. Ind. Alcohol & Tobacco Comm’n, 987 N.E.2d 525, 526-

      27 (Ind. Ct. App. 2013).


[4]   On February 29, 2012, Lebamoff filed a petition for judicial review of the

      ATC’s final order. In its petition for judicial review, Lebamoff argued that the

      ATC’s interpretation of Indiana Code section 7.1-3-10-7 was unreasonable. On

      March 28, 2012, the ATC filed a response to Lebamoff’s petition in which the

      ATC argued that the issues raised by Lebamoff were barred by the doctrines of

      res judicata, collateral estoppel, and judicial estoppel.


[5]   On April 10, 2012, the ATC filed a request for the trial court to dismiss the case

      for failure to file the administrative record. The trial court granted the ATC’s

      motion on September 20, 2012. Lebamoff appealed, and, on April 26, 2013, we

      concluded that although Lebamoff did not meet the requirements for filing an

      agency record that are set forth in the Administrative Orders and Procedures

      Act (“AOPA”), the materials submitted with the petition were sufficient for

      judicial review of the legal question at issue. Id. at 531. We then remanded the

      matter to the trial court for further proceedings. Id.


[6]   On January 23, 2014, the ATC filed a brief in opposition to Lebamoff’s petition

      for judicial review. Lebamoff responded to the ATC’s brief in opposition on

      February 7, 2014. On July 8, 2014, the trial court issued an order in which it

      found that the ATC’s interpretation of Indiana Code 7.1-3-10-7(c) was incorrect

      and that the ATC’s final order amounted to an improper attempt to exercise the

      ATC’s rulemaking function. This appeal follows.


      Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015   Page 4 of 28
                                 Discussion and Decision
[7]   On appeal, the ATC contends that, in reversing its decision, the trial court

      erroneously determined that its interpretation of the relevant statutory language

      was unreasonable. In support, the ATC argues that the relevant statutory

      language—which it claims does not allow for wine sold by Lebamoff to be

      delivered to a customer’s residence by a common carrier—is unambiguous and

      allows for only one reasonable interpretation. The ATC also contends that the

      trial court erroneously determined that its order reflected an improper attempt

      to create an agency rule rather than an administrative adjudication.


[8]   For its part, Lebamoff contends that the trial court properly determined that the

      ATC’s interpretation of the relevant statutory language was unreasonable. In

      support, Lebamoff argues that the rules of statutory construction indicate that

      Title 7.1 should be read together in a harmonious fashion. Lebamoff further

      argues that when Title 7.1 is read together in a harmonious fashion, the only

      reasonable interpretation would allow Lebamoff to ship wine to customers via

      common carrier. In making this argument, Lebamoff points to certain portions

      of Title 7.1 which allow for the shipment of wine via common carrier if certain

      requirements are met, and argues for a broad interpretation of the meaning of

      the term “permit holder.” Lebamoff also contends that the trial court’s

      determination that the ATC’s order reflected an improper attempt to create an

      agency rule was proper because the ATC failed to follow the necessary

      procedures for completing its rulemaking function.



      Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015   Page 5 of 28
                                       I. Standard of Review
[9]            While the legislature has granted courts the power to review the action
               of state government agencies taken pursuant to the [AOPA], this
               power of judicial review is limited. See State Bd. of Registration for Prof’l
               Eng’rs v. Eberenz, 723 N.E.2d 422, 430 (Ind. 2000); Indiana Dep’t of
               Envtl. Management v. Conard, 614 N.E.2d 916, 919 (Ind. 1993); Indiana
               Dep’t of Natural Resources v. United Refuse Co., 615 N.E.2d 100, 103 (Ind.
               1993). A court may only set aside agency action that is:
               (1) arbitrary, capricious, an abuse of discretion, or otherwise not in
               accordance with law;
               (2) contrary to constitutional right, power, privilege, or immunity;
               (3) in excess of statutory jurisdiction, authority, or limitations, or short
               of statutory right;
               (4) without observance of procedure required by law; or
               (5) unsupported by substantial evidence.
               See Ind. Code § 4-21.5-5-14(d).


       LTV Steel Co. v. Griffin, 730 N.E.2d 1251, 1257 (Ind. 2000). “The party seeking

       judicial review bears the burden to demonstrate that the agency’s action is

       invalid.” Pendleton v. McCarty, 747 N.E.2d 56, 61 (Ind. Ct. App. 2001) (citing

       Ind. Code § 4-21-5-5-14(a)).


[10]   A review of an administrative agency’s decision at the trial court level “is not

       intended to be a trial de novo, but rather the court simply analyzes the record as

       a whole to determine whether the administrative findings are supported by

       substantial evidence.” Whirlpool Corp. v. Vanderburgh Cnty.-City of Evansville

       Human Relations Comm’n, 875 N.E.2d 751, 759 (Ind. Ct. App. 2007) (citing

       Amoco Oil Co. v. Comm’r of Labor, 726 N.E.2d 869, 872 (Ind. Ct. App. 2000)). A

       party may appeal a trial court’s determination of the propriety of the

       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015            Page 6 of 28
       administrative agency’s decision pursuant to the rules governing civil appeals.

       See Ind. Code § 4-21.5-5-16. “When reviewing an administrative agency’s

       decision, appellate courts stand in the same position as the trial court.”

       Pendleton, 747 N.E.2d at 61 (citing Amoco, 726 N.E.2d at 872).


[11]   An appellate court “may not substitute [its] judgment on factual matters for that

       of the agency and are bound by the agency’s findings of fact if [the findings] are

       supported by substantial evidence.” Whirlpool, 875 N.E.2d at 759 (citing Ind.

       Dep’t of Natural Res., Law Enforcement Div. v. Cobb, 832 N.E.2d 585, 590 (Ind. Ct.

       App. 2005)).

               Furthermore, courts that review administrative determinations, at both
               the trial and appellate level, review the record in the light most
               favorable to the administrative proceedings and are prohibited from
               reweighing the evidence or judging the credibility of witnesses.
               [Amoco, 726 N.E.2d at 873.] While reviewing courts must accept the
               agency’s findings of fact if supported by substantial evidence, no such
               deference need be accorded an agency’s conclusions of law, as the law
               is the province of the judiciary. Id.


       Id. However, “[a]n interpretation of a statute by an administrative agency

       charged with the duty of enforcing the statute is entitled to great weight, unless

       this interpretation would be inconsistent with the statute itself.” LTV Steel, 730

       N.E.2d at 1257; State Emps. Appeals Comm’n v. Barclay, 695 N.E.2d 957, 959-60

       (Ind. Ct. App. 1998).




       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015      Page 7 of 28
                   II. Overview of Relevant Statutory Authority
                     A. General Information Relating to Title 7.1
[12]   As is stated above, Title 7.1 of the Indiana Code sets forth statutory restrictions

       relating to the sale of alcohol within the State of Indiana. Title 7.1 applies to

       the commercial manufacturing, bottling, selling, bartering, importing,

       transporting, delivering, furnishing, or possessing of alcohol and alcoholic

       beverages. Ind. Code § 7.1-1-2-2. The following are the general purposes of

       Title 7.1:

               (1) To protect the economic welfare, health, peace, and morals of the
               people of this state.
               (2) To regulate and limit the manufacture, sale, possession, and use of
               alcohol and alcoholic beverages.
               (3) To regulate the sale, possession, and distribution of tobacco
               products.
               (4) To provide for the raising of revenue.


       Ind. Code § 7.1-1-1-1.


[13]   Title 7.1 differentiates between the available permits for the sale of liquor, beer,

       and wine. As is stated above, with respect to the sale of wine, 2 Title 7.1 further




               2
                 Wine is defined as “an alcoholic beverage obtained by the fermentation of the natural
       sugar content of fruit, fruit juice, or other agricultural products containing sugar, including
       necessary additions to correct defects due to climatic, saccharine, and seasonal conditions, and
       also the alcoholic fortification of the beverage.” Ind. Code § 7.1-1-3-49. “The term includes
       hard cider, except for alcoholic beverage tax purposes.” Id. “The term does not mean an
       alcoholic beverage that contains twenty-one percent (21%), or more, of absolute alcohol
       reckoned by volume.” Id.

       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015             Page 8 of 28
       differentiates between various types of available permits. Title 7.1 creates

       different farm winery permits, wine wholesalers’ permits, wine retailers’

       permits, wine dealers’ permits, and direct wine sellers’ permits. Each of these

       types of permits have different rules and regulations that apply to the specific

       type of permit. Indiana Code section 7.1-1-2-1 specifically provides that Title

       7.1:

               is an exercise of the police powers of the state. The classifications and
               differentiations made in this title are real and are actually and
               substantially related to the accomplishment of the purposes of this title.
               The provisions of this title shall be liberally construed so as to
               effectuate the purposes of this title.


        B. Statutory Language Relating to Permit Held by Lebamoff
[14]   The ATC may issue a liquor dealer’s permit to a person,3 including a package

       liquor store,4 who desires to sell liquor to customers for consumption off the

       licensed premises. Ind. Code §§ 7.1-3-10-1, -4.




               3
                  Indiana Code section 7.1-1-3-31 indicates that the term “person” includes: (1) a natural
       individual; (2) a firm; (3) a corporation; (4) a partnership; (5) a limited partnership; (6) a limited
       liability company; (7) an incorporated or unincorporated association; or (8) an other legal entity.


               4
                   A package liquor store is “a place or establishment that meets the requirements
       provided in [Indiana Code chapter] 7.1-3-10 [(concerning liquor permits)], and whose exclusive
       business is the retail sale of alcoholic beverages and commodities that are permissible under this
       title for use or consumption only off the licensed premises.” Ind. Code § 7.1-1-3-28. Indiana
       Code section 7.1-3-10-5 provides that a package liquor store’s exclusive business shall be the
       selling of the following commodities only:
               (1) Liquor in its original package.
       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015                  Page 9 of 28
               A liquor dealer may deliver liquor only in permissible containers to a
               customer’s residence or office in a quantity that does not exceed twelve
               (12) quarts at any one (1) time. However, a liquor dealer who is
               licensed under [Indiana Code section] 7.1-3-10-4 may deliver liquor in
               permissible containers to a customer’s residence, office, or designated
               location. This delivery may only be performed by the permit holder or an
               employee who holds an employee permit. The permit holder shall maintain
               a written record of each delivery for at least one (1) year that shows the
               customer’s name, location of delivery, and quantity sold.


       Ind. Code § 7.1-3-10-7(c) (emphasis added).


          C. Relevant Types of Permits Relating to the Sale of Wine
                                           1. Wine Dealer’s Permit

[15]   The ATC may issue a wine dealer’s permit to a person who desires to sell wine

       or flavored malt beverages for consumption off the licensed premises. Ind.

       Code § 7.1-3-15-1. However, “[t]he commission may issue a wine dealer’s




               (2) Beer in permissible containers, if the permittee has the proper permit.
               (3) Wine in its original package.
               (4) Bar supplies used in the preparation for consumption of alcoholic beverages
               and in their consumption.
               (5) Tobacco products.
               (6) Uncooled and uniced charged water, carbonated soda, ginger ale, mineral
               water, grenadine, and flavoring extracts.
               (7) Printed materials.
               (8) Lottery tickets as provided in [Indiana Code chapter] 4-30-9.
               (9) Cooled or uncooled nonalcoholic malt beverages.
               (10) Flavored malt beverage in its original package.




       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015           Page 10 of 28
       permit only to the following: (a) A person who is the holder of a beer dealer’s

       permit; or, (b) A person who is the holder of a liquor dealer’s permit.” Ind.

       Code § 7.1-3-15-2. The holder of a wine dealer’s permit “shall be entitled to sell

       wine for consumption off the licensed premises only and not by the drink.”

       Ind. Code § 7.1-3-15-3(a).


[16]   “A wine dealer shall be entitled to sell wine in permissible containers in a

       quantity of not more than three (3) standard cases, as determined under the

       rules of the commission, in a single transaction.” Ind. Code § 7.1-3-15-3(b).

       “However, a wine dealer who is licensed under [Indiana Code section] 7.1-3-

       10-4 may possess wine and sell it at retail in its original package to a customer

       only for consumption off the licensed premises.” Id. Furthermore, “a wine

       dealer who is licensed under [Indiana Code section] 7.1-3-10-4 may deliver

       wine only in permissible containers to a customer’s residence, office, or

       designated location.” Ind. Code § 7.1-3-15-3(c). “This delivery may only be

       performed by the permit holder or an employee who holds an employee permit.” Id.

       (emphasis added). “The permit holder shall maintain a written record of each

       delivery for at least one (1) year that shows the customer’s name, location of

       delivery, and quantity sold.” Id.


                                      2. Direct Wine Seller’s Permits

[17]   “A person located within Indiana or outside Indiana that wants to sell and ship

       wine directly to a consumer must be the holder of a direct wine seller’s permit

       and comply with this chapter.” Ind. Code § 7.1-3-26-5.


       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015   Page 11 of 28
        (a) The commission may issue a direct wine seller’s permit to an
        applicant who meets all of the following requirements:
                 (1) The applicant is domiciled and has its principal place
                 of business in the United States.
                 (2) The applicant is engaged in the manufacture of wine.
                 (3) The applicant holds and acts within the scope of
                 authority of an alcoholic beverage license or permit to
                 manufacture wine that is required:
                          (A) in Indiana or the state where the
                          applicant is domiciled; and
                          (B) by the Tax and Trade Bureau of the
                          United States Department of the Treasury.
                 (4) The applicant qualifies with the secretary of state to do
                 business in Indiana and consents to the personal
                 jurisdiction of the commission and the courts of Indiana.
                 (5) The applicant files a surety bond with the commission
                 in accordance with [Indiana Code chapter] 7.1-3-1, or
                 deposits cash in an escrow account with the commission,
                 in the amount required of an applicant for a vintner’s
                 permit under [Indiana Code section] 7.1-3-1-7.
                 (6) The applicant:
                          (A) has not distributed wine through a wine
                          wholesaler in Indiana within the one
                          hundred twenty (120) days immediately
                          preceding the applicant’s application for a
                          direct wine seller’s permit and does not
                          distribute wine through a wine wholesaler
                          in Indiana during the term of the direct
                          wine seller’s permit; or
                          (B) has operated as a farm winery under
                          [Indiana Code chapter] 7.1-3-12.
                 (7) The applicant completes documentation regarding the
                 applicant’s application required by the commission.
        (b) The commission may issue a direct wine seller’s permit to an
        applicant who:

Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015         Page 12 of 28
                         (1) meets the requirements under subsection (a); and
                         (2) holds a permit issued under this title that allows the
                         sale of an alcoholic beverage at retail.


       Ind. Code § 7.1-3-26-7.


[18]   A seller may sell and ship wine directly only to a consumer who meets all of the

       following requirements:

               (1) The consumer is at least twenty-one (21) years of age.
               (2) The consumer has an Indiana address.
               (3) The consumer intends to use wine purchased under this chapter for
               personal use only and not for resale or other commercial purposes.
               (4) Except as provided in subdivision (5), the consumer has provided
               to the seller in one (1) initial face-to-face transaction at the seller’s
               place of business … all the following:
                         (A) Name, telephone number, Indiana address, or
                         consumer’s Indiana business address.
                         (B) Proof of age by a state issued driver’s license or state
                         issued identification card showing the consumer to be at
                         least twenty-one (21) years of age.
                         (C) A verified statement, made under penalties for
                         perjury, that the consumer satisfies the requirements of
                         subdivisions (1) through (3).
               (5) If:
                         (A) before April 1, 2006, the consumer has engaged in a
                         transaction with a seller in which the seller sold wine to
                         the consumer and, after April 1, 2006, but before
                         December 31, 2006, the consumer provides the seller with
                         a verified statement, made under penalties for perjury,
                         that the consumer is at least twenty-one (21) years of age;
                         and
                         (B) the seller provides the name and Indiana address of
                         the consumer to the commission before January 15, 2007;

       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015            Page 13 of 28
               the seller may sell directly to the consumer in accordance with this
               chapter.


       Ind. Code § 7.1-3-26-6(a).


[19]   Accordingly, a direct wine seller’s permit allows a seller to sell and ship wine to

       a consumer by receiving and filling orders that the consumer transmits by

       electronic or other means if all of the following conditions are satisfied before

       the sale or by the times set forth as follows:

               (1) The consumer provides the direct wine seller with the following:
                        (A) The verification required by section 6(4) of this
                        chapter in an initial face-to-face transaction.
                        (B) Notwithstanding clause (A), if the consumer provided
                        the information specified in section 6(5)(A) of this chapter
                        after April 1, 2006, but before December 31, 2006, and
                        the seller provides the name and Indiana address of the
                        consumer under section 6(5)(B) of this chapter to the
                        commission before January 15, 2007, the consumer is not
                        required to comply with section 6(4) of this chapter.
               (2) The direct wine seller meets the following requirements:
                        (A) Maintains for two (2) years all records of wine sales
                        made under this chapter. If the records are requested by
                        the commission, a direct wine seller shall:
                                 (i) make the records available to the
                                 commission during the direct wine seller’s
                                 regular business hours; or
                                 (ii) at the direction of the commission,
                                 deliver copies to the commission.
                        (B) Stamps, prints, or labels on the outside of the shipping
                        container the following: “CONTAINS WINE.
                        SIGNATURE OF PERSON AGE 21 OR OLDER
                        REQUIRED FOR DELIVERY.”.


       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015        Page 14 of 28
                        (C) Causes the wine to be delivered by the holder of a
                        valid carrier’s alcoholic beverage permit under [Indiana
                        code chapter] 7.1-3-18.
                        (D) Directs the carrier to verify that the individual
                        personally receiving the wine shipment is at least twenty-
                        one (21) years of age.
                        (E) Does not ship to any consumer more than two
                        hundred sixteen (216) liters of wine in any calendar year.
                        (F) Remits to the department of state revenue monthly all
                        Indiana excise, sales, and use taxes on the shipments
                        made into Indiana by the direct wine seller during the
                        previous month.
                        (G) Ships to a consumer in Indiana only wine
                        manufactured, produced, or bottled by the applicant.


       Ind. Code § 7.1-3-26-9.


[20]   A wine shipment purchased under this chapter must be delivered to:

               (1) the consumer, who shall take personal delivery of the shipment at
               the:
                        (A) consumer’s residence;
                        (B) consumer’s business address;
                        (C) carrier’s business address; or
                        (D) address displayed on the shipping container; or
               (2) an individual who is at least twenty-one (21) years of age, who shall
               take personal delivery of the shipment at the:
                        (A) consumer’s residence;
                        (B) consumer’s business address;
                        (C) carrier’s business address; or
                        (D) address designated by the consumer and displayed on
                        the shipping container.



       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015        Page 15 of 28
       Ind. Code § 7.1-3-26-13.


                            C. Carrier’s and Employee’s Permits
                                              1. Carrier’s Permits

[21]   “The commission may issue a carrier’s alcoholic permit to a person who is a

       carrier upon a showing of the reliability and responsibility of the carrier and the

       propriety of issuing the permit.” Ind. Code § 7.1-3-18-1. Indiana Code section

       7.1-1-3-8 defines a “carrier” as

               (a) A common carrier, whether licensed under the laws of this state or
               not;
               (b) A person as a proprietor who operates a transportation facility
               when regularly or casually operating intrastate state or from another
               state into this state; or,
               (c) A person who carries alcoholic beverages for hire or as a free
               accommodation for a consignor or consignee and who has no permit
               under this title authorizing him to sell, furnish, give away,
               manufacture, or rectify alcoholic beverages.


       (Footnote omitted).


[22]   “A carrier’s alcoholic permit shall be required only for, and be applicable to, the

       movement, conveyance, importation and transportation of alcohol and

       alcoholic beverages on a public highway in this state.” Ind. Code § 7.1-3-18-2.

       “A carrier’s alcoholic permit shall not be required when the conveyance,

       movement, importation, or transportation is conducted by means of cars or

       trains operated by a railroad of any type over fixed rails.” Id. “A carrier shall

       be required to apply for and obtain a carrier’s alcoholic permit before he may


       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015        Page 16 of 28
       haul, convey, transport, or import alcoholic beverages on a public highway of

       this state or crossing a boundary of it.” Ind. Code § 7.1-3-18-3.


                                            2. Employee’s Permits

[23]   “The commission may issue an employee’s permit to a person who desires to

       act as: (1) a clerk in a package liquor store; (2) an employee who serves wine at

       a farm winery; or (3) a bartender, waiter, waitress, or manager in a retail

       establishment, excepting dining car and boat employees.” Ind. Code § 7.1-3-18-

       9(a). “A permit authorized by this section is conditioned upon the compliance

       by the holder with reasonable rules relating to the permit which the commission

       may prescribe from time to time.” Ind. Code § 7.1-3-18-9(b).

               A person who, for a package liquor store or retail establishment, is:
                        (1) the sole proprietor;
                        (2) a partner, a general partner, or a limited partner in a
                        partnership or limited partnership that owns the business
                        establishment;
                        (3) a member of a limited liability company that owns the
                        business establishment; or
                        (4) a stockholder in a corporation that owns the business
                        establishment;
               is not required to obtain an employee’s permit in order to perform any
               of the acts listed in subsection (a).


       Ind. Code § 7.1-3-18-9(d).


              D. Provisions Relating to the Transportation of Wine
[24]   Indiana Code section 7.1-3-1-17 provides that the “traffic and transportation of

       alcohol and alcoholic beverages for sale within this state shall be subject to the
       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015        Page 17 of 28
       rules and regulations of the commission.” “Alcohol and alcoholic beverages

       shall be transported and delivered only in containers that are lawful under this

       title and permissible under the rules and regulations of the commission.” Id.


[25]   It is unlawful for an officer, agent, or employee of a common carrier to

       recklessly deliver: “(1) an alcoholic beverage to a person other than the person

       to whom it is consigned; (2) it without a written order by the consignee; or (3) it

       to a person when the alcoholic beverage has been consigned to a fictitious

       person or a person under a fictitious name.” Ind. Code § 7.1-5-11-4(a).

       Further, it is unlawful for a person to present or tender for transportation to a

       carrier or a person acting or assuming to act for a carrier an alcoholic beverage:

               (1) for delivery to a person other than the consignee designated by the
               person offering the alcoholic beverage for shipment; or
               (2) for the purpose of effecting a delivery of the alcoholic beverage to a
               person not permitted to receive it as consignee:
                        (A) under the provisions of this title;
                        (B) under the provisions of a rule of the commission; or
                        (C) because the person is not the bona fide consignee of
                        the shipment.


       Ind. Code § 7.1-5-11-8(a).


                                                III. Analysis
                               A. The ATC’s Interpretation of
                              Indiana Code Section 7.1-3-10-7(c)
[26]   The ATC contends that the trial court erred in determining that its

       interpretation of Indiana Code section 7.1-3-10-7(c) was unreasonable. In
       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015        Page 18 of 28
       raising this contention, the ATC argues that the relevant statutory language—

       which it claims does not allow for wine sold by Lebamoff to be delivered to a

       customer’s residence by a common carrier—is unambiguous and allows for

       only one reasonable interpretation. For its part, Lebamoff contends that the

       trial court properly determined that the ATC’s interpretation of the relevant

       statutory language was unreasonable. In raising this contention, Lebamoff

       argues for a broad interpretation of the meaning of the term “permit holder.”

       Lebamoff also argues that the rules of statutory construction indicate that when

       Title 7.1 is read together in a harmonious fashion, the only reasonable

       interpretation would allow Lebamoff to ship wine to a customer’s residence via

       common carrier.


[27]   Again, review of Title 7.1 of the Indiana Code clearly demonstrates that the

       General Assembly has taken great care to differentiate the types of permits

       available for individuals, partnerships, or corporations that produce and sell

       alcoholic beverages in Indiana. Each specific type of permit has its own rules

       and regulations. The fact that some rules and regulations are not commonly

       applied to all types of permits is evidence that the General Assembly intended

       to craft specific rules and regulations for each type of permit. Moreover, the

       language of Title 7.1 makes it clear that the General Assembly knew how to,

       and in fact did, specifically provide for delivery of wine via common carrier in

       situations where it intended to allow such delivery. See e.g., Ind. Code § 7.1-3-

       26-9 (providing that a direct wine seller may ship wine to customers via

       common carrier if certain requirements are met).


       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015   Page 19 of 28
[28]   With respect to the delivery of wine by the holder of a liquor dealer’s permit,

       Indiana Code section 7.1-3-10-7(c) specifically provides that a liquor dealer

       licensed under Indiana Code section 7.1-3-10-4 (the statute dealing with

       package liquor stores) may deliver liquor in permissible containers to a

       customer’s residence, office, or designated location. However, this delivery

       “may only be performed by the permit holder or an employee who holds an employee

       permit.” Id. (emphasis added). Similarly, Indiana Code section 7.1-3-15-3(c)

       provides that a wine dealer who is licensed under Indiana Code section 7.1-3-

       10-4 may deliver wine in permissible containers to a customer’s residence,

       office, or designated location. Like Indiana Code section 7.1-3-10-7(c), Indiana

       Code section 7.1-3-15-3(c) further provides that “[t]his delivery may only be

       performed by the permit holder or an employee who holds an employee permit.”

       (emphasis added).


[29]   In Lebamoff Enterprises, Inc. et al. v. Huskey, 666 F.3d 455, 457 (7th Cir. 2012), the

       United States Court of Appeals for the Seventh Circuit interpreted Indiana

       Code section 7.1-3-15-3(c) to “forbid liquor stores to use motor carriers [such as

       UPS or FedEx] to deliver wine (also beer and liquor, Ind. Code §§ 7.1-3-5-3(d),

       7.1-3-10-7(c) … )[.]” In discussing Indiana Code section 7.1-3-15-3(c), the

       Seventh Circuit stated the following:

               Indiana requires drivers employed by liquor retailers to be trained in
               and tested on Indiana’s alcohol laws and also trained in the
               recognition of phony IDs. See Ind. Code §§ 7.1-3-1.5-1, -6, -13, 7.1-3-
               18-9. It is because the state doesn’t require similar training of motor
               carriers’ drivers that those carriers aren’t permitted to deliver alcoholic
               beverages to a consumer unless, prior to shipping, the consumer’s age

       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015         Page 20 of 28
        is personally verified by an employee of the winery from which the
        consumer is buying. Ind. Code § 7.1-3-26-9(1)(A); Baude v. Heath, [538
        F.3d 608, 612 (7th Cir. 2008)]. Motor carriers are required to obtain
        “carriers’ alcoholic permits” in order to be allowed to transport alcohol
        on public highways in Indiana, but their drivers are not required to
        obtain permits and there is no training requirement either. See Ind.
        Code §§ 7.1-3-18-1 et seq. Allowing motor carriers to deliver wine
        could therefore undermine the state’s efforts to prevent underage
        drinking, the state having decided not unreasonably that requiring
        face-to-face age verification by someone who has passed a state-
        certified training course should reduce the prevalence of that drinking.


        The fact that Indiana allows direct deliveries by carriers to wine
        consumers, where the seller has previously verified the consumer’s age
        in person, but not other such deliveries, might seem to undermine the
        state’s rationale, since there is no training requirement for employees
        of wineries. But the statute imposes other requirements on the
        wineries designed to assure accurate age verification, see Ind. Code §
        7.1-3-26-9, and it would hardly be feasible for Indiana (and would
        indeed be severely discriminatory) to require that employees of out-of-
        state wineries undergo training in Indiana before being permitted to
        ship to an Indiana consumer.


        We might have a different case if a motor carrier were asking the state
        to allow it to opt into the same training requirement imposed on
        drivers employed by retailers of wine. That would both weaken the
        attempt to justify the challenged law on the basis of the Twenty-First
        Amendment (which so far as relates to this case merely allows a state
        to take reasonable measures for preventing underage drinking), and
        discriminate without apparent justification against motor carriers. But
        as far as appears, no motor carrier has sought such equal treatment
        with the retailers or been denied it and sued. No motor carrier is a
        party to this case.




Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015      Page 21 of 28
       Lebamoff, 666 F.3d at 458-59. We find the Seventh Circuit’s analysis to be

       persuasive and applicable to the instant matter.5


[30]   In addition, we are unpersuaded by Lebamoff’s argument that the General

       Assembly intended for the language of Indiana Code section 7.1-3-10-7(c) to be

       read in a broad enough fashion to include delivery by a common carrier, even if

       we assume that the common carrier is acting as an agent of the permit holder.

       The parties discuss the meaning of the term “permit holder” at length, with

       Lebamoff arguing that the term is equivalent to the term “permittee” and the

       ATC arguing for a more narrow construction. Indiana Code chapter 7.1-1-3

       provides definitions that shall be applied throughout Title 7.1 unless the context

       clearly requires otherwise. Indiana Code section 7.1-1-3-29 defines the term

       “permit” as “a written authorization issued by the [ATC] entitling its holder to

       manufacture, rectify, distribute, transport, sell, or otherwise deal in alcoholic

       beverages, all as provided in this title.” Indiana Code section 7.1-1-3-30 defines

       the term “permittee” as:

               (a) A person who is the holder of a valid permit under this title; and
               (b) Also includes an agent, servant, or employee of, or other person
               acting on behalf of, a permittee, whenever a permittee is prohibited




               5
                  While we are not bound by the Seventh Circuit’s interpretation of the statute at issue,
       we acknowledge that such interpretation may be considered to be persuasive and careful
       consideration should be given to such decisions. See Graves Trucking, Inc. v. Publ. Serv. Comm’n
       of Ind., 490 N.E.2d 365, 370 (Ind. Ct. App. 1986).



       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015             Page 22 of 28
               from doing a certain act under this title.


       Upon reading the above-quoted language, one can reasonably infer that the

       General Assembly intended for the term “permittee” to be read in a broader

       fashion than the term “permit holder” because the definition for the term

       “permittee” explicitly includes not only a permit holder, but also an agent,

       servant, employee, or other person acting on behalf of the permit holder.


[31]   The express language of Indiana Code section 7.1-3-10-7(c) indicates that the

       General Assembly intended that a home delivery of wine under this section was

       limited to delivery by the permit holder, i.e., the owner, partner, or manager of

       the package liquor store, or an employee of the permit holder, so long as the

       employee holds an employee permit. This language does not appear to allow

       for delivery of the wine by any other individual who might be acting as an agent

       for the permit holder. If the General Assembly had intended for Indiana Code

       section 7.1-3-10-7(c) to allow for home delivery by a common carrier, it could

       have crafted the language of this section to specifically allow for such delivery

       as it did in Indiana Code section 7.1-3-26-9. See Ind. Code § 7.1-3-26-9

       (allowing for home delivery of wine by the holder of a direct wine seller’s

       permit via common carrier). We therefore conclude that the ATC’s

       interpretation of Indiana Code section 7.1-3-10-7(c) was reasonable.6




               6
                 Lebamoff also argues that its use of a common carrier to deliver wine was permitted under
       Indiana Code section 7.1-3-10-7(c) because, under the Uniform Commercial Code (“UCC”), sales contracts
       are presumed to be “shipment contracts” meaning that delivery is complete when the seller places the
       product with the shipper. However, we conclude that the general UCC provisions relating to “shipment

       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015                   Page 23 of 28
                                  B. Agency Adjudication or
                                Improper Attempt at Rulemaking
[32]   It is undisputed that “[a]n administrative agency must follow the procedures

       outlined for it and the law which establishes the agency; an administrative

       agency can have no more or less power than the statute creating it grants.” Ind.

       Air Pollution Control Bd. v. City of Richmond, 457 N.E.2d 204, 206 (Ind. 1983)

       (citing Gordon v. Review Bd. of Ind. Emp’t Sec., 426 N.E.2d 1364 (Ind. Ct. App.

       1981)). On appeal, the ATC also contends that the trial court erroneously

       determined that its order reflected an improper attempt to create an agency rule

       rather than an administrative adjudication. Conversely, Lebamoff contends

       that the trial court’s determination that the ATC’s order reflected an improper

       attempt to create an agency rule was proper because the ATC failed to follow

       the necessary procedures for completing its rulemaking function.


[33]   Indiana Code section 4-22-2-3(b) defines a “rule” as “the whole or any part of

       an agency statement of general applicability that: (1) has or is designed to have

       the effect of law; and (2) implements, interprets, or prescribes: (A) law or policy;

       or (B) the organization, procedure, or practice requirements of an agency.”

       Indiana Code section 4-22-2-3(c) defines a “rulemaking action” as “the process

       of formulating or adopting a rule.” “The term does not include an agency

       action.” Ind. Code § 4-22-2-3(c). An agency must follow certain procedures




       contracts” do not apply in the instant matter because application of said provisions would not be harmonious
       to the general purposes of Title 7.1 or the specific language adopted by the General Assembly relating to the
       sale, shipment, and delivery of alcohol in Indiana.

       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015                        Page 24 of 28
when engaging in a rulemaking action.7 Villegas v. Silverman, 832 N.E.2d 598,

608 (Ind. Ct. App. 2005). On the other hand, an administrative adjudication is

“the administrative investigation, hearing, and determination of any agency of

issues or cases applicable to particular parties.” Blinzinger v. Americana

Healthcare Corp., 466 N.E.2d 1371, 1374 (Ind. Ct. App. 1984) (internal

quotation omitted).

        The rulemaking function is distinguished from the adjudicatory
        function in that the former embraces an element of generality,
        operating upon a class of individuals or situations whereas an
        adjudication operates upon a particular individual or circumstance. In
        addition, the exercise of administrative rulemaking power looks to the
        future, whereas an adjudication operates retrospectively upon events
        which occurred in the past. Beacon National Life Insurance Co. v. Texas
        State Board of Insurance (1979) Tex. Civ. App., 582 S.W.2d 616;
        Strumsky v. San Diego Employees Retirement Association (1974) 11 Cal. 3d
        28, 112 Cal. Rptr. 805, 520 P.2d 29.


Id. at 1375.




        7
            These procedures include, among others:

        (1) publishing notice of intent to adopt rule (Ind. Code § 4-22-2-23); (2) publishing
        notice of hearing (Ind. Code § 4-22-2-24); (3) conducting public hearing and
        allowing comments (Ind. Code § 4-22-2-26); (4) formally adopting the rule (Ind.
        Code § 4-22-2-29); (5) obtaining approval from the Attorney General (Ind. Code §§
        4-22-2-31, -32); (6) obtaining approval from the Governor (Ind. Code §§ 4-22-2-
        33, -34); and (7) submitting the rule to the Secretary of State for filing (Ind. Code
        § 4-22-2-35).

Villegas, 832 N.E.2d at 608 n.13.


Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015                Page 25 of 28
[34]   Upon review, we conclude that the ATC’s final order aims to retrospectively

       determine whether six specific acts that were alleged to have been committed by

       Lebamoff amounted to violations of the applicable statutory authority. The

       record demonstrates that the ATC conducted an investigation, collected

       evidence, and made related findings based off of the information learned during

       the investigation. In order to make these findings, the ATC was forced to

       interpret the meaning of Indiana Code section 7.1-3-10-7(c), which it did.


[35]   Lebamoff relies on this court’s opinion in Miller Brewing Company v. Bartholemew

       County Beverage Company, Inc., 674 N.E.2d 193 (Ind. Ct. App. 1996), trans.

       denied, in support of its claim that the trial court properly determined that the

       ATC’s final order reflected an improper attempt to create an agency rule

       without following the applicable rule making procedures. In Miller Brewing

       Company, we were faced with the broad question of whether a change in the

       price promotion and volume discount allowance reimbursement programs—

       which provided significantly higher rates of reimbursement for sales completed

       within a distributor’s area of primary responsibility (“APR”)—violated Indiana

       law. Specifically, the parties argued as to whether the changes constituted an

       unlawful restriction of the sale of beer in violation of 905 IAC 1-28-1 (“Rule

       28”). 674 N.E.2d at 197-99. In making their arguments, the parties discussed a

       prior decision of the IABC, the predecessor to the ATC, which prescribed a

       twelve percent limit on the inter- and intra-APR price discount differentials. Id.

       at 202. On appeal, we concluded as follows:




       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015   Page 26 of 28
               While the IABC labeled its decision in the [prior IABC decision] an
               “order”, the decision exhibited all of the significant characteristics of a
               “rule”. The IABC’s decision interprets Rule 28 to prescribe a twelve
               percent limit on inter- and intra-APR price discount differentials, and
               is a statement of general and prospective applicability since, as Miller’s
               claim of applicability to this case demonstrates, it potentially operates
               on all individuals coming within the ambit of Rule 28. As an
               administrative rule in all but name, its validity depended upon
               conformance with required rulemaking procedures. The IABC’s
               attempt in [the prior decision] to impose by interpretation a general
               and prospective rule flies in the face of the requirement that
               administrative rules be promulgated in conformance with the statutory
               rulemaking procedures set forth at [Indiana Code section] 4-22-2-3[.]
       Id.


[36]   Unlike the prior decision of the IABC that was discussed in Miller Brewing

       Company, the ATC’s interpretation of Indiana Code section 7.1-3-10-7(c) did

       not operate as a new broad rule going forward, but rather was an interpretation

       of what we believe to be unambiguous existing statutory language. As we

       stated above, the interpretation was necessary to retrospectively determine

       whether the specific alleged violations that were at issue were in fact violations

       under the law. For this reason, we find our prior decision in Miller Brewing

       Company to be distinguishable from the instant matter.


[37]   Further, although Lebamoff argues that the ATC has changed its enforcement

       of Indiana Code section 7.1-3-10-7(c) and is attempting to promulgate a rule

       that implements a new interpretation of Indiana Code section 7.1-3-10-7(c), the

       record is devoid of any evidence that the ATC has actually changed its

       enforcement of this section. Lebamoff attempts to support this argument by its

       claim that it has been shipping wine to customer’s residence via common

       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015         Page 27 of 28
       carrier for approximately thirty years. In issuing its final order, however, the

       ATC indicated that while Lebamoff may have been using this method to ship

       wine to customer’s residences, the ATC was not aware of Lebamoff’s practice

       in this regard until it became aware of the six violations of Indiana Code section

       7.1-3-10-7(c) that are at issue in the instant appeal. Because Lebamoff has

       failed to provide evidence that the interpretation of Indiana Code section 7.1-3-

       10-7(c) represents a change in policy, we conclude that the ATC’s act of

       interpreting this statute did not amount to an improper attempt to promulgate

       an agency rule.



                                                Conclusion
[38]   Applying only the provisions relating to a liquor dealer’s permit, we conclude

       that the ATC’s interpretation of the relevant statutory authority was reasonable.

       We further conclude that the ATC’s order did not reflect an improper attempt

       to create an agency rule, but rather was a proper exercise of the ATC’s

       adjudicatory function. As such, we reinstate and affirm the ATC’s final order.


[39]   The judgment of the trial court is reversed and the matter remanded to the trial

       court with instructions.

       Najam, J., and Mathias, J., concur.




       Court of Appeals of Indiana | Opinion 49A02-1408-MI-529 | March 19, 2015   Page 28 of 28
