(CN) – A convenience store claims in a putative class action lawsuit filed Friday that Iowa’s state-owned alcoholic beverages distributor is illegally raising liquor prices charged to retailers.
Quick Shop Foods in Ottumwa, Iowa, claims in the complaint filed in Polk County District Court that the Alcoholic Beverages Division of the Iowa Department of Commerce – the state’s exclusive wholesaler and distributor of liquor to retailers – illegally overcharged the convenience store and other similar retailers that sell alcohol for off-premises consumption in unopened containers.
The convenience store notes in its suit that the state legislature sought to avoid abuse of the Alcoholic Beverages Division’s monopoly by setting a cap in state law on how much the division can mark up liquor prices.
The law states that liquor sold by the division may be sold at a markup of up to 50% of the wholesale price paid by the division to liquor makers. The law allows the division to increase the markup on certain kinds of liquor more but the overall return on all sales may not exceed a 50% markup of the wholesale price.
“However, the [Alcoholic Beverages Division] has illegally charged plaintiffs and other similarly situated retailers, proprietors, and all Class E liquor license holders in excess of that statutory cap on the price of alcoholic liquor,” the store states in its complaint.
A similar allegation was lodged against the Alcoholic Beverages Division in a civil suit filed Dec. 5 by Todd P. Halbur, a former controller and accountant for the division, who alleged he was wrongfully terminated after he reported that the division had excessively and illegally marked up liquor prices. He said in the suit he refused to sign off on payment to a website developer without first going through a competitive bidding process as required by Iowa law.
The Quick Shop Foods lawsuit does not state how much the division is overcharging for liquor, only that it exceeded the cap set in state law “over the course of many years.”
The complaint was filed by Four M Inc. and Steven Mark Ebelsheiser, an owner and officer of that corporation, doing business as Quick Shop Foods. The plaintiffs are represented by Stuart Higgins and Justin Swaim of West Des Moines, Iowa.
In response to a request for comment Monday night, Swaim said: “We have nothing to add to the statements in the petition. Our witness will do his talking in court.”
A spokesman for the Alcoholic Beverages Division said Monday division officials “are consulting with legal counsel and have no further comment at this time.”
The plaintiffs seek class action status and claim to be representing “several hundreds of class members,” the exact number and identities of whom will be revealed during the discovery phase of the litigation.
Plaintiffs are asking the court to order the division to reimburse class members for the excessive markup.