On Tuesday, August 23, 2016, the Wisconsin Institute for Law & Liberty (WILL) filed a lawsuit in Vilas County Circuit Court on behalf of plaintiffs Krist Oil and Robert Lotto challenging the constitutionality and legality of s. 100.30 of the Wisconsin statutes, Wisconsin’s Minimum Markup Law. Krist Oil is an independent, family-owned Michigan corporation having its principal place of business in Iron River, Michigan. Mr. Lotto is a Wisconsin citizen who regularly purchases gasoline, including gasoline from Krist Oil.
The lawsuit alleges the state’s Minimum Markup Law
(1) violates the Wisconsin Constitution’s Due Process Clause, which states “[a]ll people are born equally free and independent, and have certain inherent rights; among these are life, liberty and the pursuit of happiness,” because the law “arbitrarily and irrationally prevents Plaintiff Krist Oil from charging appropriate and non-predatory prices in connection with its business and from freely operating an otherwise lawful business in a manner that is in its own best interest and the best interest of its customers” and that “Wisconsin has no compelling, substantial, or legitimate government interest in regulating minimum prices, even prices below some measure of costs, except where such prices could result in an actual and persistent adverse effect on competition.”
(2) violates the Wisconsin Constitution’s guarantee of equal protection of the law because the law “creates irrational and arbitrary classifications. Businesses that sell gasoline must mark that product up 9.18%. Businesses that sell alcohol or tobacco must mark those products up 6%. Businesses that sell any other product only have to sell their products above “cost.” There is no rational reason for forcing retailers to sell certain products at a specified percentage above “cost” when other products do not have the same requirements. There is no reasonable basis for those classifications and they serve no legitimate government purpose.”
Matt Hauser, on behalf of the Wisconsin Petroleum Marketers & Convenience Store Association (WPMCA), expressed confidence the law will be upheld and said the law “ensures that Wisconsin’s independent petroleum retailers can continue to provide their customers with a competitively priced product.”
A spokesman for Wisconsin Attorney General Brad Schimel said the Department of Justice plans to defend the state in the lawsuit.
Under s. 100.30 of the Wisconsin statutes, sales of merchandise below cost are generally prohibited. In addition, alcohol or tobacco products may not be sold less than cost, with the definition of cost including, as paraphrased by the Department of Agriculture, Trade and Consumer protection, “a presumptive 3% markup by wholesalers and presumptive 6% markup by retailers.” Sales of motor vehicles fuels, again as paraphrased by the Department of Agriculture, Trade and Consumer protection, “the definition of ‘cost’ relies on the ‘average posted terminal price’ and includes a 9.18% markup over this amount.”
WILL Video Overview of Lawsuit