FEDERAL JUDGE : STATE MARKUP LAW "ON AUTOPILOT", DISMISSES CASE, FAULTS STATE'S INACTION

HON. WILLIAM E. CALLAHAN, JR. -- THE MOTORIST'S FRIEND
ENEMY OF THE TRUSTS
GUARDIAN OF ECONOMIC FREEDOM

State Minimum Markup Law Fails in Federal Court




Special to the Readers of Milwaukeeworld

By Michael Horne

Magistrate Judge William E. Callahan, Jr. (pictured above) of the United States District Court for the Eastern District of Wisconsin ruled on Friday, October 12th, 2007 that the State of Wisconsin's "minimum markup law" violates the Commerce Clause of the U. S. Constitution, at least as it applies to the sale of motor fuel. The "Unfair Sales Law" [Wis. Stats. 100.30], enacted in 1939 and amended only once, in 1998, calls for a 9.18% minimum markup of fuel costs based on a calculation of the average posted terminal price, "a proxy for wholesale costs based on an industry index."
The court noted that although inflation since 1998 is up 27%, motor fuel costs have risen over 200%.
The court found that the state did not actively supervise calculations of minimum markup, allowing the process to proceed on "autopilot," based on the average terminal price, despite the considerable increase in the wholesale price of gasoline over the years. As a result, the judge ruled the law unenforceable, and granted a summary judgment in favor of the defendant in case [US 07-C-0144] filed by Kenosha-based Lotus Business Group against Flying J., Inc., a Utah firm that sells gasoline at retail in Wisconsin. Lotus operates the Lotus Travel Center in De Forest Wisconsin. It accused Flying J of selling its products below minimum markup at the Flying J Travel Plaza in Black River Falls, Wisconsin.
Interestingly, Wisconsin Attorney General J. B. Van Hollen declined to participate in the case, reserving the right to do so if an appeal is filed, which seems likely. Van Hollen's hands-off stance on the issue might be rooted in politics. Former Attorney General James Doyle, a Democrat, called in 2001 for the abolition of the law. He reiterated his call during his 2006 campaign for re-election as Wisconsin's Governor, calling the law "a 1930's relic that should be abolished." It is possible that Van Hollen, a Republican, feels no need to champion the causes of Doyle, even one which had long been considered Republican property, Doyle notwithstanding.

You will find a link to the judge's decision below.

So what is a Magistrate Judge? Congress created the office of magistrate judge in 1968 to ease the workload of Federal Judges. Since magistrate judges try only civil cases, their workload is not disrupted by priority felony cases. They are assigned to their cases on a system of random draw, at the time of case filing. Magistrate Judges are selected from nominees chosen by a merit committee and are appointed by the federal judges in their district. There are 486 full time magistrate judges, appointed for eight year terms, and about 50 part time magistrate judges appointed for four year terms. Most recent figures, from 2002, show they handled over 880,000 court matters in that year. In Milwaukee, Callahan, a 1973 graduate of Marquette University Law School, was appointed to his position in 1995 and is joined by fellow Magistrate Judges Patricia J. Gorence and Aaron E. Goodstein. He served with distinction on the committee that organized his class' 30th reunion in 2003.

Here is the link to the decision: minimum%20markup.pdf