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Newport, Linn Companies make their arguments in court over denied liquor license

The fate of businessman Stephen Linn's proposed liquor license is in the hands of three Minnesota appellate court judges.

An Appeals Court heard oral arguments Thursday in the seven-month-old dispute between the city of Newport and Linn, whose company last year was denied a liquor license for a proposed off-sale store along the city's centrally located Hastings Avenue.

The issue: Linn proposed opening the shop in one of his vacant properties a mere 500 feet from the only other liquor store in town, Newport Liquor. At the public hearing last July, Linn said he and his partners pursued a liquor store at 1594 Hastings Ave. because he was unable to find a tenant for the vacant property. The property was left empty in the fall of 2011 after Linn relocated an existing Napa Auto Parts store to a newly constructed building one block away.

Newport City Council members openly opposed the license request and said a similar business in such close proximity could detrimentally affect Newport Liquor, an establishment that has been in the community for decades.

However, David Gates, an attorney representing Linn, said the council cannot rule based on that context alone.

"The council has to link this denial to the welfare of the public in order to deny it," Gates told the judges during oral arguments. "The issue of wanting to protect one store over another is not a valid basis for (the city's) argument. It's simple protectionism."

Gates said loyalty to one business is "admirable," but he said preventing economic development is a "dangerous process."

According to Minnesota law, cities and municipalities can deny an application for a license to sell alcohol if it is in a location that may be detrimental to the welfare of the community. Gates argued that because the land is not in a "deleterious" location, Linn should be allowed to move in. However, Mary Tietjen, the attorney arguing for the city, said the issue of land use was not the topic of dispute.

"It's important to note that this is not a land use case, this is a liquor license case," she said. "The selling of liquor in the state of Minnesota is a privilege, it is not a right."

The League of Minnesota Cities cites that municipalities, rather than the state, have control over who can be issued a liquor license and how many liquor licenses will be issued. Currently, Newport city code allows up to five liquor licenses within city limits and Newport Liquor and the Red Rock Saloon both have off-sale licenses.

At the July 2012 public hearing regarding Linn's request, a handful of Newport residents voiced their concern about a second liquor store, a key factor in Tietjen's defense of the liquor license denial. She said Newport residents "don't want another liquor store," an argument Newport Liquor owner Jeerasak Poophakumpanartart used during the public hearing.

In court last week, Tietjen coupled the citizen concern with the council's fear of killing business at Newport Liquor and asked why not vouch for the business?

"Why is it not proper basis to say we want to protect a business that has been in our community for 60 years?" she asked. "How is that not in the best interest of this community to protect a well-established company?"

Newport could potentially change their policies in the future, Tietjen added during oral arguments, and fall in line with what council member Tracy Rahm said at the public hearing: maybe five years down the road.

"It just goes to show that Mr. Linn's plans are subject to individual whim," Gates refuted. "Why is the council assuming Newport Liquor is going to go out of business? If the city is true to this liquor store, maybe it might be Mr. Linn's store that goes out of business. But, this is governing by whim."

Gates argued that if the city's decision to deny Linn a liquor license is affirmed, it would "obliterate any distinction between public or private interests" and could set a precedent that "if you are old enough or even locally popular enough that you will be saved."

In researching case law related to municipal liquor licenses, Tietjen said she only came across a handful of incidents in Minnesota where an appeals court overturned a liquor license denial.

Newport City Attorney Fritz Knaak said while he cannot comment in-depth on the situation citing the ongoing litigation, he did say he is optimistic that the city will prevail.

"The judges were asking the right questions of counsel and the city of Newport was totally in the right to deny the liquor license," he said.

The court is expected to decide the case within the next 90 days.

If the court affirms the city's decision to deny the liquor license, Linn would have the opportunity to file a discretionary appeal. However, if the court decides to remand the decision, an outcome that Knaak said would be "the worst case scenario," the case could be sent to a lower circuit court and the city of Newport would have to provide more adequate evidence.