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Indiana Retailer Cap n’ Cork Waging Legal Battle To Gain Access To Neighboring States

August 26, 2019

Cap n’ Cork, the Fort Wayne, Indiana-based retail chain with 15 stores and annual sales of $28 million, is in the midst of a legal battle to roll back shipping restrictions in its home state. At present, the retailer is pursuing lawsuits in neighboring Michigan and Illinois to win the right to sell in those markets, and is considering challenges in other states as well.

Cap n’ Cork is co-owned by brothers-in-law Andy Lebamoff and Joe Doust, who built up their business by acquiring smaller rivals around Fort Wayne. But expansion has been stymied in recent years, largely because of Fort Wayne’s limits on retail licenses. Cap n’ Cork has been expanding its store sizes, but has decided that future growth must be achieved by crossing state lines via e-commerce.

Cap n’ Cork derives just over 5% of its sales from local delivery. If permitted to sell out of state, its owners would invest in a bigger fleet and send trucks over the Michigan line, just 40 miles away. “We have customers who’ve moved to Michigan and elsewhere who still request products from us,” says Doust. “We need to open up shipping laws so we can reach them.”

Cap n’ Cork filed its first lawsuit in 2016 and has won victories in the Michigan and Illinois courts, but those decisions are under appeal. “We have a judgment in Michigan allowing us to ship, but the defendants there—a group of Michigan wholesalers—aren’t rolling over, and continue to appeal,” says Robert Epstein, an Indianapolis attorney representing Cap n’ Cork. “Real relief could come in the form of legislation permitting free shipping. Connecticut has passed a law allowing out-of-state retailers to ship into the state. New York is considering such a law. More are likely to follow.”

If legislative change were to occur, Cap n’ Cork says it could use its trucks to ship as far as 250 miles away—reaching cities like Chicago, Detroit, and Grand Rapids. But even if it wins in Michigan, Cap n’ Cork’s home state of Indiana still doesn’t allow out-of-state shipping. The retailer is now also laying the groundwork to overturn that law in the statehouse. “Eventually we’ll challenge the Indiana law, but we need to take it one step at a time,” says Epstein.

Cap n’ Cork’s owners say they’re in it for the long haul. “If we go all the way to the U.S. Supreme Court, I’ll look forward to meeting (chief justice) John Roberts,” Lebamoff says

A full feature on Cap n’ Cork will appear in the November issue of Market Watch.—H. Lee Murphy

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