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ATLANTA -- A U.S. District Court Judge here dismissed claims by two independent convenience stores that they were illegally denied membership in the Atlanta Retailers Association (ARA), an incorporated group of nearly 900 Ismaili Muslim convenience store owners based in Georgia.
As reported exclusively by CSNews Online, store owners, Terry Wilson of Wilson’s Grocery, and John Potts of Potts Grocery, filed a complaint two years ago alleging they were denied membership in ARA because they are not Ismaili Muslim and therefore were unable to qualify for discounts on beverages that the group had negotiated for its members with Pepsi Bottling Group.
In a ruling on Monday, Orinda D. Evans, U.S. District Judge for the Northern District of Georgia, Atlanta Division, decided against the store owners, dismissing their claims of discrimination as well as their motion for a class certification. The plaintiffs’ claims against Pepsi, though, remain pending. Pepsi had a contract with ARA in 2007 to provide products to ARA members on a favorable basis if certain volume requirements were met.
David Marmins, attorney for the ARA, told CSNews Online his client felt vindicated that Judge Evans ruled "as a matter of law based on the undisputed evidence of the case" that the ARA did not discriminate based on race against the two c-stores owners that sought membership in the association.
According to court documents obtained by CSNews Online, few of the facts of the case were disputed by either party. ARA was founded in 1995 by a group of Ismaili Muslims. Its members are mostly immigrants to the U.S. from India and Pakistan and the association’s bylaws specify member companies be majority-owned by a person of the Ismaili Muslim faith. The case appeared to turn on the definition of Ismaili Muslim as a religion, not a race, and whether a private group could set its own membership criteria. Ismaili is a branch of the Shia sect of Islam.
Wilson, a Caucasian, native-born American c-store and gas station owner, got wind of the Pepsi deal with ARA members and approached ARA about joining, but the association would not admit him. Potts, also a Caucasian, native-born American convenience store and gas station owner, who is a friend of Wilson, said he would have been interested in joining as well, then joined Wilson in filing suit, claiming race discrimination by ARA and Pepsi.
ARA’s stated purpose is to foster Ismaili business development, encourage unity and networking among members, negotiate favorable vendor contracts for ARA members, and provide technical and professional support to the membership. ARA is maintained as a not-for-profit organization, however, the IRS has rejected ARA’s application for exemption from income tax based on non-profit status, according to court documents.
The two sides brought in expert testimony to debate whether Ismaili Muslim is a religion or a race, but Judge Evans excluded the plaintiff’s expert as unqualified. ARA also publishes a monthly newsletter with articles and information about new contracts as well as tips for running a successful convenience store. It hosts seminars on topics of relevance to its members, such as check cashing. Despite limiting membership to those of Ismaili Muslim faith, it does not hold religious services or have a religious element to its work, said the documents. ARA does not advertise for members, but court documents say potential members learn about the organization through word-of-mouth or at jamat khana, a place of worship for Ismaili Muslims.
The contract at issue in the case was signed in 2007. It called for participating ARA member stores to provide two-for-one refrigerated space for Pepsi products over Coca-Cola products. According to the two-year contract, Pepsi products would be placed in the "first position" in display cases. In return, Pepsi would provide ARA with conversion funding of $1 million (to be distributed to participating members), and base funding of $2 per case of certain Pepsi products. Under the contract, half of ARA’s conversion funding was contingent on ARA member stores reaching combined sales of 1.1 million cases of the designated Pepsi products. If the sales goal was not met, ARA would have to give back a pro-rated share of the $1 million. As it turned out, ARA terminated the agreement with Pepsi after a year and signed a new agreement with Coca-Cola in 2008.
Wilson’s Grocery is located near Atlanta in Covington, Ga. It sells fishing and hunting supplies, beer and wine, soft drinks, groceries, gasoline and other items. It also has a restaurant and sells both Coca-Cola and Pepsi products.
Potts Grocery is located nearby and sells similar products as Wilson’s.
According to Wilson’s deposition, he learned of ARA’s contract with Pepsi through his Coca-Cola sales representative. After several conversations with Pepsi and then ARA, some of them described as heated, and some of which he secretly tape-recorded, Wilson contacted a lawyer.
"At that point, I said ‘OK, they are the Atlanta Retailers Association, anyone can join and get in on the deal.' I went up there are tried to apply, and they refused my application. Then I asked them point blank why, they said it was strictly an Asian group—I didn't argue with them, I just left and then got an attorney," Wilson told CSNews Online in 2007. "It wasn't about the money, it's about being treated fairly, there's so many of us 'mom and pop stores,' as I call them here, and it's hard to compete when there's that type of competition against us. You can't compete," Wilson said.
At presstime, Wilson and Potts’ case against Pepsi remains pending, according to court documents. Both plaintiffs and Pepsi were directed by the judge to prepare a proposed consolidated pretrial order no later than April 30.
-- Independents Sue Atlanta Retailers Association – June 18, 2007
-- Local C-store Association Accused of Discrimination – May 29. 2007