The, Illinois Liquor Control Commission handed down a declaratory ruling that Anheuser-Busch, as a non-resident dealer, cannot own a controlling interest in a distributorship in the state.  It warned that City Beverage could lose its license if it attempts to proceed with this deal with ABI.

ABI was trying to buy the remaining 70% of Soave Enterprises in Illinois. This ruling is expected to be challenged in court at any hour.  Much more to come.

Posted March 10, 2010 by admin under 21st Amendment, Alcohol Regulation, Alcohol Review

Update:

Since the National Conference of State Legislatures (NCSL) continues to have its position on direct shipping interpreted wrongly across the country, they have sought to clarify it.  Recently, they have written to one attorney  asking for clarity to avoid stating that the the full NCSL had endorsed a wine model shipping legislation.  Click here for the letter.

SUPREME COURT NOT INFALLIBLE, GRANHOLM FACT WRONG.

NBWA decided to look under the hood at one of the facts used by alcohol deregulators in the Granholm and related cases.  It seemed very odd to us that the National Conference of State Legislatures (NCSL), a group dedicated to supporting state rights, would have an alleged action of that organization used AGAINST its member states.  Justice Kennedy actually seems to believe that the NCSL developed and passed the model bill drafted by the California wineries. He cited to it two times in the Granholm case.

Because one law firm continues to imply that the NCSL passed a model bill on winery direct shipping, we asked NCSL to clarify their position.  NCSL’s clarification is attached here.  I also wrote to the law firm and asked them to correct the record in other lawsuits and prevent further confusion on the NCSL activity. The letter is here.

The Supreme Court sometimes gets things wrong.  For example, last term they did not recognize an existing death penalty statute when they said there was none for child rape in Kennedy v. Louisiana.   Like that case, the Granholm court just got the facts wrong .  Next time the court takes this up, they will have the correct facts.

NCSL does have one official position that is relevant to this debate.  In its official policy statement on the internet and electronic commerce NCSL has a section on alcohol regulation.   This statement went through the proper rules and was endorsed by the entire NCSL.  It states in relevant part:  “Nothing in this policy statement is to be construed as limiting or affecting the right of any state to regulate alcohol according to its local norms and standards pursuant to the 21^st Amendment.”   A link to this official NCSL position is here: http://www.ncsl.org/Default.aspx?TabID=773&tabs=855,21,633#633

In full disclosure, the law firm disagrees  and provided this response.  To quote Strother Martin, “What we have here is a failure to communicate.”

Posted March 8, 2010 by admin under 21st Amendment, Alcohol Regulation, Dormant Commerce Clause, Supreme Court

In a very forceful advisory, the California Attorney General has made it clear that California law does not allow suppliers to micromanage and control distributor licensees.  This guidance apparently went to over 600 importers and suppliers. 

The staff of the attorney general actually  spent time reviewing the proposed supplier contracts to state law and were very concerned about the approach by the suppliers.   These contracts that were unilaterally imposed by suppliers on distrtibutors contained a wide variety of impermissible intrsusions into the beer distributors license.

“Licensure is the foundation of California’s regulatoory system of alcoholic beverages. and is fundamental to the State’s  control under Section 2 of the Twenty-First Amendment and Section 22 of Article XX of the California Constitution.”

It further held;  “We consider any attempt to enforce the provisions of these contracts to be an unlawful, prohibited exercise of control by a manufacturer over an independently licensed wholesaler.” 

Several states including Michigan and Georgia have already pointed out how a proposed supplier contract violate state laws.  I expect many more states to utilize the guidance of the California Attorney General in their states in the weeks ahead.

Posted February 15, 2010 by admin under 21st Amendment, Alcohol Regulation, Alcohol Review, Guest Columns

A motion for summary judgement was filed by the plaintiffs in the Cap’n Cork case.   Recently Indiana  filed its cross motion for summary judgement.  The recent Wine Country 5th Circuit case as well as the Buy-Rite case from New York in the 2nd Circuit and the other Indiana case, Baude  at the 7th Circuit all heavily influence the state’s brief.  All those cases are discussed in other posts on this blog.

Updated:   This case has been transferred to federal court in Indiana.  It has been assigned to Judge McKinney.

A New Indiana Lawsuit Filed by Retailer Seeking Direct Shipping Rights

Just 24 hours after the United States Supreme Court stated they would not take an out-of-state winery’s unsuccessful challenge to one provision of the Indiana alcohol code, the same unsuccessful plaintiff’s attorney has filed a new lawsuit against Indiana this time on behalf of an Indiana retailer.

A new case has been filed in the Southern District of Indiana, Lebamoff Enterprises Inc. v. Thomas Snow, Chairman of the Indiana Alcohol & Tobacco Commission(PDF). Lebamoff Enterprises dba Cap N’ Cork has filed a challenge under Indiana law, the Equal Protection Clause, the Dormant Commerce Clause and federal preemption of state regulation of  common carriers.  The Cap N’ Cork believes it is unfair that wineries are able to do some sales via common carriers whereas retailers are not.  The ATC has cited Cap N’ Cork  for violations. This will likely be an interesting case to see if wineries and retailers are in fact different as apparently the plaintiff here claims there is no difference between winery sales and retail sales.

Posted February 15, 2010 by admin under 21st Amendment, Alcohol Review, Dormant Commerce Clause

 The Plaintiffs in the Wine Country Gift Baskets/Siesta Village case are trying to get the entire 5th Circuit to hear their case in a petition filed last week.   In a press release, the Specialty Wine Retailers Association stated:  “We are concerned not only that the Fifth Circuit’s recent ruling disregarded opinions of the U.S. Supreme Court, but that it also disregarded precedent from its own cases within the Fifth Circuit,” said Tom Wark, executive director of SWRA .   Personally, I believe that this rehearing petition grossly stretches the two Fifth Circuit decisions as well as the Granholm and I am hopeful that the state will again demonstrate this succinctly to the court.

As you recall, the State of Maryland sought an en banc opinion after it lost the most recent decision at the 4th Circuit.  Similarly, Costco failed to get the entire 9th Circuit to take up its cause after it lost most of its challenge to Washington state laws.    Both requests were denied.  Rehearings en banc are rarely granted.

 A win for the 21st Amendment today in the 5th Circuit.

 Our read of Granholm is that the Twenty-first Amendment still gives each State quite broad discretion to regulate alcoholic beverages. The dormant Commerce Clause applies, but it applies differently than it does to products whose regulation is not authorized by a specific constitutional amendment. Regulating alcoholic beverage retailing is largely a State’s prerogative. “  

“Because of  Granholm and its approval of three-tier systems, we know that Texas may authorize its in-state, permit-holding retailers to make sales and may prohibiti out-of-state retailers from doing the same.” 

The decision gives the state of Texas a clear win on all counts and joins the 2nd Circuit in rejecting the attempts to twist the 2005 Supreme Court decision in Granholm v. Heald  involving wineries into an examination of state distribution and retailing laws.

The Court did caution though that it was limiting its ruling.   “We pull back from any effort to define the reach of a three-tier retailer.”

Posted January 26, 2010 by admin under 21st Amendment, Dormant Commerce Clause, Supreme Court

Iowa has recently joined the ranks of states having a federal court determining the future of its state alcohol laws.  Indiana University Professor James Tanford has filed another Dormant Commerce Clause lawsuit this one challenging provisions in the Iowa alcohol code dealing with reciprocity for direct shipping.  A copy of this lawsuit can be found here.   By my rusty calculations this is state number 27 to be have its alcohol laws challenged in federal court in the past five years.

Posted January 21, 2010 by admin under 21st Amendment, Alcohol Review, Dormant Commerce Clause

The First Circuit dealt a blow to state alcohol regulation today ruling against Massachusett’s 30,000 gallon volume cap for wineries.   In its opinion, the 1st Circuit determined that the MA law, helped by statements in the legislative record, was discriminatory in both purpose and effects and violated the Dormant Commerce Clause.  This is a different conclusion that federal district courts in Kentucky (Cherry Hill) and Arizona (Blackstar) (See below).  The 9th Circuit is currently examining Arizona’s volume cap.     Since distinctions based on size are throughout nearly every state alcohol code at some level,  this case could have huge implications.

Posted January 14, 2010 by admin under 21st Amendment, Dormant Commerce Clause, Supreme Court

Well the sordid ten year history of the TFWS case is over.  There will be no appeal to the United States Supreme Court.   In order to save the state money from attorneys fees, the state will not appeal in exchange for not having to pay attorney fees.  In a fee settlement agreement filed with the court the state will save its money and donate some of the fees to an alcohol rehabilitation center.

Because of this settlement, there remains a circuit conflict between 4th and 9th Circuit on issue of volume discount ban. 

Clock ticking in Maryland… Cert petition due Jan 8,2010

UPDATE: Looks like folks will be busy working over the end of the year holiday season. Maryland has until January 8 to file a cert petition in the TFWS matter. http://origin.www.supremecourtus.gov/docket/09a400.htm

The possibility of Supreme Court review of the intersection betweeen state action, 21st Amendment and the Sherman Antitrust Act increased with Maryland seeking more time to file a writ of certiorari in the TFWS case.

Maryland has sought an extension until December 9 to file its Writ.  If granted and fully briefed by the other side the earliest the court could decide to accept this case would most likely be February.   It is unclear if that would be enough time for the court to consider this case before the end of its term in June.

Obviously there is much more to be written in the TFWS saga.  Stay tuned here.   Click here for a copy of Maryland’s petition.

UPDATE:    That was quick.  The 4th Circuit said “No Thank You” to the state’s request for a rehearing en banc. According to the order no judge asked to keep this 10 year old case going.

Next step:  Maryland decides whether to appeal to the U.S. Supreme Court.

Yesterday the state of Maryland filed a petition for rehearing en banc for the 4th Circuit.   Recall this was a challenge to Maryland alcohol regulations on volume discount ban, price posting and price holding for wine and liquor.  This is an important development as it is an opportunity for the tortured 10 year old history of this case to be reviewed.   To me, certain aspects of this case were caught in a continuous cycle/rut of deference to previous rulings on narrow issues that failed to permit the judges the opportunity to comprehensively look at the entire case from start to finish.    It would be nice for the 4th Circuit to look at the entire case, not just one issue.

The Maryland Attorney General’s brief highlighted four main issues for appeal: 1) The unfair heightened scrutiny facing state alcohol regulations duly authorized by the 21st Amendment; 2) the court’s failure to sever aspects of this case and do a “minimum-damage” approach to state regulation review; 3) the court’s error in calling the Maryland system a hybrid restraint and 4) the court’s failure to properly balance the state and federal interests in regulating alcohol with other federal interests.

This briefing will continue through the summer.  It is unknown when this court will rule on this petition.   Adding to the drama is the unsettled nature of the 4th Circuit with 1/3 of the judge positions open.

Posted January 13, 2010 by admin under 21st Amendment, Alcohol Regulation, Alcohol Review, Supreme Court

While I was at the Center for Alcohol Policy’s annual legal symposium, the Supreme Court denied certiorari in  Virginia v. Harris.    This was a petition seeking review of a 4-3 Virginia Supreme Court decision that held that an anonymous tip of a suspected drunk driver was not sufficicent for a police officer to pull over the driver.  A police officer needs indpendent corroboration first before she can pull over a drunk driver.

In a strongly worded dissent from the denial of certiorari that was joined by Justice Scalia, Chief Justice Roberts expressed his concern over the failure to review this case.  He noted in very strong terms the deadly problems associated with drunk driving and cited to NHTSA data showing 13,000 deaths per year, or one every 40 minutes, resulting from drunk drivers.   He closed  his dissent with his opinion that the “police should have every legitimate tool at their disposal for getting drunk drivers off the road.”    I agree.  And I also believe the state legislatures and alcohol regulators should have every tool at their disposal for getting drunk drivers off the road; regulating the alcohol industry; and protecting the public.      It will be interesting to see if someone reminds  Justices Scalia and Roberts of their opinion the next time a 21st Amendment related case is before the Supreme Court!

Posted October 21, 2009 by admin under Alcohol Review

UPDATE:  The Supreme Court has denied certiorari in this 6th Circuit matter.  Cert denial can be found here.

Update:  TN brief below.   Supreme Court to decide whether to take this the week of September 29, 2009.

A pairing of lawyer and wine connoisseur has lead to the U.S. Supreme Court  being asked whether limitations imposed by Tennessee on the transportation or possession of untaxed alcoholic beverages violate the Commerce Clause. The question arises within the context of a larger challenge concerning Tennessee’s laws governing the wine industry. The U.S. Court of Appeals for the Sixth Circuit upheld Tennessee’s ban on the direct shipment of alcohol to consumers, but concluded that certain other challenged laws were discriminatory on their face and remanded the issues to the District Court for further proceedings.  Tennessee has subsequently amended its laws in response to the 6th Circuit.  Plaintiff Jelovsek is pressing this appeal despite the legislature’s action. In her appeal she suggestions the following questions presented:

I. Whether discriminatory and protectionist laws in Tennessee’s three-tier alcohol distribution system are immune from challenge on Commerce Clause grounds, contrary to the law of this Court and other circuits?

II. Whether the Sixth Circuit erred in failing to strike down the following provisions of state laws in violation of the Petitioner’s right of equal access to the interstate wine market as protected by theCommerce Clause:

A. The laws that require in-state residency and presence to obtain a Tennessee wholesale or retail alcohol license, which laws restrict the Petitioner’s access to a wide variety of wines offered by out-of-state vendors.

B. The law that prohibits direct shipment of wine to the Petitioner from out-of-state retailers, when the State allows him to purchase as much wine as he wants from in-state retailers.

C. The law that criminalizes the Petitioner’s possession of wines purchased from out-of state retail vendors upon which Tennessee taxes have not been paid, when there is no mechanism to pay such taxes �
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The State of Tennessee has filed its motion in opposition to this petition.   The state’s brief is attached here.  It notes this is a bad case to take up for several reasons including the recent changes to TN law.   Sorry for the PDF of a copy as I had a hard time finding this one.

Posted October 5, 2009 by admin under 21st Amendment, Alcohol Regulation, Alcohol Review, Dormant Commerce Clause, Supreme Court