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

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 October 28, 2009 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

If you sell liquor to consumers in New Mexico, you need to be licensed by the state to do so. Period.

United States District Judge M. Christinia Armijo has rejected US Airways claims that federal aviation statutes and regulations (specifically the Airline Deregulation Act and the Federal Aviation Act) preempt New Mexico laws requiring every person selling alcohol to secure a public service license.  In her decision Jude Armijo noted there was no basis to assume Congress intended federal law to regulate alcohol service and that state laws are not preempted.    She noted: 

Needless to say, the stakes are pretty high with this case and I personally expect an appeal by the Plaintiff in this case.    New Mexico is in the 10th Circuit.

This case further provides a strong rejection to the attempts to allow revisionist history to claim that the 21st Amendment essentially only allows a state to decide wet or dry issues.  The complaint implied that the 21st Amendment  allows a state “ONLY” to regulate the transportation or importation.  That very limited view of the 21st Amendment will not prevail.

Posted October 2, 2009 by admin under 21st Amendment, Alcohol Regulation, Alcohol Review

Washington Liquor Control Board filed its notice of appeal to the 9th Circuit on the issue of paying nearly all of the attorney fees to Costco despite winning 7/9 of  the litigation.  Their notice is here.   Also, the Washington Beer & Wine Wholesalers Association filed their notice of appeal as well.  Their appeal is here.

The chilling effect of Judge Pechman’s ruling on a whole host of often litigated issues from housing, environmental, labor and safety concerns is staggering.   Hopefully the 9th Circuit will correct Judge Pechman. Again.    A briefing schedule will be issued soon and this matter will drag throughout 2010.

Costco Wins for Losing

In one final shot at the State of Washington and the Washington Wine and Beer Wholesalers Association, federal judge Marsha Pechman has awarded Costco Corporation, $1.9 million in legal fees for their efforts to overturn Washington state alcohol laws.   In her opinion she suggested Costco was the prevailing party despite only winning on two of nine matters.  As you may recall, Judge Pechman ruled for Costco repeatedly at the trial level and the 9th Circuit unamiously overturned most of her rulings.   It is now up to the state and the wholesaler association to determine if they will appeal this decision to give a Fortune 50 company $1.9 million for losing its case.

A Seattle Times article discusses this ruling pointing out that Costco made roughly $210 million in profit last quarter.

Posted September 17, 2009 by admin under 21st Amendment, Alcohol Regulation, Alcohol Review

On September 15th, the 9th Circuit heard oral arguments of a wineries appeal of an Arizona district court’s decision upholding the state’s winery laws.   Click here if you would like  to hear the oral argument while you eat lunch at your desk.   It appears one of the judges is not all with the state, one is silent and one is mixed.  Should be interesting.

 As you may recall the district court ruled on this matter in February 2008.  The decision in Black Star Farms v. Oliver was a favorable ruling for the states.  It had good Granholm flag waiving and more importantly, placed the burden properly on the plaintiffs, not the defendants.    Also, it does not take the plaintiff’s bait of alleging hometown favoritism just because there are more wineries out of state: “The mere fact that more out-of-state wineries than in-state wineries are required to adhere to Arizona’s three-tiered distribution system is not by itself sufficient to establish that Arizona’s statutory scheme is patently discriminatory in effect against interstate commerce.”

It is unknown when the 9th Circuit will issue a ruling but we’ll post it here as soon as we get it.

Professor Tanford has filed an appeal to the 9th Circuit from his loss in the Arizona winery case, Black Star Farms, L.L.C. v. Oliver, 544 F.Supp.2d 913 (D. Ariz. 2008).  The opinion of the district court (PDF) noted that the challenge by Professor Tanford was trying to extract an unattainable perfection out of a regulatory system that is going to vary state by state; “Nothing in Granholm suggests that the Supreme Court was concerned about equalizing the inherent marketing advantage that accrues to in-state wineries because of their close proximity to a state’s consumers.”

Posted September 17, 2009 by admin under 21st Amendment, Alcohol Regulation, Alcohol Review, Dormant Commerce Clause

There is a new Illinois lawsuit seeking to stop the recently enacted increases in beer, wine and spirits taxes.   There are several arguments advanced in the complaint.  Of interest to me is its discussion of beer taxes vs. wine/liquor taxes.  In a new twist on the long running equilization debate, the plaintiff claims it is unfair underIllinois law that higher alcohol products are taxed at a higher rate than lower alcohol products.   A copy of this lawsuit is available for your review.

Posted September 1, 2009 by admin under Alcohol Regulation, Alcohol Review