Oral Argument Set for September 20th in the 10th Circuit Appeal of USAIR Case

The oral argument of US Air’s appeal is set for September 20th in Denver before the 10th Circuit.   In a twist, the US Government has pushed to be allowed to participate in the oral argument and has been granted time. The motion the federal government filed to participate in oral argument is here.

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Appellate Briefs have been filed in the 10th Circuit.   Retailers, Mothers Against Drunk Driving, State AGs, US Justice Dept, three of the past  U.S. Solicitor Generals representing corporate interests , the list is long!

Four briefs have been filed in support of the State of New Mexico by:
-American Beverage Licensees , State AGs, Mothers Against Drunk Driving and Wine & Spirits Wholesalers of America

The state of New Mexico appellate brief is here.

The State AGs brief notes that the position of the USAir and appellants that they do not need to follow New Mexico alcohol laws would also support the amazing position that US Air could serve drinks to 11 year olds.

Four briefs have been filed in support of US Airways by:
-Air Transport Association of America, Association of Flight Attendants, Ten Former Secretaries of the DOT, and The United States

(The below was written after the trial stage and before 10th Circuit filings)

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:

“In the present case, New Mexico has the authority to control US Airways’ distribution of alcohol in airplanes that are in New Mexico airspace for two reasons. First, New Mexico has concurrent jurisdiction with the federal government over events occurring in its airspace. Thus, the in-flight service of alcohol is “[t]he transportation or importation into any State. . . for delivery or use therein of intoxicating liquors.” U.S. Const. Amend. XXII, § 2. Second, even lacking concurrent jurisdiction, New Mexico has the authority to regulate liquor moving through its territory and may take “appropriate steps to prevent the unlawful diversion” of the alcohol into its regulated market.”
 
The state offered a vigorous defense and a strong lesson for all states facing this type of litigation.  The state did not concede an inch and conducted an extensive factual inquiry to develop a full record with various experts discussing how the NM licensing system works and the potential loophole the plaintiffs lawsuit would create.  The state’s answer is here.

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.

Briefs have been filed in this case.

VA ACLU Seeks Supreme Court Review of Ban on Booze Ads in Virginia College Papers

The Virginia Chapter is seeking to have the Supreme Court review the decision of the 4th Circuit to uphold Virginia’s law on the ban of alcohol advertising in college newspapers.  It its cert petition the ACLU argues that the 4th Circuit misapplied the Supreme Court precedent on First Amendment matters.  

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A divided panel fo the 4th Circuit affirmed Virginia’s ban on alcohol advertising in college newspapers stating the ban did not violate the free-speech rights of Virginia Tech’s Collegiate Times and the University of Virginia’s Cavalier Daily. Read the decision here.

5th Circuit Rejects Rehearing; Texas Wins; Supreme Court Next?

The 5th Circuit has wasted little time rejecting this third bite at the apple.  In the order, no judge on the 5th Circuit asked to hear and review this case.   Like the 2nd Circuit case, the 5th Circuit noted that Granholm dealt with wineries, not retailers.  The Granholm court’s holding that the three tier system is unquestionably legitimate remains powerful and was repeatedly used by the 5th Circuit.     Now the question is, will the plaintiffs attempt to seek the Hail Mary pass of the U.S. Supreme Court?   

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Maybe the third time is the charm.  Not satisfied with another 5th Circuit opinion rejecting the myth that alcohol retailers are the same as alcohol producers, the Siesta Village plaintiffs filed a new motion for a rehearing for an en banc hearing for the 5th Circuit.  Click here to read the petition.    Looks like they have trotted out the old “model bill”  myth again.  (See older posts for a discussion on that issue.)

(earlier post)  5th Circuit Rules For Texas. Granholm Means Wineries, Not Retailer

Today the 5th Circuit ruled for the state of Texas and that out of state alcohol retailers do not have the same rights of  in state alcohol retailers.  The opinion can be found here.    Recall a panel of the 5th Circuit ruled for Texas in January (below).   The plaintiffs appealled for a full en banc review.   Instead today the 5th Circuit  denied the en banc review,  withdrew its ruling from January 26, 2010 and substituted today’s opinion.

The court agreed with much of the 2nd Circuit’s reasoning in Arnold’s Wine v. Boyle and noted that the Granholm decision focus was on products or producers, not  all three tiers in a state’s three tier system of alcohol regulation.  It noted the similarilities of  the Texas three tier system to North Dakota’s three tier system which it noted was approved and upheld  in North Dakota v. United States, 495 U.S. 423 (1986).

 I expect an appeal to the U.S. Supreme Court despite the lack of a circuit split.

(from prior posts)          Updated: The state of Texas has filed their opposition to the en banc petition by the Plantiffs. Read their opposition here.

 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.

 Texas Wins Wine Country Retail Shipping Case in 5th Circuit

 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 case further reversed the district court’s findings of violations of the dormant commerce clause for the personal importation exemptions under Texas law.

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.”

Puerto Rico Seeks to Dismiss Coors Lawsuit Challaenging Small Brewer Tax Rate

In a new filing, the government of Puerto Rico has sought to dismiss the Coors lawsuit against Puerto Rico.   In its lawsuit Coors Brewing seeks to eliminate the lower tax rate on small brewers.   Coors claims that it does not seek to lower the taxes Coors pays, just  eliminate the tax break small brewers have under Puerto Rico law.   However, a recent decision by the United States Supreme Court in Levin v. Commerce Energy has made it clearer that deference to state courts on state taxation matters is important even where someone (like Coors) claims they are not trying to lower their own taxes.   The Levin decision can be found here.  The filing by Puerto Rico notes that the 1st Circuit returned this case to Puerto Rico district court  by relying on a line of reasoning now discredited by the Levin decision.  As such, Puerto Rico’s brief argues that this matter should be dismissed in its entirety.

This case is being closely watched to see how state alcohol tax rates are impacted in the future.   Will there be more challenges to small brewer tax rates?  (FYI- A federal bill changing the tax rates of small brewers is also being considered by Congress.)

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Interesting Puerto Rico Beer Tax Case Sent Back to District Court By First Circuit

Part of the 30 year long dispute over the taxation of beer in Puerto Rico has been a lawsuit filed by Coors Brewing Company against Puerto Rico for its tax treatment for small brewers.  It its lawsuit Coors is seeking to eliminate the tax exemption for small brewers in Puerto Rico.

Coors had lost at the district court level.   The First Circuit last week reversed and decided to send the case back to the district court for further instructions.  Complicating this case is the long history of small brewer tax rates and related litigation in Puerto Rico.   The 1st Circuit remanded the case to determine if Coors was barred by previous litigation related to a lawsuit filed by its importer for Puerto Rico or another older litigation filed by the United States Brewers Association in which Coors was a member.

It is worth a read just to learn about fun law school topics such as res judicata, collateral estoppel, the Butler Act, the Federal Relations Act and the litigious history of challenges to Puerto Rico’s treatment of small and large brewers.  Alas there is no substantive discussion of the underlying dormant commerce clause, 21st Amendment or Tax Injunction Act issues in last week’s opinion.  It is a case to monitor for future discussion of the dormant commerce clause.

Here is the complaint in Coors lawsuit against Puerto Rico. Read it here.

South Carolina Supreme Court Raises Stakes on Retailers

In this case, the South Carolina Supreme Court ruled that retailers of alcohol are liable for damages incurred by patrons who end up hurting others in car accidents.  Read the opinion here.

Wine Companies and Wine Lovers seek $2 Million from Massachussetts Taxpayers

The aggrieved oenophiles and wine companies have filed their petition for attorneys fees after winning in the First Circuit.    Claiming 3,633 hours of work, the plaintiffs seek  $2,062,343 from Massachusetts taxpayers for declaring that the state’s facially neutral volume cap law treating big and small wineries differently was unconstitutional despite being upheld in Arizona and Kentucky.    Interestingly, the law firm seeks to be paid at 2010 rates and notes that this was a “test case.”   More tests to come?

A copy of the petition can be found here.

No National Contract. Michigan Court Rules on MillerCoors Proposed Contract

The Michigan courts have clearly held that anyone wanting to sell alcohol in Michigan has to abide by Michigan law.

In a very strongly worded opinion, a Michigan State Court has upheld the decisions of the Michigan Liquor Control Commission finding that the proposed MillerCoors contract violated several aspects of Michigan alcohol law.   In his opinion, Judge James Giddings noted that “MillerCoors claims for itself authority which it may not properly exercise and rights to which it is not entitled.”     The court upheld all of  the MLCC decision against five areas of the MillerCoors contract.

In very strong language the court chided MillerCoors intrepretation of administrative law and the role of declaratory judgements.

It noted that MillerCoors interpretation of the law would “leave it up to the  ’aggrieved wholesaler’ to institgate litigation to challenge contract provisions which contravene the liquor control statutes.  It’s difficult to conceive of a more wasteful and expensive way to determine the validity of these contract provisions.”

Other states have also pointed out that a standard operating contract has to be adjusted to comply with state law.  It is unknown at this time whether MillerCoors will appeal this further.

Updates in ABI Litigation against Illinois; Oral Argument on MSJ 6/16

The court issued a ruling today setting oral argument for ABI’s Motion for Summary Judgement for June 16.  It the decision it denied the Wine and Spirits Wholesalers of Illinois attempt to intervene in the lawsuit.  However it agreed to consider the arguments made by WSWI as well as those by the Associated Beer Distributors of Illinois in its Amcius brief as they raised isssues such as jurisdcition and constitutional avoidance that the court must consider.    ABI will have a chance to respond to those arguments by June 8.

ABI has filed their response brief.

The Associated Beer Distributors of Illinois filed their amicus brief and motion to intervene in the ABI litigation.

The state of Illinois has filed their brief opposed to ABI’s motion for summary judgement.  Read it here.

AnheuserBuschInBev filed their motion for summary judgement read it here.

As you recall, the Illinois Liquor Control Commission handed down a declaratory ruling last month 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 has been challenged. Read the complaint here

The Illinois Wine and Spirit Wholesalers filed a motion to intervene in this matter. Read it here.

There will be much more to come.

Legislation to Support State Alcohol Laws Introduced in Congress

H.R. 5034, “The Comprehensive Alcohol Regulatory Effectiveness Act of 2010” or “CARE Act,” was introduced in the U.S. House of Representatives by Rep. Bill Delahunt (D-MA), Rep. Howard Coble (R-NC), Rep. Mike Quigley (D-IL) and Rep. Jason Chaffetz (R-UT).

The CARE Act aims to clarify congressional intent that states have primary authority to regulate alcohol; prevent the additional erosion of state-based alcohol regulation through the expansion of the Granholm v. Heald decision, but not allow facial discrimination against out-of-state alcohol producers; and clarify that state alcohol laws are presumed to be valid and that plaintiffs should have the burden of proof.

“It’s encouraging that Congress has taken an interest in addressing issues related to alcohol deregulation and the problems resulting from continuing litigation against the states,” said National Beer Wholesalers Association President Craig Purser.

“More than 25 states have faced challenges to their authority to regulate alcohol and their ability to maintain a licensed system of alcohol controls,” Purser continued.  “With the CARE Act, Congress is taking an important step toward preventing the erosion of the states’ ability to regulate alcohol by clarifying its intent that states have the primary authority to regulate alcohol and reaffirming its commitment to effective state-based regulation which promotes responsible consumption and maintains an orderly market.

A link to the bill can be found at  www.thomas.gov by clicking “bill number” and typing H.R. 5034.

A section by section analysis of the actual language of the bill can be found by clicking here.

9th Circuit Rules for Arizona in Volume Cap and In Person Challenge

UPDATE…….. ARIZONA WINS

The 9th Circuit has issued a ruling. The state of Arizona wins, volume caps and face to face purchase requirements are permissible. Read the ruling here.

(OLDER POST)

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.”

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.”