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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.

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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:

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.

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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.

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.

A copy of the petition can be found here.

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.

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.

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.

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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.”