Updates in NC Shipping Case at the Supreme Court Level

The request for the Supreme Court to consider the plaintiff’s appeal of their loss in the 4th Circuit retail shipping dormant commerce clause case continues to proceed.

After the appellant filed its request for the court to take this appeal, they secured an amicus brief from the National Association of Wine Retailers.

More recently, the Supreme Court asked the state of North Carolina to respond to the petition by December 9.   The Supreme Court has routinely asked the states to file a response in the recent dormant commerce clause appeals before ultimately deciding not to take the case.

(current post) B-21 Seeks Supreme Court Review of Loss in 4th Circuit Over North Carolina Retail Shipping Laws

In their tireless (tiresome?) quest to get a case before the United States Supreme Court, counsel for B-21 has filed a writ of certiorari with the Supreme Court.   The plaintiffs had previously lost at the 4th Circuit and in district court on their attempts to challenge North Carolina laws related to local delivery of alcohol.

The state of North Carolina will have the opportunity to respond later this year and the court would likely meet to consider whether to take this case in the first half of 2023.  The Supreme Court has declined to take appeals on similar cases out of the 6th and 8th Circuits, and other than the dissent of Judge Wilkinson in the 4th Circuit opinion, there appears to be no reason for the Court to change course.

If the court somehow decided to take this case,  it would likely not be ready to for court consideration until the fall of 2023.

(previous post) 4th Circuit Denies Petitions for Rehearing and En Banc Hearing Request on North Carolina Retailer Shipping Case

Today the 4th Circuit denied the petition for rehearing as well as the petition to have an en banc hearing of the entire 4th Circuit for the out of state retailer shipping case in North Carolina.

I presume this will be another case that the plaintiffs will seek Supreme Court review as they had in their losses in the 6th and 8th Circuits.

(previous post) 4th Circuit Upholds North Carolina Retail Delivery Law

Today the 4th Circuit issued its opinion rejecting the challenge by wine afficandos and a Florida retailer to a law that prohibits out of state retailers from selling to North Carolina consumers.  This opinion is consistent with opinions in the the 6th (MI) and 8th (MO) Circuits upholding similar state laws from dormant Commerce Clause challenge.

Today’s opinion was written by Judge King and he was joined by Judge Quattlebaum.  Judge Wilkinson is listed as issuing a dissent, but in parts he is agreeing with the arguments of the state.

Judge King’s opinion supported the opinion below and rejected the plaintiff’s attempts to turn all alcohol law challenges into strict scrutiny cases: “Based on those two correct observations, a less demanding standard of review must necessarily apply to an alcoholic beverage control regime than to regulations involving other products. Put most simply, applying the same stringent test to an alcoholic beverage control regime would undermine Section 2 of the Twenty-first Amendment.”

The opinion rejected the plaintiff’s attempts to seize on the various legislative tweaks, exceptions and allowances under the three-tier system as some form of abandonment of it; “As the N.C. Commission emphasizes, however, the Twenty-first Amendment is not an either-or proposition.”   It noted that states must have wide flexibility in creating their laws.

The majority noted, “There is no way for North Carolina to effectively maintain its three-tier system while allowing out-of-state retailers to bypass the system completely and ship wine directly to North Carolina consumers.

There was a dissent by Judge Harvee Wilkinson.  Interestingly, he agrees with the state on remedy and if the law was struck, nullification of the in state retailer rights would be his preference rather than extending shipping rights to out-of-state retailers.

Judge Wilkinson’s dissent focused on big picture/ national economic unit platitudes.  He would favor the dormant Commerce Clause and minimize the importance of the 21st Amendment.  His desire for a national market for all products also seems to indicate confusion about the differences between retailers and producers in the regulation of alcohol.

He would shoehorn the analysis of the North Carolina Law with that of the most recent Supreme Court decision in the Tennessee Wine Retailers Association case which dealt with retailer residency laws; “Prohibiting wine shipments to consumers from out-of-state retailers is no more essential to a three-tiered model than residency requirements.

Since the plaintiff’s attorneys have made no secret of their attempts to get this issue before the United States Supreme Court, I expect another petition to be filed with the court later this summer with the attorneys emphasizing the points in the dissent.    Previous attempts by these lawyers to have the Supreme Court take this case have been rejected in cases arriving out the 6th and 8th Circuits. The Supreme Court could consider whether to take this case sometime this winter once relevant briefing is complete.

(Previous Post) 4th Circuit Holds Oral Argument in North Carolina/B-21 Retail Shipping Case

The 4th Circuit held oral arguments on the appeal by B-21 of the district court’s ruling in favor of the motion to dismiss filed by the State of North Carolina.   Arguments were held in person and a link to the audio of the hearing can be found here.

Judge Wilkinson, Judge King, and Judge Quattlebaum were selected for the panel hearing this case.   It is always problematic to predict the outcome based upon oral arguments and both sides can claim parts of the questioning as positive and negative for their desired outcomes.

Judge Wilkinson did command a large share of time of the oral argument questioning.  He specifically spent a large amount of time focusing on the remedy section where the North Carolina legislature sought to “level down” if there is found to be any constitutional defect.  The North Carolina Solicitor General had to remind the judge that this was not the state’s preferred outcome, only an alternate theory.  Judge Wilkinson also seemed to mistakenly believe that in-state NC retailers were somehow exempt from the state’s three-tier system.   The appellant’s arguments implying that wineries and retailers are the same seemed to have some success at this oral argument.   The judges did seem a bit confused about the NC system at issue.

Interestingly, in addition to wine, the B-21 website sells liquor (which is restricted to NC ABC stores) including grain alcohol (which is illegal to sell in North Carolina).

The court is expected to rule on this matter in the next few months.

(previous post) New Defendant in NC and Final Briefing Filed by Appellant

Xander Guy resigned as chair of the North Carolina Alcohol Beverage Control.  He was the Respondent in this case until this week when his replacement was confirmed.  Hank Bauer is the new Defendant in the retailer challenge to NC laws.

The Appellant has filed its response to the state and amicus briefs.  They argue that (despite not being similarly situated) that if a state gives a winery an exception to the three-tier system it must also give one to retailers.  They claim that if there are any exceptions to an airtight three-tier system, then there is no three-tier system.

This case will now be scheduled for oral argument in the first quarter of 2022.

(previous post)    4th Circuit Briefing Finishing Up in Retail Shipping Case From North Carolina

B-21/Rash filed an appeal to the 4th Circuit from their loss at the North Carolina district court level. Their opening brief sought to cast the district court opinion as outside the parameters set by the US Supreme Court on dormant Commerce Clause challenges.

The comprehensive brief filed by the state of North Carolina argues otherwise. It notes that the facts as stipulated below and the law clearly support the district court’s decision.  The state points out the history of NC legislation and how the litigation seeks to have the benefit of selling in NC but without all the regulation that all other entities are subject too.

Two amicus briefs have been filed.  The first amicus brief was filed by the Center for Alcohol Policy and the North Carolina Association of ABC Boards.   This brief highlights the historical underpinnings of state alcohol regulation generally and how North Carolina’s regulatory structure flows from this historical development.  Much emphasis is placed on the seminal alcohol regulatory treatise Toward Liquor Control and its importance in informing alcohol policy.  The brief observes, “This book serves, in other words, much like a Federalist Paper for the Twenty-first Amendment.”

The other amicus brief was filed by the American Beverage Licensees, North Carolina Beer and Wine Wholesalers and Wine and Spirits Wholesalers of America.   The brief supplements points in the state’s brief which highlighted that the Appellants are seeking to ultimately evade wide swaths of NC state alcohol regulation by their litigation efforts.   The brief discusses the crucial role of in state retailers and wholesalers.

The appellant has an opportunity to file a response brief and then this matter will be scheduled for oral argument likely sometime in the first third of 2022.

The similar 7th Circuit case out of Indiana, which is scheduled for oral argument Friday, is slightly ahead of the NC case in timing.

(previous post) District Court Issues Rash Decision. Rules for State of North Carolina and Dismisses Out of State Retailer’s Dormant Commerce Clause Complaint

Pardon the pun but the lawsuit brought by Mike Rash, B-21 Wines, et. al has been dismissed by the district court so I will call it the Rash decision.

United States District Judge Frank Whitney of the Western District of North Carolina has granted the state of North Carolina’s motion to dismiss the effort of the plaintiffs to be able to ship wine from retailers directly to North Carolinians.

Judge Whitney noted that the attempts to claim constitutional protection for out of state retailers like out of state supplier jurisprudence is ill founded. He noted, “Wineries are producers; they are the first tier in a three-tier system and are meaningfully distinct from retailers, the third tier... Allowing producers to circumvent the three-tier system does not undermine the system in the same way allowing retailers to circumvent the system would.

Judge Whitney later reasoned that his decision is relatively straightforward, “Given a choice between virtually eliminating North Carolina’s three-tier system, which the Supreme Court and multiple Courts of Appeals have determined is unquestionably legitimate, and maintaining the status quo, the Court chooses the latter.”

It is unknown at this time whether the plaintiff will appeal.

(previous post)  Court Denies NC Motion to Dismiss Retail Shipping Case

Judge Frank Whitney of the Western District of North Carolina Granted in Part and Denied in Part the effort of NC to dismiss the retail shipping case brought by a Florida retailer and some consumers.   In his order,  Judge Whitney noted the plaintiffs had met their burden to overcome a 12b motion to dismiss.

The Court further noted it is still bound by the 4th Circuit’s  Beskind v. Easley decision from 2003 from the winery direct shipping fights.  The court also noted that the remedy applied in Beskind was to remove in state retailer shipping rather than extend retailer shipping rights to all.

The matter will return to normal discovery and briefing.

(previous post) State of North Carolina Files Motion To Dismiss Retail Shipping Case

The state of North Carolina filed its motion to dismiss against the recent complaint by an out of state retailer challenging laws that permit North Carolina retailers to perform some local delivery functions as a violation of the dorman Commerce Clause.

The state’s brief sought dismissal because the plaintiffs lack standing, the plaintiffs’ complaint fails to state a claim, and that the naming of the Attorney General as a Defendant was improper.

(previous post) Another Retailer Shipping Case Filed – This Time in North Carolina

The lawyer combination of Tanford and Epstein have filed their (at least) sixth retail shipping dormant commerce clause lawsuit since the Tennessee Wine & Spirits Retailers Association decision in the Supreme Court.

This time they have filed a complaint on behalf of Florida business and several North Carolina residents claiming that the North Carolina laws discriminate against commerce.  They claim a North Carolina retail residency law and the lack of the ability of the Florida company to secure a North Carolina permit to ship wine from out of state violate the U.S. Constitution’s dormant Commerce Clause.

Two of the North Carolina resident plaintiffs have the last name Rash.   So this will likely be a Rash decision at the end of the day.  (Sorry, had to go there.)

Comments

  1. Thanks for the update (and the laugh).

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