Tennessee v. Byrd (Child of Granholm) at SCOTUS

[Count Bobulescu]

 

Those who pay attention to the wine biz, may be familiar with the landmark 2005 SCOTUS case Granholm v. Heald, which gave US wineries the right to ship directly to consumers. Well child of Granholm may be about to be born, in the upcoming SCOTUS case Tennessee v. Byrd/Blair. Oral is set for Jan16,

 

Lots of excitement about it in wine circles because it has the potential to either shut down, or blow open, DtC  shipping for retailers, depending on how broadly or narrowly the court rules. The case itself narrowly involves what's called a durational residency requirement for obtaining a retail alcohol license, but the principle may extend well beyond that.

 

It pitts Total Wine/Trone against the Tennessee Wine & Spirits Retailers Association. Although I'm not generally a fan of Total Wine's wine, I am with them here legally speaking.

 

One of the most bizarre provisions in the law they are challenging (and which hasn't been enforced for six years) is that in order to get an alcohol license in Tennessee you must be resident in the state for two years. Licences must be renewed annually, To renew a license you must be resident for ten years...Go Figya!

 

For anyone who wants to follow along the best one stop resource I know of is:

 

Court Docs & Media Commentary

 

It has both court documents and media coverage

I'm neither a lawyer, nor in the business of 2nd guessing the Supremes, but I have read most of the briefs filed so far, and think Total stand a good chance.

Total filed their brief on 12/13, so amici in support are due imminently.

[curiouskitkatt]

I’m gonna need several glasses of wine to filter through all of this data. In other words, I’m geeking BIG time. Thank you for this post!! 

oenophile,

kat

[Count Bobulescu]

Here's as good a layman's take on this case as you're likely to get, from Tom Wark's "Fermentation " blog.

What’s at stake in the Blair case is not merely the immediate question of whether durational residency requirements violate the Commerce Clause, but also whether the many discriminatory and state-based bans on interstate retailer wine shipping also violate the Constitution’s Commerce Clause. The interest in this case and testimony to the stakes involved can be discerned from the 22 amici briefs that have been filed in support of the appellant (Tennessee Wine & Spirit Retailers Association) and the respondent (Total Wine & More).

The importance of this case is also seen in the fact that the outcome of numerous other current lawsuits will largely depend on the ruling of the Court in Blair (likely sometime around May or June 2019). Two wine retailer shipping cases, one in Michigan and one in Illinois, are essentially on hold until the court decides Blair. In addition, Walmart’s challenge of a Texas law that prevents corporate ownership of retail outlets also hinges in part on the Blair case.

It’s important to appreciate the bottom line in both the Blair case and the cases that await its conclusion. For decades the grant of power to the states by the 21st Amendment to regulate alcohol within their borders has been used in great part to support discriminatory laws that seek primarily to protect local special interests from competition. Though bans on direct shipping, restrictions on who may own retail outlets, restrictions on what kind of retailers may sell what kind of alcohol, and an embrace for the state-mandated three-tier system have all been supported by dishonest and self-serving appeals to safety, in fact, these laws are primarily efforts to reward the special interests who benefit from the protectionist laws and deliver political contributions to ensure those benefits.

If the Court rules that the protections against discrimination promised by the Commerce Clause do indeed apply to retailers, it will go a long way toward bringing down a number of state laws that merely serve the largest campaign contributors. If, on the other hand, the Court veers off course and provides constitutional justification for protectionist state legislation, consumers and entrepreneurs will be mightily harmed.

Fermentation

A more lawyerly look at a possibility few commentators seem to have considered....

As the liquor industry anticipates a groundbreaking decision in the Tennessee Wine and Spirits Retailers Association v. Blair (Tennessee Wine) case, the Supreme Court has the option to render a decision and yet at the same time defer making any groundbreaking legal precedent. To all us legal geeks out there, it is a disappointing option that the Court has available.

The Standing Question

An important but may be overlooked question is whether the plaintiff, Tennessee Wine and Spirits Retailers Association, has standing to sue?

The State of Tennessee, which is a respondent in this case, sought a declaratory judgement from the Federal District Court on whether its durational residency requirements were constitutional. After the Federal District Court’s decision was issued which determined that the durational residency requirements were not constitutional, Tennessee did not appeal the decision to the 6th Circuit and the Tennessee Attorney General waived their right to participate in oral arguments in support of their law at the 6thCircuit.

Tennessee Wine and Spirits Retailers Association filed an appeal to the 6th Circuit, when the 6th Circuit ruled that the durational residency requirements were unconstitutional, it petitioned the U.S Supreme Court.

Tennessee Wine and Spirits Retailers Association is a private trade group, that does not officially represent the people of Tennessee but represents a private economic interest.

So the major question is can a non-governmental agency represent the state’s interest in court? Especially when a state decides that they don’t want to spend the resources to uphold the law.

Supreme Court Precedent on Standing

More at Irish Liquor Lawyer

[Count Bobulescu]

Yesterday SCOTUS granted a motion by 35 states........From Lawfare 360........emph added....

 

Thirty-five states and the District of Columbia can participate as amici during oral arguments in an upcoming U.S. Supreme Court case dealing with residency requirements for out-of-state liquor retailers, the court ruled Friday.

The Illinois attorney general's office will have 10 minutes to address the court on behalf of the states, which will argue that the 21st Amendment and the dormant commerce clause empower them to regulate alcohol sales within their borders. 

This duty is critical to preventing ___ "criminal elements"____ in the alcohol market and maintaining necessary local control, the states said in a November brief.

A quick Google of the term "Liquor Industry Corruption" shows that the majority of recent cases were either in states that have signed the brief, NY and WV, "Oops", or were are the federal level.

[Count Bobulescu]

Part one of a twofer analysis by W Blake Gray on wine-searcher. Remainder tomorrow.

 

Case could open doors

 

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The most interesting arguments are those made by "amici," including consumer groups on both sides and a crowd-funded petition written by wine lovers

Including yours truly.😉

[Count Bobulescu]

Part two of the wine-searcher analysis.............

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A brief filed by 34 states calls "tied house" saloons "soulless." Wholesalers groups argue that only they care sufficiently about the communities where they distribute Smirnoff Ice to be trusted. All of them fear that underage people will get booze from disinterested out-of-state retailers.

But the Pacific Legal Foundation points out that Tennessee already allows out-of-state wineries to ship to its residents (in the wake of the 2005 Granholm decision), which undermines the youth-safety argument.

It's left to Total Wine itself to argue that for all the talk about the potential dangers of out-of-towners owning saloons, this is already legal in Tennessee. There is no residency requirement for owners of bars, restaurants or hotels that serve alcohol.

[curiouskitkatt]

8 hours ago, Count Bobulescu said:

Part two of the wine-searcher analysis.............

The plot thickens...

[Count Bobulescu]

I agree with the final graf below of the SCOTUSblog assessment of yesterday's oral argument, but I'll trample where angels fear to tread, and go one step further. I believe Total Wine, and the Ketchums will get what they want, but that amici such as myself will be disappointed and the Supremes will not reach as far as I would wish. Some justices suggested as much when referring to the "next case to come along".

Oral Argument Analysis

 

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This is a hard case to handicap: Justice Ruth Bader Ginsburg was absent, Chief Justice John Roberts said very little, and Justice Clarence Thomas did not say anything at all. Throw in the fact that Tennessee has made only a half-hearted attempt to defend the residency requirements, and it becomes even more difficult to predict exactly what the justices are likely to do.

 

[Count Bobulescu]

Once again, I'm glad to see that a lawyer has a more optimistic outlook than I have. The checkerboard justice argument is appealing.

 

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Could the Court live with checkerboard justice?

We could and probably will be back in a couple of years and the Justices admitted as much, unless, something influences the Justices to make a bold move!

With splits in the 6^th and 7^th  which will allow interstate wine shipments (this is based on the 6^th Circuit following the Byrd precedent as indicated in the Lebamoff v. Michigan case which extends Granholm to retailers, and in the 7^th it’s based on Judge Wood’s strong opinion against  Illinois’ wine shipping law) while the  2nd and 8^th will not permit interstate wine shipments, the Court will be forced to press the nuclear button eventually.

If not, there will exist checkerboard justice in the liquor world where interstate wine shipping is legal or illegal based on what geographic circuit the state is located. Checkerboard justice is not something anyone wants to see prevail. Further, the permissibility of wine shipping will not be decided by state legislature but by federal judges.

 

 

Oral Argument Analysis

[Count Bobulescu]

A 7-2 consumer friendly ruling from SCOTUS this morning. Here's how Sean O'Leary (Irish Liquor Lawyer) described it..........

 

Writing for the majority Justice Sam Alito made a statement that is going to resonate in the liquor industry for years to come. He held that reading Granholm as only extending to producers has no sound basis and Granholm stands for the proposition that the Commerce Clause prohibits state discrimination against all out-of-state economic interest.

As the debate over how Granholm applies is at issue in many wine shipping cases, Justice Alito may have ended the debate and provided a clear principle for these cases that were previously muddled by the lack of clarity after Granholm. Only time will tell how lower courts apply this principle, but the probability is high they will follow it!

Justice Alito made a very clear statement today. Here is the excerpt from the opinion.

 

“The Association resists this reading. Although it concedes (as it must under Granholm) that §2 does not give the States the power to discriminate against out-of-state alcohol products and producers, the Association presses the argument, echoed by the dissent, that a different rule applies to state laws that regulate in-state alcohol distribution. There is no sound basis for this distinction.

The state laws at issue in Granholm discriminated against out-of-state producers. See 883 F. 3d, at 621. And Granholm never said that its reading of history or its Commerce Clause analysis was limited to discrimination against products or producers. On the contrary, the Court stated that the Clause prohibits state discrimination against all “‘out-of-state economic interests,’” Granholm, 544 U. S., at 472 (emphasis added), and noted that the direct-shipment laws in question “contradict[ed]” dormant Commerce Clause principles because they “deprive[d] citizens of their right to have access to the markets of other States on equal terms.” Id., at 473 (emphasis added). Granholm also described its analysis as consistent with the rule set forth in Bacchus, Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U. S. 573 (1986), and Healy that “‘[w]hen a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, we have generally struck down the statute without further inquiry.’” Granholm, supra, at 487 (quoting Brown-Forman, supra, at 579; emphasis added).