A Wine Seller, A Greek and a Consumer Walk Up to the Bar...

Asking the Supreme Court to Step in on the Wine Retailer Shipping Issue

To many industry and legal observers, it seemed obvious that following the 2019 Supreme Court case Tennessee Wine v Thomas, states would be forced to change their laws concerning interstate retailer wine shipping. After all, that decision made clear that the non-discrimination principles outlined in the landmark Granholm v Heald Supreme Court decision on wine shipping also applied to retailers.

“The majority opinion…issued a strong defense of the Constitution's Commerce Clause, claiming Tennessee's law exists only for economic protectionism and is therefore unconstitutional. The interpretation opens the door for future challenges to discriminatory state alcohol laws, notably pertaining to retailer direct shipping.”
Emma Balter, Wine Spectator, June 26, 2019

“Finally, it must be noted that this "Granholm II" decision may prove most important for the impact it arguably has on legitimizing a national marketplace for alcohol beverages. As noted above advocates for interstate retailers such as the National Wine Retailers Association have fought for over a decade to extend the rationale of Granholm beyond just wineries selling and shipping directly to consumers. The retailers believe they, too, are entitled to make DtC sales without interstate discrimination. Seven justices of the Supreme Court appear to have agreed.”
Richard Blau, Lexology, July 3, 2019

“Which laws are the most likely targets of litigation? Any state alcohol laws that discriminate against “out-of-state economic interests” are vulnerable to challenge under Granholm and Tennessee Retailers. So, litigation could focus on laws that authorize only in-state retailers to deliver or ship to consumers.”
Barry Strike, Alcohol Beverage Law, July 2, 2019

“It is likely that the courts will have to rule against the states in the active court cases. And going forward, as more states move to expand DtC permissions for retailers, they will have to grant the same permissions to out-of-state retailers.”
Alex Koral, SOVOS, June 27, 2019

In a number of cases, District Courts and Circuit Courts of Appeal have in fact not applied the non-discrimination principle to retailer shipping after the Tennessee Wine decision. I have my own theories on why judges have not applied the obvious lessons of the 2019 Tennessee Wine Supreme Court decision and overturned discriminatory state laws that allow in-state retailers to ship wine to its consumers while barring out-of-state retailers from doing the same.

Now the Supreme Court of the United States has the opportunity to hear a case that would allow them to reiterate that they meant what they said in both Granholm and Tennessee Wine and instruct states that if their discriminatory bans on out-of-state retailer shipping are to be upheld as constitutional, states must demonstrate there is no less discriminatory means at their disposal for protecting the health and safety of their residents than a discriminatory ban on out-of-state retailer wine shipments.

The Court is being asked to take up the case of B-21 Wines v Bauer out of North Carolina. In this case, the Florida retailer B-21 Wines challenged a North Carolina law that bars them from shipping to state residents while state law allows in-state retailers to ship to consumers. The district court upheld the discriminatory ban. It was then appealed to the Fourth Circuit Court of Appeals which ruled in a 2-1 decision that the state’s interest in upholding and protecting its own “Three Tier System” was enough to justify the discriminatory retailer wine shipping ban.” B-21 then appealed to the Supreme Court to take the case.

Three “Friends of the Court” have weighed in alongside B-21 Wines asking the Supreme Court to take up the case:

The National Association of Wine Retailers
The national retailer trade association asks the Court to take the case in order to remedy the fact that the Fourth Circuit Court of Appeals misapplied the Supreme Court’s lessons on questions of discriminatory state alcohol laws. It demonstrates that the Supreme Court requires states to defend discriminatory alcohol laws by showing that there are no non-discriminatory alternatives to the state’s discriminatory retailer wine shipping ban in the course of pursuing the health and safety of its citizens. The Fourth Circuit Court of Appeals did not require this of the state of North Carolina.

41 Wine Consumers
This Friend of the Court Brief on behalf of wine consumers from across the country not only argues the Court ought to take the case because it was wrongly decided, but also points out the harm that consumers suffer when they are barred from being able to access wines from out-of-state retailers that often sell wines the consumers can’t find in their local stores.

Indianapolis Greek-American Wine Consumers
This brief asking the Court to take up the B-21 appeal speaks on behalf of greek wine consumers in Indiana who point out the near impossibility of purchasing obscure wines when the out-of-state wine retail market is off limits.

The justices of the Supreme Court are scheduled to take up the B-21 Appeal at their January 6th conference. It should be known soon after if the Court will grant the appeal.

The reason following the 2019 Tennessee Wine v Thomas decision most observers believed it would likely lead to the overturning of discriminatory state laws banning retailer wine shipments is because it’s nearly impossible to read that decision alongside the 2005 Granholm v Heald decision and not conclude that retailer shipping bans are unconstitutional due to their violations of the Constitution’s dormant Commerce Clause.

My theory is that most courts have not seen it this way because they are 1) ideologically committed to a “three-tier system”, 2) believe that it remains an important regulatory regime for advancing legitimate state interests in controlling the alcohol trade; and 3) because they generally misunderstand what a three-tier system actually is and does.

Despite what many people say and believe, today’s Supreme Court is not an activist Court. It generally avoids making broad declarations of constitutional principles and instead tends to opt for narrow decisions. Where the constitutional legitimacy of the three-tier system is concerned, this preference for narrow decisions has been detrimental to consumers and the alcohol industry.

Given what the Supreme Court has said about state alcohol laws, the 21st Amendment, the dormant Commerce Clause, and wine shipping bans over the course of two decisions, I don’t think it’s conceivable the Court would uphold the discriminatory state bans on retailer shipping. However, before that can happen, they must first agree to take up the case. We’ll find out if that happens soon after January 6, 2023.

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B-21 WINES V BAUER CASE DOCUMENTS
-Fourth Circuit Court of Appeals Decision Upholding the NC Shipping Ban and the Dissent.

-B-21 Petition for a Writ of Certiorari to the U.S. Supreme Court.

-Response by North Carolina Arguing Against the Supreme Court Taking the Case.

-B-21 Wines Response to North Carolina’s Response.

-Supreme Court Docket Page for B-21 Wines v Bauer.