Block v. Canepa

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

DEREK BLOCK, et al.,

:

Plaintiffs,

Case No. 2:20-cv-3686

v. Judge Sarah D. Morrison

Magistrate Judge Chelsey M.

Vascura

JIM CANEPA, et al.,

:

Defendants.

OPINION AND ORDER

Through this action, Plaintiffs challenge the constitutionality of portions of

Ohio’s liquor control laws. (Compl., ECF No. 1.) Plaintiff Kenneth M. Miller is an

Ohio resident and wine collector. His co-plaintiff, The House of Glunz, Inc., is an

Illinois wine retailer with no permit or license from the Ohio Division of Liquor

Control.1 Defendant Dave Yost serves as Ohio’s Attorney General.2 The Wholesale

Beer & Wine Association of Ohio (“WBWAO”) has intervened as a defendant. (See

ECF No. 17.) The matter is before the Court for consideration of Motions for

Summary Judgment filed by Plaintiffs (Pls.’ Mot. Summ. J., ECF No. 52), the

Attorney General (AG’s Mot. Summ. J., ECF No. 53), and the WBWAO (WBWAO’s

Mot. Summ. J., ECF No. 51). The parties have also filed a number of ancillary

motions. Plaintiffs seek relief from this Court’s prior Orders (Pls.’ Am. Mot. Relief,

1 Plaintiff Derek Block voluntarily dismissed his claims. (ECF No. 30.)

2 The Court dismissed Plaintiffs’ claims against all other defendants named

in the Complaint. (ECF Nos. 33, 36.)

ECF No. 54), and to strike certain testimony and exhibits offered in support of

defendants’ Motions for Summary Judgment (ECF Nos. 55–57). Finally, the

WBWAO seeks to strike certain testimony and exhibits offered in support of

Plaintiffs’ Motion for Summary Judgment. (ECF No. 60.) All eight motions, being

fully briefed, were the subject of oral argument held on September 9, 2022 (see ECF

No. 90).

For the reasons set forth below, summary judgment is GRANTED in favor of

the defendants. Accordingly, Plaintiffs’ Motion for Summary Judgment is DENIED.

Plaintiffs’ Motion for Relief from Orders is also DENIED. Plaintiffs’ Motions to

Strike expert testimony are GRANTED IN PART and DENIED IN PART, and

their Motion to Strike lay testimony is DENIED. The WBWAO’s Motion to Strike is

DENIED as moot.

I. BACKGROUND

A. Factual Background

Plaintiffs in this action represent consumers and purveyors of wine. Mr.

Miller describes himself as “an active wine consumer who looks for good wines at

good prices wherever [he] can find them.” (Miller Decl., ECF No. 52-2, ¶ 2.) He finds

it “easier and less time-consuming” to shop for wines online, but is sometimes forced

“to purchase less desirable wine,” due to limitations on sourcing. (Id., ¶ 7.) Chicago-

based House of Glunz “is a family business . . . engage[d] in retail wine sales,

including online sales, and has customers from all over the country[.]” (Donovan

Decl., ECF No. 52-3, ¶ 1–2.) House of Glunz holds licenses to engage in its business

from the City of Chicago and the State of Illinois. (Donovan Dep., ECF No. 50, 61:7–

19.) House of Glunz “would obtain an Ohio direct-shipping permit if one becomes

available,” but it “has no intention of establishing physical premises in Ohio”—

principally because the cost of doing so “would increase the cost of [its] wine and

decrease its competitiveness.” (Donovan Decl., ¶¶ 8–9.)

The instant challenge arises from what Plaintiffs have been unable to do. Mr.

Miller would like to purchase wine from out-of-state wine retailers and have it

shipped directly to his home. (Miller Decl., ¶ 5.) The House of Glunz would like to

sell wine to Ohio consumers and ship it directly to their homes. (Donovan Decl.,

¶¶ 5–7.) They contend that the regulatory scheme preventing them from doing so

runs afoul of the United States Constitution.

B. Ohio’s Liquor Control Laws

Alcohol “is the only consumer product identified in the Constitution. Only its

regulation by States is given explicit warrant.” Wine Country Gift Baskets.com v.

Steen, 612 F.3d 809, 813 (5th Cir. 2010). The history of alcohol regulation in

America has been told many times. See Tenn. Wine & Spirits Retailers Ass’n v.

Thomas, 139 S.Ct. 2449, 2462–70 (2019); Granholm v. Heald, 544 U.S. 460, 476–89

(2005). Without reciting the full history here, it is enough to say that Prohibition

began with the Eighteenth Amendment, and ended with the Twenty-first. See U.S.

CONST. amend. XVIII, repealed by U.S. CONST. amend. XXI. While § 1 of the

Twenty-first Amendment repealed the Eighteenth, § 2 prohibits:

The transportation or importation into any State. . . for delivery or use

therein of intoxicating liquors, in violation of the laws thereof[.]

U.S. Const. amend. XXI, § 2. Thus, § 2 “grants the States the power to regulate

commerce with respect to alcohol.” Lebamoff Enterprises Inc. v. Whitmer, 956 F.3d

863, 869 (6th Cir. 2020), reh’g denied, Case No. 18-2199, Docket No. 56 (May 26,

2020), cert. denied, 141 S.Ct. 1049 (2021).

Ohio has taken full advantage of that power. See Ohio Rev. Code § 4301.011.

Chapters 4301 and 4303 of the Ohio Revised Code, along with their implementing

regulations, establish a comprehensive scheme governing the transportation,

importation, distribution, and sale of alcoholic beverages. (Though the definition of

“alcohol” extends beyond wine, that particular beverage is the type at issue here.)

Together, those laws establish a three-tier system for distributing wine in Ohio.

Entities operating in each tier—first, manufacturers; second, wholesalers; and

third, retailers—must obtain a permit from the Ohio Division of Liquor Control.

See, e.g., Ohio Rev. Code §§ 4303.03, 4303.07, 4303.10, 4303.12. With limited

exception, wine must pass through each tier before reaching a consumer. Generally,

permitted manufacturers must sell to permitted wholesalers (who may purchase

only from permitted manufacturers), see Ohio Rev. Code §§ 4303.07, 4303.10,

4301.58(C), and permitted wholesalers must sell to permitted retailers (who may

purchase only from permitted wholesalers), see Ohio Rev. Code. §§ 4303.03(B)(1),

4303.35; Ohio Admin. Code 4301:1-1-46(B), (F). Wholesalers and retailers are

required to maintain a physical presence within the state of Ohio, and all wine sold

by those entities is required to “come to rest” at that physical location. (See

Stevenson/Jones Report, ECF No. 51-2, ¶ 62.a.); see also Ohio Rev. Code

§§ 4301.10(A)(1), 4301.10(A)(6), 4303.292(A); Ohio Admin Code 4301:1-1-22(B). This

prescribed supply chain allows the state’s alcohol regulatory and enforcement

agencies to keep close watch over the sale and movement of wine throughout Ohio.

(See id., ¶ 4.) It has the added benefit of allowing the state to efficiently collect

excise taxes, which are paid by manufacturers and wholesalers instead of the much

larger population of retailers. (See Stevenson/Jones Report, ¶ 77); see also Ohio Rev.

Code § 4301.43.

To qualify for a permit, participants in the three-tier system must comply

with a host of additional regulations and requirements. See Ohio Rev. Code

§ 4303.25. For example, permit applicants must submit to an initial inspection of

their premises by the Ohio Division of Liquor Control’s Investigative Services Unit.

(Powers Decl., ECF No. 53-1, ¶ 8. See also Chung Decl., ECF No. 53-2, ¶ 14.) The

Compliance Agent conducting that inspection will have received specialized training

on Ohio’s liquor control laws. (Powers Decl., ¶¶ 9, 12.) A permit holder must submit

to renewal inspections of their premises and books and records annually thereafter,

as well as inspections based on any complaints the Division might receive. (Id., ¶

23. See also Chung Decl., ¶¶ 18, 20.) During these inspections, Compliance Agents

monitor for adherence to: ownership rules, see, e.g., Ohio Rev. Code § 4301.24(B),

Ohio Admin. Code 4301:1-1-24(B); environmental cleanliness and product safety

standards, see, e.g., Ohio Admin. Code 4301:1-1-17; minimum pricing requirements,

see, e.g., Ohio Admin. Code 4301:1-1-03; and form-of-payment restrictions, see, e.g.,

Ohio Rev. Code § 4301.24(D). (Chung Decl., ¶¶ 17–18.) If a violation is found, the

permit holder may be subject to enforcement action—including Correction Notices

and fines, up to suspension or revocation of the permit. (Powers Decl., ¶ 24.) Each

year, the Division conducts thousands of renewal inspections. (Chung Decl., ¶¶ 21–

23.) In the three-year period ending August 31, 2021, the Division issued 1,357

Correction Notices and 129 formal citations to permit holders. (Chung Decl., ¶¶ 25–

26.)

Two such regulations are particularly relevant to the case sub judice. First,

Ohio law prohibits wine retailers who do not have a Division-issued permit from

shipping wine directly to Ohio consumers (the “Direct Ship Restriction”). See Ohio

Rev. Code §§ 4301.58(C), 4301.60, 4303.25, 4303.27. Because Ohio requires

permitted retailers to maintain a physical presence in the state, the Direct Ship

Restriction has the effect of severely limiting out-of-state retailers’ ability to sell

their wares to Ohio consumers—even those retailers that are licensed to sell wine

by their home state. (See Wark Report, ECF No. 52-4, ¶¶ 9–13, 19, 27, 57.) And

second, Ohio law prohibits individuals from transporting more than 4.5 liters of

wine from out-of-state in any 30-day period (the “Transportation Limit”), further

restricting out-of-state retailers’ access to the Ohio market. See Ohio Rev. Code

§§ 4301.20(L), 4301.60

II. MOTION FOR RELIEF FROM ORDERS

Plaintiffs’ Complaint challenged two provisions of the Ohio liquor control

laws—the Direct Ship Restriction and the Transportation Limit—by bringing

claims against four state officials—Jim Canepa, Superintendent of Liquor Control

for the Ohio Division of Liquor Control; Dave Yost, Ohio Attorney General; Thomas

J. Stickrath, Director of the Ohio Department of Public Safety; and Deborah Pryce,

Chair of the Ohio Liquor Control Commission. (Compl., ECF No. 1.) Those officials

moved to dismiss the Complaint on multiple grounds. (ECF No. 19.) This Court

dismissed Plaintiffs’ claims against Superintendent Canepa, Director Stickrath, and

Chair Pryce after concluding that they were entitled to Eleventh Amendment

immunity, and that the Ex Parte Young exception to such immunity did not apply.

(February 17 Order, ECF No. 33, 13–18.) After supplemental briefing, the

Transportation Limit claim was dismissed because Plaintiffs “fail[ed] to sufficiently

allege a factual predicate establishing a credible threat of prosecution” for violating

the law and, thus, lacked standing to challenge it. (May 12 Order, ECF No. 36, 18.)

Plaintiffs now seek to revive their claims as to Director Stickrath and the

Transportation Limit. (See Pls.’ Mot. Summ. J., Pls.’ Am. Mot. Relief.) “District

courts have authority both under common law and Rule 54(b) to reconsider

interlocutory orders . . . before entry of final judgment.” Rodriguez v. Tenn. Laborers

Health & Welfare Fund, 89 F. App’x 949, 959 (6th Cir. 2004). See also Fed. R. Civ. P.

54(b) (“[A]ny order . . . that adjudicates fewer than all the claims or the rights and

liabilities of fewer than all the parties . . . may be revised at any time before the

entry of a judgment adjudicating all the claims and all the parties’ rights and

liabilities.”). “Traditionally, courts will find justification for reconsidering

interlocutory orders when there is (1) an intervening change of controlling law;

(2) new evidence available; or (3) a need to correct a clear error or prevent manifest

injustice.” Rodriguez, 89 F. App’x at 959. The Court interprets Plaintiffs’ motion as

arguing that new evidence justifies reconsideration of the dismissals.3 The

argument is unavailing.

Plaintiffs’ motion rests on two discovery responses from the Attorney

General. (See Pls.’ Am. Mot. Relief.) First, the following interrogatory response:

[PLAINTIFFS’ INTERROGATORY NO. 16]: In your motion to

dismiss, you assert that none of the defendants has taken or

threatened any enforcement action regarding the 4.5 liter limit on

personal transportation of wine in Oh. Rev. Code § 4301.20 (pp. 7, 19).

State whether this provision would or would not be enforced in the

future against an Ohio resident who transports more than 4.5 liters of

wine into the state. By “enforce,” we mean any steps to investigate,

prevent, bring administrative action, initiate criminal prosecution, or

confiscate the wine, regardless of whether the person or entity is

ultimately sanctioned.

[ATTORNEY GENERAL’S] ANSWER: Objection. Defendant objects

that this Interrogatory No. 16 calls for speculation. Subject to and

without waiving any objections, Defendant answers that the limitation

provision could be enforced if a law enforcement officer observes an

excessive amount of wine during the course of an investigation of other

potential offenses or it may be handled on a complaint-driven basis.

(e.g. if an individual is transporting an excess amount of wine in

addition to transporting illegal narcotics, if an individual or entity is

transporting wine into the state to unlawfully sell at retail).

Another potential scenario is a trace-back investigation. Defendant

further states that the Ohio Department of Public Safety, Ohio

Investigative Unit could conduct a trace-back investigation if it learned

of an alcohol-related incident involving an underage person resulting

in serious death or injury. A trace-back investigation could lead to

additional charges against an individual if the investigation reveals

3 Plaintiffs argue that their motion should be analyzed under Federal Rule of

Civil Procedure 60. Rule 60 applies to motions seeking reconsideration of a final

order. Payne v. Courier-Journal, 193 F. App’x 397, 400 (6th Cir. 2006). But the

February 17 and May 12 Orders are not final—they are interlocutory. See

Consolidation Coal Co. v. U.S. Dep’t of Interior, 43 F. Supp. 2d 857, 863 (S.D. Ohio

1999) (citing James by James v. Sadler, 909 F.2d 834, 836 (5th Cir. 1990))

(explaining that “the dismissal of all claims against a particular party” is

interlocutory “so long as claims against other parties remain for adjudication”).

Rule 54(b) is, accordingly, the more appropriate framework.

that the source of the alcohol was an individual transporting an excess

amount of wine from another State.

(ECF No. 52-34, PAGEID # 4035.) And second, a spreadsheet showing eight arrests

and one administrative citation for violations of the Transportation Limit between

July 22, 2017, and July 22, 2020. (ECF No. 53-7.) The spreadsheet reflects that, of

the eight arrests, five were prosecuted. (ECF No. 53-7, PAGEID # 4481. See also

Lockhart Decl., ECF No. 68-1, ¶ 7.) All five prosecutions involved spiritous liquor.

(Lockhart Decl., ¶¶ 9–10.)

Plaintiffs contend that this information establishes a realistic possibility that

the Ohio Department of Public Safety (under Director Stickrath) will enforce the

Transportation Limit against them. (ECF No. 74, 3.) The Court disagrees. As

discussed at length in the February 17 and May 12 Orders, a plaintiff’s standing to

bring a pre-enforcement action hinges on a “credible threat of prosecution.” Susan

B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014) (internal quotation and

citation omitted). The Sixth Circuit explained in McKay v. Federspiel that a credible

threat may be shown by some combination of the following factors: (1) a history of

past enforcement; (2) enforcement warning letters sent to the plaintiff about his

specific conduct; (3) an attribute of the challenged statute making enforcement

easier or more likely; and (4) a defendant’s refusal to disavow enforcement of the

challenged statute against a particular plaintiff. 823 F.3d 862, 869 (6th Cir. 2016)

(citations omitted). However, “the credibility of a ‘threat’ is diluted when a factual

dissimilarity exists between the plaintiff’s intended future conduct and the conduct

that triggered any prior prosecutions under the challenged statute.” Bronson v.

Swensen, 500 F.3d 1099, 1108 (10th Cir. 2007) (citation omitted). The Court

concluded that the evidence of past enforcement proffered at the Motion to Dismiss

stage was insufficient to confer standing on Mr. Miller.4 (May 12 Order, 17–18.)

That evidence—namely, (i) an undated Reddit post describing the author’s arrest on

charges for transporting excess bourbon into the state and (ii) a press release

announcing charges brought for illegal re-sale of excess alcohol transported into the

state—pertained to conduct sufficiently distinct from Mr. Miller’s intended conduct

that he had not established a credible threat. (Id.)

This “new evidence” does not change the Court’s prior analysis. The

interrogatory response sets out the already-acknowledged fact that the Ohio

Department of Public Safety enforces Ohio’s liquor control laws (see February 17

Order, 17), and provides several scenarios in which it could enforce the

Transportation Limit—none of which encompass an individual of legal age

transporting more than 4.5 liters of wine into the state for personal consumption, as

Mr. Miller desires to do. Similarly, the spreadsheet of arrests fails to establish a

history of enforcing the Transportation Limit against individuals engaging in Mr.

Miller’s desired conduct. As was true before, “[n]one of the other factors is present

in this case.” (May 12 Order, 18.)

The Motion for Relief from Orders is DENIED.

4 The House of Glunz failed to submit any declarations or other evidence

supporting its standing to challenge the Transportation Limit. (See May 12 Order,

16.) Accordingly, it has none. The May 12 Order analyzes only the material

submitted by Mr. Miller.

III. MOTIONS TO STRIKE

The Court next moves to the parties’ several motions to strike evidence

offered in support of the cross-motions for summary judgment.

A. Motions to Strike Expert Reports

Three motions to strike expert reports are pending. (See ECF Nos. 55, 56, 60.)

The admissibility of expert testimony is governed by Federal Rule of Evidence 702:

A witness who is qualified as an expert by knowledge, skill, experience,

training, or education may testify in the form of an opinion or otherwise

if:

(a) the expert’s scientific, technical, or other specialized knowledge

will help the trier of fact to understand the evidence or to

determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods;

and

(d) the expert has reliably applied the principles and methods to the

facts of the case.

The Rule incorporates the Supreme Court’s instruction in Daubert v. Merrell Dow

Pharma., Inc., 509 U.S. 579 (1993) and Kumho Tire Co., Ltd. v. Carmichael, 526

U.S. 137 (1999). See Fed. R. Evid. 702 advisory committee’s notes to 2000 and 2011

amendments. This Court serves as a “gatekeeper,” tasked with “ensuring that an

expert’s testimony both rests on a reliable foundation and is relevant to the task at

hand.” Daubert, 509 U.S. at 597. Courts are afforded “considerable leeway” both in

determining whether to admit expert opinion testimony and how to test its

reliability and relevance to the case at bar. Kumho Tire, 526 U.S. at 152. The

proponent of the expert testimony bears the burden of proving its admissibility. See

Fed. R. Evid. 104(a); Sigler v. Am. Honda Motor Co., 532 F.3d 469, 478 (6th Cir.

2008). Nonetheless, the Federal Rules of Evidence provide a “permissive backdrop,”

favoring the admission of expert opinion testimony. Daubert, 509 U.S. at 588–89.

1. Plaintiffs’ Motions

Plaintiffs move to strike the Expert Report of William C. Kerr, Ph.D. (Kerr

Report, ECF No. 66-1) and the Expert Report and Rebuttal Expert Report of Bruce

D. Stevenson and Gary E. Jones (Stevenson/Jones Report; Rebuttal Report, ECF

No. 51-3). (Mot. to Strike Kerr, ECF No. 56; Mot. to Strike Stevenson/Jones, ECF

No. 55.) Dr. Kerr has 25 years’ experience as a scientific researcher in the areas of

alcohol consumption and public health. (Kerr Report, ¶ 1.) Messrs. Stevenson and

Jones are veterans of the Ohio Division of Liquor Control, respectively having

served the agency for 25 and 36 years. (Stevenson/Jones Report, ¶¶ 8, 12.) Through

their reports, Dr. Kerr and Messrs. Stevenson and Jones offer expert opinion

testimony on alcohol beverage control policy and Ohio’s regulatory apparatus.

Because Plaintiffs object to the Kerr Report and the Stevenson/Jones Reports

on the same bases (compare Mot. to Strike Kerr with Mot. to Strike

Stevenson/Jones), the Court analyzes the motions together. Though Plaintiffs do not

frame their arguments in terms of the test laid out in Daubert, the Court interprets

their challenge as going to the relevance and reliability of the opinions.

a) Legal opinions

Plaintiffs first argue that the Kerr Report and the Stevenson/Jones Reports

must be stricken because they “consist[] primarily of inadmissible legal opinions.”

(Mot. to Strike Stevenson/Jones, 2, 6. See also Mot. to Strike Kerr, 4.) “Expert

testimony on the law is excluded because the trial judge does not need the judgment

of witnesses.” United States v. Zipkin, 729 F.2d 384, 387 (6th Cir. 1984). The Court’s

“special legal knowledge” renders such evidence superfluous. Id. Opinion testimony

may embrace an ultimate issue, Fed. R. Evid. 704(a), but an opinion “carefully

couched in the precise language used in case law” may be suspect. Berry v. City of

Detroit, 25 F.3d 1342, 1353 (6th Cir. 1994). Paragraphs 2 and 122 of the

Stevenson/Jones Report, and Paragraph 12 of the Kerr Report (not including the

sub-paragraphs), are conclusive statements phrased in terms of the “predominant

effect” test laid out in Tennessee Wine. In other words, they appear to answer

precisely the legal question before the Court. The Court uses its “scalpel,” Babb v.

Maryville Anesthesiologists P.C., 942 F.3d 308, 316 (6th Cir. 2019), to strike those

three paragraphs.

b) Hearsay

Plaintiffs next argue that the Reports are impermissibly based on hearsay for

which no proper foundation was laid. (Mot. to Strike Stevenson/Jones, 4, 6; Mot. to

Strike Kerr, 6.) The Federal Rules of Evidence allow an expert to

base an opinion on facts or data in the case that the expert has been

made aware of or personally observed. If experts in the particular field

would reasonably rely on those kinds of facts or data in forming an

opinion on the subject, they need not be admissible for the opinion to

be admitted.

Fed. R. Evid. 703.

As to Dr. Kerr, Plaintiffs focus their argument on the fact that Rule 703

permits expert opinions based on inadmissible data—but does not permit the

inadmissible data itself. (ECF No. 76, 9.) Dr. Kerr specifically states that “[a]ll of

the opinions expressed in [his] report are [his] own independent conclusions.” (Kerr

Report, ¶ 11.)

As to Messrs. Stevenson and Jones, Plaintiffs insist that “[i]t is inconceivable

that experts in the alcohol and public health field would rely on” sources such as “a

1933 book on the evils of alcohol” or an article from Forbes magazine.5 (ECF No. 75,

7.) But the pair relied on studies, data, and literature that they “believe [to be]

appropriate in view of the facts and nature of this case[.]” (Stevenson/Jones Report,

¶ 20.) Without more, Plaintiffs’ indignation as to the date or form in which the

relied-upon sources were published is insufficient to call the reasonableness of that

reliance into question.

c) Reliability

Finally, Plaintiffs argue that the portions of the Kerr Report and the

Stevenson/Jones Reports opining on the effects of eliminating the Direct Ship

Restriction are unreliable because they “are not based on adequate data or the

product of reliable methodology.” (Mot. to Strike Stevenson/Jones, 4. See also Mot.

to Strike Kerr, 2–4.) Their principal complaint is that the reports cite no “concrete

evidence showing that any of these harmful effects have occurred in the states that

allow out-of-state retailers to ship wine to consumers[.]” (Mot. to Strike

Stevenson/Jones, 5. See also Mot. to Strike Kerr, 2–3.) The argument is

unpersuasive. An expert must have “good grounds” for her opinion, Daubert, 509

5 1933 was, in fact, a watershed year in the field of alcohol regulation. See

Bridenbaugh v. Freeman-Wilson, 227 F.3d 848, 853 (7th Cir. 2000) (“America

changed course in 1933 and repealed the eighteenth amendment [establishing

Prohibition] by § 1 of the twenty-first.”).

U.S. at 590, but “mere weaknesses in the factual basis of an expert witness’

opinion . . . bear on the weight of the evidence rather than on its admissibility.”

McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 801 (6th Cir. 2000) (cleaned up).

Plaintiffs do no more than point out a weakness in the expert reports.

Plaintiffs’ Motion to Strike Stevenson/Jones Reports and Motion to Strike

Kerr Report are each GRANTED IN PART and DENIED IN PART.

2. WBWAO’s Motion to Strike Wark Report

The WBWAO moves to strike the expert report of Tom Wark. (ECF No. 60.)

Plaintiffs offer Mr. Wark’s report in support of their Motion for Summary

Judgment. (See Wark Report.) Because Plaintiffs fail, even with Mr. Wark, to

establish that they are entitled to judgment as a matter of law, the motion is

DENIED as moot.

B. Plaintiffs’ Motion to Strike Lay Opinion Testimony

Finally, Plaintiffs move to strike portions of the sworn declarations offered

by: Shaun Powers, a Compliance Agent Supervisor for the Ohio Division of Liquor

Control’s Investigative Services Unit (Powers Decl., ¶ 2); Frank Chung, Chief of the

Investigative Services Unit (Chung Decl., ¶ 3); and Melissa A. Schiffel, the elected

prosecutor for Delaware County, Ohio (Schiffel Decl., ECF No. 53-5, ¶ 3). (ECF No.

57.) All three are lay witnesses offering opinion testimony in support of the

Attorney General’s motion for summary judgment. Under Federal Rule of Evidence

701, a lay witness may only testify as to an opinion that is:

(a) rationally based on the witness’s perception;

(b) helpful to clearly understanding the witness’s testimony or to

determining a fact in issue; and

(c) not based on scientific, technical, or other specialized knowledge[.]

Plaintiffs first move to strike the following paragraph of Mr. Powers’s

declaration:

7. Ohio’s liquor control laws generally require beer and wine sold

in Ohio to pass through Ohio’s three-tier system of alcoholic

beverage distribution. The three-tier system consists of

suppliers (including manufacturers), wholesale distributors, and

retailers. Each tier is regulated and licensed by the State of

Ohio, with the goal of ensuring public health and safety.

(Powers Decl., ¶ 7.) Plaintiffs argue that this paragraph constitutes an improper

legal opinion. (ECF No. 57, 2.) The Court disagrees. Mr. Powers simply recites his

understanding of the framework in which his team operates. The fact that the

statement pertains to a scheme established by law does not transform it into an

impermissible legal opinion. See Berry, 25 F.3d at 1353–54 (“It is the responsibility

of the court, not testifying witnesses, to define legal terms.”).

Plaintiffs also move to strike the following:

Powers Declaration

31. Given the absence of any mechanism to ensure that out-of-state

retailers shipping to Ohio comply with Ohio’s health and safety

regulations, there is an increased and uncontrollable risk of sale

to minors, unlawful price manipulation, or other violations of

Ohio laws and regulations if out-of-state retailers are allowed to

sell and ship wine or other alcohol products to Ohio on the same

bases as in-state retailers that can be physically inspected by

the Division.

(Powers Decl., ¶ 31.)

Chung Declaration

31. Based on information and experience, voluntary compliance is

not a feasible mechanism for ensuring that out-of-state retailers

shipping to Ohio comply with applicable Ohio health and safety

regulations. As indicated above, the Division has issued over a

thousand Correction Notices and over one hundred Citations to

Ohio liquor permit holders over the past three years. These

permit holders know they are subject to annual physical

inspection by the Division, yet hundreds still commit violations.

Retailers that are not subject to annual physical inspection by

the Division have even less incentive to ensure compliance with

applicable Ohio laws.

32. Reliance on authorities in other states is also not a feasible

mechanism for ensuring that out-of-state retailers shipping to

Ohio comply with applicable Ohio health and safety regulations.

First, the Division has no way of guaranteeing that other state

enforcement authorities will agree to cooperate with Ohio and

inspect retailers located in their states for compliance with Ohio

laws and regulations. Additionally, even if another state did

agree to such cooperation, agents in those states will not receive

the same training as Ohio’s Compliance Agents, who are trained

specifically and exclusively on Ohio’s laws.

33. Given the absence of any mechanism to ensure that out-of-state

retailers shipping to Ohio comply with Ohio’s health and safety

regulations, there is an increased and uncontrollable risk of

fraud, theft, sale to minors, unlawful conflicts of interest,

unlawful price manipulation, or other violations of Ohio laws

and regulations if out-of-state retailers are allowed to sell and

ship wine or other alcohol products to Ohio on the same bases as

in-state retailers that can be physically inspected by the

Division.

(Chung Decl., ¶¶ 31–33.)

Schiffel Declaration

9. I am concerned that the increased availability of alcohol,

particularly over the internet, may result in increased levels of

alcohol consumption in Delaware County, which, in turn, may

result in increased levels of criminal activity.

(Schiffel Decl., ¶ 9.)

Plaintiffs argue that these portions of the witnesses’ declarations do not

comport with Rule 701 because they not based on witness perceptions, are not

helpful to determining a fact at issue in the case, and are speculative. (ECF No. 57,

2–3; ECF No. 77.) Again, the Court disagrees. As to Mr. Powers and Mr. Chung, the

statements are rationally based on their perceptions as members of the team

charged with enforcing the Ohio liquor control laws, and helpful to determining how

those laws are executed and enforced in practice. And as to Attorney Schiffel, the

statement is rationally based on her perception as a county prosecutor, and is

helpful to determining the impact of the laws’ enforcement. While the testimony, by

its nature, is somewhat speculative, the Court is “convinced,” based on the balance

of their declarations, that these witnesses “kn[o]w enough from firsthand knowledge

to testify rationally as to” the expected effects of a change in the laws they enforce.

Heritage Mut. Ins. Co. v. Reck, 127 F. App’x 194, 199 (6th Cir. 2005).

Plaintiffs’ Motion to Strike Inadmissible Lay Opinions (ECF No. 57) is

DENIED.

IV. MOTIONS FOR SUMMARY JUDGMENT

Summary judgment is appropriate when “there is no genuine dispute as to

any material fact and the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a). The movant has the burden of establishing there are no genuine

issues of material fact, which may be achieved by demonstrating the nonmoving

party lacks evidence to support an essential element of its claim. Celotex Corp. v.

Catrett, 477 U.S. 317, 322–23 (1986); Barnhart v. Pickrel, Schaeffer & Ebeling Co.,

12 F.3d 1382, 1388–89 (6th Cir. 1993). The burden then shifts to the nonmoving

party to “set forth specific facts showing that there is a genuine issue for trial.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quoting Fed. R. Civ. P.

56). When evaluating a motion for summary judgment, the evidence must be viewed

in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398

U.S. 144, 157 (1970).

A genuine issue exists if the nonmoving party can present “significant

probative evidence” to show that “there is [more than] some metaphysical doubt as

to the material facts.” Moore v. Philip Morris Cos., 8 F.3d 335, 339–40 (6th Cir.

1993). In other words, “the evidence is such that a reasonable jury could return a

verdict for the nonmoving party.” Anderson, 477 U.S. at 248. See also Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (concluding that

summary judgment is appropriate when the evidence could not lead the trier of fact

to find for the nonmoving party).

Here, Defendants have submitted sufficient admissible evidence that there is

no genuine issue of material fact and they are entitled to judgment as a matter of

law. Plaintiffs have failed to present significant probative evidence establishing

otherwise.

A. Lebamoff Enterprises is controlling.

Three months before Plaintiffs filed the instant action, the Sixth Circuit

issued a decision in Lebamoff Enterprises Inc. v. Whitmer, 956 F.3d 863 (6th Cir.

2020), reh’g denied, Case No. 18-2199, Docket No. 56 (May 26, 2020), cert. denied,

141 S.Ct. 1049 (2021), a strikingly similar case challenging Michigan’s analogue to

the Direct Ship Restriction. The question before the Court in this case has

transformed from whether the Direct Ship Restriction is constitutionally sound to

whether Lebamoff is binding on the Court’s consideration thereof. (See ECF No. 80,

1 (stating that “[b]efore this Court can analyze the constitutionality of Ohio’s wine

shipping ban, it will have to decide which Sixth Circuit precedents to follow” and

conceding that the Court’s decision on whether “to follow Lebamoff . . . will largely

determine the outcome of this case”).) Of course, Lebamoff is binding. See Hall v.

Eichenlaub, 559 F. Supp. 2d 777, 782 (E.D. Mich. 2008) (“[A] district court is bound

by the decisions of the Circuit Court of Appeals in which it sits.)”

Michigan has a three-tier system of alcohol distribution. See Lebamoff, 956

F.3d at 867. Michigan law requires licensed retailers to maintain a physical

presence within the state. Id. It also prohibits out-of-state retailers from shipping

wine directly to Michigan consumers, while permitting in-state licensed retailers to

do so. Id. The Lebamoff court6 considered whether this scheme violated the dormant

Commerce Clause. Id. The court began by explaining that “[r]esolution of th[e] case

turns on the accordion-like interplay” between the Commerce Clause and the

Twenty-first Amendment:

6 The opinion in Lebamoff was authored by Chief Judge Sutton, and Judges

McKeague and Donald joined in that opinion. Lebamoff, 956 F.3d at 867. Judge

McKeague also authored a concurring opinion, in which Judge Donald joined,

analyzing the challenged statutes in the context of e-commerce. See id., at 877

(McKeague, J., concurring) (“I believe . . . the crux of this case is the online shipping

component.”). Throughout their briefing, Plaintiffs mischaracterize and

inappropriately seek to depreciate the court’s opinion as one reflecting the views of

Chief Judge Sutton alone. (See, e.g., ECF No. 80, 10 (“Judge Sutton’s opinion does

not control this Court’s analysis because it cannot overrule the Supreme Court or

prior Sixth Circuit precedents.”); Pls.’ Mot for Summ. J., 13, n.7.) But the fact of a

concurrence signed by two of the three judges comprising the panel does not render

the principal opinion that of a single judge.

The [Commerce] Clause grants Congress power to preempt or permit

state laws that interfere with interstate commerce, and it impliedly

“prohibits state laws,” as determined by the federal courts, “that

unduly restrict interstate commerce.” Tenn. Wine & Spirits, 139 S. Ct.

at 2459. Under the implied prohibition, if a state law discriminates

against “out-of-state goods or nonresident economic actors,” it may

survive only if tailored to advance a legitimate state purpose. Id. at

2461.

. . . While the Commerce Clause grants Congress power to eliminate

state laws that discriminate against interstate commerce, the Twenty-

first Amendment grants the States the power to regulate commerce

with respect to alcohol. Section 2 of the Amendment bars “[t]he

transportation or importation into any State, Territory, or possession

of the United States for delivery or use therein of intoxicating liquors,

in violation of the laws thereof.” U.S. Const. amend. XXI, § 2. The

section gives the States broad latitude to regulate the distribution of

alcohol within their borders. See North Dakota v. United States, 495

U.S. 423, 432–33, 110 S.Ct. 1986, 109 L.Ed.2d 420 (1990) (plurality

opinion); see also id. at 447–48, 110 S.Ct. 1986 (Scalia, J., concurring in

the judgment). Indeed, had Congress (as opposed to the people through

the ratification process) enacted this exact law, it is doubtful there

would be any role for the federal courts to play. When faced with a

dormant Commerce Clause challenge to an alcohol regulation, as a

result, we apply a “different” test. Tenn. Wine & Spirits, 139 S. Ct. at

2474. Rather than skeptical review, we ask whether the law “can be

justified as a public health or safety measure or on some other

legitimate nonprotectionist ground.” Id. But if the “predominant effect

of the law is protectionism,” rather than the promotion of legitimate

state interests, the Twenty-first Amendment does not “shield[ ]” it. Id.

Id. at 869.

Applying this framework, the Sixth Circuit found that the challenged statute

“promotes plenty of legitimate state interests.” Id. at 871. What is, and what is not,

a legitimate state interest in the context of alcohol regulation is not a difficult

question to answer. As the Lebamoff court explained, curbing over-consumption and

controlling distribution of alcohol are themselves sufficient. Id. (quoting North

Dakota, 495 U.S. at 433). See also id. at 879 (McKeague, J., concurring) (noting that

the three-tier system of alcohol regulation has many “baked-in public health

justifications”).

After summarizing analogous cases from across the country, the court

concluded:

[T]here is nothing unusual about the three-tier system, about

prohibiting direct deliveries from out of state to avoid it, or about

allowing in-state retailers to deliver alcohol within the State. Opening

up the State to direct deliveries from out-of-state retailers necessarily

means opening it up to alcohol that passes through out-of-state

wholesalers or for that matter no wholesaler at all. See [Arnold’s

Wines, Inc. v. Boyle, 571 F.3d 185, 185 n.3 (2d Cir. 2009)]. That

effectively eliminates the role of Michigan’s wholesalers. If successful,

Lebamoff’s challenge would create a sizeable hole in the three-tier

system. Michigan imposes heavy taxes on all alcohol products at the

wholesale level . . . , prompting higher prices than a free market would

bear. . . . That leaves too much room for out-of-state retailers to

undercut local prices and to escape the State’s interests in limiting

consumption.

There’s ample reason to think Indiana retailers like Lebamoff would do

just that.

Id. at 872.

Plaintiffs argue that Lebamoff is an aberration and should not factor into this

Court’s decision on the motions now before it. (See ECF No. 80, 2.) Instead, they

urge the Court to follow the Sixth Circuit’s pre-Tennessee Wine cases—namely,

Heald v. Engler, 342 F.3d 517 (6th Cir. 2003), aff’d sub nom Granholm v. Heald, 544

U.S. 460 (2005); Byrd v. Tenn. Wine & Spirits Retailers Ass’n, 883 F.3d 608 (6th Cir.

2018), aff’d sub nom Tenn. Wine & Spirits Retailers Ass’n v. Thomas, 139 S.Ct. 2449

(2019); Jelovsek v. Bredesen, 545 F.3d 431 (6th Cir. 2008); and Cherry Hill

Vineyards v. Lilly, 553 F.3d 423 (6th Cir. 2008)—which they argue command a

decision in their favor. 7

But the Court declines Plaintiffs’ invitation to bake this cake from scratch.

Lebamoff is good law, and is controlling and dispositive. While Plaintiffs argue that

Lebamoff is an “outlier” and does not follow prior Sixth Circuit precedent (see ECF

No. 80, 2–3, 8), they fail to acknowledge that Tennessee Wine establishes a

“different” test (which Lebamoff, in fact, applies).8

7 The thrust of Plaintiffs’ argument is that the strict test applied in ordinary

dormant Commerce Clause cases should also apply here. (See Pls.’ Mot. for Summ.

J., 13.) But Tennessee Wine (decided after the four cases on which Plaintiffs rely)

clarified that the Twenty-first Amendment commands a “different inquiry.” 139

S.Ct. at 2474. The Fourth Circuit aptly explains why:

The Plaintiffs concede on appeal that, when a statute regulating

products other than alcoholic beverages is challenged, the ordinary

dormant Commerce Clause analysis applies, triggering “a variant of

strict scrutiny” and requiring invalidation of the discriminatory statute

“unless the state demonstrates both that the statute serves a

legitimate local purpose, and that this purpose could not be served as

well by available nondiscriminatory means.” And they also recognize

that “the Twenty-first Amendment gave states greater regulatory

authority over alcoholic beverages than they have over other products.”

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.

B-21 Wines, 36 F.4th at 225 (internal citations omitted). Accord Bridenbaugh,

227 F.3d at 851 (“[Section] 2 of the twenty-first amendment empowers

Indiana to control alcohol in ways that it cannot control cheese.”).

8 “[O]nly the Court sitting en banc may overrule published circuit precedent,

absent an intervening Supreme Court decision or a change in the applicable law.”

Cooper v. MRM Inv. Co., 367 F.3d 493, 507 (6th Cir. 2004).

B. Ohio’s Direct Ship Restriction can be justified on legitimate

nonprotectionist grounds, and their predominant effect is not

protectionism.

The portions of Ohio law at issue here are substantively identical to the

Michigan law discussed in Lebamoff. Ohio has a three-tier system. Wholesalers and

retailers must be permitted by the Division. Permitted retailers must purchase

their product from permitted wholesalers, and must maintain a physical presence

within the state.9 They must also comply with a litany of other regulations—

including opening their premises and books and records to regulators, and selling

merchandise at a mandatory mark-up. Ohio’s liquor control enforcement agencies

routinely conduct inspections of physical premises to ensure compliance with the

liquor control laws, and routinely bring enforcement actions against violators.

Allowing out-of-state retailers to ship wine directly to Ohio consumers would all but

topple the scheme that the Ohio General Assembly has established, with prices

easily undercut and enforcement agencies easily neutered. See Lebamoff, 956 F.3d

at 872 (“Once out-of-state delivery opens, the least regulated (and thus the

cheapest) alcohol will win.”). Accord B-21 Wines, Inc. v. Bauer, 36 F.4th 214, 228

(4th Cir. 2022) (observing that striking down North Carolina’s corollary to the

9 In briefing, Plaintiffs dispute that physical presence is a permissible

requirement. (Pls.’ Mot. Summ. J., 10.) But in Lebamoff, the parties “agree[d] that

Michigan may impose all manner of regulations . . . on its retailers,” including “that

they be present in the State[.]” 956 F.3d at 867. Even more recently, the Eighth

Circuit concluded that physical presence was an “essential feature of [Missouri’s]

three-tiered system.” Sarasota Wine Mkt., LLC v. Schmitt, 987 F.3d 1171, 1184 (8th

Cir. 2021). The Fifth Circuit has also held that “physical location of businesses . . .

is a critical component of the three-tier system.” Wine Country Gift Baskets, 612

F.3d at 821.

Direct Ship Restrictions “would open the North Carolina wine market to less

regulated wine, undermining the State’s three-tier system and the established

public interest of safe alcohol consumption that it promotes”), reh’g denied, No. 21-

1906, Docket No. 58 (June 28, 2022); Sarasota Wine Mkt., LLC v. Schmitt, 987 F.3d

1171, 1184 (8th Cir. 2021) (finding that Missouri’s corresponding laws “are an

essential feature of its three-tiered scheme” and are constitutionally permissible)

reh’g denied, cert. denied, 142 S.Ct. 335 (2021).

In short and in sum, Ohio’s Direct Ship Restrictions can be justified on

legitimate nonprotectionist grounds, and their predominant effect is not

protectionism. Accordingly, the Attorney General and the WBWAO are entitled to

judgment as a matter of law; their motions for summary judgment are GRANTED

and Plaintiffs’ DENIED.

V. CONCLUSION

For the reasons set forth above, the Attorney General’s Motion for Summary

Judgment (ECF No. 53) and WBWAO’s Motion for Summary Judgment (ECF No.

51) are GRANTED. Plaintiffs’ Motion for Summary Judgment (ECF No. 52) is

DENIED; Amended Motion for Relief from Orders (ECF No. 54) is DENIED;

Motion to Strike Kerr Report (ECF No. 55) is GRANTED IN PART and DENIED

IN PART; Motion to Strike Stevenson/Jones Report (ECF No. 56) is GRANTED IN

PART and DENIED IN PART; and Motion to Strike Inadmissible Lay Opinions

(ECF No. 57) is DENIED. Finally, WBWAO’s Motion to Strike (ECF No. 60) is

DENIED as moot.

IT IS SO ORDERED.

/s/ Sarah D. Morrison

SARAH D. MORRISON

UNITED STATES DISTRICT JUDGE