Petition for Writ of Certiorari — Tennessee Wine and Spirits Retailers Association, Petitioner v. Russell F. Thomas, Executive Director of the Tennessee Alcoholic Beverage Commission, et al.
Supreme Court briefJul 20, 2018
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No. 18-___
IN THE
Supreme Court of the United States
TENNESSEE WINE AND SPIRITS RETAILERS ASSOCIATION,
Petitioner,
v.
CLAYTON BYRD, ET AL.,
Respondents.
On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Sixth Circuit
PETITION FOR A WRIT OF CERTIORARI
Richard L. Colbert
KAY GRIFFIN, PLLC
222 Second Avenue North,
Suite 340-M
Nashville, TN 37201
Shay Dvoretzky
Counsel of Record
JONES DAY
51 Louisiana Avenue NW
Washington, DC 20001
(202) 879-3939
sdvoretzky@jonesday.com
Amanda K. Rice
JONES DAY
150 W. Jefferson Ave.
Suite 2100
Detroit, MI 48226
Counsel for Petitioner
i
QUESTION PRESENTED
Whether the Twenty-first Amendment empowers
States, consistent with the dormant Commerce
Clause, to regulate liquor sales by granting retail or
wholesale licenses only to individuals or entities that
have resided in-state for a specified time.
ii
PARTIES TO THE PROCEEDING AND RULE
29.6 STATEMENT
Petitioner is Tennessee Wine and Spirits
Retailers Association.
Petitioner is not the
subsidiary or affiliate of any publicly owned
corporation. No publicly owned corporation owns
10% or more of Petitioner’s stock.
Respondents are Clayton Byrd, in his official
capacity as Executive Director of the Tennessee
Alcoholic Beverage Commission; Tennessee Fine
Wines and Spirits, LLC, d/b/a Total Wine Spirits
Beer & More; and Affluere Investments, Inc., d/b/a
Kimbrough Fine Wine & Spirits.
iii
TABLE OF CONTENTS
Page
QUESTION PRESENTED..........................................i
PARTIES TO THE PROCEEDING AND
RULE 29.6 STATEMENT .............................. ii
TABLE OF AUTHORITIES....................................... v
INTRODUCTION ....................................................... 1
OPINIONS BELOW ................................................... 3
JURISDICTION ......................................................... 3
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED ............................. 3
STATEMENT ............................................................. 6
REASONS FOR GRANTING THE WRIT ............... 16
I.
II.
THE COURTS OF APPEALS ARE DIVIDED .......... 17
A.
The Fifth and Sixth Circuits
Have Struck Down DurationalResidency Requirements. ................... 17
B.
The Eighth Circuit Has Upheld
Durational-Residency
Requirements ...................................... 19
C.
Applying the Same Approach as
the Eighth Circuit, the Second
and Fourth Circuits Have Upheld
Other Residency-Related
Restrictions on Retailers and
Wholesalers ......................................... 21
THE QUESTION PRESENTED MERITS THE
COURT’S ATTENTION ....................................... 23
iv
TABLE OF CONTENTS
(continued)
Page
III.
THE SIXTH CIRCUIT'S DECISION
IS WRONG........................................................ 27
CONCLUSION ......................................................... 32
APPENDIX A: Opinion of the U.S. Court of
Appeals for the Sixth Circuit
(February 21, 2018) ....................................... 1a
APPENDIX B: Opinion and Order of the U.S.
District Court, M.D. Tenn.
(April 14, 2017) ............................................ 57a
v
TABLE OF AUTHORITIES
Page(s)
CASES
44 Liquormart, Inc. v. Rhode Island,
517 U.S. 484 (1996) .............................................. 25
Arnold’s Wines, Inc. v. Boyle,
571 F.3d 185 (2d Cir. 2009) ............... 12, 21, 22, 26
Bacchus Imports, Ltd. v. Dias,
468 U.S. 263 (1984) ...................................... passim
Brooks v. Vassar,
462 F.3d 341 (4th Cir. 2006) .............. 12, 21, 22, 23
Capital Cities Cable, Inc. v. Crisp,
467 U.S. 691 (1984) ........................................ 29, 31
Cooper v. McBeath,
11 F.3d 547 (5th Cir. 1994) .................................. 17
Cooper v. Tex. Alcoholic
Beverage Comm’n,
820 F.3d 730 (5th Cir. 2016) ........................ passim
Cty. of Maricopa v. Lopez-Valenzuela,
135 S. Ct. 2046 (2015) .......................................... 25
Granholm v. Heald,
544 U.S. 460 (2005) ...................................... passim
Jelovsek v. Bredesen,
545 F.3d 431 (6th Cir. 2008) .................................. 8
North Dakota v. United States,
495 U.S. 423 (1990) .............................................. 25
Packingham v. North Carolina,
137 S. Ct. 1730 (2017) .......................................... 25
vi
TABLE OF AUTHORITIES
(continued)
Page(s)
Southern Wine & Spirits v. Div. of
Alcohol & Tobacco Control,
731 F.3d 799 (8th Cir. 2013) ........................ passim
State Bd. of Equalization v. Young’s
Mkt. Co.,
299 U.S. 59 (1936) ................................................ 28
Sveen v. Melin,
138 S. Ct. 1815 (2018) .......................................... 25
CONSTITUTIONAL AND STATUTORY AUTHORITIES
U.S. Const. amend. XXI, § 2 ................................. 3, 27
U.S. Const. art. 1, § 8, cl.3..................................... 4, 27
28 U.S.C. § 1254 .......................................................... 3
47 Pa. Stat. Ann.
§§ 4-403, 4-410, 4-431, 4-432 ............................... 24
235 Ill. Comp. Stat. 5/6-29.1 ..................................... 24
Ark. Code Ann. § 3-4-606 .......................................... 24
Cal. Bus. & Prof. Code § 23366.2 .............................. 25
Ga. Code Ann. § 3-4-23.............................................. 24
Idaho Code Ann. § 23-304 ......................................... 24
Ind. Code Ann. § 7.1-3-21-5....................................... 24
Kan. Stat. Ann. § 41-311 ........................................... 24
Ky. Rev. Stat. Ann. § 243.100 ................................... 24
La. Stat. Ann. § 26:80................................................ 24
Md. Code, Alcoholic Beverages, § 3-102 ................... 24
vii
TABLE OF AUTHORITIES
(continued)
Page(s)
Me. Rev. Stat. tit. 28-A, § 1401 ................................. 24
Mich. Comp. Laws Ann. §436.1601 .......................... 24
Miss. Code. Ann. § 67-3-21........................................ 24
Mo. Rev. Stat. § 311.060.2 .................................. 19, 24
Mo. Rev. Stat. § 311.060.3 ........................................ 19
N.H. Rev. Stat. Ann. § 178:1 ..................................... 24
N.Y. Alco. Bev. Cont. Law §§ 100, 102 ............... 21, 25
Okla. Stat. Ann. tit. 37, § 527 ................................... 24
S.C. Code Ann. § 61-6-110......................................... 24
Tenn. Code Ann. § 57-3-201 ........................................ 8
Tenn. Code Ann. § 57-3-203 ...................................... 24
Tenn. Code Ann. § 57-3-204 .............................. passim
Tenn. Code Ann. § 57-3-404 ........................................ 8
Tex. Alco. Bev. Code Ann. § 6.03 .............................. 24
Tex. Alco. Bev. Code Ann. § 109.53 .......................... 17
Va. Code Ann. § 4.1-222 ............................................ 24
Va. Code § 4.1–310 .............................................. 22, 25
W. Va. Code Ann. § 11-16-8 ...................................... 24
Wash. Rev. Code Ann. § 66.24.010 ........................... 24
Wis. Stat. Ann. § 125.04 ............................................ 24
1
INTRODUCTION
The Twenty-first Amendment grants States
“virtually complete control” over the intrastate
distribution and sale of liquor. Granholm v. Heald,
544 U.S. 460, 488 (2005). Like nearly all States,
Tennessee has exercised that authority to create a
three-tier distribution system that separately
regulates (1) producers of liquor, (2) wholesalers that
act as middlemen, and (3) retailers that sell directly
to consumers. As part of this regime, Tennessee
imposes durational-residency requirements for retail
liquor licenses. Tennessee law requires individuals
to reside in Tennessee for two years before they are
eligible for a license to sell liquor to consumers; the
same requirements apply to the directors, officers,
and capital stockholders of corporate applicants. See
Tenn. Code Ann. § 57-3-204(b)(2)(A), (3)(A).
Tennessee is not alone: At least twenty-one States
impose
some
form
of
durational-residency
requirement for liquor retailers or wholesalers. And
many
States
impose
other
residency-based
requirements on those entities.
These laws make good sense. As Judge Sutton
recognized below, States have a core Twenty-first
Amendment interest in “[p]romoting responsible
consumption and orderly liquor markets,” through
close regulation of liquor retailers and wholesalers.
Pet.App. 50a (Sutton, J., dissenting). And retailers,
in particular, “are closest to the local risks that come
with selling alcohol, such as ‘drunk driving, domestic
abuse, [and] underage drinking.’”
Id. (quoting
Southern Wine & Spirits v. Div. of Alcohol & Tobacco
Control, 731 F.3d 799, 811 (8th Cir. 2013)).
Requiring individuals (or corporate principals) to
2
reside in the communities they serve for a sustained
period before becoming eligible for retail or wholesale
licenses ensures that each seller “will be
knowledgeable about the community’s needs and
committed to its welfare.” Id.
In the decision below, however, the Sixth Circuit
held, over Judge Sutton’s dissent, that Tennessee’s
durational-residency requirements violate the
dormant Commerce Clause. The court acknowledged
and deepened a
circuit split about the
constitutionality of such laws. The Fifth and now
Sixth Circuits have held that durational-residency
requirements violate the dormant Commerce Clause.
The Eighth Circuit, in contrast, has held that they
are a valid exercise of States’ Twenty-first
Amendment authority. As the Eighth Circuit put it,
“state policies that define the structure of the [threetier] liquor distribution system” are “‘protected under
the
Twenty-first
Amendment’”
“against
constitutional challenges based on the Commerce
Clause,” as long as they “giv[e] equal treatment to instate and out-of-state liquor products and producers
. . . .” S. Wines & Spirits, 731 F.3d at 809 (quoting
Granholm, 544 U.S. at 489) (emphasis added). In so
holding, the Eighth Circuit agreed with the approach
of the Second and Fourth Circuits, which, following
Granholm, upheld other kinds of residency-related
restrictions on retailers and wholesalers.
This issue is important.
It determines the
constitutionality of durational-residency laws in at
least twenty-one States.
And in resolving the
question presented, the Court will provide muchneeded guidance to courts that have struggled to
understand Granholm’s implications for other
3
restrictions that states impose on retailers and
wholesalers. This case is also a clean vehicle—a
declaratory-judgment action filed solely to determine
the constitutionality of the law at issue. Finally, the
decision below—which leaves next to no continuing
role for Section 2 of the Twenty-first Amendment’s
grant of authority to the States—is wrong. The
Court should grant certiorari and reverse the
decision below.
OPINIONS BELOW
The District Court’s opinion granting summary
judgment to Respondent Tennessee Fine Wines
(Pet.App. 57a–81a) is published at 259 F. Supp. 3d
785 (M.D. Tenn. 2017). The Sixth Circuit’s decision
affirming that judgment (Pet.App. 1a–56a) is
published at 883 F.3d 608 (6th Cir. 2018).
JURISDICTION
The Sixth Circuit entered judgment on February
21, 2018. On April 26, 2018, Justice Kagan extended
the time to file a certiorari petition to and including
July 21, 2018. No. 17A1186. This Court has
jurisdiction under 28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
1. The Twenty-first Amendment of the
United States Constitution provides that “[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, is hereby prohibited.”
U.S. Const. amend. XXI, § 2.
4
2. The Commerce Clause of the United
States Constitution provides that “[t]he Congress
shall have Power . . . [t]o regulate Commerce with
foreign Nations, and among the several States, and
with the Indian Tribes.” U.S. Const. art. 1, § 8, cl.3.
3. Section 57-3-204(b) of the Tennessee
Code Annotated, which addresses the issuance of
licenses for the retail sale of alcoholic beverages,
provides, in relevant part:
(2) No retail license under this section may
be issued or transferred to or held by, to any
individual:
(A) Who has not been a bona fide
resident of this state during the twoyear period immediately preceding the
date upon which application is made to
the commission or, with respect to
renewal of any license issued pursuant
to this section, who has not at any time
been a resident of this state for at least
ten (10) consecutive years;
[. . .]
(3) The commission may, in its discretion,
issue such a retail license to a corporation;
provided, that no such license shall be
issued to, transferred to, or maintained by
any corporation unless such corporation
meets the following requirements:
(A) No retail license shall be issued to,
transferred to, or maintained by any
corporation if any officer, director, or
stockholder owning any capital stock in
the corporation, would be ineligible to
5
receive a retailer’s license for any reason
specified in subdivision (b)(2), if
application for such retail license had
been made by the officer, director, or
stockholder in their individual capacity;
(B) All of its capital stock must be owned
by individuals who are residents of this
state and either have been residents of
the state for the two (2) years
immediately
preceding
the
date
application is made to the commission
or, with respect to renewal of any
license issued pursuant to this section,
who has at any time been a resident of
this state for at least ten (10)
consecutive years;
[. . .]
(D) No stock of any corporation licensed
under this section shall be transferred
to any person who is not a resident of
this state and either has not been a
resident of the state for at least two (2)
years next preceding or who at any time
has not been a resident of this state for
at least ten (10) consecutive years.
(4) It is the intent of the general assembly
to distinguish between licenses authorized
generally under this title and those
specifically authorized under this section.
Because licenses granted under this section
include the retail sale of liquor, spirits and
high alcohol content beer which contain a
higher alcohol content than those contained
6
in wine or beer, as defined in § 57-5-101(b),
it is in the interest of this state to maintain
a higher degree of oversight, control and
accountability for individuals involved in
the ownership, management and control of
licensed retail premises. For these reasons,
it is in the best interest of the health, safety
and welfare of this state to require all
licensees to be residents of this state as
provided herein and the commission is
authorized and instructed to prescribe such
inspection, reporting and educational
programs as it shall deem necessary or
appropriate to ensure that the laws, rules
and regulations governing such licensees
are observed.
Tenn. Code Ann. § 57-3-204(b)(2)(A), (3)(A)–(B),
(3)(D), (4).
STATEMENT
1. “The Twenty-first Amendment grants the
States virtually complete control over whether to
permit importation or sale of liquor and how to
structure the liquor distribution system.” Granholm,
544 U.S. at 488 (quoting California Retail Liquor
Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97,
110 (1980)). Consistent with that broad grant of
authority, States are free “to ban the sale and
consumption of alcohol altogether.” Id. at 488–89.
Alternatively, “States may . . . assume direct control
of liquor distribution through state-run outlets.” Id.
at 489. Or they can set up a regulatory scheme
governing private manufacturers, distributors, and
retailers.
Such
three-tier
systems
are
7
“unquestionably legitimate.”
Id. (quoting North
Dakota v. United States, 495 U.S. 423, 432 (1990)).
To be sure, state alcohol laws may be limited in
some respects by the dormant Commerce Clause,
which
generally
prevents
States
from
“discriminat[ing] against interstate commerce” or
“favor[ing] in-state economic interests over out-ofstate interests.” See id. at 487 (quoting BrownForman Distillers Corp. v. New York State Liquor
Authority, 476 U.S. 573, 579 (1986)). For example, in
Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984),
this Court invalidated an excise tax that exempted
some liquors produced in-State, where the sole,
“undisputed . . . purpose of the exemption” was “mere
economic protectionism” rather than “any clear
concern of the Twenty-first Amendment.” Id. at 271,
276. This Court later emphasized in Granholm,
however, that “state policies” that define the
structure of a three-tier distribution system “are
protected under the Twenty-first Amendment when
they treat liquor produced out of state the same as
its domestic equivalent.” 544 U.S. at 489. Granholm
thus distinguished between discrimination against
out-of-state products, which the dormant Commerce
Clause prohibits, and a State’s decisions about “how
to structure the liquor distribution system” within its
borders, over which “[t]he Twenty-first Amendment
grants the States virtually complete control.” Id. at
488. Indeed, all nine Justices agreed that States
have virtually plenary authority over structuring a
three-tier liquor distribution system, at least as long
as they provide equal treatment to liquor produced in
and out of state. See id.; see also id. at 518 (Thomas,
J. dissenting).
8
2. Tennessee,
like
most
States,
has
implemented a three-tier regulatory scheme for the
distribution of alcohol. See Pet.App. 2a; see also
Jelovsek v. Bredesen, 545 F.3d 431, 433 (6th Cir.
2008)
(describing
Tennessee’s
regulatory
framework). Under that scheme, “[m]anufacturers
are limited to selling to wholesalers; wholesalers
may sell to retailers, or in some cases other
wholesalers; [and] consumers are required to buy
only from retailers.” Pet. App 2a (quoting Jelovsek,
545 F.3d at 434); see also Tenn. Code Ann. § 57-3404(b)–(d).
The Tennessee Alcoholic Beverage
Commission (“TABC” or the “Commission”) oversees
this system and issues licenses to individuals and
entities that meet the statutory requirements. See
Pet.App. 2a–3a; Tenn. Code Ann. § 57-3-201.
This case is about the statutory requirements for
retail licenses. Tennessee law provides that, to
obtain a retail license, an individual must have “been
a bona fide resident of [Tennessee] during the twoyear period immediately preceding the date upon
which application is made.” Tenn. Code Ann. § 57-3204(b)(2)(A).
Corporations, for their part, are
ineligible for a retail license “if any officer, director
or stockholder owning any capital stock in the
corporation, would be ineligible to receive a retailer’s
license for any reason specified in subdivision (b)(2).”
Id. § 57-3-204(b)(3)(A). 1
1 Two other aspects of Tennessee’s regulatory scheme were
also at issue in the lower courts: “its application of the
residency requirement to 100% of a retailer’s stockholders,
Tenn. Code Ann. § 57-3-204(b)(3)(A), (B), (D), and its imposition
9
The
Tennessee
legislature
codified
its
explanation of the health and safety benefits of these
durational-residency requirements:
Because licenses granted under this section
include the retail sale of liquor, spirits and
high alcohol content beer which contain a
higher alcohol content than those contained
in wine or beer, . . . it is in the interest of
this state to maintain a higher degree of
oversight, control and accountability for
individuals involved in the ownership,
management and control of licensed retail
premises. For these reasons, it is in the
best interest of the health, safety and
welfare of this state to require all licensees
to be residents of this state as provided
herein . . . .
Tenn. Code Ann. § 57-3-204(b)(4).
3. Respondents Tennessee Fine Wines and
Spirits, LLC (“Fine Wines”) and Affluere
Investments, Inc. (“Affluere”) applied for Tennessee
retail licenses in November 2016. See Pet.App. 3a.
It is undisputed that neither entity satisfies the
durational-residency requirements for these licenses.
See id.; D.Ct. Dkt. 1-1, Compl. ¶¶ 12–13. Both
entities have principal addresses outside Tennessee.
See Pet.App. 3a; D.Ct. Dkt. 1-1, Compl. ¶¶ 3–4. And
although Fine Wines is a Tennessee limited liability
company, none of its members are Tennessee
(continued…)
of a ten-year residency requirement for renewal of a license, id.
§ 57-3-204(b)(2)(A).” Pet.App. 54a (Sutton, J., dissenting).
10
residents. See Pet.App. 3a; D.Ct. Dkt. 1-1, Compl.
¶ 4.
Petitioner Tennessee Wine and Spirits Retailers
Association (the “Association”) represents the
interests of licensed Tennessee retailers.
See
Pet.App. 4a. The Association learned that the TABC
was considering granting Fine Wines’s and Affluere’s
retail-license applications despite their failure to
satisfy the durational-residency requirements. See
id. The Association then told the TABC that it would
immediately sue over licenses issued in violation of
state law. See D.Ct. Dkt. 1-1, Compl. ¶ 17. Fine
Wines and Affluere, for their part, told the TABC
that they would sue to challenge the constitutionality
of the durational-residency requirements if the
TABC denied their applications. See id. ¶ 18.
“[F]ace[d] [with] imminent litigation” over this
dispositive issue, id. ¶ 25, the TABC’s Executive
Director, Clayton Byrd, filed a declaratory-judgment
action in Tennessee state court. See Pet.App. 4a.
Byrd named Fine Wines, Affluere, and the
Association as Defendants. See generally D.Ct. Dkt.
1-1, Compl. The Complaint explained that the
TABC’s staff “f[ound] no other grounds for denying
[Fine Wines’ and Affluere’s] license applications”
besides the “statutory residency requirement.” Id.
¶ 14. Byrd therefore sought a declaratory judgment
about the constitutionality of those requirements, so
that the TABC could “lawfully fulfill its duties . . .
and correctly determine whether nonresident
Defendants [Fine Wines and Affluere] may be issued
a retail liquor license.” Id. ¶ 27.
The Association removed the case on federalquestion grounds. See Pet.App. 4a. The District
11
Court then realigned the parties to reflect their
interests in the litigation, denominating Fine Wines
and Affluere as Plaintiffs and the Association as
Defendant. See id. at 4a n.1. 2
Fine Wines moved for summary judgment,
arguing that Tennessee’s durational-residency
requirements violate the dormant Commerce Clause.
See id. at 57a–58a. Affluere sought a preliminary
injunction on the same basis. See D.Ct. Dkt. 63.
4. The District Court granted Fine Wines’
motion for summary judgment. Despite Granholm’s
limitation of dormant Commerce Clause scrutiny to
laws that “discriminate in favor of local producers,”
544 U.S. at 489 (emphasis added), the court held that
such scrutiny also extends to state laws governing
local retailers. See Pet.App. 65a–72a. Next, the
court found that Tennessee’s durational-residency
requirements in fact discriminate in favor of in-state
retailers, even though they apply to in-state and outof-state retailers alike. Id. at 73a–76a. Finally, the
District Court found that those requirements do not
“advance a legitimate local purpose that cannot be
adequately served by reasonable nondiscriminatory
alternatives.”
Id. at 80a.
The District Court
therefore held that Tennessee’s durational-residency
requirements violate the dormant Commerce Clause,
and enjoined their enforcement. Id. at 80a–801a.
2 Although Byrd remained denominated as a Plaintiff, he
defended the constitutionality of the state law in response to
Fine Wines’ summary judgment motion in the District Court,
and on appeal in the Sixth Circuit. See Pet.App. 4a n.1.
12
6. A divided panel of the Sixth Circuit affirmed.
The majority observed that this Court’s precedents
“ha[ve] created some uncertainty” about whether
“the dormant Commerce Clause appl[ies] only when
an alcoholic-beverages law regulates producers or
products,” or whether it also applies to regulations of
retailers and wholesalers. Id. at 11a. And it
acknowledged a circuit split on that fundamental
question. See id. at 11a–12a. The Second, Fourth,
and Eighth Circuits have interpreted Granholm to
mean that the dormant Commerce Clause applies
only to state laws that regulate alcohol producers or
products. See id. at 12a–13a; see also Arnold’s
Wines, Inc. v. Boyle, 571 F.3d 185, 190 (2d Cir. 2009);
Brooks v. Vassar, 462 F.3d 341, 352 (4th Cir. 2006);
S. Wine & Spirits, 731 F.3d at 809–10. According to
these circuits, the Twenty-first Amendment protects
laws regulating alcohol retailers and wholesalers
from dormant Commerce Clause scrutiny. The Fifth
Circuit, on the other hand, has extended Granholm
to retail regulation, and has held that durationalresidency requirements fail dormant Commerce
Clause scrutiny. See Pet.App. 13a–14a; see also
Cooper v. Tex. Alcoholic Beverage Comm’n, 820 F.3d
730 (5th Cir. 2016) (Cooper II).
The panel majority followed the Fifth Circuit.
See Pet.App. 15a. Like the Fifth Circuit, the panel
wrote off the producer-specific language in
Granholm, asserting that Granholm had “discussed
the relationship between the dormant Commerce
Clause and the Twenty-first Amendment in the
context of ‘producers’ simply because Granholm
involved statutes addressing that step in the threetier system.” Id. at 23a. And it relied on this Court’s
13
earlier decision in Bacchus in holding that the
dormant Commerce Clause extends to the regulation
of retailers. See id. at 22a–23a.
The majority again followed the Fifth Circuit’s
reasoning in finding that Tennessee’s interest in the
durational-residency requirements did not implicate
the core purposes of the Twenty-first Amendment.
See id. at 24a–27a. These requirements, the court
reasoned, “regulate the flow of individuals” rather
than “the flow of alcoholic beverages within the
state.” Id. at 27a. Accordingly, the Twenty-first
Amendment does not “immunize” them from
“scrutiny under the dormant Commerce Clause.” Id.
Finally, the majority concluded that Tennessee’s
law failed that scrutiny. The court acknowledged
that the State had asserted two legitimate purposes
for the durational-residency requirements—“(1)
protecting ‘the health, safety and welfare’ of its
citizens and (2) using a higher level of oversight and
control over liquor retailers.” Id. at 32a (quoting
Tenn. Code Ann. § 57-3-204(b)(4)). But the court
hypothesized that the State could achieve those
purposes through nondiscriminatory means (for
example, by “creating an electronic database to
monitor liquor retailers”). Id. at 33a. Accordingly,
the court held that the durational-residency
requirements violated the dormant Commerce
Clause, severed them from the Tennessee statute,
and enjoined their enforcement. See id. at 33a–39a.
7. Judge Sutton dissented in relevant part. He
began with the Constitution’s text. Judge Sutton
explained that the Commerce Clause’s “dormant”
aspect impliedly prohibits States from interfering
with Congress’s prerogative to “regulate Commerce
14
with foreign Nations, and among the several States,
and with the Indian Tribes.” Id. at 40a (quoting U.S.
Const. art. I, § 8, cl. 3). And “[w]hatever else this
Tennessee requirement does,” Judge Sutton
observed, “it does not purport to displace or
contradict congressional regulation of commerce
among the States.” Id. at 41a. As to the Twentyfirst Amendment, Judge Sutton stressed that the
text “prohibit[s] the ‘delivery or use’ of alcohol ‘in
violation of the laws’ of each State,” which
“empowers States to regulate sales of alcohol within
their borders.” Id. (quoting U.S. Const. amend. XXI,
§ 2).
Judge Sutton also looked to history. In the
beginning, he explained, federal and state
government powers were “[l]argely exclusive.” Id. at
42a. But that changed over time. As the federal
commerce power expanded, the line between the two
regulatory spheres blurred, until most business
activities became subject to both state and federal
regulation. See id. at 42a–43a. Accordingly, the
scope of the dormant Commerce Clause—which was
once crucial for keeping States from interfering in
the federal sphere—became, in Judge Sutton’s view,
“more difficult to articulate and police.” Id. at 46a.
Against that historical backdrop, Judge Sutton
addressed this Court’s Twenty-first Amendment
precedents. Those precedents make clear that “the
Commerce Clause still limits state efforts to regulate
activity outside of a State’s territorial domain.” Id.
at 48a. But “exceptions to the normal operation of
the Commerce Clause remain alive and well in some
areas—in particular the in-state nature of alcohol
distribution.”
Id. at 49a.
Indeed, Granholm
15
expressly said that, because in-state distribution
“implicates the States’ core interests after the repeal
of Prohibition, such regulations are generally
‘protected under [the Twenty-first Amendment]
when they treat liquor produced out of state the
same as its domestic equivalent.’” Id. (quoting
Granholm, 544 U.S. at 488). Put differently, “[s]tate
regulations of in-state distribution, even if facially
discriminatory,
are
constitutional
unless
a
challenger can show that they serve no purpose
besides ‘economic protectionism.’”
Id. (quoting
Bacchus, 468 U.S. at 276) (emphases added).
“Measured by these standards and cases,” Judge
Sutton concluded, “Tennessee’s two-year residency
requirement should survive.” Id. Some requirement
that retailers reside in-state is an inherent part of
the three-tier system that this Court has repeatedly
and unequivocally endorsed.
See id. at 50a.
Moreover, “retailers are closest to the local risks that
come with selling alcohol, such as ‘drunk driving,
domestic abuse, [and] underage drinking.’” Id.
(quoting S. Wine & Spirits, 731 F.3d at 811). And
durational-residency requirements for retailers
ensure that individuals responsible for the sale of
alcohol to Tennessee citizens will develop an
understanding of and commitment to the needs of
the local community before becoming licensed to sell
alcohol directly to the members of that community.
See id. The same logic applies “to a residency
requirement for officers and directors of the retailer.”
Id. at 51a. Accordingly, Judge Sutton would have
followed the Eighth Circuit, which “approved
[durational-residency] requirements nearly identical
to Tennessee’s.” Id. In contrast, Judge Sutton
16
explained, the panel majority and the Fifth Circuit in
Cooper II “misread Granholm” and contravened the
Twenty-first Amendment by allowing “a court [to]
unnecessarily substitute its own judgment for that of
a state legislature about the best policies for
regulating liquor.” Id. at 53a.
REASONS FOR GRANTING THE WRIT
The federal courts of appeals are squarely
divided about whether a state may exercise its
Twenty-first Amendment authority by requiring
individuals or entities to reside in-state for a certain
period before they may obtain a retail or wholesale
liquor license. The Fifth and Sixth Circuits have
held that such laws violate the dormant Commerce
Clause; the Eighth Circuit has held that they are
valid under the Twenty-first Amendment. This
divide reflects a fundamental disagreement—one
that the Second and Fourth Circuits have also
addressed—about whether and how, in light of
Granholm, the dormant Commerce Clause limits
state authority to regulate alcohol retailers and
wholesalers (as opposed to producers). This issue is
important, particularly given the prevalence of
durational-residency
requirements
and
other
residency-related regulations of wholesalers and
retailers. And the decision below is wrong because it
misunderstands
the
text
of
the
relevant
constitutional provisions and misconstrues this
Court’s precedents. This Court should grant the
petition for a writ of certiorari and reverse the
judgment of the Sixth Circuit.
17
I.
THE COURTS OF APPEALS ARE DIVIDED.
A. The Fifth and Sixth Circuits Have
Struck
Down
Durational-Residency
Requirements.
1. In Cooper II, the Fifth Circuit held that
Texas’s one-year residency requirement for liquor
retailers violated the dormant Commerce Clause.
See 820 F.3d 730 (upholding injunction against
enforcement of Tex. Alco. Bev. Code Ann. § 109.53).
The case involved a decades-old injunction issued
in a suit brought by two individuals who did not
reside in Texas but wanted to buy a Texas nightclub
licensed to sell liquor. See Cooper v. McBeath, 11
F.3d 547 (5th Cir. 1994) (Cooper I). In Cooper I,
which predated this Court’s decision in Granholm,
the Fifth Circuit relied mainly on Bacchus in
concluding
that
Texas’s
durational-residency
requirement violated the dormant Commerce Clause.
See id. at 555. The Fifth Circuit therefore enjoined
Texas from enforcing its law. See id. at 555–56.
Later, in Granholm, this Court explained that
“[s]tate policies are protected under the Twenty-first
Amendment when they treat liquor produced out of
state the same as its domestic equivalent.” 544 U.S.
at 489. So a trade association, the Texas Package
Stores Association, intervened and moved for relief
from the outdated injunction, because Texas’s law—
which regulated retailers and wholesalers, and had
nothing to do with disparate treatment of in-state
and
out-of-state
liquor
producers—passed
Granholm’s test. See Cooper II, 820 F.3d at 734–36.
The Fifth Circuit adhered to its holding that
Texas’s durational-residency requirement was
18
unconstitutional.
The court dismissed as dicta
Granholm’s statements that three-tier systems are
“unquestionably legitimate” and that policies that do
not discriminate against liquor produced out of state
are “protected under the Twenty-first Amendment.”
Id. at 742–43 (quoting Granholm, 544 U.S. at 489).
Indeed, it held precisely the opposite—that “state
regulations of the retailer and wholesaler tiers are
not immune from Commerce Clause scrutiny just
because they do not discriminate against out-of-state
liquor.” Id. at 743. “Distinctions between in-state
and out-of-state retailers and wholesalers are
permissible,” the Fifth Circuit concluded, “only if
they are an inherent aspect of the three-tier system.”
Id. And in the Fifth Circuit’s view, a “durationalresidency requirement on the owners of alcoholic
beverage retailers and wholesalers” is not an
inherent requirement of such a system. Id.
2. As described above, see supra 12–13, the
Sixth Circuit majority below followed Cooper II. The
court below summarized, at length, the varying
attempts of the “Second, Fourth, Fifth, and Eighth
Circuits . . . to reconcile [this Court’s] cases”
involving the Twenty-first Amendment. Pet.App.
11a. Rejecting the approach of most of these circuits,
the Sixth Circuit “f[ou]nd the Fifth Circuit’s
reconciliation of Bacchus and Granholm persuasive.”
Id. at 15a. In particular, the court emphasized that
“the Supreme Court explicitly declined to overrule
Bacchus in Granholm.” Id. And it afforded little
weight to Granholm’s statements about liquor
production because “Granholm involved statutes
addressing that step in the three-tier system.” Id. at
23a. Moreover, because “Tennessee’s durational-
19
residency requirements are nearly identical to”
Texas’s, the court found that the analysis in Cooper
II was on all fours with this case. Id. at 26a. It
therefore held that the dormant Commerce Clause
bars Tennessee from requiring that a liquor retailer
reside in-state for a set time to be eligible for a
license.
B. The
Eighth
Circuit
Has
Upheld
Durational-Residency Requirements.
Judge Sutton would have followed the Eighth
Circuit’s “thoughtful opinion” in Southern Wine &
Spirits v. Div. of Alcohol & Tobacco, 731 F.3d 799
(8th Cir. 2013), which upheld “requirements nearly
identical to Tennessee’s.” Pet. App. at 51a. That
case involved a Missouri law providing that a license
to engage in the wholesale distribution of
“intoxicating liquor containing alcohol in excess of
five percent by weight” could be granted only to a
“resident corporation”—i.e., one whose corporate
officers and directors had been “bona fide residents”
of Missouri for at least three years. Mo. Rev. Stat.
§§ 311.060.2(3), 311.060.3. The plaintiff, an entity
ineligible for a license because of that requirement,
alleged that Missouri’s law violated the dormant
Commerce Clause.
Writing for a unanimous panel, Judge Colloton
acknowledged that “the Supreme Court has sent
conflicting signals about the relationship between
these two constitutional provisions.” 731 F.3d at
804. Granholm itself, however, had reconciled this
Court’s earlier precedents. On the one hand, “the
Twenty-first Amendment granted the States
‘virtually complete control over whether to permit
importation or sale of liquor and how to structure the
20
liquor distribution system.’” Id. at 805 (quoting Cal.
Retail, 445 U.S. at at 110). On the other hand, state
regulations of production, rather than distribution,
do not implicate core Twenty-first Amendment
authority and thus must comply with the dormant
Commerce Clause. See id. (citing Capital Cities
Cable, Inc. v. Crisp, 467 U.S. 691, 713 (1984)).
Consistent with these principles, Granholm
concluded that “States can mandate a three-tier
distribution scheme in the exercise of their authority
under the Twenty-first Amendment,” Granholm, 544
U.S. at 466, so long as “they treat liquor produced
out of state the same as its domestic equivalent,” id.
at 489.
Applying these standards, the Eighth Circuit
upheld Missouri’s durational-residency requirement.
The court first rejected the argument that the law
was unconstitutional in light of Bacchus. Even
“[a]ssuming that Bacchus’s analysis of economic
protectionism should apply to a regulation of the
wholesale tier,” the court reasoned, a durationalresidency requirement has a non-protectionist
rationale: “to promote responsible consumption,
combat illegal underage drinking, and achieve other
important state policy goals.” S. Wine & Spirits, 731
F.3d at 807–09 (citing Mo. Rev. Stat. § 311.015). In
any event, the court held, consistent with Granholm,
that “state policies that define the structure of the
liquor distribution system while giving equal
treatment to in-state and out-of-state liquor products
and producers are ‘protected under the Twenty-first
Amendment.’” Id. (quoting Granholm, 544 U.S. at
489). Because durational-residency requirements fit
that bill, the court upheld Missouri’s law as a
21
permissible exercise of Twenty-first Amendment
authority—regardless of whether it would otherwise
offend the dormant Commerce Clause. See id. at
810. The court added, finally, that durationalresidency requirements would pass muster even if
some Commerce Clause scrutiny applied: “Missouri
residents, the legislature sensibly could suppose, are
more likely to respond to concerns of the community,
as expressed by their friends and neighbors whom
they encounter day-to-day in ballparks, churches,
and service clubs.” Id. at 811.
C. Applying the Same Approach as the
Eighth Circuit, the Second and Fourth
Circuits Have Upheld Other ResidencyRelated Restrictions on Retailers and
Wholesalers.
Two other courts of appeals—the Second and
Fourth
Circuits—have
rejected
constitutional
challenges to other kinds of residency-related
restrictions on wholesalers and retailers.
Both
circuits adopted the same approach as the Eighth
Circuit. They upheld these state laws because,
under Granholm, “the dormant Commerce Clause
only prevents a State from enacting regulation that
favors in-state producers.” Brooks, 462 F.3d at 354
(emphasis added).
1. In Arnold’s Wines, Inc. v. Boyle, 571 F.3d
185, the Second Circuit upheld a New York law
prohibiting “out-of-state wine retailers from selling
and delivering wine directly to New York
consumers.” Id. at 187; see N.Y. Alco. Bev. Cont.
Law §§ 100(1), 102(1)(a)–(b). That ruling followed
directly from Granholm, which “set forth the test for
determining the constitutionality of state liquor
22
regulations.”
Arnold’s Wines, 571 F.3d at 189.
“While the Twenty-first Amendment grants the
states broad powers to regulate the transportation,
sale, and use of alcohol within their borders, it
simply does not immunize attempts to discriminate
in favor of local products and producers.” Id. at 191.
Those principles, the court held, foreclosed the
plaintiffs’ claim. “Because New York’s three-tier
system treats in-state and out-of-state liquor the
same, and does not discriminate against out-of-state
products or producers,” the court found no need to
“analyze the regulation further under Commerce
Clause principles.” Id.
Judge Calabresi concurred, writing separately to
say that this Court has, “[r]egrettably,” “le[ft] lower
courts at a loss in seeking to figure out what the
Twenty-First Amendment means and what if any
governing principles may be derived from [its]
Twenty-First Amendment decisions.” Id. at 192.
Judge Calabresi also noted that the Twenty-first
Amendment, in a departure from its original
meaning, “has been defined and redefined to
accommodate changing social needs and norms,”
making it a case study of the “important theoretical
questions about the role of courts” in constitutional
interpretation. Id.
2. The Fourth Circuit similarly upheld a
Virginia law that, among other things, established
an “exception to the three-tier import restriction for
consumers who personally carry into Virginia no
more than one gallon (or four liters) of alcoholic
beverages for personal consumption.” Brooks, 462
F.3d at 345; see Va. Code § 4.1–310(E). The plaintiffs
argued that this exception violated the dormant
23
Commerce Clause by favoring in-state retailers, who
could sell unlimited amounts of liquor to Virginia
residents, over their out-of-state counterparts, who
could sell only a single gallon. 462 F.3d at 352.
The Fourth Circuit recognized that Granholm
foreclosed that argument. Under Granholm, “the
dormant Commerce Clause only prevents a State
from enacting regulation that favors in-state
producers.”
Id. at 354.
“[A]n argument that
compares the status of an in-state retailer with an
out-of-state retailer—or that compares the status of
any other in-state entity under the three-tier system
with its out-of-state counterpart—is nothing
different than an argument challenging the threetier system itself.” Id. at 352. And Granholm, the
court held, precludes any such challenge. See id.
3. These Second and Fourth Circuit decisions
involved residency-related regulations other than
durational requirements. But both turned on the
same core question as the decision below, and the
Fifth and Eighth Circuit durational-residency cases:
In the wake of Granholm, “[d]oes scrutiny under the
dormant Commerce Clause apply only when an
alcoholic-beverages law regulates producers or
products?”
Pet.App. 11a.
The circuits are
intractably divided about how to analyze the
constitutionality of state laws regulating retailers
and wholesalers of alcohol.
II. THE QUESTION PRESENTED
COURT’S ATTENTION.
MERITS
THE
1. At least twenty-one states impose durationalresidency requirements on alcohol retailers or
24
wholesalers. 3 These requirements vary in some
ways. Compare, e.g., S.C. Code Ann. § 61-6-110 (30day residency requirement), with Okla. Stat. tit. 37,
§ 527 (10-year residency requirement); compare, e.g.,
Ky. Rev. Stat. Ann. § 243.100(1)(f) (requirement
applicable to individuals only), with Ind. Code § 7.13-21-5 (requirement applicable to both individuals
and corporations); see also, e.g., Ga. Code Ann. § 3-423(a) (requirement specific to the county or
municipality). But this variation merely reflects the
States’ use of their Twenty-first Amendment
authority and expertise to craft liquor laws that suit
the needs of their residents.
Under the Sixth
Circuit’s reasoning, all of these laws are likely
unconstitutional.
There are many more state laws that—like those
at issue in the Second and Fourth Circuit decisions—
impose other forms of residency-related restrictions
on retailers or wholesalers. See, e.g., 235 Ill. Comp.
Stat. 5/6-29.1(b) (prohibiting out-of-state retailers,
but not in-state retailers, from shipping wine directly
3 See Ark. Code Ann. § 3-4-606(a)(1)–(3); Ga. Code Ann.
§ 3-4-23(a)–(b); Ind. Code Ann. § 7.1-3-21-5(5)(a)–(b); Kan. Stat.
Ann. § 41-311(b); Ky. Rev. Stat. Ann. § 243.100(1)(f); La. Stat.
Ann. § 26:80(A)(2); Me. Rev. Stat. tit. 28-A, § 1401(5)(A)–(B);
Md. Code, Alcoholic Beverages, § 3-102; Mich. Comp. Laws Ann.
§436.1601; Miss. Code. Ann. § 67-3-21; Mo. Rev. Stat.
§ 311.060.2(3); N.H. Rev. Stat. Ann. § 178:1; Okla. Stat. Ann. tit.
37, § 527; 47 Pa. Stat. Ann. §§ 4-403, 4-410, 4-431, 4-432; S.C.
Code Ann. § 61-6-110(2); Tenn. Code Ann. § 57-3-203; Tex. Alco.
Bev. Code Ann. § 6.03(a); Va. Code Ann. § 4.1-222; Wash. Rev.
Code Ann. § 66.24.010(2)(a); W. Va. Code Ann. § 11-16-8(a)(1);
Wis. Stat. Ann. § 125.04(5); see also Idaho Code Ann. § 23-304
(durational-residency requirement for “special distributors”).
25
to Illinois consumers); N.Y. Alco. Bev. Cont. Law
§§ 100(1), 102(1)(a)–(b) (prohibiting out-of-state
retailers, but not in-state retailers, from shipping
wine directly to New York consumers); Va. Code §
4.1–310(E) (creating an exception to personal-import
ban that favors in-state retailers); Cal. Bus. & Prof.
Code § 23366.2 (prohibiting out-of-state wholesalers,
but not in-state wholesalers, from selling liquor
directly to in-state retailers). The constitutionality of
these laws, too, turns on the interplay between the
Twenty-first
Amendment
and
the
dormant
Commerce Clause when it comes to state regulation
of alcohol retailers and wholesalers.
2. The constitutionality of dozens of state laws
is more than important enough to merit this Court’s
intervention. See, e.g., Sveen v. Melin, 138 S. Ct.
1815 (2018) (considering the constitutionality of
retroactive application of state revocation-on-divorce
statutes); Packingham v. North Carolina, 137 S. Ct.
1730 (2017) (considering the constitutionality of state
statutes limiting sex offenders’ internet access); cf.
Cty. of Maricopa v. Lopez-Valenzuela, 135 S. Ct.
2046, 2046 (2015) (Thomas, J., dissenting from
denial of certiorari) (“States deserve our careful
consideration when lower courts invalidate their
constitutional provisions.”).
This Court has also often granted certiorari to
resolve conflicts among the courts of appeals about
the meaning of the Twenty-first Amendment. See,
e.g., Granholm, 544 U.S. 460; 44 Liquormart, Inc. v.
Rhode Island, 517 U.S. 484 (1996); North Dakota,
495 U.S. 423; Bacchus Imports, 468 U.S. 263. But it
has been thirteen years since the Court has
addressed this constitutional provision. And in that
26
time, perceived contradictions within this Court’s
Twenty-first Amendment jurisprudence have “le[ft]
lower courts at a loss in seeking to figure out what
the Twenty-First Amendment means and what if any
governing principles may be derived from [this
Court’s] Twenty-First Amendment decisions.”
Arnold’s Wines, 571 F.3d at 192 (Calabresi, J.,
concurring).
Indeed, courts have consistently
acknowledged the pervasive confusion about the
interaction of the Twenty-first Amendment and the
dormant Commerce Clause post-Granholm. See id.
at 200 (observing that lower courts have been left “in
a difficult situation”); S. Wine & Spirits, 731 F.3d at
804 (“[T]he Supreme Court has sent conflicting
signals about the relationship between these two
constitutional provisions.”); Pet.App. 11a (“The
interaction between Bacchus and Granholm has
created some uncertainty.”). Only this Court can
alleviate that confusion—and resolve the resulting
division of authority.
4. This petition presents a clean vehicle for this
Court to do so. This case is a declaratory-judgment
action raising a single question: whether Tennessee’s
durational-residency
requirements
are
a
constitutional exercise of the State’s authority under
the Twenty-first Amendment, or are instead
prohibited by the dormant Commerce Clause.
Pet.App. 4a.
The Complaint alleges that this
question determines the entitlement of the
Respondent applicants to liquor licenses. D.Ct. Dkt.
1-1, Compl. ¶¶ 14, 27. And the parties preserved,
and the lower courts decided, that question at each
stage of the proceedings below. This Court should
take this opportunity to decide this important issue,
27
which affects the constitutionality of dozens of state
laws and has prompted numerous court of appeals
judges to lament the confusion flowing from this
Court’s existing precedents.
III. THE SIXTH CIRCUIT’S DECISION IS WRONG.
The decision below is wrong as a matter of
constitutional text, history, and this Court’s
precedents.
Indeed, the Sixth Circuit majority
effectively neuters Section 2 of the Twenty-first
Amendment and Granholm’s promise that States
have broad leeway to structure three-tier
distribution systems.
1. The Twenty-first Amendment gives States
broad authority to regulate “[t]he transportation or
importation into any State, Territory, or possession
of the United States for delivery or use therein of
intoxicating liquors.” U.S. Const. amend. XXI, § 2.
“Unlike any other provision in the U.S.
Constitution,” the Amendment thereby “sets up what
is largely a regulatory regime of one.” Pet.App. at
41a (Sutton, J., dissenting). And its text does not
limit State authority in this arena.
The Commerce Clause, in turn, grants Congress
exclusive authority “[t]o regulate Commerce . . .
among the several States.” U.S. Const. art. 1, § 8,
cl.3. The dormant aspect of that Clause reinforces
that exclusivity, impliedly prohibiting states from
exercising authority in that exclusively federal
arena. See Pet.App. at 42a–44a.
2. The history of these provisions shows how
the drafters of the Twenty-first Amendment expected
them to operate in tandem. At the time that
Amendment was adopted in 1933, the state and
28
federal “spheres of authority” were “[l]argely
exclusive.” Id. at 42a. So if the States had authority
in a particular area, the federal government
generally did not—and vice versa.
See id.
Accordingly, “[f]rom the vista of 1933, a lawyer (and
judge) would have presumed that the regulation of
sales of alcohol within the State (such as a residency
requirement for ownership of a retail liquor store)
would be an exclusive state power given the existing
paradigm of largely separate and exclusive spheres
of regulatory power.” Id. at 44a.
It is unsurprising, therefore, that this Court at
first understood the Twenty-first Amendment to give
States essentially plenary authority to regulate
intrastate alcohol distribution, “including in ways
that the Commerce Clause would not otherwise
allow.” Id. at 46a:
The words used [in § 2] are apt to confer
upon the State the power to forbid all
importations which do not comply with the
conditions which it prescribes. The plaintiffs
ask us to limit this broad command. They
request us to construe the Amendment as
saying, in effect: The State may prohibit the
importation of intoxicating liquors provided
it prohibits the manufacture and sale within
its borders; but if it permits such
manufacture and sale, it must let imported
liquors compete with the domestic on equal
terms. To say that, would involve not a
construction of the Amendment, but a
rewriting of it.
State Bd. of Equalization v. Young’s Mkt. Co., 299
U.S. 59, 62 (1936).
29
But things changed. The scope of federal power
to regulate commerce expanded, injecting federal
authority into what were once exclusively state
arenas. And the understanding of the dormant
Commerce Clause changed, too: “[I]n a post-1930s
world, in which the National Government and States
largely have overlapping power over most sectors of
commerce, the implementation of an implied
restriction on state authority is much more difficult
to articulate and police.” See Pet.App. 45a–46a.
Still, however, “[a]n exclusive delegation of power to
one sovereign”—whether that be the grant of alcoholregulatory authority to the states or the grant of
commerce power to the federal government—“implies
a ban on assertions of power by another sovereign
over the same matter.” Id.
3. This Court’s more recent Twenty-first
Amendment cases confirm that States retain special
authority in regulating alcohol. See Capital Cities,
467 U.S. at 712 (explaining that the Twenty-first
Amendment “created an exception to the normal
operation of the Commerce Clause”).
States
maintain “virtually complete control” over “how to
structure the[ir] liquor distribution system[s].”
Granholm, 544 U.S. at 488.
Granholm, this Court’s most recent case about
the Twenty-first Amendment, involved regulations
that permitted in-state wineries, but not out-of-state
ones, to ship directly to in-state consumers. 544 U.S.
at 468–70. This “differential treatment between instate and out-of-state wineries,” the Court explained,
“constitute[d] explicit discrimination” against the
flow of goods across state lines in a way that—were it
30
not for the Twenty-first Amendment—would violate
the dormant Commerce Clause. Id. at 467.
The Twenty-first Amendment, the Court also
determined, did not “sav[e]” these laws. Id. at 489.
In particular, that provision “does not displace the
rule that States may not give a discriminatory
preference to their own producers.” Id. at 486
(emphasis added). And it does “not give States the
authority to pass nonuniform laws in order to
discriminate against out-of-state goods.” Id. at 484–
85. Accordingly, because the laws at issue were
“straightforward attempts to discriminate in favor of
local producers” (and thus against out-of-state goods)
the Court held that they violated the dormant
Commerce Clause. Id. at 489.
The Granholm Court, however, was careful to
cabin its ruling—and preserve the force of the
Twenty-first Amendment. The Court emphasized
that it did not “call into question the
constitutionality of the three-tier system”—a system
both the majority and dissent recognized as
“unquestionably legitimate.” Id. at 488–89; see also
id. at 518 (Thomas, J., dissenting). And the Court
made clear that the Twenty-first Amendment still
provided absolute protection for regulation of in-state
sales, rather than products. “State policies,” the
Court stated, “are protected under the Twenty-first
Amendment when they treat liquor produced out of
state the same as its domestic equivalent.” Id. at
489.
4. That
principle
resolves
this
case.
Tennessee’s durational-residency requirements, like
other such laws, “treat liquor produced out of state
the same as its domestic equivalent.” Id. As a
31
result, Granholm compels the conclusion that they
are “protected under the Twenty-first Amendment.”
Id. Were it otherwise—if, as the Sixth Circuit
majority suggested, the Twenty-first Amendment
conferred no special protections for laws regulating
wholesalers and retailers of alcohol—Section 2 of the
Twenty-first Amendment would have little or no role
to play. A dormant Commerce Clause challenge to a
regulation concerning alcohol, in other words, would
be no different than such a challenge to any other
kind of regulation. Neither constitutional history
nor this Court’s precedents support that result. See
Capital Cities, 467 U.S. at 712 (observing that the
Twenty-first Amendment “created an exception to
the normal operation of the Commerce Clause”).
In any event, even if laws exclusively applicable
to retailers or wholesalers were subject to some
limited form of dormant Commerce Clause scrutiny,
durational-residency requirements should survive.
These requirements serve important State interests
in protecting the “health, safety and welfare” of
citizens. Tenn. Code Ann. § 57-3-204(b)(4). The
consequences of excessive alcohol consumption—such
as drunk driving, loss of employment, and
homelessness—do not fall on one individual alone;
they affect the community as a whole. Durationalresidency requirements ensure that alcohol retailers
know their community and are invested in its
welfare. In other words, “[t]he only way to know a
community is to live there.” Pet.App. 50a. Indeed,
that is presumably “why Congress requires federal
court of appeals judges to live within their circuits,
and district court judges to live within their
districts.” Id. at 50a–51a (citing 28 U.S.C. §§ 44(c),
32
134(b)).
Durational-residency requirements like
Tennessee’s serve the same interest.
CONCLUSION
The petition for a writ of certiorari should be
granted.
July 20, 2018
Richard L. Colbert
KAY GRIFFIN, PLLC
222 Second Avenue
North, Suite 340-M
Nashville, TN 37201
Respectfully submitted,
Shay Dvoretzky
Counsel of Record
JONES DAY
51 Louisiana Avenue NW
Washington, DC 20001
(202) 879-3939
sdvoretzky@jonesday.com
Amanda K. Rice
JONES DAY
150 W. Jefferson Ave.
Suite 2100
Detroit, MI 48226
Counsel for Petitioner
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