Amicus Curiae Brief — B-21 Wines, Inc., et al., Petitioners v. Hank Bauer, Chair, North Carolina Alcoholic Beverage Control Commission

No. 22-285

In the

Supreme Court of the United States

_________

B-21 WINES, INC., ET AL.,

Petitioners,

v.

HANK BAUER,

CHAIR OF THE N.C. ALCOHOLIC BEVERAGE

COMM’N,

Respondents.

_________

On Petition for Writ of Certiorari to

the United States Court of Appeals for the

Fourth Circuit

_________

BRIEF OF 41 WINE CONSUMERS AS AMICI

CURIAE IN SUPPORT OF PETITIONERS

_________

J. GREGORY TROUTMAN

Counsel of Record

TROUTMAN LAW OFFICE, PLLC

4205 Springhurst Boulevard,

Suite 201

Louisville, KY 40241

502-412-9179

jgtatty@yahoo.com

i

TABLE OF CONTENTS

TABLE OF CONTENTS ............................................. i

TABLE OF AUTHORITIES ....................................... ii

INTERESTS OF AMICI CURIAE................................ 1

SUMMARY OF ARGUMENT ...................................... 3

ARGUMENT ............................................................. 6

I.

The Twenty-First Amendment does not

immunize state laws which discriminate

against out-of-state commerce ……………..7

II. The market changes resulting from the

Covid

pandemic

highlight

the

discriminatory effect of the challenged

North Carolina licensing regime .............. 13

CONCLUSION ....................................................... 15

APPENDIX A. List of Amici Curiae……….……....1a

ii

TABLE OF AUTHORITIES

CASES

CBOCS West, Inc. v. Humphries,

553 U.S. 442 (2008)……..………………….……...7

Granholm v. Heald,

540 U.S. 460 (2005) …………….….………passim

Hutto v. Davis,

460 U.S. 533 (1983)…………………………..……7

North Dakota v. U.S.,

495 U.S. 423 (1990) …………………………….…5

Pike v. Bruce Church, Inc.,

397 U.S. 137 (1970)…………………..…………....7

S. Dakota v. Wayfair, Inc.,

585 U.S. ___. 138 S. Ct. 2080 (2018)……….......10

Tenn. Wine & Spirits Retailers Ass’n v. Thomas,

588 U.S. ____, 139 S.Ct. 2449 (2019)..…...passim

CONSTITUTIONS AND RULES:

U.S. CONST., amend. XXI…………………....passim

U.S. CONST., art. I, § 8, cl. 3……………….....passim

SUPREME COURT RULE 37.2………………………..1

SUPREME COURT RULE 37.6………………………..1

iii

OTHER RESOURSES:

BBC News, Coronavirus: How the pandemic is

relaxing US drinking laws. (May 15, 2020)......14

Fortune, How the On-Demand Liquor Delivery

Business Changed Overnight During the

Coronavirus Pandemic. (April 11, 2020)….......14

Laurence H. Tribe, How to Violate the Constitution

Without Really Trying: Lessons from the Repeal

of Prohibition to the Balanced Budget

Amendment, 12 CONST. COMMENT. 217

(1995)……………………………………………..…6

Office of the Governor of North Carolina, Governor

Cooper Signs Executive Order to Extend

Delivery and To-Go Mixed Beverage. (Apr. 29,

2021)……………………………………………….14

1

INTERESTS OF AMICI CURIAE1

Wine consumers nationwide2 desire to have access to wines produced beyond the borders of their

own localities. Some consumers, however, are stymied in their attempts to acquire rare, collectible,

and remote wines because of discriminatory state

laws that prevent out-of-state retailers from selling and supplying wine directly to them. Compounding this problem, states like North Carolina

prohibit out-of-state retailers from obtaining the

necessary retail package sales license required to

serve North Carolina customers unless they establish a physical presence.

A retail package license is something readily

available to North Carolina-based retailers. Such

license allows in-state retailers to make direct

shipments of wine to North Carolina consumers.

North Carolina’s licensing regime, however, effectively prevents out-of-state retailers from participating in the North Carolina marketplace because

it requires a physical presence—something this

Court has specifically prohibited. On the other

hand, wine retailers based in North Carolina may

1 Pursuant to Supreme Court Rule 37.6, counsel

for amici curiae states that no counsel for any party

authored this brief in whole or in part or made any

monetary contribution. Pursuant to Supreme Court

Rule 37.2, written consent to file was obtained from

counsel for all parties more than 10 days in advance

of the filing deadline.

2 The names of all Amici are listed in the Appen-

dix.

2

sell and ship wine directly to North Carolina residents, through an online portal, even if the consumer has never physically visited the retailer or

producer. This regime is facially protectionist in favor of in-state retailers.

Amici, as wine enthusiasts, have an interest in

ensuring a fair and level marketplace for fellow

wine enthusiast residing in North Carolina. They

have an interest in ensuring that protectionist

laws like those at issue here are struck down. The

challenged protectionist laws violate the Dormant

Commerce Clause by preventing North Carolina

wine consumers, and all others similarly situated,

from purchasing certain varieties of wine not

available in North Carolina from out-of-state retailers.

In North Carolina, a retailer must establish a

physical presence in the state as a condition of obtaining a retail package license which affords the

benefit of shipping wine directly to the state’s consumers, including internet or app-based sales.

This heavy burden effectively prevents out-of-state

retailers from participating in the North Carolina

marketplace without a corresponding legitimate

benefit aside from impermissibly protecting instate retailers.

The amici curiae respectfully request this

Court grant Petitioners’ Petition for Writ of Certiorari.

3

SUMMARY OF ARGUMENT

The Dormant Commerce Clause prohibits discrimination by any state in favor of intrastate commerce over interstate commerce. Such prohibition

encompasses both direct discrimination and discrimination in practical effect. The Twenty-First

Amendment provides states with the authority to

regulate the “transportation or importation” of alcohol. This Court’s precedent, however, holds this

authority is not absolute.

The sale of wine, like many other consumer

goods, has shifted toward online retail sales. The

North Carolina residency and in-state presence requirements fly in the face of this economic evolution. Online retail portals have brought about a

radical paradigm shift by providing consumers almost unlimited choices in a wide array of goods.

Such a massive and conveniently accessible marketplace was something beyond comprehension in

1933 when the Twenty-First Amendment was ratified.

The challenged North Carolina licensing regime is a vestige of post-Prohibition state laws enacted to regulate alcoholic beverages. Yet, the

economy has radically evolved from what existed

in the early 1930s. The state of technology in the

era immediately preceding Prohibition dictated

that a regulatory regime which required an instate presence was non-discriminatory because the

width of the gap between retailer and consumer

made it impractical for out-of-state wine retailers

4

to effectively reach in-state consumers. The narrowing of such gap resulting from new technologies

available to out-of-state retailers (internet and

app-based portals) has changed the paradigm such

that requiring an in-state presence as a condition

of doing business is now discriminatory.

North Carolina’s licensing regime is one of

those post-Prohibition economic impediments

which discriminates against out-of-state commerce

by preventing out-of-state retailers from shipping

wine directly to consumers by requiring in-state

residency. This requirement effectively bars outof-state retailers from the North Carolina marketplace. The Court’s Commerce Clause jurisprudence forbids this sort of protectionist interference

with interstate commerce.

North Carolina defends the physical presence

and residency requirements embodied in its licensing scheme by claiming an interest in promoting

and protecting the public health and welfare of citizens. Such reliance is a pretext that clearly divides access to the North Carolina marketplace between intrastate and interstate commerce and favors intrastate actors. North Carolina should, at

minimum, be required to make an evidentiary

showing that its discriminatory practice is necessary to serve the core purposes of the Twenty-First

5

Amendment, as opposed to a pretext for discrimination.3 North Carolina should thus be required to

demonstrate evidence that the purpose of its discriminatory practice cannot be achieved by nondiscriminatory means.

Finally, the Covid pandemic brought about

paradigm shifting changes in the manner of retailers selling and delivering alcoholic beverages to

consumers. These changes accentuate the discrimination against out-of-state retailers which occurs

when a state licensing regime, like that at issue

here, permits in-state retailers to sell and deliver

wine directly to its consumers but denies the same

privilege to out-of-state retailers on terms which

this Court has already banned.

North Carolina embraced the expansion of effecting the retail sale of alcoholic beverages to its

residents as the pandemic persisted. The fact

North Carolina embraced policies which expanded

the availability of alcoholic beverages to its residents must negate any claim that promoting the

Twenty-First Amendment’s core principles justifies its discriminatory requirements with respect

to out-of-state retailers. A state should not be permitted to justify a discriminatory practice upon its

3 The core principles underlying the Twenty-First

Amendment are promoting temperance, ensuring orderly market conditions and raising revenue. See

North Dakota v. U.S., 495 U.S. 423, 432 (1990) (plurality opinion.

6

Twenty-First Amendment authority when it embraces new technologies which benefit in-state interests while denying the parallel benefit of such

technologies by out-of-state retailers.

ARGUMENT

This case requires the Court to again consider

the direction which traffic must flow at the intersection of the Constitution’s Commerce Clause4

and its Twenty-First Amendment.5 How traffic

flows through this intersection has an ironic consequence because:

“there are two ways, and two ways only,

in which an ordinary private citizen, acting under her own steam and under color

of no law, can violate the United States

Constitution. One is to enslave somebody,

a suitably hellish act. The other is to bring

a bottle of beer, wine, or bourbon into a

state in violation of its beverage control

laws.”

Laurence H. Tribe, How to Violate the Constitution

Without Really Trying: Lessons from the Repeal of

Prohibition to the Balanced Budget Amendment,

12 CONST. COMMENT. 217 (1995).

The Amici concur with the Petitioners’ suggestion that the Court should grant certiorari to determine whether the Fourth Circuit’s opinion is

4 U.S. CONST., art. I, § 8, cl. 3.

5 U.S. CONST., amend. XXI.

7

consistent with prevailing jurisprudence. This

Court settled in Granholm v. Heald, 540 U.S. 460

(2005) the question which direction traffic must

flow through the intersection. This Court reiterated its settlement beyond any reasonable doubt in

Tenn. Wine & Spirits Retailers Ass’n v. Thomas,

588 U.S. ____, 139 S.Ct. 2449 (2019) when it upheld and followed Granholm. The Fourth Circuit’s

opinion is incongruent with the proposition that it

must give credence to the constitutional analysis

articulated in Granholm and Thomas.

The principle of stare decisis is intended to

bring certainty and stability in the law. CBOCS

West, Inc. v. Humphries, 553 U.S. 442, 457 (2008).

The principle of stare decisis mandates that lower

courts follow this Court’s decisions. Hutto v. Davis,

460 U.S. 533, 535 (1983). The Fourth Circuit’s

opinion demonstrates the constitutional significance of this case. The Court should accept certiorari to put to rest once and for all any question

about which direction traffic must flow when a

state alcoholic beverage law rooted in its TwentyFirst Amendment authority faces a Commerce

Clause challenge.

I.

The Twenty-First Amendment does

not immunize state laws which discriminate against out-of-state commerce.

This Court has made it clear the authority of

states to regulate alcoholic beverages granted by

the Twenty-First Amendment is limited by the

8

guardrails of the Commerce Clause’s nondiscrimination principles. The application of these coordinate principles means that a state may thus not

compel an out-of-state entity to establish an instate presence as a condition of gaining access to

the marketplace that is already open to in-state entities. Granholm, 540 U.S. at 475. Thus, the

Twenty-First Amendment grants states broad authority to choose the tone and tenor of their alcoholic beverage control policies, the Commerce

Clause restrains such authority by requiring that

such policies provide a level playing field for both

in-state and out-of-state interests.

The interplay between the Twenty-First

Amendment and the Dormant Commerce Clause

seeks to avoid discrimination which results in market inefficiencies that require out-of-state retailers

who wish to do business in North Carolina to allocate resources necessary to establish a physical

presence in the state although they already have

the infrastructure necessary to sell wine online

and deliver it directly to North Carolina consumers. This Court views with suspicion state statutes

requiring businesses to establish or move operations to a state in order to conduct business when

the same operations already exist and operate

more efficiently elsewhere. Pike v. Bruce Church,

Inc., 397 U.S. 137, 146 (1970).6

Amici acknowledge the continued viability of

Pike is presently at issue before the Court in Nat’l

Pork Producers v. Ross, No. 21-468.

6

9

The 21st Century economy has evolved to a

place completely unimaginable when the several

states ratified the Twenty-First Amendment in

1933. Perhaps the greatest evolution has been the

market efficiencies brought about by the emergency of new technologies which were a thing of futuristic fiction in 1933. Back then, physical stores

usually offered a limited selection of goods. Consumers in those days who wished to access an expanded selection of goods had to order them from

catalog companies like Sears® and Montgomery

Ward®, and then wait for their delivery by mail.

Instantaneous consumer-driven concepts like Amazon® were well beyond comprehension at the

time.

The idea of remotely purchasing alcoholic beverages was even more limited after the end of Prohibition. In 1933, it was the standard practice for

states to require face-to-face transactions between

alcoholic beverages retailers and consumers. The

state of technology in 1933 made it impractical, if

not impossible, for wine retailers in one state to

reach out-of-state consumers. This means any requirement that retailers maintain an in-state

presence have a residency would not affect the

broader national marketplace for wine given the

impracticability of reaching out-of-state consumers.

The emergence of new technologies over the

past decade has vastly narrowed the gap between

retailers and consumers. States like North Caro-

10

lina have embraced these new technologies by relaxing their in-person transaction requirements by

permitting the remote sale and delivery of wine to

its residents—but only for in-state retailers. Outof-state retailers still must establish a physical

presence and maintain a residence to avail themselves of the same remote sales privilege granted

to in-state interests. Such barriers to remote sales

of wine are anachronistic as states like North Carolina continue to adhere to an economic model that

has, in many, respects remained frozen in time as

technology evolved around it.

It is undeniable the internet and online retail

portals have become a paradigm-shifting technology which has become a pervasive outlet for interstate commerce. Such technology has brought consumers and marketplaces closer than ever before,

even when they are physically distant. S. Dakota

v. Wayfair, Inc., 585 U.S. ___. 138 S. Ct. 2080, 2095

(2018). These technologies allow consumers to purchase any number and variety of goods without

ever physically visiting a retail store. North Carolina has adopted this marketplace with respect to

wine shipment to its consumers but restricts the

privilege of purveying goods to only in-state retailers when it comes to shipping wine to North Carolina residents.

The Dormant Commerce Clause requires that

the marketplace be a level playing field between

in-state and out-of-state interests. This concept

precludes a state from placing unfair burdens

which cut out-of-state interests, either directly or

11

in practical effect, from the marketplace in favor of

in-state interests. The fact the Twenty-First

Amendment grants states authority to regulate alcohol sales in a particular manner does not exempt

those regulations from scrutiny under the Commerce Clause. Granholm, 540 U.S. at 466.

The Twenty-First Amendment, for instance,

authorizes a state to limit alcohol sales to in-person transactions. Such a policy could not be viewed

as discriminatory because it would apply equally

to both in-state retailers and out-of-state retailers.

The Twenty-First Amendment conversely authorizes a state to permit online or remote sales of alcoholic beverages. Such a policy would not pose a

discriminatory market barrier to retailers,

whether in-state or out-of-state, who choose to eschew online sales. That same policy would pose a

clear market impediment to out-of-state wine retailers who employ online and remote sales.

The North Carolina licensing regime is unlawfully discriminatory because it forces such out-ofstate retailers to establish a brick-and-mortar

presence in North Carolina, secure a managing officer who resides in North Carolina, and then sell

from that location to participate in the marketplace. This is overburdensome, unrealistic for most

out-of-state retailers, and wholly inefficient when

out-of-state retailers already have in place the

mechanisms necessary to effect the sale and delivery of wine to North Carolina consumers. These

are the kinds of efficiencies the Commerce Clause

was intended to protect.

12

Determine whether a discriminatory licensing

regime passes muster under the Commerce Clause

requires courts to both consider “concrete evidence” that is established on the record, and then

only allow discriminatory requirements for which

there is no sufficient nondiscriminatory alternative. Thomas, 139 S.Ct. at 2474. Under this standard, this Court held that Tennessee’s two-year residency requirement for retail alcohol licenses was

unconstitutional, in part because the state failed

to provide any evidence that such requirement,

which was facially discriminatory as to out-of-state

retailers, both sufficiently correlated to the protection of public health and safety and that nondiscriminatory alternatives would sufficiently protect

those interests. Id. This evidentiary showing is

more difficult for states today given that the same

technologies which brought retailers closer to consumers have also brought state regulators closer to

those parties they regulate.

It is unclear as to how the Fourth Circuit concluded that North Carolina’s residency licensure

requirement is either adequately connected to the

advancement of public health or that a nondiscriminatory alternative would adequately protect that

interest, as there was no concrete evidence in the

district court record. The Fourth Circuit asserted,

without supporting evidence, that North Carolina’s ability to regulate in-state retailers was sufficient to meet the “exacting standard” required to

allow a discriminatory practice to stand under

Commerce Clause jurisprudence. Heald, 540 U.S.

at 493.

13

At the very least, North Carolina should be required to demonstrate how its discriminatory law

which requires retailers to establish an in-state

presence in order to ship wine to consumers benefits the public health and that a nondiscriminatory

alternative would serve a similar purpose. In sum,

North Carolina should be required to demonstrate

evidence which demonstrates that no reasonable

alternative means would allow it to effectively regulate out-of-state wine retailers such that its discriminatory practices are warranted and constitutional.

II. The market changes resulting from

the Covid pandemic highlight the discriminatory effect of the challenged

North Carolina licensing regime.

Few things exist today as they did before the

Covid pandemic. The changes resulting from the

pandemic have amplified the market disparity represented by licensing regimes like those employed

by North Carolina. The pandemic brought about a

seismic economic shift in the manner of selling and

delivering alcoholic beverages at a retail level.

This occurred because states were willing to marry

a liberalized attitude regarding alcoholic beverage

14

retail regulations with the aforementioned technological advances.7/8 North Carolina embraced such

liberalization.9

It was practically unheard of before the pandemic for states to allow by-the-drink beverage retailers, such as restaurants and bars, to either deliver alcoholic beverages with food or allow the sale

of alcoholic beverages on a to-go basis. The in-person sale policies were, as discussed supra., vestiges

of the end of Prohibition. The Twenty-First

Amendment clearly authorized states to adopt relaxed policies for the retail sale of alcoholic beverages as a matter of economic expediency.

The genie, however, is now out of the proverbial bottle with respect to remote sale of alcoholic

beverages. States can no longer hide behind the

core values of the Twenty-First Amendment by

embracing new technologies which benefit in-state

interests but then deny the parallel benefit of such

technologies as to out-of-state retailers.

7 BBC News, Coronavirus: How the pandemic is

relaxing US drinking laws. (May 15, 2020).

8 Fortune, How the On-Demand Liquor Delivery

Business Changed Overnight During the Coronavirus Pandemic. (April 11, 2020).

9 Office of the Governor of North Carolina, Gover-

nor Cooper Signs Executive Order to Extend Delivery

and To-Go Mixed Beverage. (Apr. 29, 2021).

15

CONCLUSION

For the foregoing reasons, this Court should

grant the Petitioners’ Petition for Writ of Certiorari in this matter.

Respectfully submitted,

J. GREGORY TROUTMAN

Counsel of Record

TROUTMAN LAW OFFICE, PLLC

4205 Springhurst Boulevard,

Suite 201

Louisville, KY 40241

502-412-9179

jgtatty@yahoo.com

December 2022

A-1

APPENDIX

NAMES OF INDIVIDUAL AMICI

Frank David Baxter, Los Angeles CA

Austin Beeman, Cincinnati OH

Dr. Larry Buckel, Carmel IN

Kitty Buckel, Carmel IN

Cornelius P. Corbett, Saint Helena CA

Neal Cutler, Wayne PA

Louis Danzis, San Antonio TX

Brian Epstein, Carmel IN

Jessyca Frederick, La Quinta CA

Mark Galewski, Richfield MN

Myra Gassman, Charlotte, NC

Joel Goldberg, Brighton MI

Dr. Pinkus Goldberg, Indianapolis IN

Alex Goldstein, Scottsdale AZ

Mark Golodetz, Manor NY

Larry Gralla, Reno NV

Noel Kaplan, San Rafael CA

Fredric Koeppel, Memphis TN

Andrew Klug, White GA

Rob Kowalski, Napa CA

Bob Kunkle, Charlotte NC

Dan Lewis, Phoenix AZ

Kathleen Maher, Ashland OR

Gary Millman, Santa Rosa CA

Grant Opperman, Brentwood TN

Anthony Phelps, Spring Lake MI

A-2

Gary Redish, Hackensack NJ

Fred Reno, Charlottesville, VA

Mitchell Rubenstein, Boca Raton FL

Jeanne Savelle, Smyrna GA

Daniel Schmelzinger, Dawsonville GA

Elizabeth Schneider, Raleigh NC

Laurie Silvers, Boca Raton FL

Jack Schultz, Detroit MI

Jack Stride, Detroit MI

James Troutman, Louisville, KY

Bobbie Troutman, Louisville, KY

Keith Wollenberg, Atheron CA

Matthew Wood, San Carlos CA

Andrew E. Yarosh, Silverthorne, CO

Joseph Zamrin, Tampa FL