Amicus Curiae Brief — Granholm v. Heald

= Supreme Coun US

Nos. 03-1116, 03-1120 FILED

SEP 2 3 2004

In The

+, | OF RICE.OF THE CLERK

Supreme Court of the United States—~-

e

JENNIFER M. GRANHOLM, Governor, et al.,

Petitioners,

V.

ELEANOR HEALD, et a’

6

MICHIGAN BEER & WINE WHOLESALERS ASSOCIATION,

Petitioner,

V.

ELEANOR HEALD, et al.

On Writs Of Certiorari To The United States

Court Of Appeals For The Sixth Circuit

¢

BRIEF FOR THE CARGO AIRLINE ASSOCIATION

AS AMICUS CURIAE IN SUPPORT OF RESPONDENTS

+

Drew S. Days, III

Counsel of Record

BETH S. BRINKMANN

SETH M. GALANTER

MORRISON & FOERSTER LLP

2000 Pennsylvania Ave., NW

Washington, DC 20006

Of Counsel (202) 887-1500

STEPHEN A. ALTERMAN PAUL T. FRIEDMAN

MYERS & ALTERMAN RTH N. BORENSTEIN

1220 19th Street, NW MORRISON & FOERSTER LLP

Washingion, DC 20036 425 Market Street

San Francisco, CA 94105

(415) 268-7000

Counsel for Amicus Curtae

SEPTEMBER 23, 2004

COCKLE LAW BRIEF PRINTING CO (800) 225-6904

OR CALL COLLECT (402) 442-2841

TABLE OF CONTENTS

Page

I icccnitisdacndictcamninncinnsiaiinsiininn ili

INTEREST OF AMICUS CURIAE .................c:ccceeeees 1

SUMMARY OF ARGUMENT .....................csscceeeeeeeeees 2

TTI cociistinnincigninubiigdimeibhaimnindenmiateeaninienieeiennies 6

A. The FAAAA, As An Exercise Of Congress’s

Authority Under The Interstate Commerce

Clause, Preempts State Laws That Regulate

The Prices, Routes, Or Services Of Carriers

Of Property, Including Laws That Regulate

SN Ce iii nccinsiesnsnnsnsanetentacinnnpsiins 8

1. Congress Enacted The FAAAA To Elimi-

nate A Patchwork Of State Laws Regu-

lating Carriers That It Determined

Unreasonably Burdened Interstate

STITT oscinineipubinninenaiibisbenedsminanniuse 9

2. Michigan’s Regulation Of Carriers’ De-

liveries Is Preempted By The FAAAA...... 14

3. The Twenty-first Amendment Does Not

Limit Congress’s Authority To Enact

Federal Statutes, Such As The FAAAA,

Under Its Commerce Clause Authority.... 17

B. State Laws That Regulate Deliveries Of

Alcohol By Interstate Carriers Can Violate

The Dormant Commerce Clause’s Proscrip-

tion Against Local Laws That Unduly Bur-

den The Interstate Movement Of Goods......... 23

1. The Twenty-first Amendment Does Not

Authorize Enforcement Of State Laws

That Otherwise Violate The Dormant

ATT AAPOR TRS Te 24

il

TABLE OF CONTENTS - Continued

Page

2. State Laws Regulating Deliveries Of Al-

cohol Impede The Development And

Functioning Of A National Market, And

May Place An Undue Burden On Inter-

state Movement Of Goods ...............0.0000008 26

CONCLUSION ......0000ccccccceceseeee08 ovssssssieneniensaiiinaaniaai 30

iii

TABLE OF AUTHORITIES

Page

CASES

Ace Auto Body & Towing, Ltd. v. City of New York,

171 F.3d 765 (2d Cir.), cert. denied, 528 U.S. 868

Sa... sossetecnnennnonecosccees 17

American Airlines, Inc. v. Wolens, 513 U.S. 219

TTT 7,15

Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv.

Oo ncsccncncnesenscacsscoocccccocoooceoes 8

Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984).....5, 25

Bibb v. Navajo Freight Lines, Inc., 359 U.S. 520

a ___..__.. sssenasnnsonosnoecoocecs 27

Boynton v. Virginia, 364 U.S. 454 (1960)... 8

Brown v. General Services Admin., 425 U.S. 820

AT TE 13

California Div. of Labor Standards Enforcement v.

Dillingham Constr., Inc., 519 U.S. 316 (1997).............. 13

California Retail Liquor Dealers Ass’n v. Midcal

Aluminum, Inc., 445 U.S. 97 (1980)............00000... 3, 18, 19

Capital Cities Cable v. Crisp, 467 U.S. 691

(BBE) cncccsscssersesssereresserscccscsessreecesecersececossrsees 3, 4, 9, 19, 20

Case of State Freight Tax, 82 U.S. (15 Wall.) 232

TD 26

City of Columbus v. Ours Garage & Wrecker Serv.,

a sc scrssrnsnsonenen 14, 15

Department of Revenue v. James B. Beam Distilling

cee 25

iv

TABLE OF AUTHORITIES - Continued

Page

Federal Express v. California PUC, 936 F.2d 1075

(9th Cir. 1991), cert. denied, 504 U.S. 979 (1992)......... 17

Forman v. Federal Express Corp., 753 N.Y.S.2d 348

aks Ge Ges Se eserctecnnanvenesinnesinnesetainnatiiiedinieniaciainiais 15

Fry v. United States, 421 U.S. 542 (1975)... eee 9

General Motors Corp. v. Tracy, 519 U.S. 278 (1997)......... 23

Gregory v. Ashcroft, 501 U.S. 452 (1991) ..............ccccceeeeee 19

Healy v. Beer Inst., 491 U.S. 324 (1989)...........0........0... 5, 25

Hostetter v. Idlewild Bon Voyage Liquor Corp., 377

a Meee TID sctisiictinsiniinearinsictiienstanneniiniiinmaaninicetaiineaiaateie 18

Hughes v. Oklahoma, 441 U.S. 322 (1979) ............cccc0ccc0ee 26

Hughes Air Corp. v. Public Utilities Comm’n, 644

ee ee I Se ncnceriienenesinesincaiearianiliciaipsaniaiatiiiaas 10

Kassel v. Consolidated Freightways Corp., 450 U.S.

ae a sacicieersinciesiteniteteinemancaataciteaadinatdstaiaunelteiil iste, 27

Kelley v. United States, 69 F.3d 1503 (10th Cir.

1995), cert. denied, 517 U.S. 1166 (1996)......00..000 co. 17

Louisville & Nashville R.R. v. FW. Cook Brewing

ig See a Pe cccntnentccncentcncisisiiiciibiiiaiiinlbiuasiniaiaiaiiitas 26

Morales v. Trans World Airlines, Inc., 504 U.S. 374

CU TTITIEID ccitiitnsbssienarininscnmnednieiaiicnaesiniteieaanataeniiitaasiiaitiitiiaileeileatlaeias 13

North Dakota v. United States, 495 U.S. 423 (1990)........ 20

Pennsylvania Dep't of Corrections v. Yeskey, 524

re PI sccvereeesoscoeritsitenniiniiniiieaeididainiiaaiabiaatariinaiieaes 14

Philadelphia v. New Jersey, 437 U.S. 617 (1978).............. 24

Pike v. Bruce Church, Inc., 397 U.S. 137 (1970)............... 29

TABLE OF AUTHORITIES -— Continued

Page

Raymond Motor Transp., Inc. v. Rice, 434 U.S. 429

EIST eceinnecihtnciedeniandeinnneiteiiahiiiiiiiasnidglaiaiptiadeilibntapammiteadnee 27, 29

Rockwell v. United Parcel Serv., Inc., No. 99-CV-57,

1999 U.S. Dist. LEXIS 22036 (D. Vt. July 7,

SRS EPS Aen eee Musee eho Ber over aeRO ae 15

Soly v. United Parcel Serv., Inc., No. 02-CV-10499-

MEL, 2002 U.S. Dist. LEXIS 24059 (D. Mass.

BN, Ties Ti icccevsciesincsidistnntiinndininatadsamaniaaies 15

Southern Pac. Co. v. Arizona, 325 U.S. 761 (1945)........... 27

324 Liquor Corp. v. Duffy, 479 U.S. 335 (1987)... 3, 18, 19, 22

Tocher v. City of Santa Ana, 219 F.3d 1040 (9th Cir.

2000), cert. denied, 531 U.S. 1146 (2001)...................... 15

Trujillo v. American Airlines, Inc., 938 F. Supp. 392

(N.D. Tex. 1995), aff’d mem., 98 F.3d 1338 (5th

cee ee iaaahesdadiadeananddenniniiamsaataiiaatad 16

United Parcel Serv., Inc. v. Flores-Galarza, 318 F.3d

I 15, 16, 17

United Parcel Serv., Inc. v. Flores-Galarza, No. 03-

1990, 2004 U.S. App. LEXIS 19370 (1st Cir. Sept.

AE, TEP weinisnsiintenrernntsinctiianinninasnideaptnnnaineapnieisigpieemaniimenens 14

United States v. State Tax Comm’n of Miss., 412

i SE cxcnnsvsntecninmepsccennenianitiiinumneniumntieseniannmantl 20

Wabash, St. Louis and Pacific Railway Co. v.

OD DS’ DD: OE 9, 27

William Jameson & Co. v. Morgenthau, 307 U.S.

Be Ce ccrencssnntenmnnintinnsinintaameenneteiemmmmanenunnennieiia 18

vi

TABLE OF AUTHORITIES — Continued

Page

CONSTITUTION AND STATUTES

U.S. Const.:

(A TTS eee ERE Se OT OTR IEES AaL OR TT SPD 3, 18, 23

art. I, § 8, cl. 3 (Commerce Clause) ........................ passim

art. VI, cl. 2 (Supremacy Clause) ..................:::cccseeeeeees 19

I Fe etendiicieainceictcicninesnsacinscanaaicseidtriiearainiianainiiaaciii passim

I ia 5,17

Airline Deregulation Act of 1978, Pub. L. No. 95-

I ae 8a Ba 3, 10, 13

Civil Aeronautics Act of 1938, Pub. L. No. 706, 52

a a a a a 10

Federal Alcohol Administration Act, Act of Aug. 29,

1935, ch. 814, tit. I, 49 Stat. 977.00... eee 18

Federal Aviation Authorization Act of 1994, Pub. L.

No. 103-305, 108 Stat. 1569 ..............cccccccccocccsroeees passim

Interstate Commerce Act, Act of Feb. 4, 1887, ch.

I a aa a a G

Motor Carrier Act of 1935, Pub. L. No. 255, 49 Stat.

ok ana ea ca oe a ee oa eee SO Oe g

Pub. L. No. 107-273, 116 Stat. 1758 (2002) ...0..000 21

I ea ee DS hd a Oe 21

27 U.S.C.

ET TE LEE Ree OR BL Cs ee 25

aR 4, 21, 25

Bp ee OO GI. ccnseensnncensnnnniccssonsiatatetninmasiuemmntmmenepuenetiag 18

vil

TABLE OF AUTHORITIES - Continued

Page

Sheila ita aii aac 7

Sarina aici aati 7

49 US.C.

I hai iii haa acetate 15

iP TEI aiicieoninicntnniinpsniatariadipamabciteimisiidinciatiimanteimeseeiditaas 8,12

i> Ta TITIITTThiclceseinctininniasibiiiipeiaihahipseaetiaaehcaemiaettimeradeeiariaaatiasdiatlinatiele 14

Snr ssisccsnteeeitthhgsianbalitiaieiadenstibinideaieinasearatiaaduaaiiie 7

Ii TITTY sosoiieeistsiciinet chncteeinineitceteeleapdeiteeaenihbiiiguacasemeneaiaiaiaaia 7

5 AES Seer nae een ne STREET 7

TTI ncsictriiececiciniaiaerendenaieersctiinaie baie lanaliateaiatasianimeaaieaiinn 7

2 Ease even nee TT 7

TI nin nsencnnininr i icaacearieeneeneiataeenamneeiealatide lili 7

IaETTTTTET tt hsocevsenntaterisceteeneneinaninecasnianiinciniebeiaciapintainiataneiammnmataiaingaidestieeianin 7

I TTTITTITTTTE isis secerrioieaisstietsiteeastatansiaintinipaetiitmaeasiiaatieattantialaanietantiaasd 13

IID ecccccccsceencnnsenennticcnen and 8, 12

BI TTTITTTT niinicrsicitecnsintrrsterineitenenarsingaiiiiniiiatiniiiasaiaill 14

pF 28

A. Se GRR, © Be cceereccncvesssessssssccnsssmennseommvn 28

Sink Crane, GEE, SUI IAIEI UIT cinrsrnseisnieneasnrnnnsiennitinneipiieedionntnntanninaenaide 28

Me. Rev. Stat. Ann. tit. 28, § 2077-B..................cccccceeeeeeeee 28

Mich. Comp. Laws

SERA intattcreundennmnetidtenseseesesmammiunmnadennenindiid 6, 28

GTI TTT accinsennninnonsspenbecemenniinineunneateniieniiitiainnduinenins 6

DP Ge ED cencnnconesssssnnsesessusmnsunninssnstannsinsenennememateonnts 6

vill

TABLE OF AUTHORITIES — Continued

Page

ne seiciciniinitatieaitnipiiiaidiiaiaiaetad altel ial aicaiduaeaias 6

i TE ITT kicbiensinlesslconeianipnpbuiiedgsialbesinieansdiiasiaiiiiadinesiidiaiaiemmeameiiay 6

I, CI i i 28

N.H. Rev. Stat. Ann, § 178:27(ID) ...cccsssssessseeeeen PONE, 28

8 FR ee nen 6, 28

Tenn. Code Ann. § 57-3-402(b) ..............csccccesssssseserereeeeeees 28

MISCELLANEOUS MATERIALS

76 Cong. Rec. (1933)

Sr cecsscsseiansientcestiesniacsiesitnitaiimnetinitianndatentesinibioansseanaetiniadimatiinaacdsiatiied 22

i itcdhenreiieicnpeateeietieucteniainaiaiia italiana talaga iaaiaatiaiianalals 22

Gi icnnennsnediavetnsennenssnssesiseninteetinnmetennionianiiiiinesinin 23

ee iccpncerietstunniniinimitininiennipstioneninatisinnnaniinininnniaisiiaide 22

eee a EN ee IT 22

Ei cnsibieacniuttichseneiinectancmnmienianiideemmmniatiinmnmaiineiinisiial 22

ie hicniveinesbiceeaibaiceiciraiviseanitibitearpateedaiiniaemseniaaiitaiitiaasti tai saieaisiasiesinani 23

148 Cong. Rec. H6749 (daily ed. Sept. 26, 2002).............. 21

Federal Trade Comm’n, Possible Anticompetitive

Barriers to E-Commerce: Wine (2003) ..............ccccceeeeeeeees 7

H.R. Conf. Rep. No. 103-677 (1994), reprinted in

1906 U.B.C.C.A.N. 27136 ...000c0s0000s0000sc0000s 10, 11, 12, 13, 16

Legislation to Preempt State Motor Carrier Regula-

tions Pertaining to Rates, Routes, and Services:

Hearing Before the Subcomm. on Surface Transp.

of the House Comm. on Public Works and

Transp., 103d Cong., 2d Sess. (1994) .0.........cccccceeeeeeeeees 11

ix

TABLE OF AUTHORITIES -— Continued

Page

U.S. Census Bureau, U.S. Dep’t of Commerce, 2002

Economic Census: Transportation: 2002 Com-

modity Flow Survey: United States (Preliminary)

ial sitsdainieeisnintnnananeaninintansennmensnenienbeiaaiassinmaeeniatdieaieitialtinin 1

INTEREST OF AMICUS CURIAE

The Cargo Airline Association (CAA) is a trade asso-

ciation of fifteen interstate air carriers and motor carriers

affiliated with air carriers through common controlling

interest, including United Parcel Service and FedEx

Express, which transport only cargo.’

Cargo transportation is the engine that drives the

nation’s interstate commerce. It is critically important to

the economy. As of the last economic census, for-hire air

and motor carriers transported more than 3.6 billion tons

of goods, valued in excess of $4 trillion. See U.S. Census

Bureau, U.S. Dep’t of Commerce, 2002 Economic Census:

Transportation: 2002 Commodity Flow Survey: United

States (Preliminary), at 8 tbl. 1a (2003).

Carriers are able to provide the timely, efficient, and

reliable service on which the modern economy relies only

by employing uniform processes for handling, transport-

ing, and delivering packages. It is therefore critical to the

effective functioning of carriers’ delivery operations that

those operations be subject to uniform, national laws

throughout the United States, as Congress has directed in

the Federal Aviation Administration Authorization Act of

1994 (FAAAA), Pub. L. No. 103-305, tit. VI, § 601, 108

Stat. 1569, 1605-1607. Amicus CAA’s members, and their

customers, bear the burdens of divergent state laws that

seek to regulate carriers’ delivery of specific items.

' A letter from the parties consenting to the filing of this brief has

been filed with the Clerk of this Court, pursuant to Supreme Court

Rule 37.3(a). No counsel for a party authored this brief in whole or in

part, and no person or entity, othe. than the amicus curiae, its mem-

bers, or its counsel, made a monetary contribution to the preparation or

submission of this brief.

The Michigan laws at issue in these cases, and the

New York laws at issue in Swedenburg v. Kelly, No. 03-

1274, directly regulate carriers’ deliveries. Because amicus

CAA’s members depend on nationally-uniform rules in

operating their businesses, the CAA has a significant

interest in the outcome of these cases.

SUMMARY OF ARGUMENT

The state laws at issue in these cases regulate not

only the buyers and sellers of wine, but also the carriers

that transport the wine, along with other goods, to and

within Michigan. These laws directly regulate carriers by

proscribing delivery of alcohol to unauthorized recipients.

The parties apparently assume that the federal rights of

carriers are derivative of and coextensive with those of the

buyers and sellers. But that assumption is in error. Carri-

ers have been afforded special protection from state

regulation by federal statute, as well as under this Court’s

Commerce Clause jurisprudence.

Although the Michigan laws regulating carriers at

issue in these cases are invalid, many of amicus CAA’s

members offer shippers the option of requiring an adult

signature for delivery. Moreover, the federal government

remains available to address any untoward conduct by

carriers.

A. The Federal Aviation Administration Authoriza-

tion Act of 1994 (FAAAA), Pub. L. No. 103-305, tit. VI,

§ 601, 108 Stat. 1569, 1605-1607, is critical to the proper

resolution of these cases. The FAAAA preempts state laws

“related to a price, route, or service” of air and motor

carriers that transport property. The judgment below

should be affirmed on the ground that the Michigan laws

at issue are preempted by the FAAAA.

3

Congress enacted the FAAAA to reaffirm and expand

its earlier preemption of state laws regulating air carriers

in the Airline Deregulation Act of 1978, Pub. L. No. 95-

504, 92 Stat. 1705. Congress enacted the FAAAA’s preemp-

tion provisions because it determined that the existing

patchwork of state regulation of carrier operations “im-

posed an unreasonable burden on interstate commerce.”

FAAAA § 601(a)(1), 108 Stat. at 1605.

The FAAAA preempts Michigan’s laws regulating

carriers’ deliveries. A carrier’s delivery of the property it

transports is a core part of the carrier’s “service,” which

cannot be regulated by state or other local laws. The state

laws also relate to a carrier’s routes because compliance

requires special routing of packages containing alcohol,

including re-routing of non-complying packages to be

returned to shippers, and may require changes to delivery

drivers’ routes to account for the increased amount of time

necessary to conform to restrictions on the manner of

deliveries. Finally, these laws relate to a carrier’s prices

because the costs of compliance can substantially increase

the costs for carriers to transport and deliver goods.

The Twenty-first Amendment does not invalidate the

FAAAA. Congress enacted the FAAAA’s preemption

provisions pursuant to its Article I power to regulate

interstate commerce. This Court has held in three cases

that federal statutes enacted pursuant to the Commerce

Clause preempted state laws regarding alcohol despite

claims by the States that the Twenty-first Amendment

authorized the laws. See California Retail Liquor Dealers

Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980); 324

Liquor Corp. v. Duffy, 479 U.S. 335 (1987); Capital Cities

Cable v. Crisp, 467 U.S. 691 (1984). While there is lan-

guage in these cases that suggests the Court was seeking

to “balance” federal and state interests, this balance

appears no different from standard application of the

4

Supremacy Clause, in which the federal government must

prevail. Certainly, if, as in Crisp, a federal policy in favor of

access to cable television can trump a State’s interest in

promoting temperance, then a federal policy in favor of

unfettered national commercial markets for the transporta-

tion of property likewise must supercede state laws that are

motivated by a combination of temperance and economic

protectionism. To hold otherwise would draw into question

not only the FAAAA, but also other federal laws, such as

recently enacted public-safety legislation designed to reduce

the number of bulky packages that passengers carry onto

airplanes by authorizing the direct shipment of on-site

purchases of wine to consumers who could have lawfully

carried the wine into the State. See 27 U.S.C. § 124.

Nothing in the Twenty-first Amendment’s legislative

history reflects an intent to limit Congress's authority to

regulate commerce pursuant to the Commerce Clause. To

the contrary, the debates show that Congress's rejection of a

proposed Section 3 of the Amendment, which would have

granted it express authority to regulate the sale of liquor on

the premises where sold, was based in part on the under-

standing that Congress’s existing authority to regulate

liquor under the Commerce Clause was not affected.

B. If the Court does not reach the FAAAA preemp-

tion argument, the judgment below should be affirmed on

respondents claim that the Michigan laws’ facial discrimi-

nation against out-of-state products falls within the

Dormant Commerce Clause’s virtually per se rule of

invalidity. Moreover, claims under the Dormant Commerce

Clause involving undue burdens on interstate commerce

should not be foreclosed in cases such as these involving

state regulation of the delivery of alcohol.

This Court has never adopted the view, urged by

petitioners, that state laws regarding the transportation of

5

liquor can never be invalidated under the Dormant Com-

merce Clause, regardless of the burden on interstate

commerce. To the contrary, this Court has held that

nothing in the text of Section 2 of the Twenty-first

Amendment exempts state laws from Dormant Commerce

Clause scrutiny. See Bacchus Imports, Ltd. v. Dias, 468

U.S. 263 (1984); Healy v. Beer Inst., 491 U.S. 324 (1989).

The Court should not retreat from these holdings.

Even if this Court were to reject respondents’ claims of

unconstitutional discriminatory treatment, serious ques-

tions would remain concerning the constitutionality of the

burden that state laws regulating deliveries of alcohol

impose on interstate carriers under the Dormant Com-

merce Clause. This Court has long recognized that the

Clause’s proscription against economic balkanization is

often violated by state laws directly regulating interstate

carriers’ transportation of property, a determination

confirmed by Congress in enacting the FAAAA.

Michigan’s laws can impede the flow of interstate

commerce because they disrupt carriers’ operations,

increase costs, and slow service. Several States forbid

carriers from making certain deliveries of alcohol either to

unauthorized recipients or from unlicensed shippers, with

the determination of who is unauthorized or unlicensed

varying among the States. The inefficiencies and delays

caused by such state laws may constitute an undue burden

on interstate commerce in violation of the Commerce

Clause that could not be sustained unless supported by

important state interests that justify the burden. Nothing

in the Twenty-first Amendment requires this Court to

sanction unlimited balkanization of the national market

when the product being carried is alcohol.

6

ARGUMENT

Petitioners, Michigan state officials and a trade

association of Michigan beer and wine wholesalers, ask

this Court to uphold state laws that regulate not only the

buyers and sellers of wine, but also directly regulate

carriers (including trucks and aircraft) that transport the

wine, along with other goods, to and within Michigan. The

Michigan laws restrict the “delivery” of alcohol to state

licensees and forbid “delivery” to an individual under most

circumstances. Mich. Comp. Laws § 436.1203(1). Even

when they do allow direct delivery to individuals, the laws

require “[t]he person who delivers the alcoholic liquor” to

“verify that the individual accepting delivery is of legal

age” through a “diligent inquiry,” which is defined to

include “at least an examination of an official Michigan”

drivers’ license or identification card “or any other bona

fide picture identification which establishes the identity

and age of the person.” Mich. Comp. Laws § 436.1203(4),

(8)(f). The laws are enforced through criminal penalties

against delivery persons and others. See Mich. Comp.

Laws §§ 436.1909, 436.1701(1).

The New York state laws that are before the Court in

the companion case consolidated for argument, Sweden-

burg v. Kelly, No. 03-1274, likewise directly regulate

carriers by forbidding a “common carrier or other person”

from “bring[ing] or carry[ing] into the state any alcoholic

beverages, unless the same shall be consigned to a person

duly licensed hereunder to traffic in alcoholic beverages.”

N.Y. Alco. Bev. Cont. § 102(d).

The constitutional challenge in this action was

brought by persons who wish to buy wine from sellers

outside of their State and the out-of-state sellers who

wish to sell and ship directly to those persons. None of

the parties addresses the carriers who transport the wine

from the sellers to the buyers, or the provisions of the

challenged state laws that directly regulate carriers’

deliveries of wine purchased from the out-of-state sellers.

The parties apparently assume that the federal rights of

carriers are derivative of and coextensive with those of the

buyer and seller. But that assumption is in error. Carriers

have been afforded special protection from state regulation

by federal statute, as well as under this Court’s Commerce

Clause jurisprudence.

Although the Michigan laws regulating carriers at

issue in these cases are invalid, many of amicus CAA’s

members offer shippers the option of requiring an adult

signature for delivery. See Federal Trade Comm'n, Possible

Anticompetitive Barriers to E-Commerce: Wine 36-37 (2003).

Moreover, the federal government remains available to

address any untoward conduct by carriers. Despite broad

federal deregulation, air carriers must obtain from the

federal government a certificate authorizing air transporta-

tion before providing interstate cargo service. See 49 U.S.C.

§ 41101(a). The federal government may impose such terms

on the certificate as are in the public interest, see id.

§§ 41103(c), 41109(a)(2)(A), with certain exceptions regard-

ing pricing, scheduling, destinations, and the like, see id.

§$§ 41103(c), 41109%(a)(2)(B); see also id. § 40101(a\(6), (b)(2)

(describing the deregulatory market-based purposes

government must consider in assessing the public inter-

est). The federal government has also established an

administrative mechanism to police “unfair” or “deceptive”

practices by air carriers while allowing them to engage in

interstate commerce governed by national rules. See 49

U.S.C. § 41712; American Airlines, Inc. v. Wolens, 513 U.S.

219, 228 n.4 (1995).”

* The federal government also regulates those entities that produce

and ship alcohol. See 27 U.S.C. §§ 203, 205. Accordingly, the States need

not regulate the carriers that transport and deliver the shipments

(Continued on following page)

8

A. The FAAAA, As An Exercise Of Congress’s Author-

ity Under The Interstate Commerce Clause, Pre-

empts State Laws That Regulate The Prices,

Routes, Or Services Of Carriers Of Property, In-

cluding Laws That Regulate Deliveries Of Alcohol

Federal law exclusively governs carriers’ transporta-

tion of property by land and air in both interstate and

intrastate commerce. Congress enacted the Federal Avia-

tion Administration Authorization Act of 1994 (FAAAA),

Pub. L. No. 103-305, tit. VI, § 601, 108 Stat. 1569, 1605-

1607, to create and encourage an efficient and competitive

national market for the transportation of goods. The

FAAAA preempts state laws related to the prices, routes,

or services of air carriers, motor carriers, and intermodal

carriers (i.e., carriers that use a combination of both air

and motor transportation) that transport property. See 49

U.S.C. §§ 41713(b\4\A), 14501(c\1). The FAAAA is

critical to the proper resolution of these cases because it

reflects Congress’s determination that States should be

divested of virtually all authority to regulate the commer-

cial transportation of property, including the deliveries of

wine purportedly regulated by the state laws at issue in

these cases. The judgment below should be affirmed on the

ground that the Michigan laws at issue are preempted by

the FAAAA.®

because the federal government already regulates the terms upon

which entities are permitted to ship alcohol and can adjust such

regulation to address other concerns.

* Although the parties did not raise this statutory preemption

argument below, this Court has the authority to consider it. See

Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv. Comm'n, 461 U.S.

375, 382 n.6 (1983). Indeed, it is particularly appropriate to address the

statutory preemption argument because the question presented

involves the Dormant Commerce Clause and “the relationship between

legislative and judicial enforcement of the Commerce Clause is close.”

Ibid.; see also Boynton v. Virginia, 364 U.S. 454, 457 (1960) (electing to

(Contin-ed on following page)

9

1. Congress Enacted The FAAAA To Eliminate

A Patchwork Of State Laws Regulating

Carriers That It Determined Unreasonably

Burdened Interstate Commerce

Congress’s decision in the FAAAA to preempt state

regulation of the prices, routes, and services of air, motor,

and intermodal carriers of property is rooted in a long

history of federal supremacy in this field. Starting with

the creation of the Interstate Commerce Commission (ICC)

in 1887, see Act of Feb. 4, 1887, ch. 104, 24 Stat. 379, the

federal government has been responsible for regulating

the prices, routes, and services of the interstate carriage of

goods, to the exclusion of state authorities."

resolve case based on federal preemption claim not raised by petitioner

rather than the Dormant Commerce Clause claim upon which certiorari

had been granted). Moreover, by addressing the statutory question, this

Court may not need to address the constitutional issue of the interplay

between the Twenty-first Amendment and the Dormant Commerce

Clause. See Fry v. United States, 421 U.S. 542, 546 (1975) (addressing

statutory issues raised in amicus briefs but not by petitioner “rather

than decide a constitutional question”).

This Court adopted a similar course in Capital Cities Cable v.

Crisp, 467 U.S. 691 (1984), where, at the urging of an amicus, it

declined to address a First Amendment claim regarding state regula-

tion of alcohol advertising on cable television resolved by the court of

appeals and raised by petitioners in their petition for certiorari. The

Court instead disposed of the case against petitioners on statutory

preemption grounds, even though it was not passed upon by the lower

courts and even though the Court was required to address the scope of

the Twenty-first Amendment in doing so. Jd. at 697.

* Congress created the ICC to regulate railroads in response to this

Court's decision in Wabash, St. Louis and Pacific Railway Co. v. Illinois,

118 U.S. 557 (1886), which held that a state law that attempted to

regulate the intrastate portion of a railroad’s transportation of goods

intended for another State violated the Dormant Cominerce Clause.

The ICC statute was extended in 1935 to apply to trucks and other

interstate motor carriers transporting property for compensation. See

Motor Carrier Act of 1935, Pub. L. No. 255, § 217, 49 Stat. 543, 560-561.

A similarly exclusive federal regulatory regime was later established for

(Continued on following page)

10

Over time, Congress favored less regulation of air and

motor carriers of property, determining that interstate

commerce would be more efficient if transportation of

goods was governed primarily by competition in the

marketplace. Therefore, by 1978, Congress had eliminated

most federal regulation of air transportation, and had

freed air carriers, including air cargo carriers, from state

regulation of intrastate price, routes, and services. See

Airline Deregulation Act of 1978 (ADA), Pub. L. No. 95

504, §§ 4, 37(a), 40(a), 92 Stat. 1705, 1707-1708, 174},

1744-1745; Hughes Air Corp. v. Public Utilities Comm'n,

644 F.2d 1334, 1341 (9th Cir. 1981).

Although Congress had also substantially deregulated

interstate motor carriers of property, state regulation of

intrastate ground transportation initially remained in

place after the ADA. In 1994, however, Congress deter-

mined that it was necessary to extend express preemption

of state laws related to the prices, routes, or services of

carriers engaged in the intrastate transportation of prop-

erty, whether by ground, air, or some combination thereof,

because of the adverse effects such state laws had on

interstate commerce. As explained by the Conference

Committee Report accompanying the FAAAA, the US.

Department of Transportation had estimated that state

regulation imposed costs of $3 to $8 billion a year on motor

carriers and the public. H.R. Conf. Rep. No. 103-677, at 87

(1994), reprinted in 1994 U.S.C.C.A.N. 1715, 1759. State

regulation of carrier operations that had survived ADA

preemption “causeld] significant inefficiencies, increased

costs, reduction of competition, inhibition of innovation and

technology and curtailled) the expansion of markets.” Jbid.

air carriers traveling between States. See Civil Aeronautics Act of 1938,

Pub. L. No. 706, § 403(a), 52 Stat. 973, 992-993 (authorizing regulation

of interstate air carriers by the Civil Aeronautics Authority).

11

Moreover, the different rules governing interstate and

intrastate deliveries created perverse incentives for ship-

ping goods across state lines and then back into the State of

origin simply to avoid state regulation. Jd. at 87-88.

The state laws also directly interfered with interstate

commerce because the “sheer diversity of these regulatory

schemes is a huge problem for national and regional

carriers attempting to conduct a standard way of doing

business.” Jd. at 87.° Preemption was thus “necessary to

facilitate interstate commerce” by eliminating the “patch-

work of regulation” that state laws imposed on carriers

transporting property. Jbid. Congress made express

statutory findings in enacting the FAAAA that “the regula-

tion of intrastate transportation of property by the States

has — (A) imposed an unreasonable burden on interstate

commerce; [and] (B) impeded the free flow of trade, traffic,

* See, e.g., Legislation to Preempt State Motor Carrier Regulations

Pertaining to Rates, Routes, and Services: Hearing Before the Subcomm.

on Surface Transp. of the House Comm. on Public Works and Transp.,

103d Cong., 2d Sess. 21 (1994) (testimony of Frank E. Kruesi, Asst.

Sec., U.S. Department of Transportation) (“This is a national problem.

We all bear the national expense because we purchase goods made by

regional, national, and multi-national companies located in States that

regulate trucking.”); ibid. (“The very diversity of 41 [state] regulatory

schemes is an additional problem for national and regional carriers

which try to conduct a standard way of doing business. The States are

known as the Laboratories of Democracy, but this is a case where the

laboratories are not helpful to the economic well-being of our country.”);

id. at 122-123 (testimony of James A. Rogers, Vice-President, United

Parcel Service) (“How big a problem is State regulation for a company

like UPS? It is a big problem. * * * If we want to offer our customers a

new service, we have to go to 38 PUCs in 38 different States to get them

to approve the service. Every time we file one of these applications, we

are at risk that they might order us to present more evidence at a

hearing, [and] block service until they make a decision. We end up with

a checker board map of States where some we can offer service, some

we can’t, and we confuse ourselves and we very much confuse our

shippers.”).

12

and transportation of interstate commerce.” FAAAA, Pub.

L. No. 103-305, tit. VI, § 601(a)(1), 108 Stat. at 1605.

In response to these findings, Congress concluded that

“certain aspects of the State regulatory process should be

preempted.” Jd. § 601(a)(2), 108 Stat. at 1605. Congress

thus enacted statutory provisions in the FAAAA preempt-

ing state regulation of the transportation of property by all

motor carriers, air carriers, and intermodal carriers. For

example, Section 601(b) of the FAAAA provides:

a State, political subdivision of a State, or po-

litical authority of 2 or more States may not en-

act or enforce a law, regulation, or other

provision having the force and effect of law re-

lated to a price, route, or service of an air car-

rier or carrier affiliated with a direct air carrier

through common controlling ownership when

such carrier is transporting property by aircraft

or by motor vehicle (whether or not such prop-

erty has had or will have a prior or subsequent

air movement).

49 U.S.C. § 41713(b)(4)(A).°

* Section 601(c) similarly preempts state laws “related to a price,

route, or service of any motor carrier [not affiliated with a direct air

carrier] * * * with respect to the transportation of property.” 49 U.S.C.

§ 14501(c\\1). Because the preemption language in Section 601(c)

regarding motor carriers is identical to that discussed in the text in

Section 601(b) regarding air and affiliated carriers, and because amicus

CAA’s members are all air carriers or motor carriers affiliated with air

carriers, for ease of reference we refer only to Section 601(b) in discuss-

ing the FAAAA’s preemptive scope. As the text of the provision demon-

strates, however, Section 601(c) has comparable preemptive scope for

motor carriers. See also H.R. Conf. Rep. No. 103-677, at 85, reprinted in

1994 U.S.C.C.A.N. at 1757 (FAAAA’s two preemption provisions

“intended to function in the exact same manner with respect to * * *

preemptive effects”).

13

Congress intended a broad scope for FAAAA preemp-

tion. Congress modeled the FAAAA on the preemption

provision of the ADA, which preempted the enforcement of

state laws “relating to rates, routes, or services of any air

carrier having authority *** to provide interstate air

transportation.” Pub. L. No. 95-504, § 4(a), 92 Stat. at

1708 (codified as amended at 49 U.S.C. § 41713(b)(1)).

Based on the ordinary meaning of “relating to,” as well as

cases interpreting the “relates to” language of the simi-

larly-worded ERISA preemption provision, this Court has

held that “State enforcement actions having a connection

with, or reference to, airline ‘rates, routes, or services’ are

pre-empted” by the ADA. Morales v. Trans World Airlines,

Inc., 504 U.S. 374, 384 (1992). When Congress used this

same language in the FAAAA, Congress was aware of this

interpretation and said that it “d[id) not intend to alter the

broad preemption interpretation adopted by the United

States Supreme Court in Morales.” H.R. Conf. Rep. No.

103-677, at 83, reprinted in 1994 U.S.C.C.A.N. at 1755.’

” Subsequent to Morales, the broad interpretation of the “relates to”

language in the ERISA preemption provision on which the Morales Court

relied has been criticized. See, e.g., California Div. of Labor Standards

Enforcement v. Dillingham Constr., Inc., 519 U.S. 316, 336 (1997) (Scalia,

J., concurring) (Supreme Court's “first take on [ERISA] was wrong”).

Regardless of subsequent developments in ERISA preemption cases,

however, Congress intended to incorporate into the FAAAA “the broad

preemption interpretation” described in the Morales opinion. H.R. Conf.

Rep. No. 103-677, at 83, reprinted in 1994 U.S.C.C.A.N. at 1755. Con-

gress’s choice to adopt Morales as the scope of FAAAA preemption must

be honored, even if this Court ultimately determines that the scope of

preemption recognized in Morales was too broad under ERISA or the

ADA. In evaluating legislative intent, “the relevant inquiry is not

whether Congress correctly perceived the then state of the law, but

rather what its perception of the law was,” even if “that understanding

of Congress was in some ultimate sense incorrect.” Brown v. General

Services Admin., 425 U.S. 820, 828 (1976). In all event, for the reasons

discussed in the text, no matter what interpretation of the FAAAA is

(Continued on following page)

14

The FAAAA is clear about what is exempted from its

preemptive force, specifying certain types of state laws,

including those regarding: (1) safety with respect to motor

vehicles; (2) highway route controls or limits based on size,

weight, or hazardous materials; (3) insurance; and (4)

household goods carriage (i.e., transportation by special-

ized moving companies). See 49 U.S.C. § 41713(b)(4)(B);

United Parcel Serv., Inc. v. Flores-Galarza, No. 03-1990,

2004 U.S. App. LEXIS 19370, at *7-*10 (1st Cir. Sept. 14,

2004). Congress created no exception in the FAAAA for

transportation of alcohol, and thus it clearly falls within the

preemption provision. See Pennsylvania Dep't of Corrections

v. Yeskey, 524 U.S. 206, 212 (1998) (rejecting argument that

exception to broad statutory language should be created

because Congress did not expressly specify that particular

matter would be covered by statute).

2. Michigan’s Regulation Of Carriers’ Deliver-

ies Is Preempted By The FAAAA

a. The Michigan laws at issue in these cases, as well as

the New York laws at issue in Swedenburg, are preempted by

the FAAAA. The state laws proscribe delivery of alcohol to

unauthorized recipients (i.e., delivering alcohol in these

States to anyone other than persons authorized by state law

to receive them). But the delivery of alcohol is a carrier

service that the FAAAA protects from state regulation.

applied, laws regulating whether and how carriers are permitted to

make deliveries of alcoholic beverages are preempted.

* As amended, Section 601(c) regarding motor carriers contains the

same exceptions and also excludes state regulation of the price of for-

hire motor vehicle transportation by a tow truck, if such transportation

is performed without the prior consent or authorization of the owner or

operator of the motor vehicle. See 49 U.S.C. § 14501(c)\(2); City of

Columbus v. Ours Garage & Wrecker Serv., 536 U.S. 424 (2002).

15

A carrier’s delivery of the property it transports is a

core part of the carrier’s “service,” which cannot be regu-

lated by state or other local laws. Cf. American Airlines,

Inc. v. Wolens, 513 U.S. 219, 226 (1995) (ADA preempts

state law claim that relates to airline “‘services,’ i.e., access

to flights and class-of-service upgrades unlimited by retro-

spectively applied capacity controls and blackout dates”

arising from airline frequent flyer program); 49 U.S.C.

§ 13102(21)(B) (defining “transportation” for motor carriers

to include “services related to [the movement of passengers

or property], including * * * receipt, [and] delivery”).

In an analogous situation, the First Circuit has held

that the FAAAA preempts a Puerto Rico statute that

“forbids delivery” to recipients who do not show the carrier

proof that they have paid excise taxes on the transported

goods. United Parcel Serv., Inc. v. Flores-Galarza, 318 F.3d

323, 335-336 (1st Cir. 2003). The court reasoned that

“{clompliance with this provision significantly affects the

timeliness and effectiveness of UPS's service, which

includes the delivery of packages on an express or time-

guaranteed basis.” Jd. at 336; see also Tocher v. City of

Santa Ana, 219 F.3d 1040, 1047 (9th Cir. 2000) (FAAAA

preempts municipal ordinances that imposed “operating

requirements” that “directly influence the relationship

between a customer and a [carrier]”), cert. denied, 531 U.S.

1146 (2001), overruled on other grounds, City of Columbus

v. Ours Garage & Wrecker Serv., 536 U.S. 424 (2002).

* See also Soly v. United Parcel Serv., Inc., No. 02-CV-10499-MEL,

2002 U.S. Dist. LEXIS 24059, at *1-3 (D. Mass. Aug. 22, 2002) (claims

arising from the delivery of packages “arise directly from core services

provided by UPS, going to ‘the heart of the “services” that UPS pro-

vides’”); Rockwell v. United Parcel Serv., Inc., No. 99-CV-57, 1999 U.S.

Dist. LEXIS 22036, at *7 (D. Vt. July 7, 1999) (claim regarding “pack-

age intake and delivery protocol is, beyond purview, inherently a claim

against UPS's services which is also preempted”); Forman v. Federal

Express Corp., 753 N.Y.S.2d 348, 351-352 (N.Y. Civ. Ct. 2003) (“Plaintiff

(Continued on following page)

16

Moreover, the legislative history of the FAAAA confirms

that Congress intended to preempt state laws that tar-

geted carriers for special regulation based on the “types of

commodities carried.” H.R. Conf. Rep. No. 103-677, at 86,

reprinted in 1994 U.S.C.C.A.N. at 1758.

Michigan's effort to regulate the manner of delivery,

i.e., how carriers may make certain deliveries, is also

clearly within the scope of the FAAAA’s preemption clause.

See Flores-Galarza, 318 F.3d at 336 (FAAAA preempts

statutory scheme that “imposes extensive requirements

that must be met before a carrier may make a lawful

delivery”).

b. The Michigan and New York laws relate not just

to carriers’ service, but also to their routes and prices. In

order to comply with the laws, amicus CAA’s members and

other carriers must create special routing for the delivery

of packages containing alcohol so that the packages can be

segregated and trained personnel can perform the various

tasks needed to ensure compliance. Non-complying pack-

ages must be re-routed to be returned to the shipper. In

addition, carriers may have to alter delivery drivers’

routes to account for the increased time drivers will spend

on deliveries to assure themselves that packages contain-

ing alcohol are delivered only to authorized recipients. See

Flores-Galarza, 318 F.3d at 336 (requirements that pro-

hibit certain deliveries or permit them only after “exten-

sive requirements” are met create a “substantial burden”

fails to demonstrate how the failure to deliver the contents of a package

— arguably the principal service provided by Fed Ex — somehow does not

relate to Fed Ex’s ‘services.’”); cf. Trujillo v. American Airlines, Inc., 938

F. Supp. 392, 394 (N.D. Tex. 1995) (plaintiff’s claims were preempted

because “the acts [plaintiff] complains of — preparation of the Waybill

*** and delivery of the package — are services” within the meaning of

the'ADA), aff’d mem., 98 F.3d 1338 (5th Cir. 1996).

17

in the form of additional labor, costs, and delays, and

“directly and significantly affect UPS’s routes and services,

which depend upon an orderly flow of packages”).

The state laws also relate to carriers’ rates because

compliance can substantially increase the costs for carriers

to transport and deliver goods due to the increased costs of

identifying and processing packages containing alcohol.

See id. at 336 (costs of a scheme that imposes require-

ments on delivery “necessarily have a negative effect” on

prices); Federal Express v. California PUC, 936 F.2d 1075,

1078 (9th Cir. 1991) (“To regulate {terms of service] is to

affect the price.”), cert. denied, 504 U.S. 979 (1992). Be-

cause the Michigan and New York laws relate to carriers’

prices, routes, and services, the FAAAA preempts these

laws.

3. The Twenty-first Amendment Does Not

Limit Congress’s Authority To Enact Fed-

eral Statutes, Such As The FAAAA, Under

Its Commerce Clause Authority

The FAAAA’s preemption provisions protecting the

ability of air, motor, and intermodal carriers to function in

a national market without state law obstacles were en-

acted pursuant to Congress’s power to “regulate Commerce

with foreign Nations, and among the several States, and

with the Indian Tribes,” U.S. Const. art. I, § 8, cl. 3, in

conjunction with the Necessary and Proper Clause. See

FAAAA, Pub. L. No. 103-305, tit. VI, § 601(a), 108 Stat. at

1605 (statutory findings); Kelley v. United States, 69 F.3d

1503, 1508 (10th Cir. 1995) (upholding FAAAA as valid

Commerce Clause legislation), cert. denied, 517 U.S. 1166

(1996); Ace Auto Body & Towing, Ltd. v. City of New York,

171 F.3d 765, 778-779 (2d Cir.) (same), cert. denied, 528

"T.S. 868 (1999). Section 2 of the Twenty-first Amendment

does not invalidate the FAAAA.

18

a. Shortly after the Twenty-first Amendment was

ratified, this Court rejected the argument that the Amend-

ment divested Congress of its preexisting authority over

alcohol under Article I. In William Jameson & Co. v.

Morgenthau, 307 U.S. 171 (1939) (per curiam), the Court

considered a challenge to the Federal Alcohol Administra-

tion Act, which regulates importers, distillers, bottlers, and

wholesalers of alcohol, including those shipping alcohol

interstate. See Act of Aug. 29, 1935, ch. 814, tit. I, 49 Stat.

977 (currently codified at 27 U.S.C. § 201 et seqg.). The

federal statute was challenged on the ground that Congress

had been divested of authority to regulate liquor under the

Commerce Clause by the Twenty-first Amendment. This

Court saw “no substance in this contention.” 307 U.S. at

172-173.

At no point has this Court held that the Twenty-first

Amendment insulates state laws or practices from the

preemptive force of federal statutes enacted under the

Commerce Clause. To the contrary, the Court has consis-

tently rejected the view “that the Twenty-first Amendment

has somehow operated to ‘repeal’ the Commerce Clause

wherever regulation of intoxicating liquors is concerned.

* ** Such a conclusion would be patently bizarre and is

demonstrably incorrect.” Hostetter v. Idlewild Bon Voyage

Liquor Corp., 377 U.S. 324, 331-332 (1964).

Thus, in California Retail Liquor Dealers Association

v. Midcal Aluminum, Inc., 445 U.S. 97 (1980), and again in

324 Liquor Corp. v. Duffy, 479 U.S. 335 (1987), the Court

held that the Sherman Act’s broad language preempted

state laws that required fixed prices for liquor. In both

cases, the Court rejected the State’s argument that the

Twenty-first Amendment allowed the State to disregard

federal law. See Midcal, 445 US. at 113-114; Duffy, 479

U.S. at 352.

19

Similarly, in Capital Cities Cable v. Crisp, 467 U.S.

691 (1984), this Court held that a generally applicable

federal agency regulation governing cable television

preempted a state law that prohibited advertising of alco-

holic beverages. The Court rejected the State’s argument

that the Twenty-first Amendment “rescue[s] the statute

from pre-emption,” explaining that, “[nJotwithstanding the

Amendment’s broad grant of power to the States * * * the

Federal Government plainly retains authority under the

Commerce Clause to regulate even * * * liquor.” Jd. at 712-

713.

There is language in these cases that suggests the

Court was seeking to “balance” or “harmonize” federal and

state interests. See Midcal, 445 U.S. at 109; Duffy, 479

U.S. at 346; Crisp, 467 U.S. at 714, 716. But as the private

petitioner in the instant cases acknowledges, “[iJn each

case” in which “state alcohol regulations” were challenged

as violations of “affirmative exercises of Congress’s power

under the Commerce Clause,” “the federal power won.” 03-

1120 Pet. Br. 27. Indeed, the Court’s “balance” of compet-

ing interests in cases such as Midcal, Duffy, and Crisp

appears no different from standard application of the

Supremacy Clause, in which the federal government must

prevail. Cf. Gregory v. Ashcroft, 501 U.S. 452, 460 (1991)

(“The Federal Government holds a decided advantage in

this delicate balance: the Supremacy Clause. U.S. Const.,

Art. VI, cl. 2. As long as it is acting within the powers

granted it under the Constitution, Congress may impose

its will on the States.”).

In Crisp, for example, the Court accepted that the

state law was “designed to further the State’s interest in

discouraging consumption of intoxicating liquor” and was

“a reasonable, albeit limited, means of furthering the goal

of promoting temperance in the State.” Jd. at 715. Yet the

20

Court unanimously held that “the Twenty-first Amend-

ment does not save the [law] from pre-emption,” because a

federal regulation designed to ensure “diverse cable

services” outweighed the State’s interests. Jd. at 715-716.

The amicus brief of 33 States in support of petitioners

has reached this same conclusion, acknowledging that

“when Congress speaks, the question is one of pre-emption

under the Supremacy Clause.” Br. of Ohio and 32 Other

States as Amici Curiae 8. They explain that under this

Court’s cases, “Commerce Clause legislation enacted by

Congress” is treated like “other constitutional limitations”

with which States must comply without regard to the

Twenty-first Amendment. Jd. at 8-9.

Nor is there anything about applying the FAAAA’s

express preemption in the context of state laws directed at

the delivery of alcohol that puts it beyond Congress's

Commerce Clause authority. This Court has consistently

suggested that efforts by States to regulate transportation

of alcohol within their own borders can be preempted by

affirmative federal law. See United States v. State Tax

Comm’n of Miss., 412 U.S. 363, 377 (1973) (“a State may,

in the absence of conflicting federal regulation, properly

exercise its police powers to regulate and control such

[liquor] shipments during their passage through its

territory” (emphasis added)); North Dakota v. United

States, 495 U.S. 423, 439 (1990) (plurality) (“Congress has

the power to confer immunity from state regulation on

Government suppliers beyond that conferred by the

Constitution alone, even when the state regulation is

enacted pursuant to the State’s powers under the Twenty-

first Amendment.” (citations omitted)).

Certainly, if, as in Crisp, a federal policy in favor of

access to cable television can trump a State’s interest in

promoting temperance, then a federal policy in favor of

21

unfettered national commercial markets for the transpor-

tation of property likewise must supercede state laws that

are seemingly motivated by a combination of temperance

and economic protectionism. To hold otherwise would draw

into question not only the FAAAA, but also other federal

legislation.

For example, Congress recently enacted legislation

designed to reduce the number of bulky packages that

passengers carry onto airplanes now that greater precau-

tions regarding air safety are in place. See 148 Cong. Rec.

H6749 (daily ed. Sept. 26, 2002) (Rep. Gallegly). Congress

mandated that, even though many States now forbid

direct shipments of alcohol, it is lawful for consumers to

receive direct shipments of wine if they purchase the wine

on-site at a winery and could have carried it into their

home State themselves. Specifically, Congress provided

that “[d)uring any period in which the Federal Aviation

Administration has in effect restrictions on airline passen-

gers to ensure safety, the direct shipment of wine shall be

permitted from States where wine is purchased from a

winery, to another State” if the consumer “could have

carried the wine lawfully into the State * * * to which the

wine is shipped.” Pub. L. No. 107-273, Div. C, tit. I, subtit.

A, § 11022, 116 Stat. 1758, 1829 (codified at 27 U.S.C.

§ 124). Congress intended that transportation by commer-

cial carriers would be a substitute for consumers’ bringing

their winery purchases onto airplanes.” Any suggestion

that Congress lacks the power to preempt state laws

regulating direct shipments of wine under its Commerce

” The U.S. Postal Service is not an available alternative for such

shipping because Congress has forbidden the mailing of alcohol. See 18

U.S.C. § 1716(f.

22

Clause authority would have the potential for interfering

with a number of substantial national interests.

b. Michigan suggests that the legislative history of

the Twenty-first Amendment indicates that many (if not

all) of the opinions discussed above were wrongly decided.

03-1116 Pet Br. 20-21. In particular, Michigan argues, the

omission of proposed Section 3 of the Amendment, which

would have granted Congress “concurrent power to regu-

late or prohibit the sale of intoxicating liquors to be drunk

on the premises where sold,” 76 Cong. Rec. 4138 (1933),

i.e., to regulate “saloons,” reflects an intent to preclude any

federal interference with state liquor regulation. But

Congress's rejection of proposed Section 3 reflects no such

intention. See Duffy, 479 U.S. at 347 n.10 (finding no

“clear demonstration of congressional intent” to “confer on

States complete and exclusive control of the commerce of

liquor” in the debates surrounding the Amendment).

The debates around proposed Section 3 demonstrate

that members of Congress were concerned about granting

the federal government any new authority, particularly

one that might continue the nationalization of criminal!

law that had occurred during the Prohibition era. See 76

Cong. Rec. 4141 (1933) (Sen. Blaine); id. at 4177-4178

(Sen. Black); id. at 4220 (Sen. Reed). There is no indica-

tion, however, that Congress intended to limit its own

existing authority to regulate commerce pursuant to the

Commerce Clause.

To the contrary, several Senators explained that they

supported omitting Section 3 based in part on their under-

standing that Congress’s existing authority to regulate

liquor under the Commerce Clause was not affected. See

76 Cong. Rec. 4219 (1933) (Sen. Fletcher) (“I recognize, of

course, that the Congress has power to regulate interstate

commerce and to prohibit the movement of wet goods into

dry States and that sort of thing. That is in the law now;

23

we do not need to express that in a new amendment to the

Constitution.”); id. at 4225 (Sen. Reed) (Congress “can

prevent shipments into dry States; it can do that at

present; it does not need any further grant of constitu-

tional power for that.”); id. at 4144 (Sen. Wagner) (Section

3 not needed “to restore the constitutional balance of

power and authority in our Federal system which had

been upset by national prohibition”). Thus, there is noth-

ing in the history of the Twenty-first Amendment that

suggests that Congress was deprived of its original author-

ity under Article I to enact laws regulating interstate

commerce merely because those laws regulate interstate

transportation of alcohol.

B. State Laws That Regulate Deliveries Of Alco-

hol By Interstate Carriers Can Violate The

Dormant Commerce Clause’s Proscription

Against Local Laws That Unduly Burden The

Interstate Movement Of Goods

In addition to being preempted under the FAAAA,

Michigan’s laws are subject to review under the Constitu-

tion’s Dormant Commerce Clause. “The negative or dor-

mant implication of the Commerce Clause prohibits state

*** regulation that discriminates against or unduly

burdens interstate commerce and thereby ‘imped[es] free

private trade in the national marketplace.” General

Motors Corp. v. Tracy, 519 U.S. 278, 287 (1997) (citations

omitted).

Therefore, even if the Court were not to reach the

FAAAA preemption argument, the judgment below should

be affirmed on respondents’ Dormant Commerce Clause

discrimination argument. As respondents demonstrate,

Michigan’s laws should be declared unconstitutional

because they discriminate on their face between goods

24

based solely on whether they originate from out-of-state

and thus fall within the “virtually per se rule of invalidity”

embodied in the Clause. Philadelphia v. New Jersey, 437

U.S. 617, 624 (1978). Moreover, an undue burden argu-

ment should not be foreclosed in cases such as these

involving state regulation of the delivery of alcohol.

1. The Twenty-first Amendment Does Not Au-

thorize Enforcement Of State Laws That

Otherwise Violate The Dormant Commerce

Clause

Michigan and private petitioner argue that Section 2

of the Twenty-first Amendment automatically immunizes

the state laws at issue in these cases from invalidity under

the Dormant Commerce Clause, and appear to suggest

that no state law enacted with regard to the transporta-

tion of alcohol can be invalidated, regardless of its dis-

criminatory character or the burden imposed on interstate

commerce.

But this Court has never adopted that view, recogniz-

ing that to do so would free States to adopt laws that

would unduly burden interstate commerce in a manner

that would harm citizens of the several States and the

Nation as a whole. Indeed, as we discuss below, the cur-

rent patchwork of state laws regulating the delivery of

alcohol creates such harms.

Michigan and private petitioner all concede that in

order for a state law to fall within Section 2 of the Twenty-

first Amendment, the law must be an otherwise constitu-

tional law. See 03-1116 Pet. Br. 31 (“Michigan does not

contend that the 21st Amendment immunizes it from

other provisions of the Constitution. This Court’s decisions

clearly indicate that it does not.”); 03-1120 Pet. Br. 25

(“state regulation of beverage alcohol is of course subject

*** to the First Amendment and other provisions of the

25

Constitution”). Indeed, even state laws dealing with

“importation,” one of the matters expressly addressed by

the text of Section 2, are subject to all of the Constitution’s

existing constraints. See 03-1116 Pet. Br. 26-27, 31-32

(citing with approval Department of Revenue v. James B.

Beam Distilling Co., 377 U.S. 341 (1964) (state taxation of

liquor subject to Constitution’s Export-Import Clause)); 03-

1120 Pet. Br. 29 (same).

As this Court has held, there is nothing in the text of

Section 2 of the Twenty-first Amendment that exempts

state laws from Dormant Commerce Clause scrutiny. See

Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 276 (1984);

Healy v. Beer Inst., 491 U.S. 324, 341-342 (1989); id. at 344

(Scalia, J., concurring in part and concurring in judgment).

Thus, under current precedent, state laws forbidding

carriers from delivering alcohol and regulating the man-

ner of delivery are subject to invalidation under the

Dormant Commerce Clause. As respondents demonstrate,

the Court should not retreat from these holdings, which

are a proper interpretation of the Twenty-first Amendment

and are entitled to respect as a matter of stare decisis."

" Petitioners suggests that the Webb-Kenyon Act, 27 U.S.C. § 122,

reflects Congress's intent to allow state laws that would otherwise

violate the Dormant Commerce Clause. 03-1116 Pet. Br. 36-38; 03-1120

Pet. Br. 16-17. But there is nothing in that Act, just as there is nothing

in the Twenty-first Amendment itself, that indicates that Congress

intended to authorize discriminatory laws or laws placing undue

burdens on instrumentalities of interstate commerce when the burdens

outweigh any purported local interest. Indeed, in light of the FAAAA

and 27 U.S.C. § 124, the Webb-Kenyon Act simply cannot be understood

to sanction all state laws regulating transportation of alcohol.

26

2. State Laws Regulating Deliveries Of Alco-

hol Impede The Development And Func-

tioning Of A National Market, And May

Place An Undue Burden On Interstate

Movement Of Goods

The parties in these cases have focused on the state

laws’ facial discrimination in their treatment of in-state

and out-of-state sellers. As respondents explain, the laws

at issue in these cases violate fundamental tenets of the

Dormant Commerce Clause by discriminating against

interstate commerce in favor of local industry and intra-

state transportation.

Even if this Court were to reject respondents’ claims of

unconstitutional discriminatory treatment, however,

serious questions would remain open for future litigation

concerning the constitutionality of the burden that these

laws, viewed in the aggregate, impose on interstate carri-

ers under the Dormant Commerce Clause. The validity of

the Michigan provisions regulating carriers was not

litigated on this theory and thus there are not facts in the

record to establish the full extent of the burden on inter-

state commerce. Yet there are strong indications that

enforcement of these laws against carriers may be con-

trary to the constitutional principle against economic

balkanization reflected in the Commerce Clause. See

Hughes v. Oklahoma, 441 U.S. 322, 325 (1979).

a. More than a century ago, this Court held that the

Commerce Clause by its own force proscribes state regula-

tion of the “transportation of passengers or merchandise

through a State, or from one State to another” when there

is a threat that “commercial intercourse between States

remote from each other may be destroyed.” Case of State

Freight Tax, 82 U.S. (15 Wall.) 232, 279-280 (1873); see

also Louisville & Nashville R.R. v. FW. Cook Brewing Co.,

—_-,_

27

223 U.S. 70, 82-83 (1912) (“it is not competent for any

State to forbid any common carrier to transport” any

commodity that is the “legitimate subject of interstate

commerce” because such regulation would be “an unlawful

regulation of interstate commerce not authorized by the

police power of the State”).

Direct regulation by States regarding the transporta-

tion of alcohol creates precisely the kind of “oppressive”

burden on interstate carriers that led this Court in Wa-

bash, St. Louis and Pacific Railway Co. v. Illinois, 118

U.S. 557 (1886), to hold that the Dormant Commerce

Clause proscribed state regulation of the intrastate con-

duct of interstate carriers. The Court reasoned that, “if

each one of the states through whose territories these

goods are transported can fix its own rules for prices, for

modes of transit, for times and modes of delivery, and all

the other incidents of transportation to which the word

‘regulation’ can be applied, it is readily seen that the

embarrassments upon interstate transportation, as an

element of interstate commerce, might be too oppressive to

be submitted to.” Jd. at 572.

The Court has reaffirmed, time and again, that early

understanding of the practical effect of diverse local

regulation on interstate commerce in cases involving

transportation of persons and property by interstate

carriers. See, eg., Kassel v. Consolidated Freightways

Corp., 450 U.S. 662 (1981); Raymond Motor Transp., Inc. v.

Rice, 434 U.S. 429 (1978); Bibb v. Navajo Freight Lines,

Inc., 359 U.S. 520 (1959); Southern Pac. Co. v. Arizona,

325 U.S. 761 (1945).

The factual conclusion in those cases that many state

laws regulating carriers unduly interfered with interstate

commerce received the express endorsement of Congress

in the enactment of the FAAAA. As noted above, Congress

found, similar to this Court’s determinations in Wabash

28

and its progeny, that diverse state regulation of carriers

“imposels] an unreasonable burden on interstate com-

merce * * * [and] impede[s] the free flow of trade, traffic,

and transportation of interstate commerce.” Pub. L. No.

103-305, tit. VI, § 601(a\(1), 108 Stat. at 1605.

b. Many States regulate not just sellers and buyers

of alcohol, but also carriers, making it unlawful (and

criminal) for carriers to deliver alcohol to certain recipi-

ents or otherwise make deliveries that do not conform to

state law. For example, many States, including Michigan

and New York, forbid carriers from making certain deliver-

ies of alcohol] either to unauthorized recipients or from

unlicensed shippers. The specific regulations vary, how-

ever, from State to State. See, e.g., Alaska Stat. § 04.11.499

(forbidding any person from transporting alcoholic bever-

ages into certain communities); Colo. Rev. Stat. § 12-47-

901(1) (permitting deliveries only if the shipper is licensed

in Colorado); Fla. Stat. ch. 561.545(2) (making it unlawful

to knowingly and intentionally transport any alcoholic

beverage from out-of-state to anyone other than a licensed

recipient, registered exporter, or state-bonded warehouse);

Me. Rev. Stat. Ann. tit. 28, § 2077-B (forbidding the deliv-

ery of liquor from an out-of-state company by mail order);

Mich. Comp. Laws § 436.1203(1) (forbidding the delivery

of alcoholic liquor unless it is made by the State or State

licensees); Miss. Code Ann. § 27-71-315 (forbidding deliver-

ies of beer and light wines to anyone other than licensed

wholesalers and distributors); N.H. Rev. Stat. Ann.

§ 178:27(1I) (forbidding carriers from shipping into certain

areas of the State); N.Y. Alco. Bev. Cont. § 102(d) (permit-

ting deliveries only to consignees who are licensed); Tenn.

Code Ann. § 57-3-402(b) (forbidding the delivery of alcohol

unless it is to a licensed manufacturer, wholesaler, or

certain other authorized recipients).

29

Such laws can impede the flow of interstate commerce

because they disrupt carriers’ operations, increase costs,

and slow service. As a result, carriers cannot employ

uniform procedures for handling and transporting prop-

erty nationwide. The resulting inefficiencies and delays

caused by such state laws may constitute an undue burden

on interstate commerce in violation of the Commerce

Clause that could not be sustained unless supported by

important state interests that justify the burden. See

Raymond Motor Transp., 434 U.S. at 440-441 (citing Pike

v. Bruce Church, Inc., 397 U.S. 137, 142 (1970)).

The Dormant Commerce Clause serves a fundamental

purpose in making the United States the world’s largest

single economic market, a market in which interstate

carriers of property play a critical role. This Court should

not adopt a rule that any state law relating to alcohol,

regardless of its discriminatory character or direct burden

on interstate carriers, would be completely immune from

any judicial scrutiny under the Dormant Commerce

Clause. Nothing in the Twenty-first Amendment requires

this Court to sanction unlimited balkanization of that

national market when the product being carried is alcohol.

30

CONCLUSION

For the reasons set forth above and in the respon-

dents’ brief, the judgment of the court of appeals should be

affirmed.

Respectfully submitted,

Drew S. Days, III

Counsel of Record

BETH S. BRINKMANN

SETH M. GALANTER

MORRISON & FOERSTER LLP

2000 Pennsylvania Ave., NW

Washington, DC 20006

Of Counsel (202) 887-1500

STEPHEN A. ALTERMAN PAUL T. FRIEDMAN

MYERS & ALTERMAN RUTH N. BORENSTEIN

1220 19th Street, NW MORRISON & FOERSTER LLP

Washington, DC 20036 425 Market Street

San Francisco, CA 94105

(415) 268-7000

Counsel for Amicus Curiae

SEPTEMBER 23, 2004