# Amicus Curiae Brief — Michigan Beer & Wine Wholesalers Assn. v. Heald

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2004
- **Citation:** 543 U.S. 954

## Text

Nos. 03-1116, 03-1120 | re
SEP 2 3 2004
In The
F OF JHE CLERK _

Supreme Court of the Gnit

+

JENNIFER M. GRANHOLM, Governor, et al.,

Petitioners,

V.

ELEANOR HEALD, et al.

+

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

S

Of Counsel

STEPHEN A. ALTERMAN
MYERS & ALTERMAN
1220 19th Street, NW
Washington, DC 20036

SEPTEMBER 23, 2004

Drew S. Days, III

Counsel of Record
BETH S. BRINKMANN
SETH M. GALANTER
MORRISON & FOERSTER LLP
2000 Pennsylvania Ave., NW
Washington, DC 20006
(202) 887-1500

PAUL T. FRIEDMAN

RUTH N. BORENSTEIN
MORRISON & FOERSTER LLP
425 Market Street

San Francisco, CA 94105
(415) 268-7000

Counsel for Amicus Curtae

COCKLE LAW BRIEF PRINTING CO) (800) 225-69m4
OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

Page
Se ee I iicinnsscnnnasitienstoncuninvesccnindes ili
INTEREST OF AMICUS CURIAE. .................::00000000 1
SUMMARY OF ARGUMENT ....................ccssecesecceeeees 2
ET tecaciiasinntantendninetinindtindniniinenbinatieaciaeins 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
OD Ge FIO cccictdnscccesthascctssésonivescscess 8

1. Congress Enacted The FAAAA To Elimi-
nate A Patchwork Of State Laws Regu-
lating Carriers That It Determined
Unreasonably Burdened Interstate
I isisincesccnncinnesintetcnnisvennedioneeinndeiees 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
Alcoivol By Interstate Carriers Can Violate
The Dormant Commerce Clause’s Proscrip-
tion Against Local Laws That Unduly Bur-
den The Interstate Movement Of Gowds......... 23

1. The Twenty-first Amendment Does Not
Authorize Enforcement Of State Laws
That Otherwise Violate The Dormant
lectin Nanaia 24

ii
TABLE OF CONTENTS — Continued

Page
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

CONCLUSION

ill

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
a ccsnonsnancoscoccecs 17
American Airlines, Inc. v. Wolens, 513 U.S. 219
a ccssssoscncoccoses 7,15
Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv.
IE IE, MD © IID cn.scccccccccccccceccossesccssesccocossees 8
Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984)..... 5, 25
Bibb v. Navajo Freight Lines, Inc., 359 U.S. 520
a. cnssensonescccccccess 27
Boynton v. Virginia, 364 U.S. 454 (1960)... 8
Brown v. General Services Admin., 425 U.S. 820
I _..scnsnnenencccccconcee 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)........000.00008. 3, 18, 19
Capital Cities Cable v. Crisp, 467 U.S. 691
a cscunononens 3, 4, 9, 19, 20
Case of State Freight Tax, 82 U.S. (15 Wall.) 232
I censocsnsnonsononcs 26
City of Columbus v. Ours Garage & Wrecker Serv.,
a ceeeee 14, 15

Department of Revenue v. James B. Beam Distilling
a 25

lv

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
a ee OU SUE, Se iniicectesicsncnsecetncnienninenntcstetiiiamamieanticniins 15
Fry v. United States, 421 U.S. 542 (1975)... 9
General Motors Corp. v. Tracy, 519 U.S. 278 (1997)......... 23
Gregory v. Ashcroft, 501 U.S. 452 (1991)... cece 19
Healy v. Beer Inst., 491 U.S. 324 (1989)................. 5, 25
Hostetter v. Idlewild Bon Voyage Liquor Corp., 377
Ss SEI CUITIIEE reusinsiinscicindnnaieniigmbisinnaaintenananeaaiieaideadateble 18
Hughes v. Oklahoma, 441 U.S. 322 (1979) ............ccccee 26
Hughes Air Corp. v. Public Utilities Comm'n, 644
BS 10
Kassel v. Consolidated Freightways Corp., 450 U.S.
SERIE CUIITIIED eincsbitiensttsicsirininiineiiensiiendinneteiamtemeniiietaataiatiiidenealieaaiia 27
Kelley v. United States, 69 F.3d 1503 (10th Cir.
1995), cert. denied, 517 U.S. 1166 (1996)...................... 17
Louisville & Nashville R.R. v. FW. Cook Brewing
aig TRY CIE Se II ciciseciccteniienscstenceteseeiortieatnsiadhictidinashtaiehiiaal 26
Morales v. Trans World Airlines, Inc., 504 U.S. 374
GEE cscensinsimisisnsteneneeniepitasietinneaniniiniacenaaieaneintiaiiaiaasialiiadaiaialasisiaialian 13
North Dakota v. United States, 495 U.S. 423 (1990)........ 20
Pennsylvania Dep't of Corrections v. Yeskey, 524
aa SU CMU ciceichinicheciehinelientapheiment deh elas 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

Raymond Motor Transp., Inc. v. Rice, 434 U.S. 429
SS science lads 27, 29

Rockwell v. United-Parcel Serv., Inc., No. 99-CV-57,
1999 U.S. Dist. LEXIS 22036 (D. Vt. July 7,
REIT RENE teatee se amet ae EN eT Tone WN TEE NTT Soe ee RN 15

Soly v. United Parcel Serv., Inc., No. 02-CV-10499-
MEL, 2002 U.S. Dist. LEXIS 24059 (D. Mass.
Fa See occeieisenscitaieasiaciainaniaiapiniintaiaieniniainiiaitaaainabiaaiia 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

SR ae Se Sie See A ee ee 16
United Parcel Serv., Inc. v. Flores-Galarza, 318 F.3d
ENTE AEE AE 15, 16, 17

United Parcel Serv., Inc. v. Flores-Galarza, No. 03-
1990, 2004 U.S. App. LEXIS 19370 (1st Cir. Sept.

a, SE secesisccininietiihieiiriiintehiehitaintinhtiaitiameinaniiilsihieta quvinnteieinds 14
United States v. State Tax Comm'n of Miss., 412

Ss STE USUI TUTE isissinndesinhientureteiahaci inane 20
Wabash, St. Louis and Pacific Railway Co. v.

Illinois, 118 U.S. 557 (1886) ..0...........:cccccceceeeeeeeeeeeee 9, 27

William Jameson & Co. v. Morgenthau, 307 U.S.
| Ne vine ee ROO ES tren ne ee Memeo 18

vi

TABLE OF AUTHORITIES -— Continued

Page
CONSTITUTION AND STATUTES
U.S. Const

(GERBER EST ESE Se Ae OM Pe ae RL 0 ae 3, 18, 23

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

ast. Vi, &. 3 (Geppremnacy Chante) .....cccccscccccccccscssccsccscece 19

REESE RRC RS ee STN AR SPREE RE oT passim

SSR ET EE EE RM ae Mayle 5,17
Airline Deregulation Act of 1978, Pub. L. No. 95-

I Sa a 3, 10, 13
Civil Aeronautics Act of 1938, Pub. L. No. 706, 52

RRL ate atthe orm etree k ANOS mM Mate OE 10
Federal Alcohol Administration Act, Act of Aug. 29,

1935, ch. 814, tit. 1, 49 Stat. O77 ............ccccccccccccccceesooess 18
Federal Aviation Authorization Act of 1994, Pub. L.

I CUR passim
Interstate Commerce Act, Act of Feb. 4, 1887, ch.

eR EE TOR a oe Re ie]
Motor Carrier Act of 1935, Pub. L. No. 255, 49 Stat.

RN AT LS RATS SANS A ee al EN PLES OP y
Pub. L. No. 107-273, 116 Stat. 1758 (2002) .......00.00..000.. 21
DT 21
27 USC.

| SS See eee a ees Se a 25

Ee ee TNT aL a Te 4, 21, 25

IN tele lnlitaliaiaaaaal tataa iail 18

Vii

TABLE OF AUTHORITIES - Continued

Page
EF Iii cscecvccndtesidesanssntsicenandananiaisamnegemaatieamadamiaiuimiateiiatiabineiaiis 7
Eiri eratseeieeihesiesiinittinsinineindaitasiparsamsiarianinieaidinndiantnpnenininmnanenéitaiaeiaiodinls 7
49 U.S.C.
iy TTT csicstderalieetiihicutsaciianiniceiiindiniidnamiemembinsiaimensustiiy 15
iy TEE Ta et iciarichiasnatnipestiitiaiennaieieninaipeiaiabaniammmannacmeaiaiinial 8,12
iy TET citcinpinntaisiinunnnenndeiinbnebediiadapidmnepmiadennemsibiaiiniatate 14
GE IITIIEE srriceapnmnsinnncanidansisbemntiigadianmeiimmemdmaiiinuaemeianentamies 7
SENET scensientehnasinninnminneenindpmaenemensteneindaimeinimenetiiags 7
Sy GEeTTTET itPscemseisicieshineieentinepiiiaapasiainialtaeeadaineainaesesiaidiaiaiaiaaaaiate 7
GTI vrnnusiesiciesestncuniitehiinabdidibenpramibatieieeniiiiusiienanummaatiainasee 7
ey EPID eiatorsessesesapiicsidiediiesiesigeoneinaiaanniehiahiegiensaabiapanaidliinimpiniiuasiitineds 7
TET cichibiurbinsapeiidsitesinianieitiipnraniptnndaiendaalidaaniauniesmeianties 7
is Cia aa scald seidelnideltieansiieinihacinnadeaginiengeiniaadataaipadinmtnebnntanandnbebiabaiiées 7
Sp TET? <icnserinesissnaremnnssacnesiinndibdaenemtaiesbiimmsinmaiingtin 13
iy ETT TIT UIITIU acchipiedeiadethltanainenbcbenveniiiasisindiamiehiciinlanaacedi 8,12
ree anschsvititanrichienecnerigiaitienianenaienuiniiteniiaitalaibiitanianamdiaians 14
I 28
Sats CTE SERRE, FF cerersccncsnesnennnncnnssmnensemnnann 28
eis Re ER: Seen crnenercnnnersccssmaninenbetininininmnmennintinds 28
Me. Rev. Stat. Ann. tit. 28, § 2077-B..........ceeeceeeeeeeeeeeneee 28
Mich. Comp. Laws
SEE ei isinierenepuneutonerensinnicdsenmeseetenssnemeenianient 6, 28
i IIIa orusnsiencscnnnniciensibiecinguapedannennngeimetenaneiaiilensidabtia: 6

OE cnccernninntemanenmesnsonessensivammintniciimnennaietett 6

vill

TABLE OF AUTHORITIES — Continued

Page
STITT occesiniceenccencemmenisiinimenmncnnntatiimtimmnnnieenneentii 6
i Aan ITE ricesncnadeeieMleiiadenpanendassisicunnvesecnmensanetennensiminnieia 6
RS * SSS Sanne anne ED DoT mee 28
Bee, Se BONE, GM, B TH SUEED cccccescvcscscscccccssconsecsccosseses 28
s,s erernemm inal 6, 28
ee, SD A, © ED oriccnccosecescsncctosscenscosomvensensonss 28
MISCELLANEOUS MATERIALS
76 Cong. Rec. (1933)
irr cciesnsicetsheeiierietnarhaiheeniibieigetcici aidan indaihtastiealiand 22
ii anidniccnnvannndiantanmummaseeenendidansinnisinstetaniasteiaennedantés 22
Gi cncctcccincsessevencsncieniensininiiniiaedeesninemenmiemnnanecneinii 23
SAUTE sii rnssinisctentenibnniiiaaesiieitaininnicatinisilietaield aiid 22
i insianciieshosnentscndistnlinondesdmatientinbeanigidelsinnantiduipshanmesindidabdnssaiiadiiiiae 22
I ictetdicsinnnsninianeicnmneanunesianenieaabitetenssdteieanisuniieiinaieadeaimuidomils 22
i icidsctcpseveiesieesibtlielaradieesimmeneiinsipelaieiesiaheaianpiatintsinnabatinieaciaticineeiialats 23
148 Cong. Rec. H6749 (daily ed. Sept. 26, 2002).............. 21
Federal Trade Comm'n, Possible Anticompetitive
Barriers to E-Commerce: Wine (2003) ..............cccccceeeeeeee 7
H.R. Conf. Rep. No. 103-677 (1994), reprinted in
1904 U.S.C.C.A.N,. 1726 ....00000ccsccee0sese00 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) 00.0... ccccceeeeeeeeee es 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)
ISUUITTTE sincitccccvesiieinaseatinieiiauiaiaeelomtlenbisihiaiainaiblibiaciaiiaataiaeiaatitianisiea 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, other than the amicus curiae, its mem-
bers, or its counsel, made a monetary contribution to the preparation or
submission of this brief.

2

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
carmriers.

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 comsumers 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 iaws 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 la-vs 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. § 102d).

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(aX6), (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
USC. §$41713(b\4A), 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 judicia] enforcement of the Commerce Clause is close.”
Ibid .; see also Boynton v. Virginia, 364 U.S. 454, 457 (1960) (electing to

‘Continued 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 Twerty-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 amucus, 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 Commerce 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, 1741,
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 “cause{d] 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.”). a

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 -ubdivision of a State, or po-
litical authority ot 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 al] 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 USC.CA.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 “dlid] 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

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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
U.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 seq.). 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
Ar:endment 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 U.S. 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, “li]n 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. /d. 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 tnat 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
liquer 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 ‘impedles] 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 fal] 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 2lst 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 te 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, e.g., 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
“impose(s} 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 deli ver-
ies of beer and light wines to anyone other than licensed
wholesalers and distributors); N.H. Rev. Stat. Ann.
§ 178:27( IL) (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,

Of Counsel

STEPHEN A. ALTERMAN
MYERS & ALTERMAN
1220 19th Street, NW
Washington, DC 20036

SEPTEMBER 23, 2004

Drew S. Days, III

Counsel of Record
BETH S. BRINKMANN
SETH M. GALANTER
MORRISON & FOERSTER LLP
2000 Pennsylvania Ave., NW
Washington, DC 20006
(202) 887-1500

PAUL T. FRIEDMAN

RUTH N. BORENSTEIN
MORRISON & FOERSTER LLP
425 Market Street

San Francisco, CA 94105
(415) 268-7000

Counsel for Amicus Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0737%3A17. Public record. Not legal advice.