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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0737%3A20

## Record

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

## Text

|

AL LY is JUL 29 2004 |
Nos. 031116, -1120 and -1274 DERIGE OF THe CLERK |

IN THE
Supreme Court of the United States

JENNIFER M. GRANHOLM,
GOVERNOR OF MICHIGAN, et al., Petitioners,
Vv.

ELEANOR HEALD, et al., Respondents.

MICHIGAN BEER & WINE WHOLESALERS ASSOCIATION,
Petitioner,
..
ELEANOR HEALD, et al., Respondents.

On Writs of Certiorari to the
United States Court of Appeals for the Sixth Circuit

JUANITA SWEDENBURG, ef al., Petitioners,
v.
EDWARD D. KELLY, CHAIRMAN,
NEW YORK DIVISION OF ALCOHOLIC BEVERAGE CONTROL,
STATE LIQUOR AUTHORITY, ef al., Respondents.

On Writ of Certiorari to the
United States Court of Appeals for the Second Circuit

BRIEF AMICUS CURIAE OF
ILLINOIS ALCOHOLISM AND DRUG DEPENDENCE
ASSOCIATION IN SUPPORT OF PETITIONERS IN
GRANHOLM AND RESPONDENTS IN SWEDENBURG

CLAUDETTE P. MILLER

Counsel of Record
UNGARETTI & HARRIS
3500 Three First National! Plaza
Chicago, IL 60602
(312) 977-4390

Counsel for Amicus Curiae

FE A

QUESTION PRESENTED

Does a State’s regulatory scheme that permits in-state
wineries directly to ship alcohol to consumers but restricts
the ability of out-of-state wineries to do so violate the
dormant Commerce Clause in light of Section 2 of the 21"
Amendment?

TABLE OF CONTENTS
Page
BS ill
Of), ee l
LF. l
SURRERETY OF ASEIIERGEIE ..cccevccsecesesevessrenciiineiee 2
ABER 5..0.0000v00000000,0sensevsssensessesscnsessounennieennnnannnnnnnnnnnnnnE 3
I. |The Commerce Clause Has Underpinned A Strong
American Economy, But Its Unfettered Application
Is Not Appropnate As To Liquor ....................60 3
II. Alcohol Is Responsible For More Social And
Economic Damage To U.S. Society Than All Other
Drs COEBERIGE .cccccsssssessesnenssesessssininsninna 7
Ill. Illinois’ Liquor Law Is Designed To Regulate
BCTNOS LEGMIGE ....cccccccscsssseverecnsnssneniensnneanaannnian 10
IV. This Case Will Have A Substantial Impact On The
Ability Of Illinois And Other States To Maintain
Control Of Imported Alcohol .................:..:00008 12
V. The Swedenburg Analysis Facilitates State Efforts
To Control Improper Alcohol Use .................... 14
CCORRGIIBEGIE ...000ccccccececesesescesenssesesionsestennenssnnnnnnnnnnnnnnnnnnE 16

TABLE OF AUTHORITIES
Page(s)
CASES:
Allstate Beer, Inc. v. Julius Wile Sons & Co. Inc.,
479 F. Supp. 605 (N.D. Ga. 1979) 20.0.0... .eeeccceeeceeeeeeeeeeeeeee 5
Bridenbaugh v. Freeman- Wilson,
227 F.3d 848, 853 (7 Cir. 2000) ......ccccccccccceeseseeeeseeeeeeeee 5

Daley v. Jack's Tivoli Liquor Lounge, Inc.,
254 N.E.2d 814, 819, 118 Ill. App. 2d 264 (Ill. App. Ct.
Si asi diinetinrennerennesenseseensasecsscesesecsseccssoess 1]

Daley v. Rifkin,
228 N.E.2d 224, 226, 84 Ill. App. 2d 467 (Ill. App. Ct.
EE LEED 11

Erfor Corp. v. State of Illinois Liquor Control Commission,
47 Ill. App. 3d 72, 361 N.E.2d 776 (1 Dist. 1977) ....... 10

Heald v. Engler, 342 F.3d 517 (6" Cir. 2003) .........cc0000-. 16
Jager v. Illinois Liquor Control Comm'n,
392 N.E.2d 176, 182, 74 Ill. App. 3d 33
acre cceictrereneecsnenccsssessnssocess 14

Levendis v. Cobb County,
250 S.E.2d 460, 242 Ga. 592 (Ga. 1979) .0.....cccccccceeceeeeeee 5

National Bellas-Hess, Inc. v. Department of Revenue,
386 U.S. 753, 87 S. Ct. 1389 (1967) 2... cececceecceeeeeeeeeee 13

Sn

IV
Table of Authorities continued
Oregon. Waste Systems, Inc. v. Department of

Environmental Quality,
511 U.S. 98, 114 S.Ct. 1345, 1349 (1994) 00. 3

Oklahoma Alcoholic Beverage Control Board v. Parkhill
Restaurant, Inc.,
669 P.2d 265, 1983 Ok. 77 (Ok. 1983) 20.0.0... eeceeeeeeeeees 5

Quill Corporation v. North Dakota,
504 U.S. 298, 112 S. Ct. 1904 (1992) ...................... 13, 15

Show of Shows, Inc. v. Illinois Liquor Control Comm'n,
230 N.E.2d 268, 271, 86 Ill. App. 2d 109 (Ill. App. Ct.

POTTS cccnencnsenenininscnnnndunsiaaseinaeaaiulaiiainsitinmiiniieiadeialal talc 11
Spiros Lounge, Inc_v. State of Illinois Liquor Control
Comm'n,

423 N.E.2d 1366, 1372, 98 Ill. App. 3d 280, 287

Sa A GR, TEED ccnntenrccnnsncrersenesiciinaisniniiandienpananiiitie 1]

Swedenburg v. Kelly, 358 F.3d 223 (2d Cir. 2004) ....14, 16

CONSTITUTIONAL PROVISIONS:

U.S. Constitution, Art. I, § 8, cl. 3 ...................cceeeeeees passim
th G0 0 UY Sy 5
U.S. Constitution Amend. XX], § 2 ...........cccccccceeeeees passim
STATUTES:

SO OU, I ic inccsiesedtisciasiamsiiisiaia meee 4

Vv

Table of Authorities continued
Illinois Liquor Control Act of 1934:
ee ee A Gs SPD ccnsnnmnscsenteesseceneeeenns 11
a es Ge, GD, SD ctrnsenseninentnncremanatenntimmie 11
ee 11
ye en 11
ee a BR, Be ccrcencerceccineniniicnemenenmn 12
ee 10, 12
ee > GR GE IG creeencermnesememenmememnen 1]
i Ga ns Sr ei eiertecescceneencsenstensneienienincnens 11,12
A 8 8 ee 1]
re 12
Illinois Beer Industry Fair Dealing Act:
ft Ge ave 10
OTHER AUTHORITIES:

Adam Badawi, Uneasy Animosities and the Public
Tranquility: Political Market Failure and the Scope of the

Commerce Power, 91 Cal. L. Rev. 1331 (Date) ................. 3
Linda Carroll, Fetal Brains Suffer Badly from Effects of
Alcohol, New York Times,

Nov. 4, 2003, available at http://www.nytimes.comy ......... a

Frank J. Chaloupka et al., The Effects of Price on Alcohol
Consumption and Alcohol-Related Problems, 26 NATL
ABAD. SER. 0, SED cetenenietnenimnnneemnnininial 6

Chicago Magazine, The Dry Season, July 2003 ................. 6

v1

Table of Authorities continued

Forrester Research, Inc., The Growth Of Multichannel
TES cccnncsnnmnnsensimnatimannsaimmninmmnnninnmmanniatte 14

Susan E. Foster, et al., Alcohol Consumption and
Expenditures for Underage Drinking and Adult Excessive
Drinking, 289 JAMA 8, 989 (Feb. 26, 2003) ...........: — 9

B.F. Grant & D.A. Dawson, Age of Onset of Alcohol Use
and its Association with DSM-IV Alcohol Abuse and
Dependence: Results from the National Longitudinal
Alcohol Epidemiological Survey, J. SUBSTANCE ABUSE, 9,
ITED sicceinnendsenitnitniatadnniasniiniseinicinnesiguiiibumeiiietinteatipls 9

Glen R. Hanson & Ting-Kai Li, Public Health Implications
of Excessive Alcohol Consumption, 289 JAMA 8, 1031
CN I aati sesinearirhhcrinahiieiamen nonin retin ahiiebdteeeial aaa bialitciatin 7,9

National Institute on Alcohol Abuse and Alcoholism
(NIAA), Strategic Plan 2001-2005

at 20 at http://www.miass.nih. gov .................ccceseeececceeeeeeees 8

National Survey: 80% of College Students Say Peers Likely
to Purchase Alcohol Online (April 4, 2000) at

http: /‘www.texassafetynetwork.org/news/reporter/eightyperc

New Survey Confirms Majority of Americans Oppose
Internet Alcohol em. Oct. 22, 2003 at

vil

Table of Authorities continued

Christian Science Monitor: New Face of Underage Drinking:
Teenage Girls (July 13, 2004) .............ccccsseseeseeeneeercenenseees 9

Press Release, Governor Blagojevich Calls for More Federal
Funding to Prevent the Dangers of Binge Drinking: Study
Shows Heavy Drinking Isn't Just on College Campuses
NEED Vo See et crecnteneneesinnecienmnaionnstintansacinastnnsidebaninitinniee 7

Report by the Staff of the Federal Trade Commission,
Possible Anticompetitive Barriers to E-Commerce: Wine 5
TE ETD coctssnnemssndsenensusstipintninanninieasiniieenta 4, 6,8

Report of the National Academy of Sciences, Reducing
Underage Drinking: A Collective Responsibility, at 11

(September 2003) at

RN TN TRIE ocscrcemnnccmmmnasinenmannneneennnennaen 6
Douglas Smith, /nterstate Commerce and the Principles of

the Law of Nations, 2004 Utah L. Rev. 111 at 131............. 3

The Three-Tier System: Texans Overwhelmingly Reject
Direct Shipment of Alcohol (2000) at

(citing a statewide public opinion poll) .....................cee 5

CONSENT TO FILE

Consents to the filing of any amicus briefs in each of the
consolidated cases were filed by the parties on July 9, 2004,
July 13, 2004 and July 14, 2004.

INTEREST OF AMICI'

The Illinois Alcoholism and Drug Dependence
Association (IADDA) is an Illinois-based not for profit
established in 1967. IADDA is involved in professional
training, career development and advocacy for providers in
the field of alcohol and drug dependency prevention,
counseling and diversion. IADDA represents more than 100
prevention and treatment agencies. A list of its members is
attached in the Appendix.

IADDA advocates for sound public policy to foster
healthier families and safer communities. Its objectives are
to work for effective treatment for addicted or drug-
dependent people and for prevention, particularly among
youth. Its public policy advocacy works to promote
healthier individuals and safer communities by helping avoid
the problems of dependence.

IADDA partners with two prevention programs.
One, Illinois Teen Institute, operates an acclaimed
prevention and positive peer influence program directed at
teenagers. It involves youth in community planning for
prevention of addiction and dependence. Its sponsored
program, Teens Reaching For And Achieving Excellence
(TRAX) involves teen leaders workshops around the state to

' Neither party’s counsel authored any portion of this brief. No person or
entity other than amici made any monetary contribution to the
preparation or submission of this brief. S. Ct. Rule 37.6.

2

prepare them and involve them in the anti-dependence and
prevention drives. The other: program, Operation Snowball,
creates youth/adult partnerships to fight against use and
dependence on tobacco, alcohol, and other drugs. Operation
Snowball has 150 chapters working to involve communities
in healthy decisionmaking.

IADDA maintains a web site linking both
dependence providers and those involved in its affiliate
efforts to government. http://www.iadda.org. The site
facilitates access to the Illinois General Assembly, regulatory
agencies, and welfare policymakers.

SUMMARY OF ARGUMENT

The Constitutional law approach to the issue of direct
shipping advocated by the Sixth Circuit treats liquor like any
other commodity, the untrammeled trade of which should be
promoted and protected by the Commerce Clause. Such an
approach is at variance with the national welfare, public
opinion, and the plain language of the Twenty-First
Amendment to the United States Constitution.

It is indisputable that liquor is a dangerous drug and the
drug that imposes the highest social and economic costs on
American society. Many authorities, including those relied
upon by direct shipping advocates, recognize that states
legitimately may use taxes and other regulatory measures to
promote temperance and curb alcohol abuse. Particularly
now with the explosive growth of Internet sales, the Sixth
Circuit’s approach will wreak havoc on a state’s abilities to
regulate and control access to this dangerous drug. —

ARGUMENT

I. The Commerce Clause Has Underpinned A
Strong American Economy, But Its Unfettered
Application Is Not Appropriate As To Liquor

Under the Articles of Confederation that preceded the
United States Constitution, import-export duties and
regulations hindered the development of a national economy.
See Adam Badawi, Uneasy Animosities and the Public
Tranquility: Political Market Failure and the Scope of the
Commerce Power, 91 Cal. L. Rev. 1331 (2003). The
Commerce Clause, Article I, Section 8, Clause 3 of the
Constitution, has been a major force in creating a national
free market. The Commerce Clause not only expressly
conveys to Congress the power to regulate interstate trade,
but has long been accepted as denying that power to state
governments by negative implication. Oregon Waste
Systems, Inc. v. Department oj Environmental Quality, 511
U.S. 93, 98, 114 S. Ct. 1345, 1349 (1994).

As the authorities cited by the parties in the cases now
before this Court on wnt of certiorari make clear, a notable
exception to the plenary authority of Congress under the
Commerce Clause is the authority -- however broad or
narrow -- to regulate liquor granted to the states by Section 2
of the Twenty-First Amendment of the Constitution.

Some commentators and some decisions have found
further cause or function for the negative implication of the
Commerce Clause. See, e.g., Douglas Smith, /nterstate
Commerce and the Principles of the Law of Nations, 2004
Utah L. Rev. 111, 131 (2004). Arguing that it provides a
useful tool for invalidating protectionism or special interest
legislation, they contend it has been invaluable in fostering a
free market in the United States and that largely because of it,

4

American consumers get minimum prices and optimum
economic ormance. By placing the interstate portion of
the economy beyond the interference of much state
government regulation, the Constitution has facilitated a
more /aissez-faire economic system.

The parties opposing direct shipping laws make no
attempt to hide the fact that they seek to promote and protect
their ability to make liquor as widely and cheaply available
as possible. In their Brief in Opposition to the Petitions for
Wnits of Certiorari, the Respondents in the Sixth Circuit
cases open and close with references to and repeatedly cite a
Report by the Staff of the Federal Trade Commission,
Possible Anticompetitive Barriers to E-Commerce: Wine 5
(July 2003) (“Report”). In the Report the staff concludes:

states could significantly enhance consume: welfare
by allowing direct shipment of wine to consumers.
Through direct shipping, online wine sales offer
consumers lower prices and greater selection.

Id. at 3.

There is more to the issue before this Court than free
trade, however. The fact that nearly 40 state attorneys
general have added their voices in favor of alcohol regulation
and against open shipping testifies to that.

The American public does not believe that minimum
pricing and maximum consumption is desirable for all
commodities and all industries. Congress in some cases has
responded to that public concern by banning or tightly
regulating the commodity with Commerce Clause authority.
Heroin is an example. See 21 U.S.C. § 841.

Alcohol is an even better example. Congress twice
has placed before the states constitutional amendments to

5

regulate alcohol as an alternative to exclusive Commerce
Clause regulation. Both were ratified by the states and both
dealt with alcohol. The Eighteenth Amendment introduced
Prohibition and banned alcohol. The Twenty-First
Amendment repealed Prohibition and granted regulatory
authority to the states over the transportation or importation
of alcohol.

Courts have recognized the power of states to ban
alcohol totally, Bridenbaugh v. Freeman-Wilson, 227 F.3d
848, 853 (7th Cir. 2000), to permit political subdivisions to
ban it, Allstate Beer, Inc. v. Julius Wile Sons & Co., Inc., 479
F. Supp. 605 (N.D. Ga. 1979), and to ban it at specific times
or in particular places. Levendis v. Cobb County, 250 S.E.2d
460, 242 Ga. 592 (Ga. 1979); Oklahoma Alcoholic Beverage
Control Board v. Parkhill Restaurant, Inc., 669 P.2d 265,
1983 Ok. 77 (Ok. 1983).

Most Americans do not want to maximize the
availability and consumption of alcohol by minimizing price.
In a 2003 national poll by Wirthlin Worldwide, 83% of
respondents agreed that Internet sales should not be allowed
because they would give minors easier access to alcohol.
New Survey Confirms Majority of Americans Oppose Internet
Alcohol Sales, Oct. 22, 2003, at
http://www.cheaphostingdirectory.com/news/2003 1022alcoh
ol. (citing a 2003 WirthlinWorldwide survey). 77% of
Americans oppose permitting direct sales of alcohol by
Internet or mail, as do 71% of self-identified alcohol
consumers, and 85% of non-drinkers. /d. In Texas during
2000, a poll found that 71% disagreed with the statement:
“Manufactures of any product including alcoholic beverages,
should have the right to sell directly to consumers over the
Internet.” The Three-Tier System: Texans Overwhelmingly
Reject Direct Shipment of Alcohol (2000), at
http://www.texassafetynetwork.org/internet/three/survey.htm

6

(citing a statewide public opinion poll). In Chicago,
Illinois, 24 partial and 16 full precincts have voted to go
“dry” since 1992. Mayor Richard Daley has noted that a
“bad liquor establishment can tear the fabric of a
neighborhood and send it into decline.” Chicago Magazine,
The Dry Season, July 2003.

As the foregoing illustrates, prudent use is a more
favored social objective than wide-open access where liquor
is concerned. This should be recognized in evaluating the
competing schemes of legal analysis for state regulation of
alcohol.

The Report acknowledges that “some states may
explicitly pursue a policy of elevating prices above
competitive levels to promote temperance.” Jd. at 26-27. In
fact, the National Academy of Sciences has recommended
that “Congress and state legislatures should raise excise
taxes to reduce underage consumption ...“ Report of the
National Academy of Sciences, Reducing Underage
Drinking: A Collective Responsibility at 11 (September
2003) at _ http://www.marininstitute.org/alcohol_policy/
UnderageDnnking Exec Summary.

A 2002 article summarizing the economic research on
the effect of price on alcohol consumption found that:

This research, which has used a wide variety of data,
generally has concluded that increases in the price of
alcoholic beverages lead to reductions in drinking and
heavy drinking as well as in the consequences of
alcohol use and abuse.

Frank J. Chaloupka et al., The Effects Of Price On Alcohol
Consumption and Alcohol-Related Problems, 26 Nat’|. Acad.

7

Sci. 1, 22 (2003). One of the studies commended in the
review found:

After controlling for State and year effects, the
investigators concluded that a $1 increase in the per
gallon liquor tax can reduce gonorrhea rates by 2.1
percent; furthermore a beer tax increase of 20 cents
per six-pack can reduce gonorrhea rates by 8.9
percent. Similar, or even somewhat larger, effects of
liquor and beer taxes were found for syphilis rates.
See id. at 30.

Il. Alcohol Is Responsible For More Social And
Economic Damage To The American Public Than
All Other Drugs Combined.

Statistics on violence, divorce, crime, fetal alcohol
syndrome, spousal and child abuse, DUI killings and
maimings, and lost work time clearly demonstrate the
terrible social and economic cost our society pays for the
imprudent use of alcohol.

The economic cost of liquor abuse in America is
estimated at $185 billion, while that for illicit drugs is
estimated at $161 billion. Underage drinkers and adult
excessive drinkers account for an aggregate 50.1% of total
alcohol consumption in the United States. Glen R. Hanson
& Ting-Kai Li, Public Health Implications of Excessive
Alcohol Consumption, 289 JAMA 8, 1031 (Feb. 26, 2003).
Approximately one-third of U.S. adults exceed the guidelines
defining excessive consumption. Jd. at 1032. A recent
Illinois state government survey found that 10% of eighth
graders and 36% of twelfth graders reported binge drinking.
Press Release, Governor Blagojevich Calls for More Federal
Funding to Prevent the Dangers of Binge Drinking: Study
Shows Heavy Drinking Isn't Just on College Campuses

8

(April 7, 2004). The Report that the direct shipping
advocates repeatedly cite confirms what should be sobering
statistics on youth access to alcohol:

In 2002 approximately 68% of eighth graders, 85%
of tenth graders, and 95% of twelfth graders said that
it is “fairly easy” or “very easy” to get alcohol.
Underage alcohol use imposes significant costs, in
both human terms and economic terms. Although the
numbers are very difficult to quantify, one study
estimated that, in 1996, the total cost of underage
drinking— including traffic crashes, violent crimes,
burns, drowning, suicide attempts, fetal alcohol
syndrome, alcohol poisoning, and treatment—was
$52.8 billion.
Id. at 11.

Those numbers are significant for many reasons.
Alcohol is associated with violence. The National Institute
on Alcohol Abuse and Alcoholism (NIAA) has found that:

Excessive alcohol consumption is frequently a factor
in violence toward women. These events range from
being the recipient of verbal aggression . . . to
battery, rape, and death. Recent findings among
women who reported sexual assaults include higher
levels of alcohol consumption, both their own and the
perpetrators, and sexual risk-taking.

NIAA, Strategic Plan 2001-2005 at 20 at
http://www.niaa.nih.gov. 50-60 % of male alcoholics report
violent behavior toward women. /d.

Further, “[a]lcohol abuse is associated with high-risk
sexual behavior and injection drug use, two of the major
modes of human immunodeficiency virus transmission.”

9

Hanson & Li, supra, at 1031. The Christian Science Monitor
noted in a report on underage drinking that:

experts say (sex) . . . is a factor advertisers exploit,
often to the detriment of girls more than boys. ‘Bad
girls make good company,’ reads one ad for Cuervo
rum. In a Martell Cognac ad, a sultry woman is on
display with a plea to ‘be at least capable of bad.’

New Face of Underage Drinking: Teenage Girls, Christian
Science Monitor, July 13, 2004.

The adverse impact of alcohol on the young is well-
established. Drinking increases “the chances that teenagers
will become adult heavier drinkers with alcohol problems
later in life”. Susan E. Foster, et al., Alcohol Consumption
and Expenditures for Underage Drinking and Adult
Excessive Drinking, 289 JAMA 8, 989 (Feb. 26, 2003); B.F.
Grant & D.A. Dawson, Age of Onset of Alcohol Use and its
Association with DSM-IV Alcohol Abuse and Dependence:
Results from the National Longitudinal Alcohol
Epidemiological Survey, J. SUBSTANCE ABUSE, 9, 103-110
(1997). Prenatal contact with alcohol is highly detrimental:
“We found more serious cognitive impairment in relation to
alcohol than cocaine or other drugs, including marijuana or
smoking” (Dr. Sandra Jacobson, Wayne State University).
Linda Carroll, Fetal Brains Suffer Badly from Effects of
Alcohol, N.Y. Times, Nov. 4, 2003, available at
http://www.nytimes.com/. “Fetal alcohol syndrome, a
serious disorder affecting brain function, is the leading
preventable birth defect in the U.S.” Jd.

10

Ill. _ Illinois’ Liquor Law Is Designed To Regulate
Imported Liquor

Illinois is home to many large liquor retailers, such as
Sam’s Wine & Spirits, Binny’s, and Walgreen’s. Illinois,
however, has relatively few wineries and distilleries and no
major breweries, so a very high percentage of the alcohol
sold is imported. [Illinois law looks to and derives its
authority from the Twenty-First Amendment. For example,
the direct shipping provision of the Illinois Liquor Control
Act of 1934 provides:

Pursuant to the Twenty-First Amendment of the United
States Constitution allowing states to regulate the
distribution and sale of alcoholic liquor and pursuant to
the federal Webb-Kenyon Act declaring that alcoholic
liquor shipped in interstate commerce must comply with
state laws, the General Assembly hereby finds and
declares that selling alcoholic liquor from a point outside
this State through various direct marketing means, such
as Catalogs, newspapers, mailers and the Internet, directly
to residents of this State poses a serious threat to the
State’s efforts to prevent youths from accessing alcoholic
liquor; to State revenue collections; and to the economy
of this State.

235 Ill. Comp. Stat. 5/6-29.1 (1934). See also Illinois Beer
Industry Fair Dealing Act, 815 Ill. Comp. Stat. 720/2 (“This
Act is promulgated pursuant to authority of the State under
the provisions of the Twenty-First Amendment to the United
States Constitution ...”); Erfor Corp. v. State of Illinois
Liquor Control Commission, 47 Ill. App. 3d 72, 361 N.E.2d
776 (ill. App. Ct. 1977) (“The source of state power to
control alcoholic beverages is the police power as fortified
by the twenty-first amendment of the United States
Constitution.”’)

1]

In Illinois, retailers must determine age eligibility,
observe operating hours, halt bawdy conduct and gambling,
prevent disorderly conduct, and must not intoxicate patrons.
235 Ill. Comp. Stat. 5/6-16; Spiros Lounge, Inc. v. State of
Illinois Liquor Control Commission, 423 N.E.2d 1366, 1372,
98 Ill. App. 3d 280, 287 (Ill. App. Ct. 1981) (sales to minor
justified revocation); Jager v. Illinois Liquor Control
Commission, 392 N.E.2d 176, 182, 74 Ill. App. 3d 33 (Ill.
App. Ct. 1979), (repeated altercations as grounds for
revocation); Show of Shows, Inc. v. Illinois Liquor Control
Commission, 230 N.E.2d 268, 271, 86 Ill. App. 2d 109 (Ill.
App. Ct. 1967) (solicitation of drinks by female employee
warranted revocation); Daley v. Jack's Tivoli Liquor Lounge,
254 N.E.2d 814, 819, 118 Ill. App. 2d 264 (Ill. App. Ct.
1969) (sexual solicitation of police officer by prostitute
vouched for by bartender warranted revocation); Daley v.
Rifkin, 228 N.E.2d 224, 226, 84 Ill. App. 2d 467 (Ill. App. Ct.
1967) (evidence that bartender steered patron to prostitute
justified revocation).

An Illinois importing distributor must be licensed as
a distributor. 235 Ill. Comp. Stat. 5/5-1(c). An importing
distributor must hold received alcohol in his warehouse from
receipt until delivery to a retailer. 235 Ill. Comp. Stat. 5/6-8.
A tax measured by volume is imposed on importing
distributors and must be paid within 15 days of the month
following delivery to a retailer. 235 Ill. Comp. Stat. 5/8-1;
235 Ill. Comp. Stat. 5/8-2. A distributor may only deliver to
a licensed retailer. 235 Ill. Comp. Stat. 5/1-1(b).

Common carriers delivering alcohol into Illinois are
required to file shipment manifests with the Illinois Liquor
Control Commission. 235 Ill. Comp. Stat. 5/8-12.
Consequently, reconciliation of the manifest information with
the distributor tax filing and the warehouse inventory creates
a fail-safe system for tax collection. If manifested product is

12

not in the inventory, it has been delivered and tax is due. 235
Ill. Comp. Stat. 5/8-2. Further, the tax document verifies that
the distributor is only selling to retailers, not consumers,
because the retailer must remit the sales tax to the state,
accounting for the product. 235 Ill. Comp. Stat. 5/8-14. This
distribution system means that sales to consumers go through
licensed retailers and, as set forth above, Illinois polices
retailers by inventory control to assure that taxes are paid and
that sales are not made to minors or in furtherance of
undesirable conduct.

Illinois permits some limited direct shipment to
Illinois consumers, 235 Ill. Comp. Stat. 5/6-29, while
maintaining a general prohibition. 235 Ill. Comp. Stat. 5/6-
29.1. Retail inventory control is a regulatory scheme which
serves to limit youth access.

IV. This Case Will Have A Substantial Impact On
The Ability Of Illinois And Other States To
Maintain Control Of Imported Alcohol

This Court now has before it decisions by the Second
Circuit and the Sixth Circuit Courts of Appeals that take
radically different views of the authority to regulate the
importation of intoxicating liquor granted to the states by the
Twenty-First Amendment and of the interplay between the
Twenty-First Amendment and the dormant Commerce
Clause. The very basis of their analyses differs.

The Second Circuit essentially looks at the scope of
authority granted by the Twenty-First Amendment and
allows states to regulate the importation of liquor in any
rational fashion within that scope.

The Sixth Circuit, however, employs a_ two-step
approach, siarting with a dormant Commerce Clause analysis

13

and, if the state statute fails to pass a “strict scrutiny” test,
proceeding on to determine whether the statute is somehow
“saved” by the Twenty-First Amendment.

The Sixth Circuit approach effectively reduces the
Twenty-First Amendment to surplusage and prevents a state
from regulating alcohol in a fashion any stricter than it may
regulate other goods in interstate commerce.

Consider:

An out of state Internet seller with no physical
presence in Illinois sells directly to an Illinois liquor
retailer. Under the current law requiring physical
presence to establish Commerce Clause nexus with a
taxing state, the State of Illinois has no ability to
impose a sales or use tax on the seller. See Quill
Corporation v. North Dakota, 504 U.S. 298, 112 S.
Ct. 1904 (1992); National Bellas-Hess, Inc. v.
Department of Revenue, 386 U.S. 753, 87 S. Ct. 1389
(1967). The state loses not only revenue, but the
ability to use high taxes to depress consumption.
Furthermore, the state must deploy more resources or
divert existing resources to ensure that only licensees
are selling, and selling within the limits of the law.

Under Illinois law, a distributor must operate a
strictly controlled warehouse. The inventory can be
ascertained by the deliveries made and reported from
the common carrier delivery manifests. The
distributor pays a tax when product at the warehouse
is delivered to a licensed retailer. However, if an
Illinois distributor were to purchase product over the
Internet and have it delivered directly to the retailer,
tracking, regulating and taxing the product would
become infinitely more difficult for the State. An
untraceable, unidentified supply of liquor will

14

encourage failure to pay tax and lower prices, making
liquor more accessible to minors.

According to a July 2004 report released by the National
Governor’s Association and the National Conference of State
Legislators, sales over the Internet topped $104 billion in
2003, a nearly 40% jump over the previous year. See
Forrester Research, Inc., The Growth Of Multichannel
Retailing. The volume of sales over the Internet has grown
exponentially in the years since this Court last interpreted the
Twenty-First Amendment. There is no reason to think that
growth will not coutinue.

This is undoubtedly true with respect to alcohol sales
to minors, as well. A 2000 poll by Americans for
Responsible Alcohol Awareness found 80% of college
students say their peers are likely to purchase alcohol over
the Internet, as no age verification is required. National
Survey: 80% of College Students Say Peers Likely to
Purchase Alcohol Online (Apmnl 4, 2000) at
http://www.texassafetynetwork.org/news/reporter/eightyperc
ent. Volume alone will render it increasingly hard for state’s
to prevent and police such sales.

Vv. The Swedenburg Analysis Facilitates State Efforts
To Control Improper Alcohol Use

The Second Circuit’s approach in Swedenburg
requires state liquor control schemes to be rational exercises
of power pursuant to the purpose of the Twenty-First
Amendment. It necessarily looks to 7 state’s regulatory
structure to find meaning for any particular component
subject to challenge.

The Sixth Circuit’s logic in Granholm starts by
treating liquor the same as if it were any other commodity,

15

like autos, milk, or furniture. If it finds discriminatory
treatment of out-of-state-sourced liquor, it defaults to
Commerce Clause strict scrutiny.

The Sixth Circuit approach is inconsistent with the
language of the Twenty-First Amendment prohibiting
importation in violation of the state’s laws and ignores the
overwhelming medical and economic evidence that liquor is
the dangerous drug most affecting American society.
Furthermore, it flies in the face of the explosive development
of a new distribution technology that threatens to swamp
efforts at liquor regulation, the Internet.

Illinois predicates its liquor tax collection system on
distributor collection and payment. The Internet can go
around it. Under the Sixth Circuit approach, perhaps Illinois
could find a way to collect the tax from out-of-state sources.
But it would succeed only if Quill does not apply, if
Congress permits, if presence is not required, and if the
Internet shipper can actually be found. It makes a high
tax/lower consumption strategy for liquor control virtually a
dead letter.

Collection from in-state sources will be more difficult
if not impossible. A state cannot police its sales tax
collections if Internet delivery to retailers becomes
physically possible. The suggestion that the state do more
physical audits comparing inventory to sales tax remissions
and distributor delivery reports is unrealistic. Illinois has
25,000 retail liquor licensees. Constant physical surveillance
of retail sites is not a feasible enforcement option. Physical
surveillance of cyberspace is virtually impossible.

If a state predicates underage distribution control on
retail carding to determine eligibility, it still may be able to
impact diversion to minors if direct shippers are physically

16

present in the state because the state has much more intimate
supervision of how the shippers conduct business. Internet
sites can open and close in a click.

Currently, the circuits are split on direct sales of
liquor. An Internet industry in liquor looms. Illinois, like
other states, has a system that uses inventory controls to tax
and monitor retail sales. Undermining the tocis of control
will not help. Imposing Commerce Clause strict scrutiny for
a test of Twenty-First Amendment rational purpose will
promote uncontrolled, unregulated liquor sales. If states can
effectively reguiate the development of this industry, the
political branches of government may devise a strategy for
dealing with this dangerous product.

CONCLUSION

The judgment of the Second Circuit Court of Appeals in
Swedenburg v. Kelly, 358 F.3d 223 (2d Cir. 2004) should be
affirmed and the judgment of the Sixth Circuit Court of
Appeals in Heald v. Engler, 342 F.3d 517 (6™ Cir. 2003)
reversed.

Dated: July 29, 2004 Respectfully submitted,

Claudette P. Miller

UNGARETTI & HARRIS

3500 Three First National Plaza
Chicago, Illinois 60602

(312) 977-4390

Counsel of Record
Counsel for Amici Curiae

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ILLINOIS ALCOHOLISM AND
DRUG DEPENDENCE ASSOCIATION
AGENCY MEMBERS
July 7, 2004

REGION 1

Center for Alcohol & Drug Services
Carolyn Ross, Executive Director
1523 S. Fairmount St., PO Box 3278
Davenport, [A 52808

563/322-2667

FAX # 563/322-3671 (D15)

cross @cads-ia.com

Human Service Center :
Michael Boyle, President & CEO
mboyle @ fayettecompanies.org
P.O. Box 1346, 600 Fayette
Peoria, IL 61654

309/67 1-8025 .

309/671-8005 (Administration)
FAX # 309/671-8021 (DOS)

P.H.A.S.E.

Jared Kresge, Executive Director
319 South Church

Rockford, IL 61101
815/966-1285

FAX # 815/490-1051 (D08)
jebjudy @ mcleodusa.net

2a

REGION 1 (Cont.)

Robert Young Center for Community Mental Health
David Deopere, Ph.D., President

4600 Third Street

Moline, IL 61265

309/779-2051

FAX # 309/779-2555 (D11)

Rosecrance Health Network
Philip Eaton, President
3815 Harrison Avenue
Rockford, IL 61108
815/391-0100 ext. 416
FAX # 815/391-5041 (D12)
eatonp @rosecrance.net

Sojourn House, Inc.

Brenda Bombard, Director
565 North Turner Avenue
Freeport, IL 61032
815/232-5121

FAX # 815/233-4591 (S029)

REGION 2

Resolve Center

Dr. James Simone, Executive Director
411 W. Division

Manteno, IL 60952

815/468-3241

FAX # 815/468-5463 (S003)
jimdoc2] @hotmail.com

3a

REGION 2 (Cont.)

Breaking Free, Inc.

Mike Moran, Executive Director
120 Gale Street

Aurora, IL 60506

630/897-1003

FAX # 630/897-1042 (S054)
mjmoran @bigfoot.corn

Family Service & Community Mental
Health Center for McHenry Country

Robert Martens, Executive Director

Barb Schmiege, VP for Sub. Abuse Srvcs.

bschmiege @ familyservicemch.org

5320 West Elm Street

McHenry, IL 60050

815/385-6400

FAX # 815/385-8127 (D17)

famserv @stans.com

Leyden Family Service & MHC
Dennis P. Vaccaro, CEO

10001 Grand Avenue

Franklin Park, IL 60131
847/451-0330

FAX # 847/451-1652 (S052)
dpvaccaro @aol.com

Renz Addiction Counseling Center

Jerry Skogmo, Executive Director (x232)
Two American Way

Elgin, IL 60120

847/742-3545

FAX # 847/697-5583 (S051)

jskogmo @aol.com

REGION 2 (Cont.)

Stepping Stones, Inc.

Peter McLenighan, Exec. Director (x 125)
pmclenighan @steppingstonestreatment.com
Paul Lauridsen, Clinical Director (x 103)
plauridsen @ steppingstonestreatment.com
1621 Theodore Street

Joliet, IL 60435

815/744-4555

FAX # 815/744-4670 (S055)

Aunt Martha’s Youth Service Ctr.
C. Gary Leofanti, Exec. Director
Warren Wood, Division Manager
wwood @ auntmarthas.org

233 W. Joe Urr Road (North Bldg)
Chicago Heights, IL 60411
708/754-1044

FAX # 708/747-3497 (D16)

Will County Health Department
Dr. Joseph Troiani, Director
Randy Bultman, Interim Manager
501 Ella Avenue

Joliet, IL 60433

815/727-8521

FAX # 815/727-8436 (D18)
jtroiani @ willcountyhealth.org

Sa

REGION 3

Central East Alcoholism and Drug Council
Pam Irwin, Ph.D., Executive Director

635 Division, PO Box 532

Charleston, IL 61920

217/348-8108

FAX # 217/345-6794 (S038)
ceadpam @ hotmail.com

Chestnut Health Systems, Inc.
Rev. Russell J. Hagen, Pres. /\CEO
1003 Martin Luther King Drive
Bloomington, IL 61701
309/827-6026 ext. 2200

FAX # 309/820-3574 (D28)

rhagen @chestnut.org

Great River Recovery Resources
Ron Howell, Exec. Director

428 S. 36th Street

Quincy, IL 62301

217/224-6300

FAX # 217/224-4329 (D36)

info@recoveryres.org

Human Resource Center

Kenneth Polky, Executive Director
P.O. Box 1118, 753 E. Court
Paris, IL 61944

217/465-4118

FAX # 217/463-1899 (D38)
kenneth.polky @hrcec.org

REGION 3 (Cont.)

Illinois Alcohol & Other Drug Abuse
Professional Certification Association

Bill Johnson, Executive Director

1305 Wabash Avenue, Suite L

Springfield, IL 62704

217/698-8110

FAX # 217/698-8234 (S078)

iaodapca @ aol.com

Prairie Center Health Systems, Inc.
Patrick Leary, CEO

718 Killarney

Urbana, IL 61801

217/328-4500

FAX # 217/328-4535 (S050)

pleary @ mail.prairie-center.com

Prevention First, Inc.

Karel Ares, Executive Director
2800 Montvale Drive
Springfield, IL 62704
217/793-7353 or 800/252-8951
FAX # 217/793-7354 (D39)
Chicago Office

720 N. Franklin Street, Suite 500
Chicago, IL 60610
312/988-4646 or 800/572-5385
FAX # 312/998-7096

aresk @prevention.org

7a

REGION 3 (Cont.)

Project Oz

Peter Rankaitis, Executive Director
peter @projectoz.org

Nancy Wisted, Dir., Drug Education
502 South Morris

Bloomington, IL 61701
309/827-0377

FAX # 309/829-8877 (SO43)

Schuyler Counseling & Health Services
Francis "Kip" Wilson, Director

127 S. Liberty, P.O. Box 320
Rushville, IL 62681

217/322-4373

FAX # 217/322-2138 (SO45)
kipwilson @ starband.net

Shelby County Community Services
Dick Gloede, CEO

Cheri Fiala, Program Coordinator
1810 W. S. 3rd Street, P.O. Box 650
Shelbyville, IL 62565

217/774-5587

Fax # 217/774-1400 (S083)
sccsaoda @consolidated.net

The Wells Center

Bruce Carter, Exec. Director
1300 Lincoln Avenue
Jacksonville, IL 62650
217/243-1871

FAX # 217/243-2278 (D40)
bcarter @ weliscenter.org

REGION 4

Franklin-Williamson Human Services, Inc.
Dr. David Melby, Administrator

902 West Main

West Frankfort, IL 62896

618/997-5336 ext. 7100

dmelby @fwhs.org

Wendy Bailie, Substance Abuse Services Division Director
1307 West Main St., PO Box 365

Marion, IL 62959

618/997-5336 ext. 6108

FAX # 618/993-2969 (S006)

wbailie @fwhs.org

Human Service Center

Gary Buatte, Executive Director
10257 State Route Three

Red Bud, IL 62278

618/282-6233

FAX # 618/282-6220 (S082)
g.buatte@humanservicegroup.com

REGION 5

Addiction Counseling & Educational Service (A.C.E.S.)
Mary Ellen Flynn, Director

721 N. LaSalle Drive

Chicago, IL 60610

312/655-7453

FAX # 312/335-9853 (D19)

mflynn @catholiccharities.net

9a

REGION 5 (Cont.)

Alternative Schools Network
Jack Wuest, Exec. Director
1807 W. Sunnyside, Suite 1D
Chicago, IL 60640
773/728-4030

FAX # 773/728-3335 (S009)
jwuest @altschools.net

Bobby E. Wright Comprehensive
Behavioral Health Center, Inc.
Lucy Lang-Chappell, Ph.D., Exec. Dir.
Geraldine Katovich, Administrator

Program Manager

Nine South Kedzie Avenue
Chicago, IL 60612
773/722-7900

FAX # 773/722-0644 (S056)

Central States Institute of Addiction Programs
Kevin Doyle, Executive Director

120 West Huron Street °

Chicago, IL 60610

312/655-7530

FAX # 312/266-9027 (SO11)

kdoyle @catholiccharities.net

10a

REGION 5 (Cont.)

Cornell Interventions, Inc.

Leslie Balonick, Regional Vice President
Terri Matthes, Regional Director

901 W. Jackson Blvd., Ste. 400

Chicago, IL 60607

312/421-0817

FAX # 312/421-6425 (S092)

Ibalonick @cornellcompanies.com
tmatthes @comellcompanies.com

Gateway Foundation, Inc.
Michael Darcy, Pres/CEO (ext.216)
mdarcy @ gatewayfoundation.org
Nick Gantes, Vice President, IL
ngantes @ gatewayfoundation.org
312/913-2324

819 S. Wabash, Suite 300
Chicago, IL 60605
312/663-1130 (Administration)
FAX # 312/663-0504 (S017)
Springfield Office

413 E. Adams

Springfield, IL 62701
217/544-2040 ext. 104

FAX # 217/544-2188 (S081)

Healthcare Alternative Systems
Marco Jacome, Exec. Director
2755 West Armitage Avenue
Chicago, IL 60647
773/252-3100

FAX # 773/252-8945 (5019)
hascares @aol.com

lla

REGION 5 (Cont.)

Human Resources Dev. Inst.

Dr. Terra Thomas, President & CEO
222 S. Jefferson Street

Chicago, IL 60661

312/441-9009

FAX # 312/441-1663 (S020)

hrdi @hrdi.org

Illinois Association of Extended Care
Sterling Gildersleeve, Chairman

P.O. Box 269180

Chicago, IL 60626

708/224-2445

FAX # 773/764-1866 (R10)
iaecrecovery @ aol.com

Lutheran Social Services of Ilinois
Rev. Frederick Aigner, President
1001 Touhy Avenue, Ste. 50

Des Plaines, IL 60018
847/635-4600

Fax # 847/635-6764 (S023)

Rev. Roger A. Boekenhauer

Exec. Dir. Behavioral Health Services
4840 W. Byron

Chicago, IL 60641

773/282-7347 ext. 281

Fax # 773/282-9013 (S024)
roger.boekenhauer @Issi.org

12a

REGION 5 (Cont.)

PEER Services, Inc.

Kate Mahoney, Executive Director
906 Davis Street

Evanston, IL 60201

847/492-1778

FAX 847/492-0320 (S021)
peer_services ameritech.net

Omni Youth Services

Jay Meyer, Associate Executive Director
jmeyer @omniyouth.org

1111 Lake Cook Road

Buffalo Grove, IL 60089

847/353-1750

FAX # 847/541-0228 (S027)

Pillars Community Services
John Shustitzky, Executive Director
6120 South Archer Road
Summit, IL 60501

708/458-6920

FAX # 708/458-2326 (SO49)
jshustitzk @pillarscommunity.org
Jerri Allers

Director, Prevention Task Force
100 W. Cosset

La Grange, IL 60525
708/352-1188

Fax # 708/352-1198 (S034)
taskforce @earthlink.net

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13a

REGION 5 (Cont.)

South East Alcohol & Drug Abuse Center
Greg Zyvert, Exec. Director

8640 S. South Chicago Avenue

Chicago, IL 60617

773/731-9100 ext. 232

FAX # 773/731-1292 (S030)

gzyvert @seadac.org

South Suburban Council on Alcoholism
Allen Sandusky, President/CEO

1909 Checker Square

East Hazel Crest, IL 60429
708/647-3333

FAX # 708/957-2614 (S031)
allensandusky @ameritech.net

Specialized Assistance Services (SASI)
Doris Reynolds, Exec. Director

2101 South Indiana Ave, 2nd Floor
Chicago, IL 60616

312/808-3218

FAX # 312/791-9037 (S039)

sasichgo @earthlink.net

TASC, Inc.

Melody Heaps, President (ext. 203)
1500 North Halsted, 2nd Floor
Chicago, IL 60622

312/787-0208 ext. 203 or 800/621-8076
FAX # 312/787-8214 (S033)

mheaps @tasc-il.org

nreyes @tasc-il.org —- Admin. Assistant

14a

YMCA Network for Counseling & Youth Development
of Greater Chicagoland

Peter Sari, Interim Executive Director

3801 W. 127th

Alsip, IL 60658

708/385-6700

FAX # 708/385-6770 (S005)

petersari @hotmail.com

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0737%3A20. Public record. Not legal advice.