Opposition Brief — Brooks v. Vassar (No. 06-1111)

No. 06-1111

In The

Supreme Court of the Anited States

+

PETER BROOKS, DAVID T. GIES, PATRICIA CLEMMER

PETERS, ROBIN B. HEATWOLE, DRY COMAL CREEK

VINEYARDS, a Texas Corporation, HOOD RIVER VINEYARDS.

an Oregon Sole Proprictorship, and

SCHNEIDER LIQUOR COMPANY. INC..

Petitioners.

'?

ESTHER IH. VASSAR, PAMELA O'BERRY EVANS, and

SUSAN R. SWECKER. all in their official capacities as members

of the Virginia Alcoholic Beverage © ontrol Board. and

VIRGINIA WINE WHOLESALERS ASSOCTATION. INC.

Respondents.

a

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Fourth Circuit

¢

BRIEF OF ESTHER H. VASSAR, PAMELA O’BERRY

EVANS, AND SUSAN R. SWECKER IN OPPOSITION

TO THE PETITION FOR A WRIT OF CERTIORARI

«

Ropert FL MeDONNELL WiLtiamM C. Mims

Attorney General of Virginia Chief Deputy Attorney General

WiIntiamM EF. Tike FRANCIS S. FERGUSON

State Solicitor General Deputy Attorney General

Counsel of Record 4 :

— CaAkLA R. Couns

STEPHEN Ro MeCuntptouci MICHELLE Wencu

Deputy State Sohcitor Assistant Attorneys General

General .

OFFICE oF THe: ATTORNEY GENERAI

900 East Main Street

Richmond, Virginia 23219

Telephone: (804) 786-2436

Facsimile: (804) 786-1991

Counsel for Esther H. Vassar.

Pamela O Berry Evans, and

April 6, 2007 Susan R. Siwecker

(te BEE EAA RETER PRINTING) CO) ose 22% tote

COC ND 4 CORE EO'T tert. 50 ott

a a aa a a a

QUESTIONS PRESENTED

The Twenty-first Amendment enhances the States’

sovereignty by allowing them to maintain an effective and

uniform system for controlling liquor by regulating its

transportation, importation, and use. The Petition

concerns the scope of that sovereign power. The questions

presented are:

1. May a State require that all or virtually all alcohol

consumed in the State pass through the State’s

regulatory system?

2. When a State sells wine in direct competition with

more than 10,000 private retailers, may the State sell

only wine that was produced within the State?

TABLE OF CONTENTS

Page

py Be 8 oy 4 | i

Re OE PU LOBE FEI ecesecercesscnvecocscecovevnceceveveseseves iii

ERE EERIE EE Nae rae eave EN aD 1

STITT Thi cient adlenciohsdbtiiiisiaunonnieneibienianiediansth 3

REASONS FOR DENYING THE PETITION ............... 10

I. THE LOWER COURTS DECISION IS

IEEE tidal atc cioeDbeakaisanibiennadiaiemaanennesoee ll

A. The State Can Require Virtually All

Alcohol Consumed in the State to Pass

Through the State’s Regulatory System ..... 11

1. The Twenty-first Amendment Empowers

the States to Require Virtually All

Alcohol Consumed in the State to Pass

Through the State’s Regulatory System... 11

2. Congress Has Authorized the States to

Require Virtually All Alcohol Consumed

in the State to Pass Through the State’s

Regulatory System ......c.ccccsrcsscsrosssssevevsoes 17

B. When the State Acts as a Market

Participant, It Can Favor Products Produced

nn nT en 19

Il. THERE IS NO CONFLICT AMONG THE

IIIT is in cities asiceheioliedenannenvniveedondenieuneciiianin 20

Ill. THIS PETITION IS A POOR VEHICLE FOR

RESOLVING THE QUESTIONS .............:::eeeees 21

SIT iad ccicenettisepdepeessruinoueinerrnentndenieneoaseeeeneiies 23

TABLE OF AUTHORITIES

Page

CASES

44 Liquormart, Inc. v. Rhode Island,

ey erie Ge soceccs aanceniccicihicheaisnintabaneiadanpamamaabiain 13

Alden v. Maine,

Fae Se Pe Ce wistisinsctginitnsintdataininisabiibduiataneiitesaal 11

Bacchus Imports, Ltd. v. Dias,

RE. RRSP aren RO ARETE RCD 7,13

Beskind v. Easley,

FS 8 I PE ee name oa Miner ete oes 5

Bolick v. Danielson,

330 F.3d 274 (4 Cir. 2003) (Bolick ID .0.0.....::c00000 4,5, 22

Bolick v. Roberts,

199 F. Supp. 2d 397 (E.D. Va. 2002) (Bolick D.........:000+. 5

Bridenbaugh v. Freeman- Wilson,

EE Fe Be Cr Ce Bi ieicineaasicseciniecinndactincinicistanen 12, 16

Brown-Forman Distillers Corp. v.

New York State Liquor Auth..,

Sy Bie Lt ARERR RS ETT OCMC ON RENEE ATID, UADD 14

California Democratic Party v. Jones,

ae res Ne alk l deihaabiteiscmeciininnseddnnaitineheraieeen eepiieiamn 21

California Retail Liquor Dealers Ass’n

v. Midcal Aluminum, Inc.,

SD Bate ee ae hierniana ialdicaeiciniaios tin tcitcntican 12,13

Capital Cities Cable, Inc. v. Crisp,

Se Se IE ee ciniccricientcseicenaiieaiheitaicibediniialacidlecsih 13

Central Virginia Cmty. Coll. v. Katz,

SE Be Ss Ba ee ea titheecasisaitstceabesichiciones cieeseciaiashieiicie 20

Clark Distilling Co. v. Western Maryland R. Co.,

pI ts . ; SORE RCN TES NCD Com AOE EEE 18

iv

TABLE OF AUTHORITIES — Continued

Page

Craig v. Boren,

ae Ce NE ieihieaniesinbiictaiaibentesleitedinildesai 11, 12, 13

Department of Revenue v.

James B. Beam Distilling Co.,

ee Re Ie CE with die netipinbicdnbceishesaiintiniatisiabuicdaseandepaiatins 13

General Motors Corp. v. Tracy,

Se es Se NOD wisiiniecioniisitiiesstilbeicaastinioiiaanenibadiiontattaamiiiies 17

Granholm v. Heald,

544 U.S. 460 (2005)..............6. 1, 2, 7, 8, 10, 12, 13, 14, 18

Healy v. Beer Inst.,

ee RT Ca sui dihienecideondaisinstiiatncdainccnnsasacwosetasiaaiinaia 14

Hughes v. Alexandria Scrap Corp.,

I Se Pe UI iinicsdiordntncsnicetnadecncsisliasvenalisetieies 3, 9,19

Larkin v. Grendel’s Den, Inc.,

459 U.S. 116 (1982)........... shale iiidedaasasilaptiiatanendaiaaanintclaiinds 13

Leisy v. Hardin,

pF ___ Sea ES na Re ROPES De I DUR I EPC oe 18

New York State Bd. of Elections v. Torres,

cert. granted,

ee Be Ge BED iitsicisentiicntasiccvuccainiinebinnsttaladiamacabi 21

New York v. United States,

SI RPI Pe LI ciicidisnstthiciiisecdbsstatdanisiiicptiaaieiaicence: il

North Dakota v. United States,

"go 5. Nee aed meres traits 12, 13

Prudential Ins. Co. v. Benjamin,

a ee ee Ca iickirenitctchcnbakidtttotantaabtaesidliietamecscanies 17

Reeves, Inc. v. Stake,

ge RAN REA NE ROE DENT 19

TABLE OF AUTHORITIES — Continued

Page

Romer v. Evans,

Pe ese EY 6 INET iinish ch chncdui snncpensnassubienblaceseicsnesvecensadel 21

Rostker v. Goldberg,

ae Te CA vis ii dbcaicseicttaddshoveinieaascsabhenetesteinle 21

Scott v. Donald,

Es GUE CE A aienicsctvaundinsitkscdduinidbdnhdtibabigsataanionines 18

U.S. Term Limits, Inc. v. Thornton,

ee A A TO GIT sekiciesvezsdetdasevigiedsisin Gbssetsentediaeameannas 21

United States v. Sharpnack,

ee es CT eiiccacnincadnsunidikssaecicaseaiebannbiediatintedionts 17

Washington v. Washington State Republican Party,

cert. granted,

Be 2 eT I iintritiietscemicirnitaintanesietatna 21

White v. Massachusetts Council of Constr.

Employers, Inc.,

ss eR arcinistciiticansiimebsianeiaiidmuniee 19

Wisconsin v. Constantineau,

Se re EE 0 tikiivovsisscsidsnrrtintiecsoner idan 13

CONSTITUTIONAL PROVISIONS

U.S. Const. art. I, § 8, cl. 3

III COIN hcsitccecensisnsctexctessstentanionsauile 3, 7, 9-13, 17

ee I: NE iii isitidcdiedercese eee eee eee 13

TABLE OF AUTHORITIES -— Continued

Page

STATUTES

27 U.S.C. § 121

i cstsueouibonaiian 17, 18

27 U.S.C. § 122

TE ©, SRE EN cae ne Len a ETD 18

I Ge Be icesninietididniiisbeniignitnbcenininitintinetensedes 2

I, I a alee 2

I Ce Be cestniecsceiniinteninieesinietiinijnteiinnteeanianiaas 2

California Bus. & Prof. Code § 23661............:sscsssesecseeereees 2

Colorado Rev. Stat. §§ 12-47-106(4),

I CI icieicinicinranivtacaticoiencecenitacsetebissuapitspidtenmtn 2

Ce Ce, GE Bi iciienictiecctvenenventesenteneensenecnunns 1

a Ee Be Eiictaikictiaiahinvnsanicenigtiaiisnibabivaliaaibeniniclioteadedin 2

ts Ge Oe TO... siniscienacitnannneeionaisiiaioaanioniienais 1

ST GG: SIR II siiienisisitciecncicsnenseiaicounanitecmenbsineeeiiaieliiieis 1

I Se 0 Se verestnctnivetnriniccexcorneccblateenseneienmsehiinnanne 1

BOE BO, Tee ey Ek docccceenidnccnconscccnveceeevnieininsctiiainnnns 1

I 1

Illinois Comp. Stat. § 235 ILCS 5/1-3.16.............ccceesseeeeeees 1

I I a a oaeedgemiibinaenes 1

I 1

IN I We OIE isis ic Gasehsincscinmesaadiarnhigitensbonbianaeiueiinnnnions 1

Kentucky Rev. Stat. §§ 243.200, 243.720 .......... ee eeeseeeeeees 2

Louisiana Rev. Stat. §§ RS 23:360, 361 ..............ccccseeseeeeeees 2

Denise Tee. Beak. Ce. BBO, § BOT G oa. cececceccavscsevceececverecccsecsoesss 1

Vii

TABLE OF AUTHORITIES — Continued

Page

Maryland Code Tax-General, § 5-104.......... ccc eeseeeeeeeeeeeees 1

Massachusetts Gen. Laws ch. 138, § 22...........ccccccceeesssseeees 1

Michigan Comp. Laws § 436.1203(8)(a) .........cccccseseesseoeenees 1

pL | ER eR PRE ee EEO 1

PRE CAE BB a ccenstceaestetitnlithsnrtscanciitinisitivcipiateiann 2

ETE Fe TE, FB Be icsiccnicintciccaaickentainbinesenminsanaies 1

as Cs S See eeicivirenricsnnintirestnitintinantacinndiniiien 1

NeOraska Bev. Slat. $ BB-1D6.08 ...0cccesccoccescveccvecccesiovessocssvoce 1

Tae, CE, Be icsncnctenishctnncccntictintcartniinniastiiiana 2

New Hampshire Rev. Stat. § 175:6 ......ccccccccsccccsscesseeseeeseeens 2

FON PAG BOS IAD hiteinnistncistissinisiccintinieamaiiicsniiiniaiints 2

FOR FOES FE, GTI cet ccectentinsinnintcttnsiphintianttniaieianns 2

New York Alco. Bev. Cont. Law § 102 .............cscccceseeceeseeoees 2

North Carolina Gen. Stat. § 18B-402 ..............ccesseeeeersersenes 2

North Dakota Cent. Code § 5-01-16 ...........cccceeesecesecesseeeeeees 2

Ee Ce ae i rccsteveteeeectennennisdedneccbscesuibiiatnintgendies 2

Cpe: Bie. GH. Be, SG tccsiencesccintscctonsiscnnninniiaiadenia 2

CS TI SUE Br Re sacoreccttintptccecccccsninecnsictsionds 2

47 Pennsylvania Cons. Stat. § 491(2) ...........ccsssscereecsssereeees 2

Rhode Island Gen. Laws § 3-6-14 ...........ccccsccssessersectercesesees 2

South Carolina Code § 12-21-1610 ............eeseeesesseeeeeeeeeeeees 2

South Dakota Codified Laws § 35-4-66 ............cccccsesseseeeeees 2

Tennessee Code §§ 57-3-401, 402..............cccccseccceesereeceeeceeees 2

Dee AOD, Te CSS FG ee ccewnvtiicccdciinccentinenintincantsesinnvte 2

TABLE OF AUTHORITIES — Continued

Page

Utah Code $§ S32A-12-201, 212. .ncccscccrscovvscessesersencsossneeseceees 2

Wereperad Biard., GR, Fs 6 G cccccsicsnicishivertsctodintidictiataiiiitasicmiciais 2

Ver ienies Code § GF SIE wicrecstcsseschesvsnnistemapiutvesioniatintan 4,15

Vivwplseies Code § 42 +Ti Ea) ccscecesccsaticcnisiincaticenniesinatsebiasniea 6

Virginia Code § 4.1-119

(State Stores Provision) .............:sseseeeeceeees 4, 5, 7-9, 11, 22

Virgineda: Coe § 4. 1+ D IBD scceosnssscvcnnssessivctacnatetcateivnssstionsons 4

Virginia Cod) § 6.2S OTD wresicecsieissvsivevsnissevatennanivvimenmnes 6

Viratada Cote 9 SBT DD scccticicetonsacseieisetesverituceivvontntteltines 6

Viraleeda Code © 6.3-BGID) vniecesncsssessnvtsssptvintsanicslabicaviaimine 6

Virgltein Code § 6.2-DORD) ensissnsictseeinindunminmniaeel 6

Wiswplvades Cote 9 AFT vescensscraccctnseccsscterriveiiaaiecitaaccneiaia 4

Viswherhes Cale 9 41 BB icaievsscstairvvtscisistenrersssciiniiaineiaiants 15

Virwiaia Cae § ESD B vs oncccccscntinessecsinninsincieinanscianampitianal 15

Virginia Code § 4.1-310

(Personal Import Exception)................. 2, 5-11, 16, 18, 22

Virwheatas Comte FS 6, F-DI cccevscccteciccvsnssioenvseseecttisesbiataanan 3

Virgindes Come § 4.26 8E secssuisssscssictevvisarinsnsecnecinaninecndaanan 2

Virginia Code § 4.3-B2G caceccscncsnceeresssovosssnsovorsvoesaesasersoessens 15

Washington Rev. Code § 66.12.120 ..........ccccccccsceeeessseeseseeers 2

West Virginie Code § 60-6 nccssiscesccsssccsesscetsewnsiavettiovesinctntaes 2

Wisconsin Stat. § LSO.CHGENA) ncccccessecorsccassscntrevessvnssvetssesvsece 2

Wyotrsing Ghat. § LSB IGE coceicisceconssetsicersisnisuccvintandiigeaseatant 2

TABLE OF AUTHORITIES — Continued

Page

ATTORNEY GENERAL OPINIONS

Alaska Att’y Gen. Op. (Jume 25, 1953)... cccccssserseeereeeees 2

OTHER AUTHORITIES

1 Laurence H. Tribe,

AMERICAN CONSTITUTIONAL LAW (3d ed. 2000) ...........+. 17

BRIEF IN OPPOSITION TO THE

PETITION FORA WRIT OF CERTIORARI

Virginia Attorney General Robert F. McDonnell, on

behalf of Esther H. Vassar, Pamela O’Berry Evans, and

Susan R. Swecker, all in their official capacities as

members of the Virginia Alcoholic Beverage Control Board

(collectively “Virginia”), responds to the Petition for a Writ

of Certiorari.’ For the reasons detailed below, the Petition

should be denied.

INTRODUCTION

The Twenty-first Amendment, U.S. Const. amend.

XXI, § 2, allows “States to maintain an effective and

uniform system for controlling liquor by regulating its

transportation, importation, and use.” Granholm v. Heald,

544 U.S. 460, 484 (2005). Exercising the sovereign power

conferred by the Twenty-first Amendment, the States have

prohibited or severely restricted the importation of alcohol

for personal use.’ These import restrictions ensure that all

* On February 15, 2007, this Court extended the time for filing the

response to April 9, 2007.

* Thirty-six States and the District of Columbia regulate the flow

of alcoholic beverages brought into their borders in some fashion. The

quantity of alcoholic beverages transported by an interstate traveler

into a State or the District of Columbia is regulated through possession,

transportation, or excise taxation statutes. See Connecticut Gen. Stat.

§ 12-436; Delaware Code tit. 4, § 716; Florida Stat. ch. 562.15; Georgia

Code § 3-3-8; Hawaii Rev. Stat. § 281-33.1; Idaho Code § 23-610; Illinois

Comp. Stat. § 235 ILCS 5/1-3.16; Indiana Code § 7.1-5-11; Iowa Code

§ 123.22; Kansas Stat. § 41-501; Maine Rev. Stat. tit. 28-a, § 2076;

Maryland Code Tax-General, § 5-104; Massachusetts Gen. Laws ch. 138,

§ 22; Michigan Comp. Laws § 436.1203(8)(a); Minnesota Stat. § 297g.07;

Missouri Rev. Stat. § 311.420; Montana Code § 16-6-301; Nebraska Rev.

(Continued on following page)

2

or virtually all alcohol consumed in a State passes through

the State’s regulatory system. Requiring all or virtually all

alcohol to pass through the State’s regulatory system is

“unquestionably legitimate.” Jd. at 489. Indeed, “State

policies are protected under the Twenty-first Amendment

when they treat liquor produced out of state the same as

its domestic equivalent.” Jd.

Nevertheless, the Petitioners contend that restrictions

on the importation of alcohol for personal use are

unconstitutional. Recognizing that any import restriction

inhibits the ability of individuals to go to another State,

purchase alcohol, and then return to their home State, the

Petitioners claim that import restrictions violate the

Stat. § 53-194.03; Nevada Rev. Stat. § 369.490; New Hampshire Rev.

Stat. § 175:6; New Jersey Stat. § 33:1-2; New Mexico Stat. § 60-7A-3;

North Carolina Gen. Stat. § 18B-402; North Dakota Cent. Code

§ 5-01-16; Ohio Rev. Code § 4301.20; Oklahom«: Stat. tit. 37, § 537;

Oregon Rev. Stat. § 471.405; 47 Pennsylvania Cons. Stat. § 491(2);

South Dakota Codified Laws § 35-4-66; Tennessee Code §§ 57-3-401,

402; Texas Alco. Bev. Code § 107.07; Vermont Stat. tit. 7, § 61; Virginia

Code §§ 4.1-310, 311; Washington Rev. Code § 66.12.120; West Virginia

Code § 60-6-6; Wyoming Stat. § 12-3-101. See also D.C. Code § 25-772.

Another State - Alaska ~ has an Attorney General’s Opinion imposing

similar regulations. Alaska Att’y Gen. Op. (June 25, 1953). Of the

remaining thirteen States, all either completely prohibit the interstate

importation of alcoholic beverages on the person, or impose stringent

regulations, such as requiring the resident to obtain por regulatory

permission to bring the beverages into the State, a: ~r requiring the

payment of in-state excise taxes on alcoholic beverages purchased

out-of-state upon their introduction into the State. See Alabama

Code § 28-3A-25; Arizona Rev. Stat. § 4-244.02; Arkansas Code

3-3-216; California Bus. & Prof. Code § 23661; Colorado Rev. Stat.

§§ 12-47-106(4), 12-47-901(1Xj), (3a); Kentucky Rev. Stat. §§ 243.200,

243.720; Louisiana Rev. Stat. §§ RS 23:360, 361; Mississippi Code

§ 97-31-47; New York Alco. Bev. Cont. Law §102; Rhode Island

Gen. Laws § 3-6-14; South Carolina Code § 12-21-1610; Utah Code

§§ 32A-12-201, 212; Wisconsin Stat. § 139.03(5)a).

. 3

negative aspect of the Commerce Clause, U.S. Const. art.

I, § 8, cl. 3. Additionally, although the negative aspect of

the Commerce Clause is inapplicable when the State acts

as a market participant, Hughes v. Alexandria Scrap

Corp., 426 U.S. 794, 808-10 (1976), the Petitioners further

contend that Virginia may not favor wine produced within

its borders when it sells wine in direct competition with

more than 10,000 private retailers and many out-of-state

wineries that are licensed by Virginia to ship directly to

Virginia consumers.

Neither contention is worthy of this Court’s review.

The decision below is correct, there is no conflict among

the Circuits, and the lack of a developed record makes the

Petition a poor vehicle to resolve the questions presented.

Certiorari should be denied.

STATEMENT

1. This matter involves a constitutional challenge to two

aspects of Virginia’s regulation of alcoholic beverages.

First, Virginia Code $§4.1-310{E) (“Personal Import

Exception”) prohibits consumers from _ personally

transporting more than one gallon (four liters if the

alcoholic beverages are being transported in metric-sized

containers) of any alcoholic beverages from another State

into Virginia.’ This limit applies to all alcohol obtained

out-of-state, regardless of whether the alcohol was

* If a person is relocating his place of residence to Virginia, this

provision also prohibits him from shipping more than a “reasonable

quantity” of alcoholic beverages, not for resale, in his personal or

household effects.

4

produced in Virginia or some other State or abroad. By

limiting the ability of individuals to import alcohol into

the State, Virginia prevents the circumvention of those

statutes requiring that virtually all alcohol consumed in

the State pass through Virginia’s regulatory system.

Second, Virginia, in the exercise of its sovereign

authority under the Twenty-first Amendment, has decided

that, with limited exceptions, distilled “hard” liquor will

only be sold in retail stores that are owned and operated

by Virginia. See Virginia Code §§ 4.1-119 and 4.1-221.

These stores, known as “ABC stores,” sell not only

approximately 2000 “hard liquor” items, but also wine

produced by “farm wineries” located in Virginia. See

Virginia Code §4.1-119(A) (“State Stores Provision”).

While the ABC stores have a monopoly on the sale of “hard

liquor,” they compete with more than 10,000 private

retailers for the sale of wine and with a number of

wineries, both inside and outside of Virginia, that are

licensed by Virginia to ship directly to Virginia consumers.

See Virginia Code §§ 4.1-112.1 and 4.1-119.

2. This litigation began in 1999 when Petitioners Robin

B. Heatwole, Dry Comal Creek Vineyards, Hood River

Vineyards, and others who have since withdrawn from the

litigation challenged “the constitutionality of Virginia’s

Alcoholic Beverage Control laws, which prohibit the

importation of wine and beer into Virginia except through

a regulated, multi-tiered structure.” Bolick v. Danielson,

330 F.3d 274, 276 (4° Cir. 2003) (Bolick ID. Several

statutes were alleged to be unconstitutional “principally

because they favor local wine and beer manufacturers,

who are permitted to sell directly to consumers, and

discriminate against out-of-state wine and _ beer

manufacturers, who must sell through the more costly

9 :

multi-tiered structure.” Jd. Although the complaint

challenged the State Stores Provision, it did not challenge

the Personal Import Exception. Ultimately, the district

court agreed that Virginia could not permit in-state

wineries to ship directly while prohibiting out-of-state

wineries from doing so and that the State Stores Provision

was unconstitutional. See Bolick v. Roberts, 199

F. Supp. 2d 397, 417 (E.D. Va. 2002) (Bolick D.

3. Virginia then appealed to the Fourth Circuit. While

the case was pending, the Virginia General Assembly

enacted new legislation that allowed out-of-state wineries

licensed by Virginia to ship directly to Virginia consumers

and, thus, mooted portions of the case. Bolick II, 330 F.3d

at 276. The new legislation also altered the analysis and

arguments for the State Stores Provision of the case. Id. at

276-77. Accordingly, the Fourth Circuit vacated the entire

judgment and remanded for “reconsideration of plaintiffs’

challenges in light of the recent statutory enactments and

in light of Beskind [v. Easley, 325 F.3d 506 (2003)].” Id. at

277.

4. On remand to the district court, the lawsuit was

transformed. Two litigants, including the lead plaintiff,

dropped out of the litigation. Petitioners Peter Brooks,

David T. Gies, Patricia Clemmer Peters, and Schneider

Liquor Company decided to join the litigation. This new

configuration of Petitioners filed an amended complaint

setting forth new challenges to different provisions of

Virginia’s alcoholic beverage control laws. In addition to

challenging the Personal Import Exception and renewing

the challenge to the State Stores Provision, the Petitioners

challenged:

6

¢ Virginia Code § 4.1-112.1(B) which, at the

time, required that applicants for a shipping

license who were not brand owners to obtain

explicit written permission from brand

owners in order to ship wine and beer to

Virginia consumers, If an applicant for a

Virginia shipping license already held a

Virginia retail off premises license and

purchased alcohol from a Virginia licensed

wholesaler, there was a_ rebuttable

presumption that the brand owner had

granted permission to ship.

e Virginia Code §§ 4.1-207(5) and 4.1-208(1)

which, at the time, allowed Virginia farm

wineries and breweries to by-pass the

wholesalers and deliver their products

directly to retailers while out-of-state

wineries and breweries were required to use

wholesalers. Virginia Code § 4.1-310.

¢ Virginia Code §§ 4.1-207(4) and 4.1-208(7)

which, at the time, permitted Virginia-based

wineries and breweries to sell unlimited

quantities of their respective products on

site and to deliver unlimited amounts to

consumers as long as they performed their

own deliveries.

After the Magistrate Judge recommended that all of these

statutes be declared unconstitutional, the district court

accepted that recommendation in all relevant respects.

Pet. App. at 40a-41a; 63a.

5. Virginia immediately appealed and the Petitioners

cross-appealed on the issue of remedy. While the appeal was

pending, the Virginia General Assembly amended Virginia

Code §§ 4,.1-112.1(B), 4.1-207(4), 4.1-207(5), 4.1-208(1), and

4.1-208(7) so as to eliminate the constitutional problems

7

identified by the district court. Because the statutes had

been amended, the Fourth Circuit vacated that portion of

the district court judgment that held those statutes to be

unconstitutional. Pet. App. at 5a; 10a-12a. Thus, the only

remaining issues were the constitutionality of the

Personal Import Exception and the State Stores Provision.

a. The court of appeals found the Personal Import

Exception “is justified as an appropriate regulation under

the Twenty-first Amendment that is not denied legitimacy

by being ‘economic protectionism,’ as was condemned by

the holdings of Granholm and Bacchus.” Pet. App. at 21a.

As the Court explained:

the Commonwealth’s interest in otherwise

regulating the importation, transportation, and

use of wine in Virginia is protected by the

Twenty-first Amendment. It is readily apparent

that the Personal Import Exception is not

economic protectionism but part of Virginia’s

import regulation. It provides a de minimis

exception to Virginia’s import regulations,

allowing consumers to import one gallon or four

liters of wine for personal consumption. Under

no economic construct could such a provision

be considered economic protectionism of local

industry. Ts the contrary, it actually amounts to

disadvantage local wineries whose wine may only

be purchased through retailers.

Pet. App. at 224-23a.

Judge Niemeyer also believed that the Personal

Import Exception did not violate the negative aspect of the

Commerce Clause. As he observed:

an argument that compares the status of an

in-state retailer with an out-of-state retailer -

or that compares the status of any other in-state

8

entity under the three-tier system with its

out-of-state counterpart — is nothing different

than an argument challenging the three-tier

system itself. As already noted, this argument is

foreclosed by the Twenty-first Amendment and

the Supreme Court’s decision in Granholm,

which upheld the three-tier system as

“unquestionably legitimate.” As the ABC Act now

stands, all out-of-state suppliers of wine are

required by Virginia to sell in Virginia through

the three-tier system ... and the Personal

Import Exception to that import restriction does

not favor in-state wineries.

Pet. App. at 18a-19a (Niemeyer, J., announcing the

judgment of the Court) (parenthetical omitted).

b. The lower court also found the State Stores Provision

to be valid. Pet. App. at 23a-32a. As the Court explained:

Virginia has elected to sell beer and wine, as well

as some related products — along with liquor-

from state-owned and operated stores. And just

as the Commonwealth has elected not to sell

every brand of liquor manufactured, it has

elected not to sell out-of-state wines, choosing

instead to sell only Virginia-produced wines. In

doing so, it competes as a participant in the

Virginia wine market with the thousands — more

than 10,000, according to Virginia — of other

private wine retailers who sell both Virginia

wines and out-of-state wines in Virginia.

Virginia’s choice of selling only Virginia wine is

no more inappropriate than would be its choice

to sell only Hershey’s brand chocolate bars at

a State commissary. Like all other in-state

wine retailers, the ABC stores can choose which

wines they purchase and stock, and Virginia’s

commitment to purchase only in-state wines is a

9

choice that any wine retailer would be free to

make for itself. This choice is indistinguishable

from Maryland’s choice in Alexandria Scrap.

Just as Maryland favored in-state sellers when

it purchased automobile scrap at high prices,

Virginia favors in-state wines in its stores.

Pet. App. at 26a-27a.

c. District Judge Goodwin, sitting on the Fourth Circuit

by designation, dissented from both the Personal Import

Exception and State Stores Provision holdings. As to the

Personal Import Exception, he explained:

The majority concludes that to find the Personai

Import Exception unconstitutional, we also

would have to find Virginia’s_ three-tier

distribution system unconstitutional. I disagree.

The discriminatory effect of the Personal Import

Exception occurs after the beverages have passed

through Virginia’s three-tier system. It is at this

stage, when the alcoholic beverages are on the

shelves ready for market, that interstate

commerce is impermissibly impeded.

Pet. App. at 35a. (Goodwin, J., dissenting) (emphasis

original). With respect to the State Stores Provision, he

believed that the negative aspect of the Commerce Clause

was applicable because “fa] consumer’s demand for

purchasing both a bottle of liquor and a bottle of wine

at the same time may be satisfied only in ABC Stores. The

relevant market is not the market for wine, but the

market for wine and liquor.” Pet. App. at 38a. (Goodwin,

J., dissenting) (emphasis original).

The Petition for Certiorari followed.

+

10

REASONS FOR DENYING THE PETITION

The Petition should be denied for three reasons. First,

the lower court’s decision is correct. “State policies are

protected under the Twenty-first Amendment when they

treat liquor produced out of state the same as its domestic

equivalent.” Granholm, 544 U.S. at 489. Virginia’s

regulatory system in general and the Personal Import

Exception in particular treat alcohol produced in other

States in the same manner as alcohol produced in

Virginia. Moreover, even if the Twenty-first Amendment

did not authorize Virginia to adopt these statutes,

Congress has passed legislation explicitly authorizing the

States to regulate alcohol.

Additionally, when a State acts as a market

participant, its choices about what to buy and sell are

insulated from Commerce Clause scrutiny. Thus, when

Virginia sells wine, it may favor in-state products. The fact

that Virginia regulates the alcohol market does not change

this constitutional reality, particularly when Virginia is

competing with more than 10,000 private sector wine

retailers as well as numerous wineries that are licensed by

Virginia to ship directly to consumers.

Second, there is no conflict among the Circuits

concerning the validity of requiring all or virtually all

alcohol to pass through the State’s regulatory system. Nor

is there a conflict among the Circuits as to whether a State

may favor in-state products when competing directly with

the private sector in the wine market. In the absence of a

conflict among the Circuits and in a situation where the

lower court has upheld the state statute, this Court should

decline to grant review.

11

Finally, the Petition is a poor vehicle for resolving the

questions presented. There is no record concerning the

economic impact of the Personal Import Exception. While

there is a record concerning the impact of the State Stores

Provision, that record is incomplete since it does not

include evidence regarding the impact of Virginia’s direct

shipment statutes, which were enacted in 2003. If this

Court is going to address these questions, it should do so

in a case with a fully developed record.

I. THE LOWER COURT'S DECISION IS CORRECT.

A. The State Can Require Virtually All Alcohol

Consumed in the State to Pass Through the

State’s Regulatory System.

1. The Twenty-first Amendment Empowers

the States to Require Virtually All

Alcohol Consumed in the State to Pass

Through the State’s Regulatory System.

The Twenty-first Amendment creates “an exception to

the normal operation of the Commerce Clause,” Craig v.

Boren, 429 U.S. 190, 206 (1976), and, by a fundamental

reallocation of sovereignty, “empowers [each State] to

control alcohol in ways that it cannot control cheese.”

* Although the Constitution “divides power among sovereigns and

among branches of government precisely so that we may resist the

temptation to concentrate power in one tocation as an expedient

solution to the crisis of the day,” New York v. United States, 505 U.S.

144, 187 (1992), the People, by adopting constitutional amendments,

have reallocated power between the two sovereigns. For example, by

“adopting the Fourteenth Amendment, the People required the States

to surrender a portion of the sovereignty that had been preserved to

them by the original Constitution” and transferred that sovereignty to

the National Government. Alden v. Maine, 527 U.S. 706, 756 (1999). On

(Continued on following page)

12

Bridenbaugh v. Freeman- Wilson, 227 F.3d 848, 851 (7" Cir.

2000). See also Granholm, 544 U.S. at 494 (Stevens, J.,

joined by O’Connor, J., dissenting) (“[E]ver since the

adoption of the Eighteenth Amendment and _ the

Twenty-first Amendment, our Constitution has placed

commerce in alcoholic beverages in a special category.”)

Indeed, the “Twenty-first Amendment grants the States

virtually complete control over whether to permit

importation or sale of liquor and how to structure the

liquor distribution system.” California Retail Liquor

Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 110

(1980). Consequently, Virginia “has ‘virtually complete

control’ over the importation and sale of liquor and the

structure of the liquor distribution system ... [including]

the power to control shipments of liquor during their

passage through their territory and to take appropriate

steps to prevent the unlawful diversion of liquor into their

regulated intrastate markets.” North Dakota v. United

States, 495 U.S. 423, 431 (1990) (Stevens, J., joined by

Rehnquist, C.J., White & O’Connor, JJ., announcing the

judgment of the Court) (citation omitted). Indeed, ever

since the Twenty-first Amendment was first adopted, it

has always been “transparently clear,” Craig, 429 U.S. at

207, that States could control who may import, transport,

distribute, and selJl, as well as purchase, alcoholic

beverages within a State. See North Dakota, 495 U.S. at

the other hand, by adopting the Twenty-first Amendment, the People

returned to the States a portion of the power originally surrendered to

the National Government under the Commerce Clause. Specifically, the

People created an exception to the Commerce Clause so that “[t)he

transportation or importation into any State, Territory, or Possession of

the United States for delivery or use therein of intoxicating liquors, in

violation of the laws thereof, is hereby prohibited.” U.S. Const. amend.

XXI, § 2.

13

447 (Scalia, J., concurring) (“Twenty-first Amendment .. .

empowers [the States] to require that all liquor sold for

use in the State be purchased from a licensed in-state

[entity].”). After the adoption of the Amendment, the

States have the “plenary power to regulate and control...

the distribution, use, or consumption of intoxicants within

her territory.” Department of Revenue v. James B. Beam

Distilling Co., 377 U.S. 341, 346 (1964). See also North

Dakota, 495 U.S. at 424 (Stevens, J., joined by Rehnquist,

C.J., White & O’Connor, JJ., announcing the judgment

of the Court) (Twenty-first Amendment gives States

“‘virtually complete control’ over the importation and sale

of liquor and the structure of the liquor distribution

system.”).

To be sure, the discretion given to the States by the

Twenty-first Amendment is not absolute. In regulating

alcohol, the States may not violate the First Amendment,

44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 514-16

(1996); the Establishment Clause, Larkin v. Grendel’s Den,

Inc., 459 U.S. 116, 122 (1982); the Equal Protection

Clause, Craig, 429 U.S. at 204-09, the Due Process Clause,

Wisconsin v. Constantineau, 400 U.S. 433, 509 (1971), or

the Import-Export Clause. James B. Beam Distilling Co.,

377 U.S. at 344-46. Nor does the Twenty-first Amendment

allow the States to interfere with the National

Government's ability to regulate interstate commerce.

Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 712-16

(1984); Midcal, 445 U.S. at 106-10. Indeed, the States’

power under the Twenty-first Amendment is limited by the

nondiscrimination principle of the Commerce Clause.

Granholm, 544 U.S. at 486-89; Bacchus Imports, Ltd. v.

Dias, 468 U.S. 263, 276 (1984) (“The central purpose of the

[Amendment] was not to empower States to favor local

14

liquor industries by erecting barriers to competition.”);

Brown-Forman Distillers Corp. v. New York State Liquor

Auth., 476 U.S, 573, 579 (1986) (“When a state statute

directly regulates or discriminates against interstate

commerce, or when its effect is to favor in-state economic

interests over out-of-state interests, we have generally

struck down the statute without further inquiry.”); Healy

uv. Beer Inst., 491 U.S. 324, 328 (1989) (invalidating a state

statute that required producers to limit the price of

alcohol). Rather, as this Court explained:

The Twenty-first Amendment grants the States

virtually complete control over whether to permit

importation or sale of liquor and how to structure

the liquor distribution system. A State which

chooses to ban the sale and consumption of

alcohol altogether could bar its importation; and,

as our history shows, it would have to do so to

make its laws effective. States may also assume

direct control of liquor distribution through state-

run outlets or funnel sales through the three-tier

system. We have previously recognized that the

three-tier system itself is “unquestionably

legitimate.” State policies are protected under the

Twenty-first Amendment when they treat liquor

produced out of state the same as its domestic

equivalent.

Granholm, 544 U.S. at 488-89 (emphasis added, citations

omitted). In other words, as long as the State does not

discriminate based on where the alcohol was produced, the

State may require all alcohol consumed in the State to

pass through the State’s regulatory system.

Virginia’s regulatory system is consistent with these

principles. If alcohol is imported from another State, it

must be imported by a Virginia-licensed wholesaler,

15

Virginia Code §4.1-310, or through a Virginia-licensed

direct shipper, Virginia Code § 4.1-112.1. If the alcohol

is produced in Virginia, it must be distributed by a

Virginia-licensed wholesaler, Virginia Code § 4.1-310, or

through a Virginia-licensed direct shipper, Virginia Code

§ 4.1-112.1. In order to sell alcohol, Virginia’s retailers,

bars, and restaurants must be licensed. Virginia Code

§ 4.1-302. If licensed to sell alcohol, the retailers, bars,

and restaurants must purchase the alcohol from a

Virginia-licensed wholesaler. Virginia Code § 4.1-326. If a

consumer wishes to purchase alcohol, he must do so from

one of Virginia’s ABC Stores or from a Virginia-licensed

direct shipper, retailer, restaurant, or bar. Virginia Code

§ 4.1-303. Thus, regardless of where it is produced, virtually

all alcohol consumed in Virginia must pass through

Virginia’s regulatory system.

There is an exception to this requirement that alcohol

pass through Virginia’s regulatory system. The Personal

Import Exception allows consumers to go to another State

and return with a small amount of alcohol.’ Thus, a

Virginian can visit California’s wine country and bring

back a few bottles of wine. Similarly, a Virginian who lives

on the Tennessee border can buy a six-pack of beer at the

convenience store across the state line and bring the beer

home. Like Virginia’s other alcohol regulations, the

Personal Import Exception does not distinguish between

alcohol produced in Virginia and alcohol produced

elsewhere. If alcohol is produced in Virginia, exported to

another State, and purchased by a Virginia resident who

* Only one gallon may be imported into Virginia. The Personal

Import Exception does not favor Virginia producers of alcohol.

16

wishes to bring the alcohol back to Virginia, the Personal

Import Exception applies.*

If a State requires all or virtually all alcohol consumed

in the State to pass through the State’s regulatory system,

then it is necessary to prohibit or severely restrict imports

by consumers. If consumers can import unlimited amounts

of alcohol, then the State’s regulatory system easily may

be circumvented and the State will lose effective control

over the transportation and distribution of alcohol within

its borders. In other words, the sovereignty conferred by

the Twenty-first Amendment will be diminished. Although

import restrictions designed to ensure the integrity of the

State’s regulatory system will inhibit interstate commerce,

that inhibition is constitutionally authorized.’ See U.S.

Const. amend. XXI, § 2. Indeed,

all “importation” involves shipments from another

state or nation. Every use of § 2 [of the Twenty-first

Amendment] could be called ‘discriminatory in the

sense that plaintiffs use that term, because every

statute limiting importation leaves intrastate

commerce unaffected. If that were the sort of

discrimination that lies outside state power, then

§ 2 would be a dead letter.

Bridenbaugh, 227 F.3d at 853 (emphasis original).

* Of course, if the Virginia citizen does not wish to import the wine

into Virginia, he may purchase as much wine as is allowed by the laws

of that State.

" A fundamental difference exists between a policy that has some

inhibiting effect on interstate commerce and one that discriminates or

“gases a cognizable burden on interstate commerce. For example, if a

State raises its sales tax or declares a temporary sales tax holiday, the

pelicy inhibits or promotes interstate commerce, Yet, no one would

seriously contend that these policies are unconstitutional.

17

2. Congress Has Authorized the States

to Require Virtually All Alcohol

Consumed in the State to Pass Through

the State’s Regulatory System.

Congress, in the exercise of its power to regulate

interstate commerce, may enact legislation that explicitly

authorizes the States to regulate interstate commerce.” See

Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 434 (1946).

See also 1 Laurence H. Tribe, AMERICAN CONSTITUTIONAL

LAW, 1242 (3d ed. 2000) (discussing the Court’s decisions

regarding congressional authorization of the States’

regulation of interstate commerce). Cf. United States v.

Sharpnack, 355 U.S. 286, 294 (1958) (upholding “a

deliberate continuing adoption by Congress [of laws] as

shall have been already put in effect by the respective

States”). Consequently, even if the Twenty-first

Amendment did not explicitly empower the States to

require that all or virtually all alcohol in the States pass

through the State’s regulatory system, Congress could

enact legislation that allowed the States to impose such a

requirement.

This is exactly what Congress has done. By enacting

the Wilson Act, 27 U.S.C. § 121, Congress authorized “the

States to regulate imported liquor on the same terms as

* Moreover, any finding of discrimination within the meaning

of Commerce Clause jurisprudence “assumes a comparison of

substantially similar entities.” General Motors Corp. v. Tracy, 519 U.S.

278, 279 (1997). Indeed, “in the absence of actual or prospective

competition between the supposedly favored and disfavored entities in a

single market there can be no local preference, whether by express

discrimination against interstate commerce or undue burden upon it, to

which the dormant Commerce Clause may apply.” Jd. at 300.

18

domestic liquor.” Granholm, 544 U.S. at 478. See also Scott

v. Donald, 165 U.S. 58, 100-01 (1897) (interpreting the

Wilson Act). However, the Wilson Act does not apply until

the alcoho! actually enters the State. Granholm, 544 U.S.

at 480-81. See also Leisy v. Hardin, 135 U.S. 100, 124-25

(1890) (States were prohibited from regulating the resale

of alcohol imported from outside the State so long as the

liquor stayed in its original package). Congress responded

to this “loophole” by enacting the Webb-Kenyon Act, 27

U.S.C. § 122, “to prevent the immunity characteristic of

interstate commerce from being used to permit the receipt

of liquor through such commerce in States contrary to

their laws, and thus in effect afford a means by subterfuge

and indirection to set such laws at naught.” Clark

Distilling Co. v. Western Maryland R. Co., 242 U.S. 311,

324 (1917). The Webb-Kenyon “Act’s language displaces

any negative Commerce Clause barrier to state regulation

of liquor sales to in-state consumers.” Granholm, 544 U.S.

at 497-98 (Thomas, J., joined by Rehnquist, C.J., Stevens,

& O’Connor, JJ., dissenting). Taken together, the Wilson

and Webb-Kenyon Acts authorize the States to regulate

alcohol as they see fit as long as the States do not

discriminate against alcohol produced out-of-state. In

other words, the Wilson and Webb-Kenyon Acts authorize

Virginia’s alcohol regulation system in general and the

Personal Import Exception in particular.

Because both the Twenty-first Amendment and

the combination of the Wilson and Webb-Kenyon Acts

empower the States to require all or virtually all alcohol to

pass through a State’s regulatory system, Virginia’s

regulatory system in general and the Personal Import

Exception in particular are constitutional.

19

B. When the State Acts as a Market

Participant, It Can Favor Products

Produced Within the State.

When a State purchases goods for its own use or for

resale to others, it may favor goods produced within its own

State. See White v. Massachusetts Council of Constr.

Employers, Inc., 460 U.S. 204, 214-15 (1983) (upholding city

ordinance which favored hiring city residents for construction

jobs); Reeves, Inc. v. Stake, 447 U.S. 429, 436 (1980) (upholding

state policy of selling government-produced goods only to

residents of the State); Hughes, 426 U.S. at 808-10

(upholding statute which made it easier for in-state

processors of junk vehicles to do business with the State).

For example, when Virginia opens a gift shop in a state

park or museum, or operates or stocks vending machines

at a highway rest area, it necessarily makes choices to sell

some products and not to sell others. In the same vein,

when a state university enters into an agreement to

market exclusively a particular soft drink on cainpus, the

other soft drinks are excluded from the campus

distribution system. It is common for a particular product

to be excluded by a particular retailer, even when that

retailer is the State. These practices are not regulation of

commerce, but simply the realities of retailing.

Consequently, when Virginia chooses to sell wine in direct

competition with more than 10,000 private sector retailers

and with wineries throughout the country licensed by

Virginia to ship directly to Virginia consumers, Virginia

may choose to stock only Virginia wine.

Nevertheless, the Petitioners insist there is an

exception for those situations when the State also acts as

regulator of the product that it is selling or purchasing.

The Petitioners’ novel theory has never been adopted by

20

this Court.’ Moreover, if this Court were to create a

regulatory exception, it should be limited to those

situations where the government is using its regulatory

power and market participant power to make itself the

exclusive retailer and to restrict consumer choice to in-

state products. In other words, if the regulatory exception

should be limited to instances where the State is the only

retail source of a product, it cannot exclude out-of-state

products. It should not apply to a situation where there

are more than 10,000 private sector competitors of the

State and where there are numerous wineries authorized

to ship directly to Virginia consumers.

Il. THERE IS NO CONFLICT AMONG THE

CIRCUITS.

There is no conflict among the Circuits regarding the

validity of requiring all or virtually all alcohol to pass

through the State’s regulatory system. Nor is there a

conflict among the Circuits concerning the validity of a

State choosing to sell only in-state wine when the State

engages in direct competition with more than 10,000

private sector retailers and those wineries throughout the

country that are licensed by Virginia to ship directly to

Virginia consumers. Indeed, other than the court below, it

does not appear that any other federal court has addressed

these issues.

* Although there are passages in some opinions which implicitly

recognize the possibility of the Petitioners’ theory, new constitutional

standards cannot be created by “dicta in a prior case in which the point

now at issue was not fully debated.” Central Virginia Cmty. Coll. v.

Katz, 126 S. Ct. 990, 996 (2006).

21

To be sure, in the absence of a conflict, this Court does

grant review if there are important questions concerning

the States’ sovereign choices. See California Democratic

Party v. Jones, 530 U.S. 567, 571 (2000) (participation

in party primary); U.S. Term Limits, Inc. v. Thornton,

514 U.S. 779, 786 (1995) (term limits for members of

Congress); Romer v. Evans, 517 U.S. 620, 625-26 (1996)

(ability of state and local governments to enact

non-discrimination provisions). See also Washington uv.

Washington State Republican Party, cert. granted, 127

S. Ct. 1373 (2007) (ability of political parties to repudiate

candidates claiming to represent the party); New York

State Bd. of Elections v. Torres, cert. granted, 127 S. Ct.

1325 (2007) (requirement that candidates be selected by

convention rather than by primary). Those cases involve

situations where the lower courts have invalidated a state

statute or constitutional provision and the State itself has

sought review by this Court. Since the determination of

the constitutionality of a legislative act is “the gravest and

most delicate duty that [the judiciary] is called upon to

perform,” Rostker v. Goldberg, 453 U.S. 57, 64 (1981), it is

appropriate for this Court to review any lower court

decision invalidating a state statute on federal

constitutional grounds. However, where, as here, the lower

court has upheld the state statute and the State is

opposing certiorari, there is no need for this Court to

review the matter absent a clear conflict among the lower

courts.

Ill. THIS PETITION IS A POOR VEHICLE FOR

RESOLVING THE QUESTIONS.

This Petition is a poor vehicle for resolving the

questions presented. Quite simply, there is no factual

22

record on the constitutionality of the Personal Import

Exception. While there is a record on the constitutionality

of the State Stores Provision, it is incomplete.

To explain, after the Fourth Circuit vacated the initial

judgment and remanded Bolick II, 330 F.3d at 277, the

district court permitted the Petitioners to amend their

complaint to challenge the Personal Import Exception.

However, there was no additional discovery. Instead,

the district court granted summary judgment to the

Petitioners.

With respect to the State Stores Provision, the district

court allowed the parties to develop a factual record

in 2001 and 2002 before Virginia amended its statutes so

that out-of-state wineries licensed by Virginia could ship

directly to consumers. Based on this record, the district

court declared the State Stores Provision unconstitutional.

While the case was on appeal to the Fourth Circuit,

the Virginia General Assembly enacted legislation that

enabled out-of-state wineries to ship directly to Virginia

consumers. Recognizing that this new legislation could

alter the analysis, the court of appeals vacated the

judgment and remanded for “reconsideration of plaintiffs’

challenges in light of the recent statutory enactments and

in light of Beskind.” Bolick II, 330 F.3d at 277 (citation

omitted).

Yet, on remand, there was no additional discovery or

development of the record concerning the impact of the new

legislation. Instead, the district court explicitly adopted its

previous reasoning and granted the Petitioners’ Motion for

Summary Judgment. Thus, there is nothing in the record

concerning the impact of Virginia’s decision to expand

further the wine market by licensing out-of-state wineries

to ship directly to Virginia consumers.

23

If this Court is going to determine whether a State

may require all or virtually all alcohol consumed in the

State to pass through the State’s regulatory system, then

it should do so in a case where there is a fully developed

record on the economic impact of the State’s regulatory

system. Similarly, if this Court is going to consider some

sort of regulatory exception to the States’ ability to favor

in-state interests when the States act as a market

participant, then it should do so in a case where there is a

fully developed record on the economic impact of the States’

regulation.

¢

CONCLUSION

For the reasons stated above, the Petition for a Writ of

Certiorari should be DENIED.

Respectfully submitted,

ROBERT F. MCDONNELL WILLIAM C. MIMS

Attorney General of Chief Deputy Attorney General

Virginia FRANCIS S. FERGUSON

WILLIAM E. THRO Deputy Attorney General

State Solicitor General C R. Conus

Counsel of Record MICHELLE WELCH

STEPHEN R. MCCULLOUGH Assistant Attorneys General

Deputy State Solicitor OFFICE OF THE ATTORNEY

General

GENERAL

900 East Main Street

Richmond, Virginia 23219

Telephone: (804) 786-2436

Facsimile: (804) 786-1991

Counsel for Esther H. Vassar,

Pamela O’Berry Evans, and

April 6, 2007 Susan R. Swecker