Petition for Writ of Certiorari — Austin, Nichols & Co. v. Georgia

Supreme Court brief2000

Ask Donna

What actually matters in this document.

Text

) PILED”

~ 00-498 SEP 28 2009)

ar a

In The E

Supreme Court of the United States

AUSTIN, NICHOLS & CO., INCORPORATED;

BACARDI IMPORTS, INC.; JIM BEAM BRANDS CO.;

BROWN-FORMAN CORPORATION; DAVID

SHERMAN CORPORATION; REMY AMERIQUE, INC.;

and SOUTHERN WINE & SPIRITS OF AMERICA,

INC., d/b/a Shaw Ross International Importers,

Petitioners,

STATE OF GEORGIA; ZELL MILLER, individually and

as Governor of the State of Georgia; MARCUS E.

COLLINS, individually and as Georgia State Revenue

Commissioner; and CLAUDE L. VICKERS, individually

and as Deputy Commissioner of the Administration

Division of the Department of Administrative Services

and as Director of the Fiscal Division of the

Department of Administrative Services and as State

Treasurer for the State of Georgia,

Respondents.

On Petition For Writ Of Certiorari

To The Supreme Court Of Georgia

PETITION FOR WRIT OF CERTIORARI

JoHN L. Taytor, Jr.

Counsel of Record

CeLeste McCoLLouGH

MatTHew L. Hess

Cuorey, TayLtor & Fei

A Professional Corporation

The Lenox Building, Suite 1700

3399 Peachtree Road, N.E.

Atlanta, Georgia 30326

Telephone: 404/841-3200

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED FOR REVIEW

1. ¢ Is Georgia’s “import” approach - establishing

double taxation for alcoholic beverages produced out-of-

state, not using “Georgia grown products,” and thereafter

“imported” into Georgia (see Ga. L. 1985 at p. 665, § 2,

codified at O.C.G.A. § 3-4-60 (sometimes the “1985 Stat-

ute”)) - immunized by the Twenty-First Amendment

against challenge under the Interstate Commerce Clause

(and the Equal Protection Clause) as determined by the

Georgia courts in this.case and in Heublein, Inc. v. State,

256 Ga. 578, 351 S.E.2d 190 (1987)?

¢ Or does the import approach violate the Interstate

Commerce Clause, notwithstanding the Twenty-First

Amendment, as determined by the Florida Supreme

Court in Ivey v. Bacardi Imports Co., 541 So.2d 1129 (Fla.

1989)? And does the requirement to use local agricultural

product violate both the Commerce and Equal Protection

Clauses, notwithstanding the Twenty-First Amendment,

as determined by the Florida Supreme Court in Division of

Alc. Bevs. & Tob. v. McKesson Corp., 524 So.2d 1000 (Fla.

1988) (subsequent history omitted)?

Subsidiary questions:

la. Typically, a test of congruence is applied: The State

proffers a purpose to justify legislation challenged under

the Commerce Clause and the reviewing court tests the

proffered purpose against the effects of the challenged

legislation.-At bottom, this remains an “effect” challenge:

Discriminatory effect vitiates the legislation even if the

QUESTIONS PRESENTED FOR REVIEW - Continued

proffered purpose is genuine. This “effect” test of congru-

ence may be preferred, as a prudential matter, when

adjudicating a discrimination challenge, but is a direct

challenge to discriminatory “purpose” also generally

authorized under the Commerce Clause by the language

of Bacchus Imports v. Dias, 468 U.S. 263 (1984), and other

cases? If generally authorized, is a direct challenge to

discriminatory purpose nonetheless foreclosed when the

proffered purpose is a declared purpose stated in the

legislation itself? May legislative history - events and

statements contemporaneous with and part of the legisla-

tive consideration and enactment of the statute — be used,

not to interpret the meaning of the statute, but to chal-

lenge the statute as animated by discriminatory purpose,

notwithstanding any guise or subterfuge to the contrary?

lb. Ifa direct challenge to discriminatory purpose is not

generally authorized under the Commerce Clause, is

there an exception when the challenged legislation has,

with legislative findings, sought to pre-determine the

“effect” as well? Apart from their relation to the availabil-

ity of a purpose challenge, do such legislative findings

foreclose an “effect” challenge? What level of scrutiny, or

deference, should be applied to such legislative findings

in a discrimination challenge under the Interstate Com-

merce Clause? What level should be applied in nexus,

multiple taxation, and tax-to-cost relation challenges

under the Interstate Commerce Clause and the Due Pro-

cess Clause of the Fourteenth Amendment?

QUESTIONS PRESENTED FOR REVIEW - Continued

lc. When the State defends with an assertion of Twenty-

First Amendment immunity, does this assertion change

the tests and level of scrutiny generally applicable to

discrimination (as well as nexus, multiple taxation, and

tax-to-cost relation) challenges under the Interstate Com-

merce Clause and the Due Process Clause of the Four-

teenth Amendment under the circumstances outlined

above? More particularly, should the courts follow the

approach represented, by way of example, by the

e the Fifth Circuit’s decision in Cooper v. McBeath, 11

F.3d 547 (Sth Cir.), cert. denied, 512 U.S. 1205 (1994),

e the D.C. Circuit’s decision in Milton S. Kronheim &

Co. v. District of Colombia, 91 F.3d 193 (D.C. Cir. 1996), cert.

denied, 520 U.S. 1186 (1997), whose approach was gener-

ally followed in this case, or

e the Seventh Circuit’s decision in Bridenbaugh v.

Freeman-Wilson, Nos. 00-1044 & 00-1046, 2000 U.S. _

LEXIS 22991 (7th Cir. Sept. 13, 2000)?

2. ¢ Does the Twenty-First Amendment provide any

immunity for a violation of the Foreign Commerce Clause

as determined by the Georgia courts in this case?

¢ Or is such immunity unavailing as generally

determined by General Agreement on Trade and Tariffs

(GATT) Panel on United States - Measures Affecting

Alcoholic and Malt Beverages in March 1992?

QUESTIONS PRESENTED FOR REVIEW - Continued

Subsidiary questions:

2a. When the challenge is based on the Foreign Com-

merce Clause, does this change the tests and level of

scrutiny that would otherwise generally apply under the

circumstances outlined above?

2b. If the Twenty-First Amendment does provide any

level of immunity for a violation of the Foreign Com-

merce Clause, does the assertion of this immunity change

the tests and level of scrutiny generally applicable under

the circumstances outlined above?

CORPORATE DISCLOSURE STATEMENT

Austin, Nichols & Co., Inc. is a privately held corpo-

ration, which is 100% owned by the French corporation,

Pernod Ricard S.A., which is publicly traded on the

Bourse.

Bacardi-Martini U.S.A., Inc. is 100% owned by

Bacardi Limited, a Bermudian privately held corporation.

Jim Beam Brands Co. is 100% owned by Jim Beam

Brands Worldwide, Inc., which is 100% owned by Fortune

Brands, Inc., a publicly traded Delaware corporation.

Brown-Forman Corporation has no parent or publicly

held company owning 10% or more of the corporation’s

stock.

David Sherman Corporation has no parent or pub-

licly held company owning 10% or more of the corpora-

tion’s stock.

Remy Amerique, Inc. is a privately held corporation,

which is 100% owned by the French corporation, Coin-

treau S.A., which is 100% owned by Remy-Cointreau,

S.A., a French publicly traded company.

Southern Wine & Spirits of America, Inc. has no

parent or publicly held company owning 10% or more of

the corporation’s stock.

TABLE OF CONTENTS

Page

OPTIONS ANID ORGS . ccc cccccniscccsesevsees 1

SE SUE 6 sss bSAn dpb oesna¢oseacssadeendeubion 1

g 8.) 8 ty |) nner ereer a 1

STATEMENT OF THE PU ewarcssavctusdseeatinabe 2

A. Georgia’s 1985 Statute Was Enacted, Using the

Guise of a So-Called “Import” Approach, in Cir-

cumvention of Bacchus Imports, Ltd. v. Dias, 468

U.S. 263 (1984), to Continue the Discriminatory

and Protectionist Double Taxation that Has Been

Ae FERCS TRICO TS TIT oan se ccca cea secesans

Since 1985, Georgia Has Consistently Avoided

Application of Federal Law....................

In the First Challenge to the “Import”

Approach, the Georgia Supreme Court Con-

strued Plaintiff Heublein’s Challenge as an

“Unchallenge” and Summarily Rejected the

PION 6. ces vei wun wn cine cas veeSbeusuwses

Faced with Incontestable Discrimination in

the Legislative History of the 1985 Statute,

the Georgia Supreme Court Held the Pre-1985

Statute Unconstitutional, but Made its Hold-

eg he Pere ere ee

Despite this Court’s Reversal of Prospectivity

in Beam, the Georgia Supreme Court Relied

upon the Reich “Bait and Switch” to Avoid

Se SMO 6 eed cea bake Seaien eer elel

Vii

TABLE OF CONTENTS - Continued

Page

4. The Florida Supreme Court, in Ivey, Refused

to Follow the Georgia Supreme Court’s

Heublein Decision and Held the “Import”

Ruse to Be Unconstitutional................ 9

5. The GATT Panel on United States — Measures

Affecting Alcoholic and Malt Beverages Held.

Georgia’s 1985 Statute to be a Violation of the

RN eS RON 0a £05 PESTS Be oUt ee se kkk 11

C. The Present Case: The Twenty-First Amendment

Was Upheld as an Immunity to All Claims .... 12

ARGUMENT AND CITATION OF AUTHORITY.... 15

A. Now that Other States Have Brought Themselves

into Compliance with Bacchus, only this Court

Can Protect Their Commerce from Georgia’s

Willful Hold-Out Discrimination............... 15

B. The Conflict between Georgia and Florida over

the “Import” Approach Centers on the Nature of

a Challenge to Discriminatory Purpose under the

St Sa Sete Re tne ey onan ae 17

C. The Conflict also Points up a Split among the

- Circuits over How to Weigh Purpose when

Deciding Twenty-First Amendment Immunity .. 20

D. This Case also Presents the Important Question

Whether the Twenty-First Amendment Affords

Immunity to the States for their Violations of the

Foreign Commerce Clause..................... 24

Se cate pe ag EE OE DoE RE 25

Vili

TABLE OF AUTHORITIES

Page

Unitep States CONSTITUTION

U.S. Const. amend. XIV, § 1.......... sep ere re te 1, 14

CE. SAE SINE. Es bss on ios whew civ ecieets passim

Sk ee ee Oe ee eer reeeerrr ree i, 13, 3

tk Ge Ye eS 8 ee errr rere ree 1, 13

Ss is I nd ribs vn saa tensci ete ssvaceeeusscans 1

STATUTES AND INTERNATIONAL AGREEMENT

DD Ui Br is hore e hs oo hk ea 1

a A i ree as 15

Ga. L. 1985 at p. 665, codified at O.C.G.A. § 3-4-60. .passim

Gon. L. TORR OR We BI ie on oie noes cnns cick en sieieees 13

General Ageement on Trade and Tariffs eueae- —

DECISIONS OF THE

Unrtep STATES SUPREME COURT

324 Liquor Corp. v. Duffy, 479 U.S. 335 (1987)........ 21

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

Bayside Fish Flower Co. v. Gentry, 297 U.S. 422

CROUI is «we eRR Ks Wns CEMA ih Se Sie Ia 19

Brown-Forman Distillers Corp. v. New York State

Liguor Auth., 476 U.S. 573 (1986)...........+... 6, 2

California Ret. Lig. Deals Ass’n v. Midcal Alum., Inc.,

a US. 97 (19S) ... 2.225. Pa Ve Kntasndnkasbae ees 14, 21

he 2 pokeatiae) na.

TABLE OF AUTHORITIES - Continued

Page

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

PER AN rs SANGRA baa Can Kanrneadee dace od Cceee 14, 21

Celotex Corp. v. Catrett, 477 U.S. 317 (1986).......... 14

Complete Auto Transit, Inc. v. Brady, 430 U.S. 274

Cecile, CAAA ETO EO Ae aa 20

Container Corp. v. Franchise Tax Bd., 463 U.S. 159

i TPR eP er ee ee ye AWiededapebivarese fuse eis des 25

Crosby v. National Foreign Trade Counsel, 503 U.S. -,

Se EE hes 6 op ce bck ca nok ov ces 7

Foster-Fountain Packing Co. v. Haydel, 278 US. 1

RE ERs TE ean eA Re en 19

Freeman v. Hewitt, 329 U.S. 249 (1946)............... 20

Healy v. Beer Inst., Inc., 491 U.S. 324 (1989).......... 15

Hunt v. Washington State Apple Advertising

Comme; G52 1.5: S53 (Y977).i ice cc ccc vsccescccs 18

James B. Beam Distilling Co. v. Georgia, 501 U.S. 529

GN 6 bois £6 00 bs 5 2a Oi dav acts uive vtbis Cech 2,9

James B. Beam Distilling Co. v. Georgia, 513 U.S.

MNS oo toe FAC ARERd odo Saw du da6e ooo chdksixe 9

Japan Line, Ltd. v. County of Los Angeles, 441 U.S.

cle he: ER EEPES REE & go SaDt RR abe LRM Si erly ae a 24

Minnesota v. Clover Leaf Creamery, Co., 449 U.S. 456

PMEE Rak oivadsbnsiatereivaeedss ae eee eAeANS mise 20

North Dakota v. United States, 495 U.S. 423 (1990) ....22

Postal Tel.-Cable Co. v. Borough of Taylor, 192 U.S. 64

NG ihc hd Anes wen h WAN UES wkd 0: dk ae 4% o dé 0's 19

TABLE OF AUTHORITIES - Continued

Page

Postal Tel.-Cable Co. v. City of Richmond, 249 U.S.

Mn MEOOUE cocker ect cusnncnacccecnnekcssesbesestuns 19

Retcn @ Camis, SIS US. BGG CIGPED oa ccccccccscvesscs 9

South-Central Timber Dev., Inc. v. Wunnicke, 467

Da GE GUE 8 wc Sa ciic cadivntsnnnebenduduneens 18, 24

State Board of Equalization v. Young's Market Co.,

Be Sa OP CEPR hak ctcdnsanvarensasecesenantas 2, 3

Washington v. United States, 460 U.S. 536 (1983)...... 19

West Lynn Creamery, Inc. v. Healy, 512 U.S. 186

Serer ee rrrry rece re rt rrr eT 16

OTHER DECISIONS

Age Int'l. Inc. v. Miller, 830 F. Supp. 1484 (N.D. Ga.

POU c cs cet ewdtartecevesshedsianshoeteteesetees 12, 15

Bridenbaugh v. Freeman-Wilson,. Nos. 00-1044 &

00-1046, 2000 U.S. App. LEXIS 22991 (7th Cir.

BOOS. ED, BROEs c cc tccccdsvetcsnsencncedheesass 23, 24

Cooper v. McBeath. 11 F.3d 547 (5th Cir. 1994)... 14, 20, 21

Dickerson v. Bailey, 87 F. Supp. 2d 691 (S.D. Tex.

BOOED: voc nehvesadeceesncseeednsdvteseaseeewet cases 14

Division of Alc. Bevs. & Tob. v. McKesson Corp., 524

BO. BE WORD CFG. TUDE ov ccc cen sescanncrecwawsst 6, 21

GATT Panel on U.S. - Measures Affecting Alcoholic

and Malt Beverages (Mar. 16, 1992) ..... 11, 12, 23, 24

Heublein, Inc. v. State, 256 Ga. 578, 351 S.E.2d 190

SENT 6GNAD4 4:0 E EAL aO ARES EE PUA D OR EASA CEE EE ES passim

Heublein, Inc. v. Department of Alc. Bev. Cont., 237

Woh Sik, SPO: Me FE CROUOW sv ecdccsancdccnsesee’ 21

TABLE OF AUTHORITIES - Continued

Page

Ivey v. Bacardi Imports Co., 541 So. 2d 1129 (Fla.

NTA 64606 bbebanacnnentonaunend aklenebnnct passim

Indiana Wholesale Wine & Liquor Co. v. State, 662

N.E.2d 950 (Ind. App. 1996) ................... 14, 21

James B. Beam Distilling Co. v. State, 259 Ga. 363,

ee EE WE CUED 8 00 045 Vewkeaneenuraselaneees 8

James B. Beam Distilling Co. v. State, 263 Ga. 609,

Sr Oe FO SPU bok enc cncnvinassoackcousseeann 9

Kendall-Jackson Win., Ltd. v. Branson, 82 F. Supp. 2d

Se GPCEA TE FUND a ved cickcisccencaisceuchweaaas 21

Lau’s Corp. v. Haskins, 621 Ga. 491, 405 S.E.2d 474

i) Ee ey ee Nene 14

Loretto Winery, Ltd. v. Gazara, 601 F. Supp. 850

GREG Bs BOE nv vv su auienecnveawntes hexxegsenke 6, 21

Milton S. Kronheim & Co. v. District of Columbia, 91

en Woe GE. CR, DOU ios oven cv bec incaescad 22, 23

Pete's Brewing Co. v. Whitehead, 19 F. Supp. 2d 1004

SOGR. GN BEUK Cu ktbocndeacedn dc ceased punemen 14, 21

Reich v. Collins, 262 Ga. 625, 422 S.E.2d 846 (1992) ..... 9

Rice v. Alcoholic Bev. Cont. Apps. Bd., 21 Cal.3d 431,

ee re rrT en Pree 14, 21

OPINIONS AND ORDERS

The Superior Court of Fulton County, State of Geor-

gia, filed a Final Order in this matter, Civil Action File

Nos. E-3793 & E-25073, on May 21, 1998. The Georgia

Supreme Court passed a minute order in Case No.

S00A1357 on June 30, 2000 dismissing the appeal.

JURISDICTION

The Georgia Supreme Court’s minute order was

passed on June 30, 2000. Jurisdiction is conferred upon

this Court under 28 U.S.C. § 1257.

PROVISIONS INVOLVED

This action is a challenge to Georgia’s double taxa-

tion for alcoholic beverages produced out-of-state, not

using “Georgia grown products,” enacted at Ga. L. 1985

at p. 665, § 2, codified at O.C.G.A. § 3-4-60 (sometimes the

“1985 Statute”). The action is based on, among other

provisions, the Interstate and Foreign Commerce Clause,

U.S. Const. art. I, § 8, cl. 3; the Due Process Clause of the

Fourteenth Amendment, U.S. Const. amend. XIV, § 1; the

Equal Protection Clause of the Fourteenth Amendment,

U.S. Const. amend. XIV, § 1; the Import Export Clause,

U.S. Const. art. I, § 10; and the Supremacy Clause, U.S.

Const. art. VI, which are set out in the Appendix, and

also involves the Twenty-First Amendment, U.S. Const.

amend. XXI, and the General Agreement on Trade and

Tariffs (GATT).

STATEMENT OF THE CASE

A. Georgia’s 1985 Statute Was Enacted, Using the

Guise of a So-Called “Import” Approach, in

Circumvention of Bacchus Imports, Ltd. v. Dias,

468 U.S. 263 (1984), to Continue the Discrimina-

tory and Protectionist Double Taxation that Has

Been in Place Since the 1930s.

The double-taxing 1985 Statute was enacted in spring

of 1985. Georgia had imposed discriminatory double tax-

ation (under what is sometimes called the Pre-1985 Stat-

ute) for decades. The double taxation of the 1985 Statute

is a mere continuation of the double taxation of the

Pre-1985 Statute. The Pre-1985 Statute was struck down

as a violation of the Commerce Clause. See James B. Beam

Distilling Co. v. Georgia, 501 U.S. 529 (1991). The present

lawsuit is an effort, the second such effort, to do the same

for the 1985 Statute.

The crisis for Georgia’s discriminatory taxation

scheme began in 1984. Until 1984, a minority of States

(Hawaii, Georgia, and Florida among them), relying upon

State Board of Equalization v. Young’s Market Co., 299 U.S.

59 (1936), and progeny, favored alcoholic beverages pro-

duced within their borders by imposing lighter taxation

on those beverages while imposing heavier taxation on

alcoholic beverages produced in the other States. In 1984,

in Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984), this

Court struck down Hawaii's preferential taxation for in-

state alcoholic beverages as discriminatory against out-

of-state beverages and as simple economic protectionism,

all in violation of the Interstate Commerce Clause. The

Court did so expressly notwithstanding its earlier Young’s

Market decision and progeny.! With the advent of Bacchus,

the remaining discriminatory taxation against out-of-state

beverages in a minority of jurisdictions fell State by State

through repeal, attorney general opinion, or court deci-

sion — with the exception of at least two States: Georgia

and Florida.

In some of these jurisdictions, the State officials took

bold action by declining to apply and implement their

own State tax statutes in a discriminatory fashion, even in

advance of corrective action by the State legislature.2

Georgia officials were not so bold, but they did monitor

what was happening in the other affected States in order

to consider their options for correcting Georgia’s discrim-

ination against out-of-state alcohol products. By early

September of 1984, Georgia officials had concluded that

the Georgia tax scheme (with its so-called “preferential

tax,” preferring in-state product and suppliers over out-

1 See Bacchus, 468 U.S. at 274 & n.13 (“Despite broad

language in some of the opinions of this Court written shortly

after ratification of the Amendment... ,” citing Young’s Market).

? The legislative discussion in the Georgia House, at the

time of the enactment of the 1985 Statute, likewise took note of

these developments: “The State of Tennessee, in view of the

Bacchus decision, has already reversed itself. The State of

Virginia has reversed itself. The State of Florida has reversed

itself, and they’ve gone into, they’ve got a court litigation going

on in this case down there now.” All references to evidence are

supported and explained in the Appendix.

of-state product and suppliers) was unconstitutional. Fur-

ther, Georgia officials (of the Georgia Revenue Depart-

ment, after consulting with the Georgia Law Department)

concluded that the unconstitutionality should be cor-

rected by equalizing the tax. The tax on in-state liquor

and wine would be brought up to and equalized at the

level of taxation already imposed upon out-of-state liquor

and wine. The Revenue Department proposed an equaliz-

ation bill that would, in the words of the Department’s

Director of the Alcohol & Tobacco Tax Unit, correct the

illegal pre-1985 “preferential tax treatment for in state

distillers and vint[nJers,” now clearly unconstitutional in

light of “the U. S. Supreme Court Decision in the State of

Hawaii case.”

In-state distillers and vintners, and their lobbyist

lawyers, fiercely resisted equalization. To protect the

competitive advantage afforded them by the preferential

tax, the in-state lobby devised a guise by which they

hoped to continue the same double taxation under

another name. Their subterfuge became known as the

import approach. Under the import approach, the historic

first half of the tax would be applied, as before, to all

alcohol products regardless of origin. The historic second

half of the tax would be renamed an import tax and

applied to all alcohol products “imported” into Georgia.

Since the in-state products, by definition, could not be

“imported” into Georgia, these products would never

become subject to the second tax. Since all out-of-state

products must cross over a Georgia border, all out-of-

state products would be subject to the second tax. The net

effect of the import approach would be that the same

discriminatory and protectionist double taxation of the

Pre-1985 Statute would go on in precisely the same man-

ner — but under a new “import” name.

A critical question in the ensuing legislative struggle:

Could the tax break be maintained by renaming the sec-

ond half of the tax and calling it an import tax: “Is it

further true that the import tax, the new tax added, is just

a new tax not called an excise tax, but,an import tax, to

maintain that base of income that we presently have from

the alcohol?” A proponent of the import approach charac-

terized the bill as an effort, using “verbiage,” to “shore

up” “the existing law that has been in effect in this state

since 1937.” Another legislator, more honest, decried the

bill as “a PHONEY new import tax called a different

name.” The in-state lobby recruited George D. Busbee to

the effort, former Governor and, by this time, in private

practice at the Atlanta firm of King & Spalding. He urged

that, without economic protectionism, Georgia “would

[be] put . . . at a competitive disadvantage with the 19

states now providing similar incentives.” Proponents of

equalization easily rebutted that contention - if all States

complied, there would be no competitive disadvantage

for any one of them - and urged compliance with this

Court’s Bacchus decision: “I think that all states is going

to come down to have an equal tax rate so that they can

comply with the commerce clause that is deemed by the

Supreme Court of this land.” Mr. Busbee would have

nothing of it: “[DJ]o not let U.S. Supreme Court change

State public policy.”

° John Linder, now U.S. Representative. (All emphasis

herein is supplied unless otherwise indicated.)

Proponents of the import approach won the day with

yet more economic protectionism. They built into their

bill a second protection requiring that producers use

“Georgia grown products” to qualify for the tax break

(while imposing double taxation on all those producers,

and their goods, who use agricultural products of out-of-

state origin). See Ga. L. 1985 at p. 665, § 2, codified at

O.C.G.A. § 3-4-60(3). With this second protection,* propo-

nents of the import approach could appeal to rural legis-

lators: “[T]he measure that I’m now bringing before

you... will give the favorable tax preference to the agri-

cultural products of this state.” At the end of the legisla-

tive proceedings that gave rise to the 1985 Statute, there

was this striking admission:

What I’m telling you is that there is a piece of

legislation in the Governor’s office that provides

the tax benefits to our own people and our own

agricultural products, both with respect to alcohol

tax on distilled spirits and on domestically produced

wine.

4 Such a requirement has been held to constitute an

independent violation of the Commerce Clause. See Loretto

Winery, Ltd. v. Gazara, 601 F. Supp. 850, 858-59 (S.D.N.Y.),

modified on other grounds, 761 F.2d 140 (2d Cir. 1985); see also, e.g.,

Bacchus, 468 U.S. at 268-73; Division of Alc. Bevs. & Tob. v.

McKesson Corp., 524 So. 2d 1000, 1006-09 (Fla. 1988) (subsequent

history omitted) (similar content requirement under Florida law

held to violate both Commerce and Equal Protection Clauses).

B. Since 1985, Georgia Has Consistently Avoided

Application of Federal Law.

1. In the First Challenge to the “Import”

Approach, the Georgia Supreme Court Con-

strued Plaintiff Heublein’s Challenge as an

-“Unchallenge” and Summarily Rejected the

Appeal.

The first challenge to the import approach came in

Heublein, Inc. v. State, 256 Ga. 578, 351 S.E.2d 190, appeal

dismissed, 483 U.S. 1013 (1987). Without benefit of discov-

ery, Heublein was a facial challenge. Counsel for the plain-

tiff, in oral argument before the trial court, concentrated

the challenge on discriminatory effect,5 stating in a rhe-

torical flourish that “ ‘we are not sitting here and chal-

lenging what the state says their purpose was in adopting

this legislation. This is not a factual case. What we are

saying is whatever you feel your reason was, it doesn’t

fly in light of the Commerce Clause.’ ” See Heublein, 256

Ga. 578, 351 S.E.2d at 195-96. The Georgia Supreme Court

seized upon this statement in the trial court transcript

and ruled, summarily rejecting the appeal, that the plain-

tiff had left purpose “unchallenged.” Id. 351 S.E.2d at 196.

° Counsel presumably sought to avoid complications in

challenging legislative “intent” and lacked the evidentiary basis

to do so in any event. He no doubt also wanted to avoid the

expense of developing legislative history. See Crosby v. National

Foreign Trade Council, 530 U.S. -, 120 S. Ct. 2288, 2304 (2000)

(Scalia, J., concurring). A facial challenge based upon

discriminatory effect is, moreover, a time-honored tradition,

often encouraged by the cases so as to avoid the

embarrassments of a direct challenge to purpose. See infra.

2. Faced with Incontestable Discrimination in the

Legislative History of the 1985 Statute, the

Georgia Supreme Court Held the Pre-1985 Stat-

ute Unconstitutional, but Made its Holding Pro-

spective Only.

The next challenge was to the Pre-1985 Statute. Lim-

ited discovery turned up evidence surrounding the enact-

ment of the 1985 Statute, the statute under challenge here,

so compelling that the trial court struck down the prede-

cessor statute:

This Court further holds that the purpose of

O.C.G.A. § 3-4-60, as it existed during the years

in question, was economic protectionism, i.e., to

benefit local business and local industry. This

purpose is indicated by the legislative history

.... The protectionist purpose of the statute is

further indicated by the exhibits “A-3” through

“A-13” produced by the plaintiff in opposition

to the defendants’ Motion for Summary Judg-

ment and produced to plaintiffs by the defen-

dants pursuant to this Court’s Order of

December 3, 1987{ ].

The Georgia Supreme Court affirmed “that the purpose

and effect of the statute was economic protectionism,”

James B. Beam Distilling Co. v. State, 259 Ga. 363, 382 S.E.2d

95, 96 (1989), but avoided application of Federal law by

making the ruling prospective only. Even without its

skirting prospectivity ruling, this Beam decision would

not have brought Georgia into compliance with Federal

law: The Pre-1985 Statute no longer existed, and its suc-

cessor in double taxation, the 1985 Statute, had already

been upheld in Heublein, ironically for the reason that

“purpose” was “unchallenged.”

3. Despite this Court’s Reversal of Prospec-

tivity in Beam, the Georgia Supreme Court

Relied upon the Reich “Bait and Switch” to

Avoid Federal Law.

This Court reversed prospectivity. James B. Beam Dis-

tilling, 501 U.S. 529 (1991). After remand, the Georgia

Supreme Court, anticipating and discussing the Beam

case, established new procedural bars in the notorious

Federal pensioners’ case, Reich v. Collins, 262 Ga. 625, 422

S.E.2d 846 (1992), which were then applied in the Beam

case to avoid, once again, the application of Federal law.

See James B. Beam Distilling Co. v. State, 263 Ga. 609, 437

S.E.2d 782 (1993). This Court, reversing in Reich, branded

the Georgia Supreme Court’s newly created procedural

bars a “ ‘bait and switch,’ “Reich v. Collins, 513 U.S.106,

111 (1994) (tendential quotation marks in original), but it

was too late for the Beam case. See James B. Beam Distilling

Co. v. Georgia, 513 U.S. 1056 (1994) (denying cert.)

4. The Florida Supreme Court, in Ivey,

Refused to Follow the Georgia Supreme

Court’s Heublein Decision and Held the

“Import” Ruse to Be Unconstitutional.

Florida, like Georgia, had resisted Bacchus. When the

Georgia Supreme Court rejected the Heublein challenge to

the new import approach, the Florida legislature followed

suit and enacted an import approach statute of its own,

specifically “modeled after Georgia’s import tax on alco-

holic beverages.” Ivey v. Bacardi Imports Co., 541 So. 2d

1129, 1137 & n.5 (Fla. 1989). The Florida Supreme Court

~—

declined to follow the Georgia Supreme Court’s Heublein

decision, however: .

The tax scheme at issue was modeled after

Georgia’s import tax on alcoholic beverages

which was recently upheld by the Georgia

Supreme Court in Heublein, Inc. v. State, 256 Ga.

578, 351 S.E.2d 190 appeal dismissed, 483 U.S.

1013, 107 S. Ct. 3253, 97 L. Ed. 2d 753 (1987). In

Heublein, the court employed the balancing

approach set forth in Bacchus to uphold a dis-

criminatory import tax on distilled spirits and

wines, because “the unchallenged purpose of

the import tax implicate[d] central concerns of

the Twenty-first Amendment, i.e., defraying the

increased costs of regulating the importation

into this state of intoxicating liquors.” The

import tax which was upheld in Heublein was

based on legislative findings similar to those set

forth in section 9. However, unlike the plaintiffs

in the instant case, the plaintiffs in Heublein did

not challenge the Georgia general assembly’s

stated purpose for the import tax. They simply

conceded the existence of the Twenty-first

amendment concerns and argued that whatever

the underlying purpose, ” ‘it doesn’t fly in light

of the Commerce Clause.’ ”

Id. at 1137 (citation and footnotes omitted). The Florida

Supreme Court, squarely presented with the challenge

that was said not to have been made in Heublein, went on

to consider the merits of the challenge and rejected the

import approach as “unconstitutional.” Id. at 1137-40.

Georgia now stands alone in its reliance upon the import

approach to justify differential taxation on in-state and

out-of-state alcoholic beverages.

5. The GATT Panel on United States - Mea-

sures Affecting Alcoholic and Malt Bever-

ages Held Georgia’s 1985 Statute to be a

Violation of the GATT.

At the same time, perhaps spurred on by the Bacchus

decision’s upholding of the principle of nondiscrimina-

tion in interstate commerce, even as applied to alcoholic

beverages, Canada moved to uphold this principle in

international commerce and challenged, under the Gen-

eral Agreement on Trade and Tariffs (GATT), numerous

discriminatory and protectionist provisions enacted by

United States political subdivisions, including the very

Georgia statute under challenge here. The resulting deci-

sion of the GATT Panel on United States — Measures

Affecting Alcoholic and Malt Beverages (Mar. 16, 1992),

which only dealt with measures affecting wine and malt

beverages, specifically condemned the Georgia statute’s

double taxation, as it applies to out-of-state wine, as a

violation of the GATT.®

5.20 The Panel next examined the claim by Canada

that the lower excise tax rate or the tax exemption

provided by the states of Alabama, Georgia, Iowa,

Nebraska and New Mexico to wine based upon the

in-state or domestic origin of the product was

contrary to Articles III:1 and III:2. The Panel recalled

the United States arguments that the lower excise tax

rates and tax exemptions in the states of Alabama,

Georgia, Nebraska and New Mexico were allowable

as subsidies under Article III:8(b), and that the state

of Iowa applied the same tax rate to wine from all

sources sold at wholesale. For the same reasons as

those enunciated with respect to the federal excise tax

C. The Present Case: The Twenty-First Amend-

ment Was Upheld as an Immunity to All

Claims.

Chastened by the 1991 loss on prospectivity in Beam

(but before the ultimately successful “bait and switch” in

1994), Georgia again contemplated equalization. What

emerged from the 1992 Georgia legislative session, how-

ever, was procedural manipulation - a newly shortened

90-day statute of limitations, a denial of interest, a useless

credit, among other things. See Age Int'l, Inc. v. Miller, 830

F. Supp. 1484, 1489 (N.D. Ga. 1993), aff'd, 37 F.3d 637 (11th

on beer, the Panel found that the application of

differential state excise tax rates in the states of Alabama,

‘Georgia, lowa, Nebraska and New Mexico based

upon the origin of the wine, which discriminates

against imported wine in favour of the domestic like

product, is inconsistent with Article III:2, first

sentence. Also, for the same reasons enunciated

earlier, the Panel found that the state tax measures in

issue are not allowable as subsidies under Article

III:8(b).

GATT Panel Decision { 5.20 (emphasis in part omitted). The

Panel concluded that

(e) the provision by the states of Alabama, Georgia,

Nebraska and New Mexico of lower excise tax rates

on wine based upon its in-state or domestic origin,

which lower rates are not available to imported wine,

is inconsistent with Article III:2, first sentence, and is

not covered by Article III:8(b).

Id. J 6.1(e). After initially defending Georgia’s discriminatory

practices before the Panel, once the adverse decision was

rendered, the United States, through its Ambassador Rufus

Yerxa, decided not to oppose formal adoption of the Panel’s

report.

Cir. 1994). The new 90-day limitations period prompted

the instant lawsuit. Petitioners filed their administrative

applications with the Georgia Revenue Department, as

prescribed by statute, and when “the Department took no

action on the applications” (as Respondents later admit-

ted and as U.S. District Court found, see id. at 1496-97),

Petitioners filed their “suit” on the 88th day - barely

“within 90 days after the effective date” as the 1992

procedural limitations had commanded, on pain of losing

the claims altogether.”

Acutely aware of the Heublein whipsaw, Petitioners

launched a much expanded challenge - facial and

applied, potential and actual - to the 1985 Statute, assert-

ing every available Interstate Commerce Clause claim,

attacking both discriminatory purpose and/or effect and

making nexus, multiple taxation, and tax-to-cost relation

claims as well. Petitioners brought additional claims

under the Foreign Commerce Clause, the Import Export

7 (d) With regard to taxes paid and stamps

purchased prior to the effective date of this Act and

with regard to which an application for credit or

claim for refund has been filed prior to the effective

date of this Act, the law which was in effect at the

time the application for credit or claim for refund was

filed shall apply, provided that no interest shall be

allowed on any such payments, and provided,

further, that if a suit for refund or credit has not been filed

prior to the effective date of this Act with regard to any

such application or claim, any suit for recovery of a

credit pertaining to such a claim or application must

be filed within 90 days after the effective date of this

Act.

See Ga. L. 1992, p. 1458, § 5(d).

Clause, the Due Process Clause, and the Equal Protection

Clause, among others. Opposing motion for summary

judgment,® Petitioners exhaustively supported all of these

claims with extensive evidentiary materials and legal

analysis. The trial court solicited proposed orders on

floppy, and with almost no modification, Respondents’

floppy became Fulton Superior Court’s Final Order. Skip-

ping over Petitioners’ extensive showing (in disregard of

the teachings of this Court and others’), the Final Order

§ Under a State law regime indistinguishable from Celotex

Corp. v. Catrett, 477 U.S. 317 (1986). Compare Lau’s Corp. v.

Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991).

9 Numerous decisions confirm that a court must “turn first

before assessing the impact of the Twenty-first Amendment to

consider whether the [state] statute does in fact conflict with

federal law.” Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 698

(1984); accord California Ret. Liq. Deals. Ass'n v. Midcal Alum.,

Inc., 445 U.S. 97 (1980); Bacchus, 468 U.S. 263; Cooper v. McBeath,

11 F.3d 547, 552-54 (Sth Cir.) (first conducting a “traditional

Commerce Clause” analysis), cert. denied, 512 U.S. 1205 (1994);

Dickerson v. Bailey, 87 F. Supp. 2d 691, 707 (S.D. Tex. 2000) (“In

applying the two-tier balancing test to challenged liquor

statutes to determine whether they discriminate against out-of-

state interests and, if so, whether they are ‘saved’ by the twenty-

first amendment”); Rice v. Alcoholic Bev. Cont. Apps. Bd., 21 Cal.

3d 431, 439, 579 P.2d 476, 482 (1978) (“Our first inquiry”);

Indiana Wholesale Wine & Liquor Co. v. State, 662 N.E.2d 950, 964

(Ind. App. 1996) (“If the operation of the Twenty-first

Amendment is to ‘save’ state regulation otherwise invalid

under the ‘negative’ Commerce Clause, one must a fortiori

conclude that the state regulation is constitutionally infirm

before considering the extent to which the Twenty-first

Amendment ‘saves’ the regulation from invalidity” (citation

omitted), in part vacated on other grounds, Indiana W.W.&L. Co.,

Inc. v. State, 695 N.E.2d 99 (Ind. 1998); see also Ivey, 541 So. 2d at

1136; Pete’s Brewing Co. v. Whitehead, 19 F. Supp. 2d 1004, 1017

(W.D. Mo. 1998).

effectively upheld the Twenty-First Amendment as an

immunity to all of Petitioners’ claims.!° The Georgia

Supreme Court summarily dismissed Petitioners’ appeal

without opinion.

ARGUMENT AND CITATION OF AUTHORITY

A. Now that Other States Have Brought Them-

selves into Compliance with Bacchus, only this

Court Can Protect Their Commerce from Geor-

gia’s Willful Hold-Out Discrimination.

Even if classic circumstances, see Sup. Ct. R. 10(a), (b)

& (c), were not present, prudential considerations would

strongly favor review on certiorari. When Bacchus was

rendered, as many as 19 other States had various forms of

discriminatory taxation in violation of the Federal Consti-

tution. Because the violations involve State taxes, they

cannot be reviewed in the lower Federal courts. See Age

Int'l, 830 F. Supp. at 1502 (dismissing “on jurisdictional

grounds” under the Tax Injunction Act, 28 U.S.C. § 1341).

Short of eventual action by this Court, it is left to each

State to sort out its own compliance with the Federal

Constitution. The argument against compliance is always

the same, as it was here: Former Governor Busbee urged

10 In contravention of established precedent as to some

three of Petitioners’ claims (the nexus, multiple taxation, and

tax-to-cost relation claims — sometimes called direct regulation

challenges). See Healy v. Beer Inst., Inc., 491 US. 324, 334-35

(1989) (plurality opinion) (citing Brown-Forman Distillers Corp. v.

New York State Liquor Auth., 476 U.S. 573, 585 (1986) (holding

supported by five Justices)).

that the double taxation be retained because, without

protectionism, Georgia “would [be] put . . . at a competi-

tive disadvantage with the 19 states now providing simi-

lar incentives.” The argument is, of course, fallacious. The

Commerce Clause establishes a “unitary national mar-

ket,” in effect a free trade zone, among the several States.

See West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994).

Just as it required Georgia to resist Mr. Busbee’s impor-

tuning for special “incentives” and special “competitive”

advantages for “local industries,” the Commerce Clause

requires all other States to do the same. If 19 other States

did provide protectionist incentives, those incentives

would have to go as well.

And they did fall, with Georgia and Florida as hold-

outs, clinging to the import approach. The Florida

Supreme Court could easily have followed Georgia's

Heublein decision to uphold Florida’s import statute

(specifically “modeled after Georgia’s import tax on alco-

holic beverages,” Ivey, 541 So. 2d at 1137). But the Ivey

court, in a remarkable tribute to the confidence the

framers of the Tax Injunction Act showed in establishing

this unusual system of self-review, took on the import

approach and unanimously condemned its own State’s

statute as “unconstitutional.” Id. at 1137-40. Two High

State courts have now passed on the constitutionality of

the import approach and reached diametrically opposed

results. No other Federal court can resolve, or even con-

sider, this conflict. If Georgia’s import approach is

allowed to stand, unreviewed, in this closely watched

industry, it could well lead to a new proliferation of

“import” exceptions. Even if none of this were true, espe-

cially when other States have brought themselves into

compliance, Georgia should not be allowed to profit, to

the disadvantage of other States, from its hold-out posi-

tion and from its studied refusal at each step of the way

to apply Federal law. After more than a decade of litiga-

tion, multiple court challenges in State and Federal court,

and repeated legislative initiatives, there is no other

recourse for Petitioners or the other compliant States.

B. The Conflict between Georgia and Florida over

the “Import” Approach Centers on the Nature

of a Challenge to Discriminatory Purpose under

the Commerce Clause.

“Purpose” often stands at the disputed intersection

of the Twenty-First Amendment and the Commerce

Clause. Courts have searched for the “central purpose of

the provision,” e.g., Bacchus, 468 U.S. at 276, and of

course, discriminatory “purpose” often forms the basis of

challenge under the Commerce Clause, e.g., id. at 270.

Even conceding that the term may have differing mean-

ings in each context,!! intersection, and even collision, is

unavoidable: Is the “purpose” of the legislature within

the “purpose,” or reserved power, of the Amendment?

The watchword of Bacchus and other cases in negotiating

this intersection is pragmatic harmonization. See id. at

275. This effort assumes that the legislative “purpose” has

"! Referring, in the one case, to the purposes or, perhaps

better said, powers set out in the text of the Amendment,

intended by its framers, and otherwise implied by the structure

of the Constitution and, in the other case, to the purposes of the

enacter or implementer of the challenged legislation.

already been established.!? Complicating the inquiry into

purpose is the great temptation, as in all Commerce

Clause cases, for the State legislature to discriminate

against unrepresented outside interests and to dissemble

about doing so - precisely so as to preserve the discrimi-

natory measure against challenge. See generally South-

Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 92

(1984).

Even without the overlay of the Twenty-First Amend-

ment, the ways in which a plaintiff may establish, and

challenge, purpose in a Commerce Clause case are highly

disputed. The cases frequently avoid implications arising

from evidence of purposive discrimination by declining

to reach the issue and resolving the case instead on

“effect” grounds. E.g., Hunt v. Washington State Apple

Advertising Comm'n, 432 U.S. 333, 352-53 (1977). Presuma-

bly, this avoidance is to be preferred as a prudential

matter when the plaintiff’s claim will be sustained in any

event on another basis. But has this technique crystalized,

as held below, into the exclusive means to challenge

purpose? If direct challenge to purpose remains a viable

Commerce Clause claim, is it nonetheless foreclosed, as

held below, when the purpose proffered by the State is a

declared purpose stated in the legislation itself?!5 Even if

12 An issue that arguably did not arise in Bacchus because

the purpose was said to be “undisputed.” See Bacchus, 468 U.S.

at 271.

13 If a direct challenge to purpose is still viable, then there

is the question what evidence may be used to support such a

challenge. If the plaintiff is confined to the formally enacted text

of the legislation (on the principle, largely from cases

concerning statutory interpretation, that only the agreed text

the precedents to the contrary,!4 from another era, are not

to be sustained, should an exception be made for the

circumstances in this case where the legislature has sup-

plied advance findings to pre-determine “effect” as well?

Without such an exception, a legislature can make bullet-

proof its discrimination against the commerce of other

States. Apart from their relation to the availability of a

purpose challenge, do such legislative findings foreclose

can be said to represent the will of all legislators), then a

carefully crafted declared purpose and legislative findings

(however counterfactual), all of which are by definition part of

the formal text, may be easily used, as here, to pre-empt such a

challenge. Application of this principle in a Commerce Clause

setting leaves enforcement of the Clause to the political

branches of a single State where, however, there is no “ ‘political

check,’ ” Washington v. United States, 460 U.S. 536, 545 (1983)

(tendential quotation marks), representing the interests of the

remaining 49 States.

14 Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1, 10 (1928)

(“One challenging the validity of the state enactment on the

grounds that it is repugnant to the commerce clause is not

necessarily bound by the legislative declarations of purpose”);

Bayside Fish Flour Co. v. Gentry, 297 U.S. 422, 426-27 (1936)

(reconfirming that, in Foster-Fountain, the “ostensible purpose

of the act was to conserve the raw shells for local use. The bill

and affidavits in support of it, however, demonstrated, we held,

that this purpose was feigned, and that the real purpose” was

otherwise); Postal Tel.-Cable Co. v. Borough of Taylor, 192 U.S. 64,

73 (1904) (under Commerce Clause, “Courts are not to be

deceived by the mere phraseology in which an ordinance may

be couched when it appears conclusively that it was passed for

an unlawful purpose and not for the one stated therein”

(quoting syllabus)); Postal Tel.-Cable Co. v. City of Richmond, 249

U.S: 252, 259-60 (1919) (under Commerce Clause, plaintiff may

Prove that “the tax is a disguised attempt to tax interstate

commerce”).

an “effect” challenge? What level of scrutiny should be

applied to such legislative findings under the- Interstate

Commerce Clause?}5

C. The Conflict also Points up a Split among the

Circuits over How to Weigh Purpose when

Deciding Twenty-First Amendment Immunity.

This case presents the further issue how purpose,

however established, is to be weighed when assessing an

assertion of Twenty-First Amendment immunity. Here,

there is a Circuit split as well as a High State court split.

In Cooper v. McBeath, 11 F.3d 547 (5th Cir.), cert.

denied, 512 U.S. 1205 (1994), the Fifth Circuit first con-

ducted what it called a “traditional Commerce Clause”

analysis, see Cooper, 11 F.3d at 554, and concluded that

portions of the Texas Alcoholic Beverage Code were in

violation of the Clause, see id. at 552-54, before taking up

the Texas defendants’ “alternative argument [that,] even

if the statutes violate traditional Commerce Clause princi-

ples, the Twenty-first Amendment imbues the States with

carte blanche authority to manage the flow of alcohol

within their borders,” see id. at 554. This alternative argu-

ment was ultimately rejected because “The core concerns

underlying the Twenty-first Amendment are not entitled

to greater weight than the principle of nondiscrimination

15 Despite various formulations, see, e.g., Complete Auto

Transit, Inc. v. Brady, 430 U.S. 274, 288 n.15 (1977) (“careful

scrutiny”); Freeman v. Hewit, 329 U.S. 249, 253 (1946) (“carefully

scrutinized”), an arguably still unresolved issue as applied to

legislative findings. See Minnesota v. Clover Leaf Creamery Co.,

449 U.S. 456, 476 n.2 (1981) (per Powell, J.)

animating the Commerce Clause.” See id. at 555. Ivey and

McKesson, the Florida Supreme Court decisions rejecting

the import approach and the local agricultural content

requirement, may be aligned with Cooper on this issue.

See Ivey, 541 So. 2d at 1135-40; McKesson, 524 So. 2d at

1009.16

16 See generally 324 Liquor Corp. v. Duffy, 479 U.S. 335, 351-52

(1987) (legislature’s bare “statement” of purpose, without

evidentiary support, would not suffice for 21st Amendment

immunity); Capital Cities, 467 U.S. at 714-16 (examining record

for purpose state law “designed principally to further” and

district court findings on actual effect to assess “nature” and

“substantiality” of stated 21st Amendment interests); Midcal,

445 U.S. at 110-14 (“careful scrutiny” to stated 21st Amendment

purposes and whether there was a cause-and-effect

“correlation” “supported by the evidence”); Kendall-Jackson

Win., Ltd. v. Branson, 82 F. Supp. 2d 844, 865-67 (N.D. Ill. 2000)

(whether “advances” 21st Amendment interest; “how

... discrimination . . . advances this objective”; “discrimination

has not been shown to advance any legitimate purpose”); Pete’s,

19 F. Supp. 2d at 1018-20 (whether “evidence” shows that State

law “promotes” 21st Amendment purpose; “as a matter of fact”

no such “purpose” or “effect”; whether “accomplishes any of

these objectives”; “advance is so insubstantial that it is clearly

outweighed by important federal objectives”); Indiana

Wholesale, 662 N.E.2d at 969-71 (looking for a “showing that

[State law] here serves its purported interests”; finding asserted

“premise” to be “unsubstantiated”); Loretto, 601 F. Supp. at

862-64 (examining whether State law in fact advanced 21st

Amendment interest); Rice, 21 Cal. 3d at 451-59, 579 P2d at

490-95 (examining evidence and legislative history to determine

“what policies are furthered by” State statute at issue; “whether

[provisions] clearly vindicate those policies,” including whether

they “do” in fact “promote” “declared purpose”); Heublein, Inc.

v. Department of Alc. Bev. Cont., 237 Va. 192, 198-99, 376 S.E.2d 77,

80 (1989) (examining “legislative background” to find purpose

of economic protectionism even in absence of any such “avowed

In Kronheim, the D.C. Circuit treated the plaintiff's

showing of discrimination and the defendant's proffered

justification as presenting a case of “mixed motive.” Mil-

ton S. Kronheim & Co. v. District of Colombia, 91 F.3d 193,

203 (D.C. Cir. 1996), cert. denied, 520 U.S. 1186 (1997). In

such a case, according to the Kronheim court, the Twenty-

First Amendment concern, called an untainted motive, is

given all weight, to the exclusion of the “tainted motive.”

Id. at 203-04. In the present case, the Georgia legislature

purported to “find[ ]” that

the cost of regulating and administering the

manufacture, distribution, and sale of alcohol,

distilled spirits, table wines, and dessert wines

consumed ‘in this state is greater for imported

alcohol, distilled spirits, table wines, and dessert

wines than it is for alcohol, distilled spirits,

table wines, and dessert wines produced within

this state.

See Ga. L. 1985 at p. 665, § 1; see also Heublein, 256 Ga. 578,

351 S.E.2d at 195. Petitioners demonstrated that the find-

ing was false, on its face and otherwise.!” The Ivey court

likewise disputed the counterpart legislative finding in

that case:

purpose”; whether State law “will promote” asserted 21st

Amendment purpose); see also North Dakota v. United States, 495

U.S. 423, 432-33 & n.5 (1990) (both four-Justice plurality and

four-Justice partial dissent examine evidence to assess

substantiality of stated 21st Amendment interests and whether

State law was necessary to bring about desired result).

17 For instance, there is no cost whatsoever, let alone

“greater” cost, associated with “regulating and administering

the manufacture [of] imported alcohol” because Georgia does

not ever regulate or administer the manufacture of beverages

produced out-of-state. See also Appendix at Q63-Q81.

Further, the premise that the costs of regulating

and administering imported alcoholic beverages

are greater than those for domestic alcoholic

beverages is erroneous. It is clear from the record

that it actually costs less on a per gallon basis to

regulate and administer imported alcoholic bev-

erages than it does to regulate and administer

alcoholic beverages manufactured in state.

Ivey, 541 So. 2d at 1138. Respondents in the instant case

responded that, even if the “per gallon” or per liter cost is

less for out-of-state beverages, the legislative finding was

nonetheless literally true because the total cost of regulat-

ing out-of-state beverages is greater - for the simple

reason that the total volume of out-of-state beverages is

greater. Further, the purpose of defraying, through dou-

ble taxation, this total cost (even though far in excess of

the total cost and in a discriminatory manner) was said to

be within the purpose of the Twenty-First Amendment.

Finally, as applied in this case, the Kronheim approach

meant that this asserted Twenty-First Amendment pur-

pose — however insubstantial, specious, and inherently

discriminatory - would prevail over blatant discrimina-

tion.

The Seventh Circuit has recently proposed an alto-

gether different approach in Bridenbaugh v. Freeman-

Wilson, Nos. 00-1044 & 00-1046, 2000 U.S. App. LEXIS

22991 (7th Cir. Sept. 13, 2000). Eschewing all analysis of

purpose as “unilluminating,” the Bridenbaugh court in

effect declined to “follow the Supreme Court” and devel-

oped instead a test of “functional discrimination,” said to

be derived from “the text and history of the Constitu-

tion.” Bridenbaugh, 2000 U.S. App. LEXIS 22991, at 10-11,

17. The Bridenbaugh court understood the Brown-Forman

and Bacchus cases as applying “an unconstitutional-con-

ditions approach” to Twenty-First Amendment immunity.

Id. at 16. Under its functional discrimination test (argua-

bly a test of pure effect), the court examined whether the

State had “used its power to impose a discriminatory

condition on importation, one that favors [in-state]

sources of alcoholic beverages over sources in other

states.” Id. at 17.

D. This Case also Presents the Important Question

Whether the Twenty-First Amendment Affords

Immunity to the States for their Viclations of

the Foreign Commerce Clause.

As noted, a GATT Panel determined in March 1992

that Georgia’s 1985 Statute - with its double taxation for

beverages (not using “Georgia grown products”), not

only of other-state, but also of foreign origin, see Ga. L.

1985 at p. 665, § 2, codified at O.C.G.A. § 3-4-60 - violates

the principle of nondiscrimination in international law.

Because the United States defended with the Twenty-First

Amendment, the Panel addressed whether the Amend-

ment afforded immunity for this violation and concluded

that it did not. See, e.g., GATT Panel Decision {{ 5.45 to

5.48. In the present case, by contrast, Twenty-First

Amendment immunity was upheld as to Petitioners’ For-

_ eign Commerce Clause claims. The question is thus pre-

sented whether, in light of the structure of the Federal

Constitution and the “more rigorous and searching

scrutiny” afforded such claims,’® the Twenty-First

18 South-Central, 467 U.S. at 100; accord Japan Line, Ltd. v.

County of Los Angeles, 441 U.S. 434, 446 (1979) (“more extensive

Amendment provides any immunity to the States for

their violations of the Foreign Commerce Clause.

CONCLUSION

This case presents a direct conflict, between Georgia

and Florida, over the viability of the “import” approach

after Bacchus. The conflict also points up a split among

the Circuits over Twenty-First Amendment immunity.

The case also presents the important question whether

the Twenty-First Amendment affords immunity to the

States for their violations of the Foreign Commerce

Clause. More important than all of these issues, after

more than a decade of litigation, multiple court chal-

lenges in State and Federal court, and repeated legislative

initiatives, there is no other recourse for Petitioners or the

49 other States to bring Georgia into compliance after

Bacchus.

Respectfully submitted,

JouNn L. Taytor, Jr.

Counsel of ‘Record

CeLeste McCoLioucH

MattHew L. Hess

Cuorey, Taytor & Fen

A Professional Corporation

The Lenox Building, Suite 1700

3399 Peachtree Road, N.E.

Atlanta, Georgia 30326

Telephone: 404/841-3200

constitutional inquiry is required”); Container Corp. v. Franchise

Tax Bd., 463 U.S. 159, 185 (1983) (“additional scrutiny

required”),

Puy’

4 ay

i es

4 .

PP Ls

ay ia

t mri

‘

qi LA

Se 7 5

s .

7 - =e

a aie

= ea? at fale s Fd

4 4 % il

« ~ “I a

as a F

oe eas 2d)

; . 4

a 7 —

aa oe .

] 7 bs 18 ow as

> , ay 7

; ee aes eed

No.

In The

Supreme Court of the United States

AUSTIN, NICHOLS & CO., INCORPORATED;

BACARDI IMPORTS, INC.; JIM BEAM BRANDS CO.:

BROWN-FORMAN CORPORATION; DAVID

SHERMAN CORPORATION; REMY AMERIQUE, INC.:;

and SOUTHERN WINE & SPIRITS OF AMERICA,

INC., d/b/a Shaw Ross International Importers,

Petitioners,

Vv.

STATE OF GEORGIA; ZELL MILLER, individually and

as Governor of the State of Georgia; MARCUS E.

COLLINS, individually and as Georgia State Revenue

Commissioner; and CLAUDE L. VICKERS, individually

and as Deputy Commissioner of the Administration

Division of the Department of Administrative Services

and as Director of the Fiscal Division of the

Department of Administrative Services and as State

Treasurer for the State of Georgia,

Respondents.

On Petition For Writ Of Certiorari

To The Supreme Court Of Georgia

APPENDIX TO PETITION FOR

WRIT OF CERTIORARI

TABLE OF CONTENTS

Page

VOLUME | -

Final Order (filed May 21, 1998) in Civil Action

File Nos. E-3793 & E-25073 by the Superior Court

of Fulton County, State of Georgia.............

Minute Order (dated June 30, 2000) in Case No.

S00A1357 by the Georgia Supreme Court.......

Order (filed Mar. 1, 1994) in Civil Action File No.

E-3793 by the Superior Court of Fulton County,

Order (filed April 7, 1993) in Civil Action File

No. E-3793 by the Superior Court of Fulton

County, State of Georgia ......................

Order (filed July 28, 1995) in Civil Action File

Nos. E-3793 & E-25073 by the Superior Court of

Fulton County, State of Georgia................

Order (filed June 17, 1997) in Civil Action File

Nos. E-3793 & E-25073 by the Superior Court of

Fulton County, State of Georgia................

Order on Defendants’ Motion to Quash Sub-

poena (filed June 17, 1997) in Civil Action File

Nos. E-3793 & E-25073 by the Superior Court of

Fulton County, State of Georgia ...............

Interstate and Foreign Commerce Clause, Article

i ee le...

Due Process Clause of the Fourteenth Amend-

ment, Amendment XIV, Section 1...............

Equal Protection Clause of the Fourteenth

Amendment, Amendment XIV, Section 1........

Import Export Clause, Article I, Section 10,

oe eS

TABLE OF CONTENTS - Continued

Page

L. Supremacy Clause, Article VI.................. L1

Mi. Amondianmat AX ow. ses ccccsccsecccvacsetacves Mi

N. Complaint in Civil Action File No. E-3793 in the

Superior Court of Fulton County, State of Geor-

GPR. sv cavcvsnvenctssesasaeebascanesaeheunesenes

Exhibit A to Appendix N: Refund Statute,

OMIA, © QBBDe «5 on kev cicnntesscasscanace

Exhibit B to Appendix N: 1992 Act..........

Exhibit C to Appendix N: Administrative

Applicetiam .... 0 s<s00 cus snesacdepane scenes

Exhibit W to Appendix N: The 1985 Statute,

OLGA, & SOG a wk ciciice cru cadie ccaVeeses

Exhibit X to Appendix N: The Pre-1985

DONNUIO ox <6 nine NaS ne Sieeie xd eeu eeeee ee

Exhibit Y to Appendix N: The Fallback Consti-

Centhomnal Saath. «...0isice sc vec cnevisceeswtacetees

Exhibit Z to Appendix N: The 1985 Statute, Ga.

8 eg ST ee eee

O. Verified First Amendment to Complaint in Civil

Action File No. E-3793 in the Superior Court of

Fulton County, State of Georgia ...............

P. Verified Second Amendment to Complaint in

Civil Action File No. E-3793 in the Superior Court

of Fulton County, State of Georgia.............

VOLUME II

Q. Plaintiffs’ Memorandum of Law in Opposition to

Defendants’ Motion for Summary Judgment in

Civil Action File Nos. E-3793 & 25073 in the

Superior Court of Fulton County, State of Geor-

ABs nc cacccsnacerecachnessancesnesnokeen amu sann

ili

TABLE OF CONTENTS - Continued

Page

Plaintiffs’ Letter Brief (dated April 2, 1998) to the

Honorable Alford J. Dempsey, Jr., Judge of the

Superior Court of Fulton County, State of Geor-

Pr 14h vse e ns sea sw§ we eR Deas Meee Eee

Plaintiffs’ Letter Brief (dated April 10 1998) to the

Honorable Alford J. Dempsey, Jr., Judge of the

Superior Court-of Fulton County, State of Georgia

Brief of Plaintiffs/Appellants in Case No.

S00A1357 in the Georgia Supreme Court .......

Appellants’ Opposition to Motion to Dismiss in

Case No. S00A1357 in the Georgia Supreme

OM 5 5 sen eeu sveekenideaa acne ie ee

APPENDIX A

IN THE FULTON COUNTY SUPERIOR COURT

STATE OF GEORGIA

AGE INTERNATIONAL, INC.,

)

et al., )

—_ ) CIVIL ACTION

Plaintiffs, ) FILE NO. E-3793

V. )

STATE OF GEORGIA., et al., ‘

Defendants. )

AGE INTERNATIONAL, INC.,_ )

et al., )

oi ) CIVIL ACTION

Plaintiffs, ) FILE NO. E-25073

v. )

STATE OF GEORGIA, et al.,

Defendants. )

FINAL ORDER

(Filed May 21, 1998)

These cases are before the Court on Defendants’

Motion for Summary Judgment and several related evi-

dentiary motions. The primary issue in these actions, in

which the Plaintiffs seek refunds of distilled Spirits taxes

already collected by the State, is whether a state may

impose an import tax on alcoholic beverages without

violating the Interstate Commerce Clause of the United

States Constitution, if such tax is designed to carry out a

legitimate purpose under the Twenty-First Amendment

to that Constitution. Defendants contend that these cases

present a legal question for determination by the Court,

while the Plaintiffs contend that the Court must conduct

a trial on factual issues in order to resolve these cases.

To prevail on summary judgment under O.C.G.A.

§9-11-56, the moving party must demonstrate that there is

no genuine issue of material fact, and that the facts,

viewed in the light most favorable to the non-moving

party, warrant judgment as a matter of law. Defendants

must demonstrate that the facts that exist without sub-

stantial controversy warrant an affirmative ruling as to

those legal issues currently before the court. O.C.G.A.

§9-11-56(d).

Defendants’ burden as the moving party may be

discharged by piercing the allegations of the complaint

and establishing as a matter of law that the plaintiff could

not recover under any theory fairly drawn from the

pleadings and the evidence. Holiday Inn, Inc. v. Newton,

157 Ga. App. 436, 278 S.E.2d 85 (1981). The non-moving

party must then point to specific evidence giving rise to

triable issues. Lau’s Corp. v. Haskins, 261 Ga. 491, 405

S.E.2d 474 (1991). Conclusory allegations are insufficient,

in the absence of substantiating facts or circumstances, to

raise a material issue for trial. Sherwood v. Boshears, 157

Ga. App. 542, 278 S.E.2d 124 (1981). If the moving party

discharges this burden, the nonmoving party cannot rest

on its pleadings, but rather must point to specific evi-

dence giving rise to a triable issue. O.C.G.A. § 9-11-56 (e).

Having reviewed the record, including the pleadings,

briefs and affidavits, and having listened to oral argu-

ment, the Court hereby GRANTS Defendants’ motions

for the reasons that follow:

A. FINDINGS OF FACTS

Construing the facts herein, and all reasonable infer-

ences drawn therefrom, most favorably to the non-mov-

ing party, the court finds that the following material facts

exist without substantial controversy:

In 1985, the Georgia Legislature repealed the 1938

version of O.C.G.A. § 3-4-60 and enacted a new system

for the taxation of alcoholic beverages sold or consumed

within this State. Under the new law, two distinct taxes

are imposed: an excise tax upon the first sale, use, or final

delivery of distilled spirits and alcohol in Georgia and,

the disputed tax in the instant cases, a tax upon the

importation for use, consumption, or final delivery in

Georgia of distilled spirits and alcohol. See Ga. Laws

1985, p. 665, O.C.G.A. § 3-4-60(2).

In the 1985 Act, the General Assembly stated that this

Act’s purpose was “to provide for the increased cost of

administration and collection of revenues; to aid in the

exercise of the police power; [and] to promote tem-

perance. ...” Ga. Laws 1985, p. 665. The Legislature also

made explicit findings regarding the greater costs to the

State of regulating and administering the distribution of

imported distilled spirits, alcohol, and wine. Id.

Plaintiff Heublein, Inc., immediately challenged the

1985 Act on Commerce Clause, due process, and equal

protection grounds. This Court and the Georgia Supreme

Court rejected plaintiff's arguments and upheld the con-

stitutionality of the 1985 Act, and the U.S. Supreme Court

dismissed the subsequent appeal. Heublein, Inc. v. State of

Georgia, Civil Action No. D-20634 (Fult. Super. Sep. 23,

1985), aff'd, 256 Ga. 578, 351 S.E.2d 190 (1987), appeal

dismissed, 483 U.S. 1013 (1987).

Plaintiffs Heublein, Inc., Jim Beam Brands Co., (f/k/a

James B. Beam Distilling Co.) and Joseph E. Seagram &

Sons, Inc., then filed three suits for refund, one in this

Court and two in Dekalb Superior Court, for taxes paid

under the 1938 liquor tax statute. Although the Georgia

Supreme Court held the 1938 statute invalid in Beam’s

refund action, the Supreme Court also held that liquor

manufacturers lack standing to obtain a refund from the

State of alcohol taxes which they have already recovered

from their Georgia wholesalers. James B. Beam Distilling

Co. v. State of Georgia, 259 Ga. 363, 382 S.E.2d 95 (1989)

(holding the 1938 statute unconstitutional, but applying

the ruling prospectively), rev'd & remanded for consider-

ation of remedial issues, 501 U.S. 529, 115 L.Ed.2d 481, 111

S.Ct. 2439 (1991) (holding the 1938 tax retroactively

invalid, but protecting the State’s right to raise pro-

cedural bars and defenses to the refund claim), remedial

issues decided on remand, 263 Ga. 609, 437 S.E.2d 782 (1993)

(holding that the manufacturer lacked standing to obtain

a refund, and that due process is not violated thereby),

cert. denied, 513 U.S. 1056, 130 L.Ed.2d 597, 115 S.Ct. 662

(1994).

Those same three plaintiffs, together with additional

out-of-state liquor manufacturers, jointly filed the two

instant cases, again seeking to challenge the constitu-

tionality of O.C.G.A. § 3-4-60(2) (1985), and seeking a

refund of $96,000,000, plus interest, for liquor stamps

allegedly purchased from the Revenue Department dur-

ing 1989 to early 1992 (Civil Action No. E-3793) and

during early 1992 through January 31, 1993 (Civil Action

No. E-25073).

Each of the Plaintiffs already has collected the taxes

they seek from the State herein from their designated

Georgia wholesalers, by separately billing the whole-

salers for “state stamps,” “state tax,” or the like.

In reliance on the validity of the 1985 Act, the State

expended the tax revenues in question to benefit both the

Plaintiffs and its citizens. Through such expenditures, the

State sought to regulate and control alcoholic beverages

generally, to provide exclusive marketing territories in

Georgia for Plaintiffs and their brands, to protect con-

sumers and Plaintiffs’ brands against bootleg and contra-

band products and sales, and to provide other

governmental benefits and services.

The State incurs greater expenses in regulating

imported alcoholic beverages than domestic alcoholic

beverages.! Furthermore, this Court is bound by the

Georgia Supreme Court’s determination, in its prior opin-

ion resolving the Heublein litigation, that O.C.G.A.

§ 3-4-60(2) implicates central concerns of the Twenty-first

Amendment by “defraying the increased costs of regulat-

ing the importation into this state of intoxicating liquors.”

Heublein, supra at 584-585.

Defendants timely filed a motion for summary judg-

ment, with supporting affidavits. In opposition to that

motion, Plaintiffs submitted affidavits and documents to

support their contention that these cases should be tried.

Defendants have objected to certain documents and affi-

davits relied upon by Plaintiffs in reply to this summary

judgment motion.

For the reasons set out herein, after viewing the facts

in a light most favorable to the Plaintiffs, the Court finds

that there is no genuine issue as to any material fact.

1 “[Ijt is axiomatic that a state may better police, regulate

and control alcoholic beverages produced within its borders

than that which is imported from other states, and that a cost

differential exists with regard to the control and administration

of the vast quantities of alcoholic beverages imported into this

State.” Heublein, supra at 584.

Therefore, the constitutional issues presented by these

cases involve questions of law which can best be resolved

by summary judgment.

B. CONCLUSIONS OF LAW

In Heublein, supra, O.C.G.A. § 3-4-60(2) was upheld

against Commerce Clause, equal protection, and due pro-

cess challenges. Under the doctrines of res judicata and

collateral estoppel, the judgment and decision in that case

operate to bar Plaintiff Heublein, Inc.’s effort to litigate

this same matter again. See, e.g., O.C.G.A. § 9-12-40 (bar-

ring relitigation of “all matters put in issue or which

under the rules of law might have been put in issue” in

the former case); Danzell v. Cannon, 224 Ga. App. 602, 603,

481 S.E.2d 588, 589-90 (1997); Langton v. Department of

Corrections, 220 Ga. App. 445, 446, 469 S.E.2d 509, 510

(1996); Williams v. Summit Psychiatric Centers. P.C., 185 Ga.

App. 264, 267, 363 S.E.2d 794, 797 (1987).

With regard to the other Plaintiffs in the instant

cases, the Heublein decision operates as stare decisis,

thereby barring the other Plaintiffs’ challenge. See GA.

CONST. OF 1983, Art. VI, Sec. VI, Par. VI; Cobb v. State,

187 Ga. 448, 452, 200 S.E. 796, 798 (1939); Grantham v.

State, 151 Ga. App. 707, 261 S.E.2d 445, 446 (1979) (“Once

a constitutional question has been finally and con-

clusively determined by the Supreme Court, in later cases

raising the same question, the courts merely apply the

holding of the Supreme Court”), aff'd, 244 Ga. 775, 262

S.E.2d 777 (1979).

Here, just as in Heublein, the Plaintiffs ostensibly

attack the validity of O.C.G.A. § 3-4-60(2) under the Inter-

state Commerce Clause of the federal Constitution. How-

ever, any consideration of a challenge to a State statute

involving alcoholic beverages necessarily begins with the

Twenty-first Amendment, section two of which states that

“(t]he transportation or importation into any State, Terri-

tory, or possession of the United States for delivery or use

therein of intoxicating liquors, in violation of the laws

thereof, is hereby prohibited.”

In State Board of Equalization of California v. Young's

Market Co., 299 U.S. 59, 62-63, 81 L.Ed. 38, 40-41, 57 S.Ct.

77, 78-79 (1936), the U.S. Supreme Court expressly upheld

a state’s discriminatory import fee on alcoholic beverages

under the Twenty-first Amendment, noting that a state

may either ban all imports or “discourage importation by

laying a heavy impost” or a “heavy importation fee.”

“The Twenty-first Amendment made a fundamental

change, as to control of the liquor traffic, in the constitu-

tional relations between the States and national author-

ity.” United States v. Frankfort Distilleries, 324 U.S. 293,

299-300, 65 S.Ct. 661, 89 L.Ed. 951, 956-57 (1945) (Frank-

furter, J., concurring). Thus, the U.S. Supreme Court has

noted that such Amendment limits the effect of the dor-

mant Commerce Clause and grants the States virtually

complete control over the importation of liquor into their

territory. See e.g., North Dakota v. United States, 495 U.S.

423, 431-32, 110 S.Ct. 1986, 1992-93, 109 L.Ed.2d 420,

430-31 (1990); Heublein, Inc. v. South Carolina Tax Comm'n,

409 U.S. 275, 283, 93 S.Ct. 483, 489, 34 L.Ed.2d 472, 479

(1972); Department of Revenue v. James B. Beam Distilling

Co., 377 U.S. 341, 346, 84 S.Ct. 1247, 1250, 12 L.Ed.2d 362,

366 (1964); United States v. Frankfort Distilleries, 324 U.S. at

299-301, 65 S.Ct. at 664-65, 89 L.Ed. at 956-57; Carter v.

Virginia, 321 U.S. 131, 137, 64 S.Ct. 464, 468, 88 L.Ed. 605

(1944); Duckworth v. Arkansas, 314 U.S. 390, 398-99, 62

S.Ct. 311, 315, 86 L.Ed. 294, 299 (1941) (Jackson, J., concur-

ring); Joseph S. Finch & Co. v. McKittrick, 305 U.S. 395, 398,

59 S.Ct. 256, 257, 83 L.Ed. 246, 249 (1939).

In Heublein, Inc. v. State of Georgia, supra, the Georgia

Supreme Court traced the history of the decisions under

the Twenty-First Amendment, and, echoing the decision

in Bacchus Imports. Ltd. v. Dias, 468 U.S. 263, 82 .Ed.2d 200,

104 S.Ct. 3049 (1984), held that when a central concern of

the Twenty-first Amendment is implicated, that Amend-

ment controls competing Commerce Clause concerns.

Heublein, 256 Ga. at 578-85, 351 S.E.2d at 191-96. Accord

Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 712-15, 104

S.Ct. 2694, 2707-09, 81 L.Ed.2d 580, 597-99 (1984); Milton

S. Kronheim & Co. v. District of Columbia, 91 F.3d 193, 203

(D.C. Cir. 1996), cert. denied, __ U.S. __, 117 S.Ct. 1468,

137 L.Ed.2d 681 (1997).

As the Georgia Supreme Court noted in Heublein, the

Hawaiian legislature made no effort to suggest that the

statute challenged in Bacchus advanced any purpose rec-

ognized under the Twenty-first Amendment. Here, in

stark contrast to that statute and its acknowledged pur-

pose, Georgia’s statute specifically addresses multiple

Al0

concerns central to the Twenty-first Amendment. For

example, O.C.G.A. § 3-4-60(2) provides for the increased

cost of administration and collection of revenues, aids in

the exercise of the police power, and promotes tem-

perance. See Ga. Laws 1985, p. 665. The Act also contains

express legislative findings indicating that the legislation

was designed to carry out central Twenty-first Amend-

ment purposes, including a finding that the State’s costs

for regulating and administering imported alcoholic bev-

erages is greater than for nonimports. Id.

Notwithstanding the Georgia Supreme Court's reso-

lution of the Heublein litigation, Plaintiffs in the instant

case seek to challenge O.C.G.A. 3-4-60(2) under the Com-

merce Clause by alleging that the statute was enacted

pursuant to illicit protectionist motives. Although such

efforts might seem to offer an unexplored avenue for

challenging the statute, the Court finds that, as a practical

matter, the determinations of this Court and the Georgia

Supreme Court in the Heublein litigation dispel any con-

stitutional infirmities concerning this statute. Heublein,

supra at 584-585. Accordingly, this court will not strike

down an otherwise constitutional statute on the basis of an

alleged illicit legislative motive. See, e.g., United States v.

O’Brien, 391 U.S. 367, 383-84, 88 S.Ct. 1673, 1682-83, 20

L.Ed.2d 672, 683-84 (1968) (“What motivates one legisla-

tor to make a speech about a statute is not necessarily

what motivates scores of others to enact it”); F.C.C. v.

Beach Communications, Inc., 508 U.S. 307, 315, 113 S.Ct.

2096, 2102, 124 L.Ed.2d 211, 222 (1993); Minnesota v. Cloyer «.

Leaf Creamery Co., 449 U.S. 456, 463-70 & n. 7, 471 n. 15,

All

101 S.Ct. 715, 723-27, 66 L.Ed.2d 659, 668-73 (1981) (“We

will not invalidate a state statute . . . merely because some

legislators sought to obtain votes for the measure on the

basis of its beneficial side effects on state industry”); State

v. Miller, 260 Ga. 669, 672 n.3, 398 S.E.2d 547, 551, n.3

(1990) (“While the court will often consider legislative

motives or purposes in interpreting a statute, ‘[i]t is

entirely a different matter when we are asked to void a

statute that is, under well-settled criteria, constitutional

on its face, on the basis of what fewer than a handful of

[legislators] said about it’ ”); World Famous Dudley's Food

& Spirits Inc. v. City of College Park, 265 Ga. 618, 621, 458

S.E.2d 823 (1995) (Fletcher, P.J., concurring). See also City

of Calhoun v. North Georgia Elec. Membership Corp., 233 Ga.

759, 213 S.E.2d 596 (1975) and Tripp v. Martin, 210 Ga. 284,

79 S.E.2d 521 (1954) (Supreme Court will not inquire into

motives of the General Assembly in enactment of legisla-

tion).

In addition, courts afford great deference to legisla-

tive findings. Nagel v. State, 262 Ga. 888, 427 S.E.2d 490

(1993) (It is proper for courts to pay particular deference

to reasonable legislative judgments); appeal after remand

264 Ga. 150, 442 S.E.2d 446 (1994). “The constitutionality

of a law is not to be determined on a question of fact to be

ascertained by the court. If under any possible state of

facts an act would be constitutional, the courts are bound

to presume that such facts exist; and therefore the courts

will not make a separate investigation of the facts, or

attempt to decide whether the legislature has reached a

correct conclusion with respect to them.” Holcombe v.

Georgia Milk Producers Confederation, 188 Ga. 358, 369-72, 3

S.E.2d 705, 712-13 (1939).

Al2

In Milton S. Kronheim & Co. v. District of Columbia, 91

F.3d 193, 203 (D.C. Cir. 1996), cert. denied, __ U.S. __, 117

S.Ct. 1468, 137 L.Ed.2d 681 (1997), a statute enacted by

the District of Columbia, which purportedly discrimi-

nated against imported alcohol, was challenged under the

Commerce Clause. As in the instant cases, the plaintiff in

Kronheim alleged an improper protectionist motive. The

Kronheim court analyzed the competing Twenty-first

Amendment and Commerce Clause concerns and con-

cluded that it was legally irrelevant if there were an

improper protectionist purpose, as long as a legitimate

Twenty-first Amendment purpose was also possible.

Concluding that such a purpose was possible, the court

upheld the statute. Kronheim, supra at 203-204.

Here, just as in Kronheim, the General Assembly’s

stated legislative purposes and findings reasonably fall

within powers delineated by the Twenty-first Amend-

ment. Therefore, following the reasoning of the Kronheim

court, the Court finds that the General Assembly stated

valid legislative purposes to support O.C.G.A. § 3-4-60

under powers granted this state by the Twenty-first

Amendment, and that such purposes prevail in spite of

competing Commerce Clause concerns.? In light of such a

2 Neither plaintiffs’ counsel nor this Court has uncovered

any authority that suggests that, where valid Twenty-first

Amendment purposes have been articulated within a legislative

act, such purposes may still yield to the competing Commerce

Clause interests. Only in Bacchus, where no legitimate Twenty-

first Amendment concern was articulated, did such a challenge

prevail. To rule otherwise today, or to further announce the

quantum of proof by which an alleged illicit motive must

Al3

finding, whether any individual legislator had a different

motive or whether the legislative findings are, in fact,

correct, remain irrelevant. O’Brien, supra; Beach, supra;

Clover Leaf Creamery Co., supra.

Plaintiffs’ equal protection, due process, Supremacy

Clause, Import-Export Clause, and Georgia constitutional

arguments are disposed of by, inter alia, the decision in

Heublein, the Twenty-first Amendment and the decisions

thereunder discussed above, and by the Georgia Consti-

tution. See U.S. CONST., TWENTY-FIRST AMEND., Sec.

2; GA. CONST. OF 1983, Art. III, Sec. VI, Par. VII; 19

U.S.C. § 3512(b)(2)(A); Heublein, Inc. v. State of Georgia,

supra; House of Seagram, Inc. v. State Liquor Authority, 292

N.Y.S.2d 183 (N.Y. App. 1968) (tax on liquor which comes

to rest in taxing state does not violate Import-Export

Clause), aff'd, 303 N.Y.S.2d 880 (N.Y. 1969), cert. denied,

396 U.S. 121, 90 S.Ct. 396 (1969).

Plaintiffs lack standing to obtain a refund from the

State of the taxes in question, because they have already

recovered them from the liable parties, i.c., the Georgia

wholesalers. James B. Beam Distilling Co. v. State of Georgia,

outweigh legitimate Twenty-first Amendment concerns in order

to bring a Commerce Clause challenge, clearly would be beyond

the province of this Court.

Al4

263 Ga. at 611, 437 S.E.2d at 784 (1993), cert. denied, 513

U.S. 1056 (1994). Additionally, plaintiffs’ claims for equi-

table relief are unsupported, as well as negated by the

State’s own reliance interests and competing equitable

concerns.

Plaintiffs have no viable claims under 42 U.S.C.

§ 1983, as such actions are barred in state courts when

adequate procedural remedies are provided by the state.

See, e.g. Backus v. Chilivis, 236 Ga. 500, 224 S.E.2d 370

(1976). See also Age International, Inc. v. Miller, 830 F.

Supp. 1484 (N.D. Ga. 1993) (state procedural remedies

trigger the Tax Injunction Act and bar federal district

court jurisdiction over actions for refund of state taxes),

aff'd 37 F.3d 637 (11th Cir. 1994).

Similarly, Plaintiffs’ claims asserted under alternative

state law theories of action and against the Defendants in

their individual capacities are barred by the doctrines of

sovereign and official immunity. See GA. CONST. OF

1983, Art. I, Sec. Il, Par. IX(d) and Par. IX(e); OCGA

§ 50-20-21 et. seq.; Clark v. State, 240 Ga. 188, 240 S.E.2d. 5

(1977).

Finally, Defendants have objected to certain evidenti-

ary materials submitted by Plaintiffs in opposition to the

Motion for Summary Judgment and throughout this case,

i.e., to certain informal audio recordings, and the edited

transcripts thereof, which purportedly contain selected

A15

statements by unidentified former legislators; to various

privileged and unauthenticated documents; and to por-

tions of affidavits filed by Plaintiffs. Concomitantly,

Plaintiffs have asked the Court to reconsider its prior

rulings on the inadmissibility of certain privileged and

unauthenticated documents; and Plaintiffs have

requested that Defendants file certain “original discov-

ery.”

Consistent with the discussion in part 3(d) of this

order, the Court finds that evidence relating to Plaintiffs’

continuing attempts to reveal illicit legislative motives is

irrelevant. The legitimate Twenty-first Amendment con-

cerns articulated within the statute itself, and noted by

both this Court and the Georgia Supreme Court in

Heublein, supra, require that any Commerce Clause chal-

lenge yield to these Twenty-first Amendment concerns.

Accordingly, the Court sustains Defendants’ objec-

tions and grants the motion to strike the audiotapes and

transcripts thereof, and the other identified items in

Defendants’ written objections, Table, and motions to

strike dated October 27, 1997 and December 19, 1997.

Additionally, the Court denies Plaintiffs’ motion for

reconsideration of the “proffered exhibits” and sustains

Defendants’ objections to Plaintiffs’ requests for Defen-

dants to file the original audiotapes.

C. CONCLUSION

The Court finds that there is no genuine issue of

material fact and that Defendants are entitled to judg-

ment on Plaintiffs’ Complaints as a matter of law. Accord-

ingly, the Court GRANTS Defendants’ Motion for

Al6

Summary Judgment on all claims articulated in each of

these cases. Pursuant to O.C.G.A. § 9-11-54, the Court

directs entry of final judgment in favor of the Defendants

on Plaintiffs’ Complaints in the above-styled actions.

SO ORDERED, this 21 day of May, 1998.

/s/ Alford J. Dempsey, Jr.

ALFORD J. DEMPSEY, JR.,

JUDGE

FULTON COUNTY

SUPERIOR COURT

ATLANTA JUDICIAL

CIRCUIT

APPENDIX B

(SEAL) SUPREME COURT OF GEORGIA

Case No. S00A1357

Atlanta June 30, 2000

The Honorable Supreme Court met pursuant to

adjournment.

The following order was passed.

AUSTIN, NICHOLS & COMPANY, INC., et al. v. STATE

OF GEORGIA et al.

Upon consideration of the Motion to Dismiss filed in

this case, it is ordered that this appeal be hereby dis-

missed.

SUPREME COURT OF THE

STATE OF GEORGIA

Clerk’s Office, Atlanta

(SEAL)

I certify that the above is a true extract

from the minutes of the Supreme Court of

Georgia.

Witness my signature and the seal of

said court hereto affixed the day and year

last above written.

/s/ Lynn M. Stinchcomb,

Chief Deputy Clerk

APPENDIX C

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

AGE INTERNATIONAL,

INC., et al.

x CIVIL ACTION

A FILE

STATE OF GEORGIA, No. E-3793

et al.

ORDER

(Filed Mar. 1, 1994)

This case came before the Court on the Plaintiffs’

Motion to Compel Discovery, the Court having heard the

argument of counsel and considered the pleadings filed

by the parties, and good cause having been found, it is

hereby ORDERED as follows:

Plaintiffs’ Motion to Compel production of docu-

ments pursuant to Plaintiffs’ First Document Requests

numbered 10, 12, 13, 30, 31, 35, and 37 is, with respect to

the legislative intent and purpose behind the wine tax

statute, O.C.G.A. § 36-50 from June 1, 1984 through

March 22, 1993 Granted, such production to be limited to

the State Revenue Commissioner’s general files relating

to legislation; the files of the person or persons within the

Governor's office with substantive responsibility for leg-

islation associated with State wine taxes; and (excluding

work product and privileged documents) files of the

Department of Law.

The Plaintiffs’ Motion to Compel production of docu-

ments pursuant to Plaintiffs’ First Document Request No.

Se ME METS NE MET

aa nha My

PM eh eS PASE

18 is Granted as follows: such production shall be limited

to either statistical data or appropriately redacted docu-

ments showing the actual protests, if any, of the payment

of distilled spirits taxes during 1989 as to which any

refunds were actually granted. Information that may be

redacted may include dollar amounts, names, addresses,

identity of the taxpayer or its representatives or its prod-

ucts, or anything else indicating the identity of any tax-

payer.

In light of the Court’s above rulings the Plaintiffs

have withdrawn the remainder of their Motion to Com-

pel, and Plaintiffs will not refile or further pursue their

Motion if the Defendants produce the documents, if any,

required by this Order.

Nothing contained herein shall be construed to affect

or override the parties’ prior negotiations and consensual

understanding and agreement with respect to any of the

document requests contained in the Plaintiffs’ First Docu-

ment Requests. Nothing contained herein shall require

the production of any privileged documents. In the case

documents as to which Defendants assert a “govern-

mental deliberations privilege”, the Defendants shall

specifically identify such documents so as to enable the

Court, if necessary, to determine the applicability of any

such privilege. The same identification duty shall apply

to any close questions with respect to the applicability of

the attorney/client privilege to a particular document.

SO ORDERED, this 1st day of March, 1994.

/s/ Frank M. Hull

Frank M. Hull, Judge

Superior Court of

Fulton County

APPENDIX D

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

AGE INTERNATIONAL, INC.;

AUSTIN, NICHOLS & CO.,

INC.; BACARDI IMPORTS, INC.;

THE BLACK PRINCE

DISTILLERY, INC.; BROWN-

FORMAN CORP.; CARILLON

IMPORTERS LTD.; DAVID

SHERMAN CORPORATION; E.

& J. GALLO WINERY; THE

FLEISCHMANN DISTILLING

COMPANY, a Division of Fourth

Colchester, Inc. f/k/a Whitbread

North America, Inc.; FOURTH

COLCHESTER, INC., f/k/a

Whitbread North America, Inc.,

in its own right and as

)

successor to Buckingham Wile )

)

CIVIL ACTION

FILE NO.

E-3793

Co.; HEAVEN HILL

DISTILLERIES, INC. HEIBLEIN,

INC.; HIRAM WALKER &

SONS, INC., in its own right

and as successor to Hiram

Walker Incorporated, also

successor to Maidstone Wine &

Spirits Inc., also successor to W.

A. Taylor & Company; et al.,

Plaintiffs

STATE OF GEORGIA, ZELL

MILLER, individually and as

Governor of the State of

Georgia, MARCUS E. COLLINS,

ee Te

individually and as Georgia State

Revenue Commissioner, and

CLAUDE L. VICKERS, individually

and as Deputy Commissioner of

the Administration Division of the

Department of Administrative

Services and as Director of the

Fiscal Division of the Department

of Administrative Services and as

State Treasurer for the State of

Georgia,

i i i

Defendants

ORDER

(Filed April 7, 1993)

This case came before the Court on the following

Motions:

1. Defendants’ Motion to Stay Discovery (filed

August 27, 1992);

2. Defendants’ Motion to Dismiss, or, in the

Alternative, for Judgment on the Pleadings

(filed September 4, 1992);

3. Plaintiffs’ Motion Pursuant to O.C.G.A.

§ 9-11-12(b) and (c) to Exclude Extraneous

Matters, or, in the Alternative, Pursuant to

O.C.G.A. § 9-11-56(f) for an Opportunity to

Take Discovery (October 16, 1992);

4. Defendants’ Motion to Strike Plaintiffs’ Evi-

dentiary Submissions of October 16, 1992

(November 17, 1992);

5. Defendants’ Motion to Strike Plaintiffs’ Evi-

dentiary submissions of January 8, 1993,

Namely, Exhibits “HH” Through “KK” (filed

February 1, 1993); and,

6. Defendants’ Objection and Motion to Strike

Plaintiffs’ Filing of Exhibits “LL”, “MM”,

and “NN” (filed February 5, 1993).

The Court, having reviewed all of the pending

Motions listed above, having heard oral argument of

counsel, and having found good cause, enters the within

Order, as follows.

I. DEFENDANTS’ MOTION TO DISMISS, OR, IN

THE ALTERNATIVE, FOR JUDGMENT ON THE

PLEADINGS

In ruling upon a Motion to Dismiss under O.C.G.A.

§ 9-11-12(b)(6), all “facts alleged in the complaint must be

taken as true.” Guthrie v. Monumental Properties, Inc., 141

Ga. App. 21, 232 S.E.2d 369, 372 (1977). Under O.C.G.A.

§ 9-11-12(b)(6), the “rules require that [the complaint] be

construed in the light most favorable to the [nonmoving]

plaintiff.” Morgan v. Georgia Vitrified Brick & Clay Co., 196

Ga. App. 779, 397 S.E.2d 49, 50 (1990). Moreover, “all

doubts” must be resolved in [the plaintiff’s] favor.” Tri-

City Sanitation, Inc. v. Action Sanitation Serv., Inc., 227 Ga.

489, 181 S.E.2d 377, 378 (1971). Likewise, in ruling upon a

motion for judgment on the pleadings under O.C.G.A.

§ 9-11-12(c), all allegations in the non-movant's pleading

“are to be taken as true and all allegations made by the

moving party “are taken as false”. Pressley v. Maxwell, 242

Ga. 360, 249 S.E.2d 49, 50 (1978). See also, Frady v. Irvin,

245 Ga. 307, 264 S.E.2d 866, 870 (1975); Seaboard Coast Line

R.R. v. Dockery, 135 Ga. App. 540, 218 S.E.2d 263, 266

(1975).

The plaintiffs have alleged that O.C.G.A. § 3-4-60, as

enacted in 1985, violates certain federal and state consti-

tutional provisions. The defendants’ Motion to Dismiss

and Motion for Judgment on the Pleadings seek, inter alia,

to raise a defense of collateral estoppel and res judicata,

but both Motions refer to and rely on numerous matters

outside the pleadings to support the Motions. Thus, the

Court can not find that these Motions can be granted

based on just the pleadings. In addition, the issues of

collateral estoppel and res judicata can not be decided

here without considering matters extraneous to the

pleadings, which is not allowable on Motions to Dismiss

or on Motions for Judgment on the Pleadings. The Court

holds that, taking all of the allegations in the Complaint

as true, the defendants have not carried their burden for

dismissa! or judgment at this juncture and some discov-

ery is warranted in this case. Accordingly, the defen-

dants’ Motion to Dismiss, or, in the Alternative, for

Judgment on the Pleadings is DENIED without prejudice

to seek judgment as a matter of law at a later date. This

Order is [sic] no manner rules on the merits of the

defenses of collateral estoppel or res judicata.

II. DEFENDANTS’ MOTION TO STAY DISCOVERY

Defendants have requested a stay of discovery pend-

ing resolution of Cross-Motions for Summary Judgment

that were pending before this Court in James B. Beam

Distilling Co. v. State of Georgia, et al., Civil Action No.

D-42527 and pending a resolution of the defendants’

Motion to Dismiss. The Cross-Motions for Summary

Judgment in the Beam case that were pending at the time

of defendants’ Motion to Stay Discovery are no longer

pending, and the defendants’ Motion to Dismiss is now

being denied. Accordingly, the defendants’ Motion to

Stay Discovery is DENIED as moot, and discovery may

proceed in accordance with the Civil Practice Act.

III. PLAINTIFFS’ MOTION PURSUANT TO O.C.G.A.

§ 9-11-12(b) AND (c) TO EXCLUDE EXTRANEOUS

MATTERS, OR, IN THE ALTERNATIVE, PUR-

TUNITY TO TAKE DISCOVERY

The plaintiffs moved to exclude from the Court's

consideration in ruling upon the defendants’ Motion to

Dismiss certain “Extraneous matters”. In the alternative,

the plaintiffs moved pursuant to O.C.G.A. § 9-11-56(f) for

an opportunity to take discovery. In ruling upon the

defendants’ Motion to Dismiss, the Court did not con-

sider the extraneous matters referenced in the defen-

dants’ Motion or in the plaintiffs’ replies, but considered

only the pleadings of record and the law. Accordingly,

plaintiffs’ Motion Pursuant to O.C.G.A. § 9-11-12(b) and

Pursuant to O.C.G.A. § 9-11-56(f) for an Opportunity to

Take Discovery is DENIED as moot.

IV. DEFENDANTS’ MOTION TO STRIKE PLAIN-

TIFFS’ EVIDENTIARY SUBMISSIONS OF OCTO-

BER 16, 1992

Vv. DEFENDANTS’ MOTION TO STRIKE PLAIN-

TIFFS’ EVIDENTIARY SUBMISSIONS OF JANU-

ARY 8, 1993, NAMELY, EXHIBITS “HH”

THROUGH “KK”; AND,

VI. DEFENDANTS’ OBJECTION AND MOTION TO

STRIKE PLAINTIFFS’ FILING OF EXHIBITS

“LL”, “MM” AND “NN”

Because the Court considered only the pleadings and

law in ruling upon defendants’ Motion to Dismiss, defen-

dants’ Motion to Strike plaintiffs’ Evidentiary Submis-

sions of October 16, 1992; Defendants’ Motion to Strike

Plaintiffs’ Evidentiary Submissions of January 8, 1993,

Namely, Exhibits “HH” Through “KK”; and Defendants’

Objection and Motion to Strike Plaintiffs’ Filing of

Exhibits “LL”, “MM” and “NN” are pretermitted and

there is no need to reach these issues until such later

time, if any, as the evidence objected to is relied upon by

a party.

SUMMARY

In summary,

1. Defendants’ Motion to Stay Discovery (filed August

27, 1992 is DENIED as moot and discovery may pro-

ceed in accordance with the Civil Practice Act;

2. Defendants’ Motion to Dismiss, or, in the Alternative,

for judgment on the Pleadings (filed September 4,

1992) is DENIED;

3. Plaintiffs’ Motion Pursuant to O.C.G.A. § 9-11-12(b)

and (c) to Exclude Extraneous Matters, or, in the

Alternative, Pursuant to O.C.G.A. § 9-11-56(f) for an

Opportunity to Take Discovery (October 16, 1992) is

DENIED as moot;

4. Defendants’ Motion to Strike Plaintiffs’ Evidentiary

Submissions of October 16, 1992 (November 17, 1992)

is deemed moot or pretermitted by the ruling on the

main Motion;

5. Defendants’ Motion to Strike Plaintiffs’ Evidentiary

Submissions of January 8, 1993, Namely, Exhibits

“HH” Through “KK” (filed February 1, 1993) is

deemed moot or pretermitted by the ruling on the

main Motion; and,

6. Defendants’ Objection and Motion to Strike Plaintiffs’

Filing of Exhibits “LL”, “MM” and “NN” (filed Feb-

ruary 5, 1993) is deemed moot or pretermitted by the

ruling on the main Motion.

IT IS HEREBY ORDERED, this 7th/ day of April, 1993.

/s/ Frank M. Hull

FRANK M. HULL

Judge, Fulton Superior Court

Atlanta Judicial Circuit

APPENDIX E

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

AGE INTERNATIONAL, INC.;

AUSTIN, NICHOLS & CO.,

INCORPORATED; BACARDI

IMPORTS, INC.; THE BLACK

PRINCE DISTILLERY, INC.;

BROWN-FORMAN

CORPORATION; CARILLON

IMPORTERS LTD.; DAVID

SHERMAN CORPORATION; E. & :

J. GALLO WINERY; HEAVEN

HILL DISTILLERIES, INC.;

HEUBLEIN, INC.; HIRAM :

WALKER & SONS, INC.; JIM : Civil Action No.

BEAM BRANDS CO.; JOSEPH E. :_ E-25073

SEAGRAM & SONS, INC.; THE ,

PADDINGTON CORPORATION; argent =

REMY AMERIQUE, INC.; : No. E-03793)

SAZERAC COMPANY, INC.;

SCHIEFFELIN & SOMEREST CO.; :

SIDNEY FRANK IMPORTING

COMPANY INC.; SOUTHERN

WINE & SPIRITS OF AMERICA,

INC., d/b/a Shaw Ross

International Importers; and

WILLIAM GRANT & SONS, INC., :

Plaintiffs,

VS.

STATE OF GEORGIA; ZELL

MILLER, individually and as

DRED Re Tat

OR NE EN ONS NR OE NR Rh

OF Bele eh Oo ™

" ts aS

Governor of the State of Georgia

MARCUS E. COLLINS, :

individually and as Georgia State :

Revenue Commissioner; and

STEVEN N. MCCOY individually

and as Director of Office of

Treasury and Fiscal Services for

the State of Georgia,

Defendants.

ORDER

(Filed Jul. 28, 1995)

BACKGROUND

This matter is before this Court on the following

discovery motions:

1) Non-Party Movants’ motion to quash and/

or motion for protective order; (filed 12/16/94)

2) Defendants’ motion to limit discovery and

for protective order; (filed 12/27/94)

3) Plaintiffs’ motion to compel and request for

extension of discovery; (filed 02/03/95) and

4) Defendants’ motion to determine the suffi-

ciency of response and request for admissions

and to compel discovery. (filed 05/12/95)

The Court heard the arguments of these motions on June

23, 1995, has read the briefs submitted by the parties, and

has reviewed the file in this case.

This action (along with Civil Action No. E-03793)

arises out of Plaintiffs’ claims for refund of liquor taxes in

this challenge to the constitutionality of Georgia’s liquor

tax statutes. Plaintiffs make a Commerce Clause chal-

lenge to O.C.G.A. § 3-4-60 as amended in 1985; they

additionally make a constitutional challenge to the 1992

Act.

Plaintiffs have sought discovery from the Defendants

and from non-party attorneys regarding the legislative

history surrounding the 1985 liquor tax statute. Attached

to the subpoenas to the non-parties were documents

which Defendants claim are protected by privilege and

which Plaintiffs inadvertently obtained.

NON-PARTY ATTORNEYS’ MOTION TO QUASH

AND/OR MOTION FOR PROTECTIVE ORDER;

DEFENDANTS’ MOTION TO LIMIT DISCOVERY;

AND PLAINTIFFS’ MOTION TO COMPEL AND

MOTION TO EXTEND DISCOVERY

The four non-party attorneys (“Movants”) represent

clients involved in the manufacturing, sale and/or distri-

bution of alcoholic beverages. These attorneys were

involved in lobbying efforts with various State officials

and others concerning legislation which would affect the

interests of Movants’ clients. Movants were served with

deposition subpoenas seeking the production of docu-

ments which Plaintiffs contend relate to the legislative

history surrounding the passage of the 1985 and the 1992

statutes.

The Court finds that these discovery requests seek

information that is irrelevant and not calculated to lead to

the discovery of admissible evidence. See Primary Care

Physicians Group, P.C. et al. v. Ledbetter, et al., 102 F.R.D.

RAMEN REY IN Ra RIE IRAN etc NY i cn MR RU ary “oe anayi cE er otgd-a AH Aas Mint Deeds Dong rt an

pelea as

SHOTS:

254 (1984). The lobbying efforts of these nonparty attor-

neys are not relevant to the questions of the existence of a

valid factor unrelated to protectionism and the absence of

less discriminatory alternative to achieve the State’s goal,

which are the ultimate questions in this case. See C & A

Carbone, Inc. v. Town of Clarkstown, N.Y., 114 S.Ct. 3049

(1994); Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 104 S.Ct.

3049 (1984); Hunt v. Washington Apple Advertising Comm’n,

432 U.S. 333, 97 S.Ct. 2434 (1977).

Accordingly, the Movants’ motion to quash is hereby

GRANTED. Plaintiffs may not discover from Movants

information regarding their lobbying efforts on behalf of

their clients nor may Plaintiffs discover any information

protected by the attorney-client privilege or which is

commercially confidential information. Movants shall

produce all documents which do not relate to lobbying

efforts and which are not privileged and shall appear at

their depositions subject to the foregoing limitations.

Plaintiffs’ motion to extend the discovery period is

hereby GRANTED. The discovery period will be

extended three months from the date of this Order. The

Court declines to award attorney’s fees in connection

with this motion.

MOTION FOR PROTECTIVE ORDER

Defendants’ motion concerns Plaintiffs’ attempt to

depose the non-parties about certain documents which

Defendants contend are privileged and which they claim

inadvertently came into Plaintiffs’ possession.

The Court finds that state law governs the issue of

evidentiary privileges in this case. See Federal Ins. Co. v.

National Distributing Co., 203 Ga. App. 763 (1992). The

attorney-client privilege protects some of the documents

at issue. Plaintiffs claim that these documents were pro-

duced in the Beam litigation and that therefore Defen-

dants have waived their privilege in this action.

However, Defendants argue that the earlier production of

these documents was inadvertent. Previous disclosure of

privileged documents in discovery does not waive the

privilege. See Marriott Corp. v. American Academy of Psy-

chotherapists, Inc., 157 Ga. App. 497 (1981). The Court

finds that Exhibits J, K and II are protected by the attor-

ney-client privilege.

Documents which are prepared in anticipation of

litigation will be protected by the work-product privilege

if reasonable grounds exist to believe that litigation is

probable. See Lowe's of Georgia, Inc. v. Webb, 180 Ga. App.

755 (1986). The privilege also applies to statements of

witnesses taken by a party’s agent. See Warmack v. Mini-

Skools, Ltd., 164 Ga. App. 737 (1983). The Court finds that

the Exhibits L, M, EE, and FF were prepared in anticipa-

tion of a challenge to Georgia’s alcohol import legislation

after the Bacchus decision, which invalidated a Hawaii

alcohol tax exemption. See Bacchus Imports Ltd. v. Dias, 468

U.S. 263, 104 S. Ct. 3049 (1984).

The Court finds that the term “secrets of state” as

stated in O.C.G.A. § 24-9-21(4) means more than matters

of national security, such as military and diplomatic

information. See Hardaway Co. v. Rives, 262 Ga. 631 (1992).

Exhibits U, V, W, X, Y, DD, and HH are pre-decisional

documents of state employees regarding the proposed

legislation which are protected by O.C.G.A. § 24-9-21(4).

For the foregoing reasons, Defendants’ motion is

hereby GRANTED. Plaintiffs shall not use and dissemi-

nate the privileged documents at issue.

MOTION TO DETERMINE SUFFICIENCY OF

RESPONSES TO REQUESTS FOR ADMISSIONS AND

TO COMPEL DISCOVERY RESPONSES

Defendants served each individual Plaintiff with

a set of requests to admit and interrogatories requesting

each Plaintiff to state and describe its individual claim for

a refund. Defendants wanted to ensure by this discovery

that each Plaintiff asserted an independent claim for a

refund. Plaintiffs collectively filed one joint response

which was a general denial of the requests. The Court

finds that Plaintiffs’ responses to Defendants’ discovery

are inadequate and insufficient. Plaintiffs shall speci-

fically and directly respond to the requests to admit by

either admitting or denying each request without merely

providing narrative responses. See O.C.G.A. § 9-11-36.

Each Plaintiff shall answer each of Defendants’ interroga-

tories separately and fully in accordance with Section 33

(a) of the Civil Practice Act.

Accordingly, Defendants’ motion is hereby

GRANTED. Plaintiffs shall fully respond to the discovery

within twenty (20) days of this order.

SO ORDERED this 28 day of July, 1995.

/s/ Alice D. Bonner

ALICE D. BONNER, JUDGE

Superior Court of Fulton

County

APPENDIX F

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

AGE INTERNATIONAL,

INC., et al.,

Plaintiffs,

VS.

STATE OF GEORGIA, et al.,

)

) CIVIL ACTION

)

Defendants, ‘

)

FILE NO: E-3793

AGE INTERNATIONAL,

INC., et al.,

Plaintiffs,

CIVIL ACTION

FILE NO: E-25073

vs.

STATE OF GEORGIA, et al.,

Defendants.

ORDER

(Filed June 17, 1997)

Before the court are the following motions:

1. Plaintiff's Motion to Compel;

2. Motion of Non-Party Attorneys George D. Busbee

and King & Spalding to Quash Subpoenas and for Protec-

tive Order;

3. Motion to Quash Plaintiffs’ Subpoena to Former

Legislator Lauren (Bubba) McDonald and for Protective

Order;

ee ee

4. Defendants’ Motion for Protective Order and to

Enforce this Court's July 28, 1995 Order Limiting Discov-

ery and for Other Relief; and

5. Plaintiffs’ Motion for Extension of Discovery.

I. PLAINTIFFS’ MOTION TO COMPEL

Plaintiff contends that the following non-parties were

served with Subpoenas Duces Tecum for Deposition,

Notices to Produce, and Requests for Production of Docu-

ments: Dan E. White, Office of Dan E. White, J.R. Cullens,

Office of J.R. Cullens, William I. Divine, Jr., Divine,

Wilkin, Raulerson, Fields, Joseph R. Cullens, and Free-

man & Hawkins (“non-party attorneys”); that the non-

party attorneys filed a motion to quash and/or for

Motion for protective order; and that Judge Bonner, in an

order entered on July 28, 1995, granted the motion in

part, but ordered the non-party attorneys to appear at the

deposition and to produce documents. Mr. White

appeared at a deposition on September 22, 1995, but

refused to answer most questions and did not produce

the documents. Plaintiffs seek an order (1) directing Dan

White (and the Office of Dan E. White) to appear for

deposition, to answer the questions already asked, to

answer follow-up questions, and to produce documents;

(2) overruling any and all advance objections based on

blanket assertions of privilege or claims of protection; (3)

holding that Plaintiffs may inquire, without limitation,

into any witnesses’ lobbying efforts, if the information

sought is generally relevant to the general subject matter

of this litigation and appears reasonably calculated to

lead to the discovery of admissible evidence; (4) granting

an extension of discovery period; (5) and ordering Mr.

White or his counsel to pay the Plaintiffs’ reasonable

expenses and attorneys’ fees associated with Mr. White’s

September 22, 1995 deposition.

Plaintiffs contend that the lobbying efforts of the non-

party attorneys are discoverable and relevant to the issue

of whether the State’s purposes behind the legislation

were legitimate. Defendants and the non-parties respond

that Judge Bonner’s order already ruled on this exact

issue, that their testimony is irrelevant, and that they are

incompetent to testify about the legislature’s purpose.

They also contend that Plaintiffs’ argument does not take

into consideration the effect of the Twenty-first Amend-

ment, in that the court must give deference to the State’s

stated purpose of the legislation when it addresses core

concerns of the Twenty-first Amendment (i.e., defraying

costs of regulating the importation of intoxicating

liquors).

Judge Bonner’s order held that lobbying efforts of the

non-party attorneys are not relevant to “the questions of

the existence of a valid factor unrelated to protectionism

and the absence of less discriminatory alternative [sic] to

achieve the State’s goal, which are the ultimate questions

in this case.” The order further directs the non-party

attorneys to “produce all documents which do not relate

to lobbying efforts and which are not privileged and shall

appear at their depositions subject to the foregoing lim-

itations.”

Judge Bonner’s order is consistent with the holdings in

Heublein, Inc. v. Georgia, 256 Ga. 578, 584, 351 S.E.2d 190

(1987) and Bacchus Imports, Ltd. v. Dias, 468 U.S. 263

(1984) that “the question for decision in a case in which a

liquor law within the ambit of the Twenty-first Amend-

ment is challenged as violating the Commerce Clause is

‘whether the principles underlying the Twenty-first

Amendment are sufficiently implicated . . . to outweigh

the Commerce Clause principles that would otherwise be

offended.’ ” Having carefully reviewed Heublein, Bacchus,

and the other authorities cited by the parties in their

voluminous “briefs”, the Court concludes that where the

purpose of a statute on its face supports the tenets under-

lying the Twenty-first Amendment, the only way to chal-

lenge the statute is to prove that its effect does not satisfy

its stated purpose. Even though both Bacchus and Hunt v.

Washington Apple Advertising Comm'n, 432 U.S. 333 (1977)

make reference to a challenge made on the basis of a

discriminatory purpose as distinguished from effect, nei-

ther is analogous to the case at bar. Hunt was decided on

the basis that the effect of the statute proved that the

purpose was improper and discriminatory, and Bacchus

involved a statute whose purpose was discriminatory and

improper on its face. Thus, in the case at bar, where one

court has already found that the purpose of the statute in

question “implicates central concerns of the Twenty-first

Amendment, i.e., defraying the increased costs of regulat-

ing the importation into this state of intoxicating liquors,”

Heublein, supra at 584-585, evidence tending to challenge

the purpose, including lobbying efforts on the part of the

attorneys sought to be deposed, is not relevant.

Having reviewed the record (which includes the tran-

script of Mr. White’s deposition), it does not appear that

Plaintiffs seek any information from Mr. White other than

his efforts regarding lobbying for the statute in question.

Therefore, Plaintiffs’ Motion to Compel is hereby

DENIED.

II. MOTION OF NON-PARTY ATTORNEYS GEORGE

D. BUSBEE AND KING & SPALDING TO QUASH

SUBPOENAS AND FOR PROTECTIVE ORDER

Non-party attorneys Busbee and King & Spalding were

attorneys for business competitors of the plaintiffs and

lobbyists for the current legislation. They have been sub-

poenaed for deposition and ask for an order quashing the

subpoena and protecting them from having to appear at

deposition, consistent with Judge Bonner’s July order.

They rely upon Mr. White’s argument supra.

Plaintiff’s contend that testimony concerning legisla-

tive history is relevant in an action to set aside a law and

cite to Fulton County v. Dangerfield, 260 Ga. 665, 398 S.E.2d

14 (1990). However, Dangerfield relates to zoning deci-

sions which is distinguishable from a Commerce Clause

challenge to a law which is within the ambit of the

Twenty-first Amendment and whose stated purpose

implicates the central concerns of the Twenty-first

Amendment, as discussed above. Further, it appears that

what the Plaintiffs are seeking is lobbying efforts as

opposed to legislative history. Plaintiffs’ reference to the

information sought as “legislative history” as opposed to

“lobbying efforts” is mere equivocation. As discussed

above, the lobbying efforts of the movants are not rele-

vant in this case.

Therefore, the Motion of Non-Party Attorneys George

D. Busbee and King & Spalding to Quash Subpoenas and

for Protective Order is hereby GRANTED. Plaintiffs are

prohibited from taking the depositions of George D. Bus-

bee and King & Spalding.

III MOTION TO QUASH PLAINTIFFS’ SUBPOENA

TO FORMER LEGISLATOR LAUREN (BUBBA)

MCDONALD AND FOR PROTECTIVE ORDER

Defendants contend that the Plaintiffs’ Subpoena for

Deposition of Lauren McDonald attempts to obtain the

testimony of a former legislator concerning the Legisla-

ture’s purpose or intent in enacting O.C.G.A. §3-4-60 in

violation of the Court’s July 28, 1995 order and seek to

quash the Subpoena for Deposition of Lauren McDonald

and to obtain a protective order. The Defendants further

contend that the Court should defer to the stated purpose

of the statute.

The Plaintiffs respond that the subpoena was issued

after July 28, 1995, so it cannot be in violation of the July

28, 1995 order, and that order dealt with lobbying efforts

of non-party attorneys, not the testimony of legislators.

The Plaintiffs cannot use the testimony of a legislator to

prove that O.C.G.A. 3-4-60 violates the Commerce Clause

based on an underlying improper purpose of “economic

protectionism”. Steward v. Atlanta Beef Co., 93 Ga. 12, 18

S.E. 981 (1893); Fulton County v. Dangerfield, supra; Jackson

v. Delk, 257 Ga. 541, 361 S.E.2d 370 (1987); Southern Rail-

way Co. v. A.O. Smith Corp., 134 Ga. App. 219, 213 S.E.2d

903 (1975).

While the opinion of a member of the legislature

which passed an act, or that of the comptroller-

general, as to its meaning and purpose, might

possibly often be valuable and constructive in

construing the act and arriving at the legislative

intent, it cannot be seriously contended that

courts can properly resort to sources of this kind

in ascertaining the legislative will as expressed

in a statute. These gentlemen [sic.] might differ

as to what an act did mean, which would only

increase, rather than relieve any difficulty a

court might have in construing the law. But

aside from this, which is only thrown out as a

suggestion in passing, this method of arriving at

the meaning of a public statute, cannot, after

careful reflection, receive the sanction of any

fair mind.

Southern Railway Co., supra at 221 (quoting Stewart, supra

at 18.) The post-enactment elucidation of a statute by one

legislator borders on being irrelevant to show the pur-

pose of the legislature as a whole. See Edwards v.

Aguillard, 482 U.S. 578, 596 n.19 (1987) & Wallace v. Jaffree,

472 U.S. 38, 74-75 (1985) (O’Connor’s Concurrence). Fur-

ther, “[hJuman experience teaches that those who expect

public dissemination of their remarks may well temper

candor with a concern for appearances and for their own

interests to the detriment of the decisionmaking process.”

U.S. v. Nixon, 418 U.S. 683, 705 (1974).

Therefore, the Motion to Quash Plaintiffs’ Subpoena to

Former Legislator Lauren (Bubba) McDonald and for the

Protective Order is hereby GRANTED. Plaintiffs are pro-

hibited from taking Mr. McDonald’s deposition.

IV. DEFENDANTS’ MOTION FOR PROTECTIVE

ORDER AND TO ENFORCE THIS COURT’S JULY

28, 1995 ORDER LIMITING DISCOVERY AND

FOR OTHER RELIEF.

Defendants seek to enforce the July 28, 1995 order and

to “limit Plaintiffs’ impermissible discovery efforts.”

Judge Bonner already issued a protective order on July

28, 1995, and to some extent, this order expands that

protective order as well. Defendants have not otherwise

shown how the Plaintiffs have failed to comply with the

July 28, 1995 order pursuant to O.C.G.A. §9-11-37. It

appears that this motion is a mere redundancy of previ-

ously filed motions. Therefore, Defendants’ Motion for

Protective Order and to Enforce this Court’s July 28, 1995

Order limiting Discovery and for Other Relief is hereby

DENIED.

V. PLAINTIFFS’ MOTION FOR EXTENSION OF DIS-

COVERY

In light of the foregoing rulings, it appears that no

further discovery need be done at this time. Therefore.

Plaintiffs’ Motion for Extension of Discovery is hereby

DENIED. As discussed in prior correspondence with

counsel, counsel are ordered to confer with one another

regarding the preparation of a scheduling order that

would provide time for the parties to file summary judg-

ment motions and a consolidated pre-trial order.

All requests for oral argument are denied.

SO ORDERED, this 17 day of June, 1997.

/s/ Alford J. Dempsey, Jr., Judge

ALFORD J. DEMPSEY, JR., JUDGE

FULTON COUNTY SUPERIOR COURT

ATLANTA JUDICIAL CIRCUIT

APPENDIX G

IN THE SUPERIOK COURT OF FULTON COUNTY

STATE OF GEORGIA

AGE INTERNATIONAL, INC.,

et al.,

Plaintiffs,

= CIVIL ACTION

STATE OF GEORGIA, et al., FILE NO: E-3793

Defendants.

)

AGE INTERNATIONAL, INC.,

)

et al., CIVIL ACITON

Plaintiffs, FILE NO: E-25073

VS.

STATE OF GEORGIA, et al.,

Defendants.

ORDER ON DEFENDANTS’ MOTION TO

QUASH SUBPOENA

(Filed Jun. 17, 1997)

Before the Court is Defendants’ Motion to Quash Sub-

poena to Verley J. Spivey and For Protective Order. Plain-

tiffs seek to depose Mr. Spivey about certain documents

that were produced in a prior suit against the Defendants

(James B. Beam Distilling Co. v. State of Georgia, Fulton

County Superior Court, Civil Action File No. D-42527). Mr.

Spivey worked as an attorney for the State Attorney Gen-

eral’s office at the time those documents were produced.

In an order entered on July 28, 1995, Judge Alice Bonner

granted Defendants’ Motion for Protective Order regard-

ing these documents, ruling that the Defendants did not

waive any privileges associated with the documents at

issue. Having reviewed the record and the relevant and

applicable law, the court finds that Plaintiffs have not

shown the relevance of Mr. Spivey’s testimony or that it

will lead to the discovery of admissible evidence.

Plaintiffs contend that Mr. Spivey failed to timely file

the motion to quash. O.C.G.A. §9-11-45 states that a court

may quash a subpoena “upon motion made promptly and

in any event at or before the time specified in the sub-

poena for compliance therewith.” The subpoena sched-

uled the deposition for September 28, 1995. Both counsel

agreed to reschedule the deposition until October 17,

1995. The motion was filed on October 16, 1995. Because

the motion was filed before the actual date of the deposi-

tion to which both counsel agreed, the court finds that the

motion to quash was timely under O.C.G.A. §9-11-45.

For the foregoing reasons, this Court hereby

GRANTS Defendants’ Motion to Quash Subpoena to Ver-

ley J. Spivey and for Protective Order. Plaintiffs are

hereby prohibited from taking the deposition of Mr. Ver-

ley J. Spivey.

Plaintiffs’ request for oral argument is denied.

SO ORDERED, this 17 day of June, 1997.

/s/ Alford J. Dempsey, Jr.

JUDGE

FULTON COUNTY

SUPERIOR COURT

_ ATLANTA JUDICIAL CIRCUIT

, JR.,

APPENDIX H

UNITED STATES CONSTITUTION

Interstate and Foreign Commerce Clause,

Article I, Section 8, clause 3

The Congress shall have Power . . . To regulate Com-

merce with foreign Nations, and among the several States

and with the Indian Tribes

APPENDIX I

UNITED STATES CONSTITUTION

Due Process Clause of the Fourteenth Amendment,

Amendment XIV, Section 1

No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person of

life, liberty, or property, without due process of law

APPENDIX J

UNITED STATES CONSTITUTION

Equal Protection Clause of the Fourteenth Amendment,

Amendment XIV, Section 1

No State shall . . . deny to any person within its jurisdic-

tion the equal protection of the laws

APPENDIX K

UNITED STATES CONSTITUTION

Import Export Clause, Article I, Section 10, clause 2

No State shall, without the Consent of the Congress,

lay any Imposts or Duties on Imports or Exports, except

what may be absolutely necessary for executing its

inspection Laws; and the net Produce of all Duties and

Imposts, laid by any State on Imports or Exports, shall be

for the Use of the Treasury of the United States; and all

such Laws shall be subject to the Revisions and Controul

of the Congress

APPENDIX L

UNITED STATES CONSTITUTION

Supremacy Clause, Article VI

This Constitution, and the Laws of the United States

which shall be made in Pursuance thereof; and all

Treaties made, or which shail be made, under the Author-

ity of the United States, shall be the supreme Law of the

Land; and the Judges in every State shall be bound

thereby, any Thing in the Constitution or Laws of any

State to the Contrary notwithstanding

APPENDIX M

UNITED STATES CONSTITUTION

Amendment XXI

Section 1.

The eighteenth article of amendment to the Constitu-

tion of the United States is hereby repealed.

Section 2.

The transportation or importation into any State, Ter-

ritory, or possession of the United States for delivery or

use therein of intoxicating liquors, in violation of the laws

thereof, is hereby prohibited.

APPENDIX N

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

COMPLAINT

Plaintiffs identified specifically in Paragraphs 4 - 29

below (hereinafter sometimes the “Out-of-State Sup-

pliers”) bring this civil action against the Defendants

named specifically in Paragraphs 30 - 38 below (hereinaf-

ter sometimes the “Defendants”) and allege as follows:

I. The Parties, Jurisdiction, and Venue

1. The Out-of-State Suppliers ship, deliver, or sell

alcohol and distilled spirits, within the meaning of

O.C.G.A. § 3-4-60, to wholesalers doing business in the

State of Georgia.

2. These alcohol beverages are produced either out-

side the State of Georgia and within the United States or

outside of the United States.

3. The Out-of-State Suppliers are prohibited by

Georgia law from shipping, delivering, and selling these

alcohol beverages to Georgia wholesalers unless they pay

applicable state taxes in advance by purchasing stamps

and affixing them or causing them to be affixed to each

bottle or container of alcohol beverages shipped into,

delivered in, or sold in the State of Georgia.

* * *

II. Procedural History

~ 46. This action seeks refunds, with interest, pur-

suant to O.C.G.A. § 48-2-35 (hereinafter sometimes the

“refund statute”) (as it existed prior to amendment by the

Act to Amend Title 3 of the Official Code of Georgia

Annotated, etc. (hereinafter sometimes the “1992 Act”)),

for taxes imposed pursuant to O.C.G.A. § 3-4-60 on dis-

tilled spirits and alcohol.

47. A true and correct copy of the refund statute is

attached hereto as Exhibit A and by this reference incor-

porate herein.

48. A true and correct copy of the 1992 Act is

attached hereto and by this reference incorporated herein

as Exhibit B.

49. In Section 5(d), the 1992 Act provides that, with

regard to taxes paid and stamps purchased prior to the

effectiveness of the 1992 Act and with regard to which an

application for credit or claim for refund has been filed

Prior to the effectiveness of the 1992 Act, the law in effect

at the time the application for credit or claim for refund

was filed shall apply, provided that no interest shall be

allowed on any such payment.

50. The 1992 Act by its terms became effective on

April 13, 1992 at the time Defendant Zell Miller approved

the Act.

51. Each of the Out-of-State Suppliers has timely

filed an Application for Tax Refund.

52. Each such Application for Tax Refund concerns

taxes paid and stamps purchased prior to the effective-

ness of the 1992 Act.

53. Each such Application for Tax Refund was filed

prior to the effectiveness of the 1992 Act.

54. A true and correct copy of the Application for

Tax Refund filed by Plaintiff Age International, Inc. is

attached hereto and by this reference incorporated herein

as Exhibit C.

* * *

80. Each of the Out-of-State Suppliers made a

request for a conference or hearing before the Revenue

Commissioner in connection with its Application(s) for

Tax Refund.

81. The Revenue Commissioner has failed to grant

any of these requests for a conference or hearing.

82. This action is timely commenced pursuant

O.C.G.A. § 48-2-35 and to Section 5(d) of the 1992 Act.

III. General Allegations

83. The taxes at issue were erroneously and illegally

assessed and collected for the reason that the statute

imposing these taxes, O.C.G.A § 3-4-60, is invalid, both

on its face and as applied, under United States law and

Georgia law.

84. The violations of United States law and Georgia

law by the State of Georgia are both historical and con-

tinuing as are the efforts of the State of Georgia to

deprive the Out-of-State Suppliers of a remedy for the

violations.

85. A true and correct copy of O.C.G.A. § 3-4-60 as

it was approved on April 1, 1985 (hereinafter sometimes

the “1985 statute”), which is the subject of this lawsuit, is

attached hereto and by this reference incorporated herein

as Exhibit W.

86. Distilled spirits and alcohol are manufactured in

the State of Georgia and shipped and delivered to whole-

salers doing business in the State of Georgia.

87. The State of Georgia first undertook to discrimi-

nate against suppliers of alcohol beverages manufactured

outside the State of Georgia and to foster and protect

suppliers of alcohol beverages manufactured inside the

State of Georgia shortly after Prohibition was repealed by

the Twenty-First Amendment to the United States Consti-

tution.

88. The Commerce Clause of the United States Con-.

stitution mandated the creation of an economic union to

replace the economic Balkanization permitted by the Arti-

cles of Confederation of the Republic that preceded the

United States Constitution.

89. The State of Georgia sought to justify its dis-

crimination against suppliers of out-of-state alcohol bev-

erages and its protection of suppliers of in-state alcohol

beverages by asserting that the Twenty-First Amendment

was a pro tanto repeal of the Commerce Clause.

90. By asserting that the Twenty-First Amendment

in effect repealed the Commerce Clause with respect to

any law or regulation having to do with alcohol bever-

ages, the State of Georgia maintained that discriminatory

measures that would otherwise be prohibited by the

Commerce Clause were constitutionally permissible as

long as the subject matter of the regulation was alcohol

beverages.

91. A true and correct copy of O.C.G.A. § 3-4-60 as

it existed prior to March 31, 1985 (hereinafter sometimes

the “pre-1985 statute”) is attached hereto and by this

reference incorporated herein as Exhibit X. .

92. Prior to 1985, the State of Georgia taxed distilled

spirits and alcohol originating outside the State of Geor-

gia at twice the rate as those that were “manufactured in

this State” and made “from Georgia-grown products.”

93. In other words, on its very face, the pre-1985

statute evinced a purpose to foster and protect, not only

the in-state manufacture of distilled spirits and alcohol,

but also the in-state agricultural production of the prod-

ucts used to manufacture these beverages.

94. The pre-1985 statute imposed a tax in the

amount of $.50 upon every liter of distilled spirits manu-

factured in the State of Georgia from Georgia grown

products.

95. By contrast, for distilled spirits manufactured

outside the State of Georgia, the pre-1985 statute doubled

the amount of the tax to $1.00 per liter of distilled spirits.

96. Similarly, the pre-1985 statute imposed a tax in

the amount of $.70 upon every liter of alcohol manufac-

tured in the State of Georgia from Georgia grown prod-

ucts.

97. By contrast, for alcohol manufactured outside

the State of Georgia, the pre-1985 statute doubled the

amount of the tax to $1.40 per liter of alcohol.

98. In 1984, in Bacchus Imports, Ltd. v. Dias, 468 U.S.

263, 104 S. Ct. 3049 (1984) (hereinafter sometimes “Bac-

chus”), the United States Supreme Court rejected the

proposition that the Twenty-First Amendment was a pro

tanto repeal of the Commerce Clause of the United States

Constitution.

99. In Bacchus, the United States Supreme Court

struck down as violative of the Commerce Clause a

Hawaii statute that fostered and protected producers of

alcohol beverages in Hawaii by imposing higher and

discriminatory taxes on alcohol beverages manufactured

outside the State of Hawaii.

100. Shortly after the United States Supreme Court's

1984 Bacchus decision, the State of Georgia and represen-

tatives of Georgia producers of alcohol beverages agreed

to continue in effect the longstanding policy of fostering

and protecting suppliers of in-state alcohol beverages by

discriminating against out-of-state suppliers of alcohol

beverages despite the Supreme Court’s determination

that such discrimination and protectionism violate the

Commerce Clause.

101. In furtherance of this plan to continue this

invidious discrimination and protectionism, representa-

tives of Georgia producers of alcohol beverages devel-

oped the so-called “import approach.” Under this plan,

the same discriminatory and protectionist alcohol tax sys-

tem in place since the 1930s (and, with it, the policy of

fostering and protecting suppliers of in-state alcohol bev-

erages by discriminating against suppliers of out-of-state

alcohol beverages) would remain in place, but under a

newly enacted statute reciting as a subterfuge legislative

purposes linked with the language contained in the

Twenty-First Amendment.

102. Under the import approach, the statute,

although it would leave in place the very same discrimi-

natory double taxation and protectionist single taxation,

was to be worded so as to impose taxes upon the facially

more neutral activities of a) first sale, use, or delivery of

beverages and b) importation of beverages into Georgia.

103. Thus, under the new import approach, subpart

(1) of O.C.G.A. § 3-4-60 would impose one tax upon the

“first sale, use, or final delivery within this state,” and

subpart (2) of O.C.G.A. § 3-4-60 would impose a second

and double tax upon “the importation . . . into this state.”

104. This sleight of hand continued the invidious

discrimination and protectionism because beverages pro-

duced in state are never imported into Georgia. Thus,

alcohol beverages produced in Georgia would never be

subject to the import tax and, therefore, would continue

to be favored and protected by the new import approach.

105. There was one problem with the import

approach. With its facially more neutral concepts of a)

first sale, use, and delivery and b) importation, the

import approach clearly continued the longstanding pol-

icy of fostering and protecting the in-state production of

alcohol beverages, just as had the pre-1985 statute — albeit

in a less obvious way. But the pure import approach

would not work to foster and protect the in-state agri-

cultural producers of the products used to make these

beverages.

106. Thus, although the pure and facially more neu-

tral import approach would continue the pre-1985 stat-

ute’s policy of fostering and protecting suppliers of in-

state beverage production, it would surrender the protec-

tion also afforded to suppliers of in-state agricultural

production by the pre-1985 statute. Under the pure

import approach, in-state beverage producers would

become free for the first time to buy the component

products they needed from anywhere, not just from

within Georgia, without Sacrificing the tax benefit

afforded them by the new protectionist statute. In other

words, the pure import approach would sacrifice the

protection and promotion of Georgia growers of agri-

cultural products.

107. The cost was too high, and the pure and

facially more neutral import approach was compromised

and undercut and ultimately defeated by a modification

to include express language of overt unconstitutional eco-

nomic protectionism on the very face of the statute.

108. Thus, a third subpart was tacked onto subparts

(1) and (2), which compose the pure and facially more

neutral import approach. The tacked-on subpart (3) of the

1985 statute provides that “All alcohol Spirits manufac-

tured within this state for sale within this state shall be

made from Georgia grown products.” (Emphasis supplied)

109. Under this modified import approach, the in-

State beverage producers would have to continue to buy

their component products in state, just as under the

mad ube Aa Sa ee

pre-1985 statute, in order to continue to benefit from the

discriminatory tax rates. By this means, the protection

also afforded the in-state agricultural producers under

the pre-1985 statute was continued under the 1985 statute

as well.

110. With its enactment of the 1985 statute, the State

of Georgia adopted the in-state alcohol beverage pro-

ducers’ import approach, as modified to accommodate

the in-state agricultural producers.

111. Thus was the protection of the in-state agri-

cultural producers restored, but at a new cost: This time,

at the cost of the pure and facially more neutral import

approach.

112. The inclusion of the tacked-on subpart (3) of

O.C.G.A. § 3-4-60, with its express protection of “Georgia

grown products,” made it painfully obvious once again

on the very face of the statute (and in language taken

directly, but for the omission of a hyphen, from the

unconstitutional pre-1985 statute) that the whole plan to

enact a new statute almost identical in form and sub-

stance to the double-taxing pre-1985 statute was simply

designed to avoid the mandate of the United States

Supreme Court’s 1984 Bacchus decision and to continue in

place the economic protectionism that the State of Geor-

gia had always maintained was its prerogative under the

Twenty-First Amendment.

113. Incorporating the modified import approach,

the 1985 statute imposes a tax in the amount of $.50 upon

every liter of distilled spirits manufactured in the State of

Georgia from Georgia grown products. This is the same

tax in effect under the pre-1985 statute. _

N10

114. By contrast, for distilled spirits manufactured

outside the State of Georgia, the 1985 statute doubles the

amount of the tax to $1.00 per liter of distilled spirits.

This is the same tax in effect under the pre-1985 statute.

115. Similarly, the 1985 statute imposes a tax in the

amount of $.70 upon every liter of alcohol manufactured

in the State of Georgia from Georgia grown products.

This is the same tax in effect under the pre-1985 statute.

116. By contrast, for alcohol manufactured outside

the State of Georgia, the 1985 statute doubles the amount

of the tax to $1.40 per liter of alcohol. This is the same tax

in effect under the pre-1985 statute.

117. Anticipating that its blatant subterfuge might

not withstand judicial scrutiny, the State of Georgia

implemented the modified import approach with a com-

plicated series of enactments and repeals so as to obscure

its discriminatory purpose and to attempt to assure that a

valid statute observing the mandate of the Commerce

Clause would automatically come into effect in the event

that the discriminatory and protectionist modified import

approach version of the statute should be struck down.

118. In Spring of 1985, the General Assembly of the

State of Georgia enacted an act (approved March 31, 1985)

Striking the pre-1985 statute and inserting in lieu thereof

a new O.C.G.A. § 3-4-60 (hereinafter sometimes the “fall-

back constitutional statute”) granting an equal tax on “all

distilled spirits, whether imported into this state or man-

ufactured in this state” and granting an equal tax on “all

alcohol whether imported into this state or manufactured

in this state.”

Nil

119. A true and correct copy of the act adopting the

fallback constitutional statute is attached hereto and by

this reference incorporated herein as Exhibit Y.

120. Immediately thereafter, the Georgia General

Assembly enacted yet another act (approved April 1,

1985) striking the fallback constitutional statute and

inserting in lieu thereof the 1985 statute incorporating the

modified import approach.

121. A true and correct copy of the act adopting the

modified import approach 1985 statute is attached hereto

and by this reference incorporated herein as Exhibit Z.

122. At the same time, the State of Georgia provided

that the fallback constitutional statute, which had been in

effect for only a single day, would “revive” if ever the

modified import approach 1985 statute should later be

deemed invalid.

123. The newly enacted modified import approach

1985 statute (which has remained the operative statute

throughout the periods at issue in the Out-of-State Sup-

pliers’ Applications for Tax Refund), imposes a tax of $.50

per liter for distilled spirits and $.70 per liter for alcohol

produced in state from Georgia grown products, precisely

as did the pre-1985 statute. On the other hand, the 1985

statute imposes a tax of twice that amount at $1.00 and

$1.40 per liter on imported distilled spirits and alcohol,

respectively, as did the pre-1985 statute.

124. In enacting the modified import approach 1985

statute, the Georgia General Assembly recited that the

enactment would provide for the increased cost of admin-

_ istration and collection of revenues.

N12

125. The Georgia General Assembly also purported

to find and determine “that the cost of regulating and

administering the manufacture, distribution, and sale of

[alcohol beverages] consumed in this state is greater for

imported [alcohol beverages] than it is for [alcohol bever-

ages] produced within this state.”

126. The finding and determination was a sham

intended solely to obscure the purpose behind the mod-

ified import approach 1985 statute, which was designed

to continue to discriminate against alcohol beverages pro-

duced outside the State of Georgia and to provide a

competitive advantage to Georgia producers.

127. By way of example, imported alcohol bever-

ages are by definition never manufactured in the State of

Georgia. On the other hand, alcohol beverages produced

within the State of Georgia are by definition always manu-

factured in the State of Georgia. The cost of regulating and

administering the manufacture of alcohol beverages there-

fore can never be greater for imported alcohol beverages

than it is for alcohol beverages produced within the State

of Georgia.

128. In 1987, in Heublein, Inc. v. State, 256 Ga. 578,

351 S.E.2d 190 (“Heublein”), appeal dismissed, 483 U.S. 1013

(1987), the Supreme Court of Georgia upheld the 1985

statute in the face of a limited challenge to the statute

under the Commerce Clause of the United States Consti-

tution.

129. In its opinion, the Georgia Supreme Court

recited the finding and determination of the Georgia Gen-

eral Assembly set forth in Paragraph 125 above and a

similar finding by the trial court.

N13

130. In its opinion, the Georgia Supreme Court

stated that the plaintiff before the court did not challenge

the purpose of the 1985 statute and concluded that, for

the reason that the unchallenged purpose of the 1985

statute was to defray the increased costs of regulating the

importation into the State of Georgia of intoxicating

liquors, the trial court had not erred in sustaining the

validity of the 1985 statute.

131. The amount of revenue raised each year by the

State of Georgia through the extra tax borne solely by

imported alcohol products exceeds by several multiples

the entire annual budget for all kinds of regulation (not

just regulation pertaining to importation into the State of

Georgia) of all kinds of imported and local alcohol bever-

ages (not just distilled spirits and alcohol).

132. In James B. Beam Distilling Company v. State,

Civil Action No. D-42527 (Fulton Super.) (hereinafter

sometimes “Beam”); Joseph E. Seagram & Sons, Inc. v. State,

Civil Action File No. 87-7070-8 (Dekalb Super.) (hereinaf-

ter sometimes “Seagram”); and Heublein, Inc. v. State, Civil

Action File No. 87-3542-6 (DeKalb Super.) (hereinafter

sometimes “Heublein II”), the pre-1985 statute has been

challenged in separate actions in the Superior Courts of

Georgia.

133. In the discovery phase of the Beam action con-

cerning the pre-1985 statute, the State of Georgia pro-

duced documents concerning the legislative history of the

1985 statute that had not been produced or considered by

the court in the earlier and unsuccessful Heublein court

challenge to the 1985 statute.

N14

134. Relying upon the newly disclosed evidence

concerning the enactment of the modified import

approach 1985 statute, the Fulton County Superior Court

in Beam found and held that the purpose of the pre-1985

statute was economic protectionism (that is, to benefit

local business and local industry) and that the pre-1985

statute was therefore in violation of the Commerce Clause

of the United States Constitution.

135. On appeal, the Georgia Supreme Court in James

B. Beam Distilling Co. v. State of Georgia, 259 Ga. 363, 382

S.E.2d 95 (1989), affirmed that both the purpose and the

effect of the pre-1985 statute were simple economic pro-

tectionism and that the pre-1985 statute was invalid

under the Commerce Clause of the United States Consti-

tution.

136. Both the Fulton County Superior Court and the

Georgia Supreme Court in Beam limited their holdings to

prospective application only. This limitation had the

effect of denying any refund relief to the taxpayer in Beam

because, by that time, the pre-1985 statute had been

replaced by the 1985 statute incorporating the modified

import approach.

137. With this sequence of events, the State of Geor-

gia had finally purported to acknowledge the Commerce

Clause’s prohibition of discriminatory and protectionist

taxes on alcohol beverages (at least as to the pre-1985

Statute). Nevertheless, the State of Georgia has to this day

refused to grant any remedy to beverage taxpayers who

were forced to pay taxes under the unconstitutional

pre-1985 statute.

ee —

N15

138. Additionally, through this sequence of events,

the State of Georgia has fulfilled its purpose of discrimi-

nation and protectionism through the imposition of the

exact same invalid double taxation in the exact same

amounts, now reimposed by the modified import

approach 1985 statute and continuing to this very day.

139. With this result, the State of Georgia deliber-

ately violated the Commerce Clause of the United States

Constitution.

140. In James B. Beam Distilling Co. v. State of Georgia,

__. U.S. __, 111 S. Ct. 2439 (1991), the United States

Supreme Court held that its ruling in Bacchus and the

Georgia Courts’ ruling in Beam (that the pre-1985 statute

violated the Commerce Clause) must not be limited to

prospective application, but must also be applied to the

taxpayer in Beam and other similarly situated litigants.

Notwithstanding that decision, the State of Georgia con-

tinues in its efforts to thwart the purpose of the Com-

merce Clause and to ignore the mandates of the

Fourteenth Amendment to the United States Constitution

by refusing to refund any money to the taxpayers in

Beam, Seagram, and Heublein II or otherwise to grant them

any retrospective relief. The State of Georgia has done so

through the assertion of new defenses in Beam, Seagram,

and Heublein II after the Beam case was remanded by the

United States Supreme Court.

141. Additionally, since the decision of the United

States Supreme Court in Beam, the State of Georgia has

enacted new legislation (the 1992 Act) as described below

in an effort to deny beverage taxpayers a remedy;

e---

N16

included within the 1992 Act is a purported repeal of the

provision for interest on tax refunds.

142.- The United States Supreme Court's reversal of

the Georgia Supreme Court's prospectivity limitation on

its holding in Beam (that the pre-1985 statute was uncon-

stitutional) launched a movement to amend the 1985 stat-

ute so as to equalize the tax. ,

143. The Georgia General Assembly refused to

amend the 1985 statute, deciding instead to continue the

policy of discriminating against out-of-state beverage

suppliers and fostering and protecting in-state beverage

suppliers by leaving the modified import approach 1985

Statute intact.

144. Instead of equalizing the tax so as to eliminate

the 1985 statute’s invalidity under United States law, the

Georgia General Assembly with its enactment of the 1992

Act singled out the alcohol beverage taxpayers who hold

the claims of invalidity from all other Georgia taxpayers

for a special cut-off and elimination of remedies to

enforce those claims.

145. Prior to April 13, 1992, the only retrospective

remedy under Georgia law for taxes erroneously or ille-

gally assessed or collected that was available with respect

to taxes paid or stamps purchased for alcohol beverages

was the refund statute, O.C.G.A. § 48-2-35 (Exhibit A).

146. Although the State of Georgia contends that

the refund statute is unavailable to alcohol beverage tax-

Payers, the refund statute provided for the mandatory

payment of a full refund of all taxes or fees “determined

N17

to have been erroneously or illegally assessed and collect-

ed... under the laws of this state, whether paid volun-

tarily or involuntarily.”

147. Although the State of Georgia contends that

the refund statute is unavailable to alcohol beverage tax-

payers, the refund statute provided for the payment of

“interest on the amount of taxes or fees [erroneously or

illegally assessed or collected] at the rate of 9 percent per

annum from the date of payment of the tax or fee.”

148. In Sections 5(d) and 6, the 1992 Act purported

to repeal the provision for interest.

149. The 1992 Act purported to repeal the interest

provision even as to tax refund applications involving

taxes paid before the effectiveness of the 1992 Act.

150. The 1992 Act purported to repeal the interest

provision even as to tax refund applications filed with the

Revenue Commissioner before the effectiveness of the

1992 Act.

151. Both the purpose and the effect of the 1992 Act

are to retaliate against and discriminate against alcohol

beverage taxpayers with claims of invalidity concerning

the alcohol tax system of the State of Georgia and its

protectionist treatment of in-state alcohol beverages and

the suppliers of such beverages through its discrimina-

tory treatment of out-of-state alcohol beverages and the

suppliers of such beverages.

_ 152. The 1992 Act’s purported repeal of the interest

provision is invalid in that the 1992 Act was enacted in

violation of United States law.

N18

* * *

154. The 1992 Act’s purported repeal of the interest

Provision is, as a retroactive law, invalid generally and

invalid with respect to the Out-of-State Suppliers in that

it violates the Constitution of the United States, includ-

ing, but not limited to, the Supremacy Clause of the

United States Constitution, U.S. Const. art. Vi; the Due

Process Clause of the Fourteenth Amendment to the

United States Constitution, U.S. Const. amend. XIV, § 1;

the Equal Protection Clause of the Fourteenth Amend-

ment to the United States Constitution, U.S. Const.

amend. XIV, § 1; and the prohibition in the United States

Constitution against passage by any state of “any Bill of

Attainder, ex post facto Law,” U.S. Const. art. I, § 10, cl.1.

* * *

A. First Claim: Violation of Supremacy

Clause and Commerce Clause

o om *

B. Second Claim: Violation of Supremacy

Clause and Import Export Clause

* * *

C. Third Claim: Violation of Supremacy

Clause and Due Process

* * *

D. Fourth Claim: Violation of Supremacy

Clause and Equal Protection

* * *

E. Fifth Claim: Due Process

* * *

N19

EXHIBIT A

(a) A taxpayer shall be refunded any and all taxes

or fees which are determined to have been erroneously or

illegally assessed and collected from him under the laws

of this state, whether paid voluntarily or involuntarily,

and shall be refunded interest on the amount of the taxes

or fees at the rate of 9 percent per annum from the date of

payment of the tax or fee to the commissioner. Refunds

shall be drawn from the treasury on warrants of the

Governor issued upon itemized requisitions showing in

each instance the person to whom the refund is to be

made, the amount of the refund, and the reason for the

refund.

(b) (1) A claim for refund of a tax or fee erro-

neously or illegally assessed and collected may be

made by the taxpayer at any time within three years

after the date of the payment of the tax or fee to the

commissioner. Each claim shall be filed in writing in

the form and containing such information as the

commissioner may reasonably require and shall

include a summary statement of the grounds upon

which the taxpayer relies. Should any person be

prevented from filing such an application because of

his own or his counsel’s service in the armed forces

during such period, the period of limitation shall

date from his or his counsel’s discharge from the

service. .

(2) In the event the taxpayer desires a confer-

ence or hearing before the commissioner in connec-

tion with any claim for refund, he shall specify such

desire in writing in the claim and, if the claim con-

forms with the requirements of this Code section, the

commissioner shall grant a conference at a time he

shall reasonably specify.

N20

(3) The commissioner or his delegate shall con-

sider information contained in the taxpayer’s claim

for refund, together with such other information as

may be available, and shall approve or disapprove

the taxpayer’s claim and notify the taxpayer of his

action.

(4) Any taxpayer whose claim for refund is

denied by the commissioner or his delegate or whose

claim is not decided by the commissioner or his

delegate within one year from the date of filing the

claim shall have the right to bring an action for a

refund in the superior court of the county of the

residence of the taxpayer, except that:

(A) If the taxpayer is a public utility or a non-

resident, the taxpayer shall have the right to

bring an action for a refund in the superior court

of the county in which is located the taxpayer’s

principal place of doing business in this state or

in which the taxpayer’s chief or highest corpo-

rate officer or employee resident in this state

maintains his office; or

(B) If the taxpayer is a nonresident individual

or foreign corporation having no place of doing

business and no officer or employee resident and

maintaining his office in this state, the taxpayer

shall have the right to bring an action for a

refund in the Superior Court of Fulton County

or in the superior court of the county in which

the commissioner in office at the time the action

is filed resides.

(5) No action or proceeding for the recovery of

a refund under this Code section shall be com-

menced before the expiration of one year from the

date of filing the claim for refund unless the commis-

sioner or his delegate renders a decision on the claim

within that time, nor shall any action or proceeding

N21

be commenced after the expiration of two years from

the date the claim is denied. The two-year period

prescribed in this paragraph for filing an action for

refund shall be extended for such period as may be

agreed upon in writing between the taxpayer and the

commissioner during the two-year period or any

extension thereof.

approved by the commissioner or his delegate and the

taxpayer has not paid other state taxes which have

become due, the commissioner or department may set off

the unpaid taxes against the refund. When the setoff

authorized by this subsection is exercised, the refund

shall be deemed granted and the amount of the setoff

shall be considered for all purposes as a payment toward

the particular tax debt which is being set off. Any excess

refund remaining after the setoff has been applied shall

be refunded to the taxpayer.

O.C.G.A. § 48-2-35

EXHIBIT B

SENATE BILL 774

By: Senators Langford of the 35th, Dawkins of the 45th,

Taylor of the 12th and others

[AS PASSED]

AN ACT '

To amend Title 3 of the Official Code of Georgia

Annotated, relating to alcoholic beverages, so as to

change the provisions for and limitations upon refunds or

N22

credits for taxes on alcoholic beverages; to change provi-

sions relating to the manner of collecting state excise

taxes on distilled spirits; to amend Code Section 48-2-35

of the Official Code of Georgia Annotated, relating to

refund of taxes, so as to clarify that said Code section

does not apply to taxes paid or stamps purchased for

alcoholic beverages; to provide an effective date; to pro-

vide for applicability; to repeal conflicting laws; and for

other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF

GEORGIA:

Section 1. Title 3 of the Official Code of Georgia

Annotated, relating to alcoholic beverages, is amended by

striking Code Section 3-2-13, relating to the issuance of

refunds or credits for taxes paid on alcoholic beverages or

stamps purchased, and inserting in lieu thereof a new

Code Section 3-2-13 to read as follows:

“3-2-13. (a) Notwithstanding any other provi-

sion of this title or any other title to the contrary, the

Provisions of this article shall provide the exclusive

remedy and procedure for seeking and obtaining any

and all refunds or credits for taxes paid on alcoholic

beverages and for stamps purchased in payment of

taxes on alcoholic beverages. No refund in the form

of a disbursement from the state treasury shall be

allowed for any such taxes or payments. No credit

Shall be allowed for any such taxes or payments

unless expressly authorized by this article.

(b) The commissioner may issue credits for

taxes paid by or due from a wholesaler or, in the case

of taxes on distilled spirits, may issue credits for

stamps purchased by a manufacturer, distiller, or

N23

wholesaler when it is shown to the commissioner’s

satisfaction that any of the following events have

occurred:

(1) Alcoholic beverages have been received

by the wholesaler through an error in shipment

and the alcoholic beverages are returned to the

shipper prior to any sale by the wholesaler in

this state;

(2) Alcoholic beverages ordered by the

wholesaler have been destroyed in transit prior

to entry into the wholesaler’s warehouse or stor-

age area;

(3) Alcoholic beverages which are unfit for

consumption upon receipt have been received by

the wholesaler and the alcoholic beverages are

returned to the shipper or destroyed prior to any

sale by the wholesaler in this state;

(4) Alcoholic beverages have been

destroyed while in the possession of a whole-

saler within the state by an act of God, such as

fire, flood, lightning, wind, or other natural

calamity;

(5) Wines have been sold by the wholesaler

for delivery and consumption outside the state,

provided the sale and delivery shall in all

respects comply with the requirements of Code

Section 3-6-26.1; or

(6) Taxes were paid or stamps were pur-

chased under a statute expressly held to be

unconstitutional by a court of last resort and the

payments were made under protest and the

ground of the protest was the same as the basis

for the ruling of unconstitutionality by the court

of last resort.

N24

paid or stamps purchased in any case where an

amount equal to the amount of taxes paid or to the

cost of the stamps purchased has been charged to or

paid by any purchaser of the person seeking a refund

or credit. When an applicant is issued a credit for

taxes paid or stamps purchased, in every case where

an amount equal to the amount of taxes paid or cost

of the stamps purchased has been charged to or paid

by any purchaser of the applicant, the applicant shall

refund or credit to the purchaser or customer an

amount equal to the credit allowed by the commis-

sioner.”

Section 2. Said title is further amended by striking

Code Section 3-2-14, relating to limitations on refunds,

and inserting in lieu thereof a new Code Section 3-2-14 to

read as follows:

“3-2-14. (a) No credit for taxes paid on alco-

holic beverages or for stamps purchased in payment

of taxes on alcoholic beverages shall be allowed

unless an application for credit is filed with the

commissioner within 90 days from the date payment

is received by the commissioner. If, in the opinion of

the commissioner, an application for credit of taxes

paid pursuant to this title contains a false statement,

the application shall be denied. When an applicant is

indebted to the state or an applicant is in violation of

this title, the commissioner shall decline to approve

the credit until the applicant has complied with the

laws of this state. In no event shall interest be

allowed on any refund or credit for taxes paid on

alcoholic beverages or for stamps purchased in pay-

ment of taxes on alcoholic beverages. Nothing con-

tained in this Code section shall be construed so as

to allow for a credit or refund of any license fee

lawfully due or paid under this title.

N25

(b) Each application for credit shall be filed in

writing in the form and containing such information

as the commissioner may reasonably require. The

commissioner or his delegate shall consider informa-

tion contained in the application, together with saci

other information as may be available, and shall

approve or disapprove the application and notify the

applicant of his action. Any applicant whose claim is

denied by the commissioner or his delegate or whose

claim is not decided by the commissioner or his

delegate within one year from the date of filing the

claim shall have the right to bring an action for a

credit in the Superior Court of Fulton County. No

action or proceeding for the recovery of a credit shall

be commenced before the expiration of one year

from the date of filing the application unless the

commissioner or his delegate renders a decision on

the application within that time, nor shall any action

or proceeding be commenced after the occurrence of

the earlier of (1) the expiration of one year from the

date the claim is denied, or (2) the expiration of two

years from the date the application was filed. The

time for filing an action for the recovery of a credit

may be extended for such period as may be agreed

upon in writing between the applicant and the com-

missioner during the period authorized for bringing

an action or any extension thereof. In the event any

application is approved and the taxpaye

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.