Clayton Byrd v. Tenn. Wine & Spirits Retailers Ass'n
883 F.3d 608
6th Cir.2018Background
- Tennessee requires retail alcoholic-beverage licensees (and, for corporations, their officers, directors, and stockholders) to have been bona fide Tennessee residents for two years to obtain a license and ten years to renew. (Tenn. Code Ann. § 57-3-204(b)).
- Two out-of-state retailers (Total Wine affiliate and Kimbrough) applied for Tennessee retail licenses but did not meet the durational-residency requirements; TABC deferred action. The Tennessee Wine & Spirits Retailers Association alerted TABC that litigation was likely.
- Tennessee's Attorney General (on behalf of the TABC Executive Director Byrd) sought a declaratory judgment; the Association removed the case to federal court; plaintiffs (the retailers) moved for summary judgment challenging the residency rules as violating the dormant Commerce Clause.
- The district court held the durational-residency provisions facially discriminatory and unconstitutional under the dormant Commerce Clause; it rejected Tennessee’s argument that the Twenty-first Amendment immunized the provisions.
- The Sixth Circuit affirmed, declaring § 57-3-204(b)(2)(A), (3)(A)-(B), and (3)(D) unconstitutional and severing those provisions from the statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tennessee's durational-residency requirements are immunized by the Twenty-first Amendment | Granholm/Bacchus do not bar Commerce Clause review; residency rules are not central to §2 powers | §21 grants states near-plenary control over in-state alcohol distribution; residency rules fit §2 authority | The Twenty-first Amendment does not shield these durational-residency provisions from Commerce Clause scrutiny; not closely related to §2 core powers |
| Whether the residency requirements violate the dormant Commerce Clause | The provisions discriminate against out-of-state economic actors and are facially discriminatory; no necessary relation to distribution of product | The rules advance health, safety, oversight and are permissible regulation of in-state distribution | Statute is facially discriminatory and thus virtually per se invalid absent an unserveable local purpose; the state failed to show no reasonable nondiscriminatory alternative |
| Whether Tennessee’s asserted interests (health, safety, oversight) can be achieved by nondiscriminatory means | Plaintiffs: nondiscriminatory alternatives (manager residency, bonds, electronic monitoring, public meetings) suffice | State: residency ensures accountability and local knowledge to protect health/safety | State did not demonstrate that nondiscriminatory alternatives were inadequate; burden not met |
| Remedy: whether the offending provisions should be invalidated or severed | Plaintiffs sought relief removing the durational-residency barriers | State argued for preserving the statute under §2 or limiting relief | Court severed the unconstitutional residency provisions and left the remainder of §57-3-204 intact under Tennessee elision/severability law |
Key Cases Cited
- Granholm v. Heald, 544 U.S. 460 (2005) (Twenty-first Amendment does not automatically save state laws that discriminate in favor of local producers; Commerce Clause still limits discriminatory alcohol regulations)
- Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984) (state alcohol laws that are mere economic protectionism are not saved by §2)
- Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (1986) (Commerce Clause strikes discriminatory state liquor regulation)
- Healy v. Beer Institute, 491 U.S. 324 (1989) (state law invalidated for regulating out-of-state commerce in a way that burdens interstate commerce)
- Pike v. Bruce Church, Inc., 397 U.S. 137 (1970) (nondiscriminatory statutes tested by balancing burden on interstate commerce against local benefits)
- Jelovsek v. Bredesen, 545 F.3d 431 (6th Cir. 2008) (invalidated a two-year Tennessee residency requirement for winery licenses as impermissibly favoring in-state interests)
- Cooper v. Texas Alcoholic Beverage Comm'n (Cooper II), 820 F.3d 730 (5th Cir. 2016) (Granholm affirmed Commerce Clause scrutiny of alcohol laws; durational residency on owners not justified by §2)
- S. Wine & Spirits of Am., Inc. v. Div. of Alcohol & Tobacco Control, 731 F.3d 799 (8th Cir. 2013) (upheld Missouri in‑state residency requirements for wholesalers' officers/directors/majority owners under deferential §2 analysis)