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Freeman v. Corzine
2010 U.S. App. LEXIS 25694
3rd Cir.
2010
Read the full case

Background

  • Five plaintiffs—including two New Jersey wine enthusiasts and a California winery—sue New Jersey ABC Director challenging the ABC Law under the Dormant Commerce Clause.
  • New Jersey maintains a three-tier alcohol distribution system: producers to wholesalers to retailers to consumers.
  • Plaintiffs challenge: (i) in-state direct-sale privileges for plenary/farm wineries vs. out-of-state wineries; (ii) personal importation limits and reciprocity; (iii) ban on direct shipments from all wineries to consumers.
  • Granholm v. Heald (and North Dakota v. United States) confirm three-tier systems are legitimate but cannot discriminate against out-of-state interests.
  • The District Court granted summary judgment against some provisions and for others; this Third Circuit opinion addresses standing, merits, and remedies.
  • The court ultimately remands for a district-court remedy determination after invalidating certain provisions and upholding the direct-shipment ban.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Are in-state direct-sale provisions discriminatory under the Dormant Commerce Clause? Freemans: discriminatorily favor in-state wineries. Fischer/State: on-premises sales within premises; non-discriminatory or salvageable by interpretation. Discriminatory; invalid as facially violating Dormant Commerce Clause.
Do the direct-sale to retailers/consumer provisions violate the Dormant Commerce Clause? Freemans: prohibit out-of-state access to channels; harms interstate commerce. State may regulate; distributors may serve local interests. Discriminatory; invalid as to both resale and direct-consumer pathways.
Do the one-gallon import cap and the reciprocity provision violate the Dormant Commerce Clause? Cap and reciprocity discriminate against interstate commerce. Limitation serves local regulatory interests; reciprocity is permissible under construction. Both provisions unconstitutional; strict scrutiny applied and invalidated.
Is the direct shipments ban constitutional as to effects and Pike balancing? Direct shipment ban harms interstate commerce in effect. Commerce Clause permits choice of channels; effects not discriminatory. Not shown to burden interstate commerce; direct shipments ban sustained.
What remedies should follow the invalidation of underinclusive provisions? Remedy should extend coverage or nullify offending provisions. Remedy best determined by district court. Remand to district court to determine appropriate remedy.

Key Cases Cited

  • Granholm v. Heald, 544 U.S. 460 (U.S. 2005) (restrains states from discriminating in favor of local producers; three-tier system legitimate)
  • North Dakota v. United States, 495 U.S. 423 (U.S. 1990) (three-tier system legitimate; cautions against local-preference discrimination)
  • Am. Trucking Ass'ns v. Whitman, 437 F.3d 313 (3d Cir. 2006) (dormant Commerce Clause aims to prevent protectionism and local favoritism)
  • Cloverland-Green Spring Dairies v. Pa. Milk Mktg. Bd., 298 F.3d 201 (3d Cir. 2002) (discrimination and balancing framework for dormant Commerce Clause)
  • Cherry Hill Vineyards v. Lilly, 553 F.3d 423 (6th Cir. 2008) (contrast on direct shipment bans; factors for discriminatory effects)
  • Brown v. City of Pittsburgh, 586 F.3d 263 (3d Cir. 2009) (interpretation of statutory construction and limiting constructions in constitutional challenges)
  • Baldacci v. Baldacci, 505 F.3d 46 (1st Cir. 2007) (discriminatory potential alone not enough to trigger strict scrutiny)
Read the full case

Case Details

Case Name: Freeman v. Corzine
Court Name: Court of Appeals for the Third Circuit
Date Published: Dec 17, 2010
Citation: 2010 U.S. App. LEXIS 25694
Docket Number: 99-1678
Court Abbreviation: 3rd Cir.