Freeman v. Corzine
2010 U.S. App. LEXIS 25694
3rd Cir.2010Background
- 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)
