Lebamoff Enters., Inc. v. Gretchen Whitmer, 18-2200

Background

Michigan operates a three-tier alcohol system (producers → in-state wholesalers → in-state retailers) and is the wholesale seller for liquor; wholesalers and retailers face extensive state regulation.
In 2017 Michigan amended its Liquor Control Code to permit in-state retailers to deliver alcohol to consumers via licensed third-party facilitators or common carriers but denied the same delivery privilege to out-of-state retailers unless they obtain a Michigan retail license.
Lebamoff (an Indiana wine retailer) and several Michigan consumers sued, alleging the delivery restriction violates the dormant Commerce Clause and the Article IV Privileges and Immunities Clause; the Michigan Beer & Wine Wholesalers Association intervened to defend the law.
The district court granted summary judgment to plaintiffs and extended delivery rights to out-of-state retailers; Michigan obtained a stay and appealed.
The Sixth Circuit reversed: it held the Twenty-first Amendment permits Michigan to distinguish in-state retailers (subject to the three-tier system) from out-of-state sellers and upheld the delivery restriction; it also held the district court imposed the wrong remedy and should have severed the offending provision.
A concurring opinion emphasized the novel issues posed by online/remote sales but agreed Michigan presented sufficient evidence that the in-state requirement advances public-health/regulatory objectives under Tennessee Wine.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Michigan's restriction on out-of-state retailer deliveries violates the dormant Commerce Clause	Lebamoff: the law discriminates against out-of-state economic actors and is subject to normal dormant Commerce Clause scrutiny	Michigan: Twenty-first Amendment supplies a "different" test permitting regulations that channel alcohol through in-state mechanisms to protect public health and enforce the three-tier system	Held: Twenty-first Amendment permits Michigan to treat in-state retailers differently if the law is justified by public-health or other legitimate nonprotectionist grounds; Michigan's law survives under that framework
Whether the delivery restriction is pretextual protectionism	Lebamoff: the restriction functions as economic protectionism favoring local businesses	Michigan: restriction preserves the three-tier system, tax collection, and enforcement; not mere protectionism	Held: Court finds regulatory/health/supervision rationales sufficient and not predominantly protectionist
Whether the law violates the Privileges and Immunities Clause (Art. IV)	Lebamoff: out-of-state sellers are denied privileges affording in-state retailers an advantage	Michigan: Clause protects citizens, not a right to sell alcohol; nonresidents can obtain MI licenses and are not barred by residency	Held: No Privileges and Immunities violation; selling alcohol is not a protected privilege and nonresidents may obtain licenses
Proper remedy if law were unconstitutional	Lebamoff: district court extended delivery rights to out-of-state retailers	Michigan: sever the offending new-delivery provision and leave pre-2017 regime intact per severability clause and legislative intent	Held: Court: district court chose wrong remedy; should have severed the unconstitutional provision consistent with the statute's severability clause and purpose

Key Cases Cited

Tennessee Wine & Spirits Retailers Ass'n v. Thomas, 139 S. Ct. 2449 (U.S. 2019) (alcohol regulations subject to a different dormant Commerce Clause test; states may justify differential treatment on public-health/nonprotectionist grounds)
Granholm v. Heald, 544 U.S. 460 (U.S. 2005) (States may mandate three-tier systems but must not enact facially discriminatory exceptions favoring in-state economic actors)
North Dakota v. United States, 495 U.S. 423 (U.S. 1990) (Twenty-first Amendment affords States broad authority to regulate importation/distribution of alcohol)
Healy v. Beer Inst., 491 U.S. 324 (U.S. 1989) (extraterritoriality doctrine bars state laws that effectively control commerce outside the State)
Bridenbaugh v. Freeman-Wilson, 227 F.3d 848 (7th Cir. 2000) (upholding state ban on out-of-state direct deliveries as consistent with §2 of the Twenty-first Amendment)
Arnold's Wines, Inc. v. Boyle, 571 F.3d 185 (2d Cir. 2009) (upholding in-state-only retailer delivery privileges to preserve three-tier system)
Wine Country Gift Baskets.com v. Steen, 612 F.3d 809 (5th Cir. 2010) (recognizing local deliveries as a constitutionally benign incident of the three-tier system)
Midcal Aluminum, Inc. v. State Farm, 445 U.S. 97 (U.S. 1980) (States' authority to structure distribution system qualifies for deferential treatment in certain alcohol regulatory contexts)
Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (U.S. 1984) (States have legitimate interests like promoting temperance when regulating alcohol)