KAMBIS ANVAR and MICHELLE DRUM, Plaintiffs, Appellants, v. ELIZABETH K. DWYER, in her official capacity as Interim Director of RI Department of Business Regulation; PETER F. NERONHA, in his official capacity as Attorney General of Rhode Island; and RHODE ISLAND RESPONSIBLE BEVERAGE ALCOHOL COALITION, INC., Defendants, Appellees.
No. 22-1843
United States Court of Appeals For the First Circuit
September 7, 2023
Hon. John J. McConnell, Jr., U.S. District Judge
Before Montecalvo, Selya, and Thompson, Circuit Judges.
James A. Tanford, with whom Robert D. Epstein and Epstein Seif Porter & Beutel, LLP were on brief, for appellants.
Michael W. Field, Assistant Attorney General, with whom Katherine Connolly Sadeck, Assistant Attorney General, was on brief, for appellees Dwyer and Neronha.
Deborah A. Skakel, with whоm Blank Rome LLP, Gerald J. Petros, Ryan M. Gainor, and Hinckley Allen & Snyder LLP were on brief, for appellee Rhode Island Responsible Beverage Alcohol Coalition, Inc.
John C. Neiman, Jr. and Maynard Nexsen PC on brief for Center for Alcohol Policy, amicus curiae.
Jacob Hegeman, Frederick R. Yarger, Teresa G. Akkara, and Wheeler Trigg O‘Donnell LLP on brief for Wine & Spirits Wholesalers of America, Inc. and American Beverage Licensees, amici curiae.
SELYA, Circuit Judge. This appeal arises out of a challenge to Rhode Island‘s liquor laws on the ground that consumers are denied access to alcohol deliveries from out-of-state retailers in violation of the Commerce Clause. See
We briefly rehearse the background facts and travel of the case.
A
Rhode Island, like many states, controls the distribution of alcohol within its borders through what is commonly described as a three-tier system. The state issues licenses specific to the manufacture, wholesale, or retail of alcohol, thereby maintaining a distinction between each tier of the alcohol supply chain. See
The licensing of retailers is left to local municipalities. See
Within this three-tier system, alcoholic beverages sold to consumers are first funneled through in-state wholesalers. They are the only entities allowed to sell alcohol to licensed Rhode Islаnd retailers. See
This regulatory scheme does admit one exception: consumers may buy alcohol for a non-business purpose from an in-state or out-of-state manufacturer and have it shipped directly to their home by common carrier if the purchase is made in person on the manufacturer‘s premises. See
B
Against this backdrop, we turn to the case at hand. Plaintiffs-appellants Kambis Anvar and Michelle Drum are Rhode Island wine consumers who allege that they would purchase wine from out-of-state retailers and have it delivered to their homes if that course of action was not prohibited by state law. In October of 2019, they sued Elizabeth K. Dwyer, in her official capacity as the Interim Director of the DBR, and Peter F. Neronha, in his official capacity as the Rhode Island Attorney General, in
In due course, the parties cross-moved for summary judgment. See
After hearing oral argument and mulling the parties’ competing contentions, the district court held that requiring retailers to establish a physical presence within the state to sell and deliver alcohol was allowed under the Twenty-first Amendment because the physical-presence requirement was essential to the state‘s three-tier system and, thus, necessary to “promote[] the health and safety of Rhode Islanders.” Anvar v. Dwyer, 633 F. Supp. 3d 592, 599 (D.R.I. 2022). In upholding the in-statе-presence requirement for retailers, the court did not examine concrete evidence to discern the effectiveness of that requirement in promoting public health and safety. The court also upheld, on similar grounds, the requirement that licensed retailers purchase alcohol only from licensed in-state wholesalers. See id.
As to the plaintiffs’ challenge to the requirement that retailers deliver alcohol themselves (as opposed to arranging for delivery of customer purchases by common carrier), the district court determined that the relevant laws do not discriminate against out-of-state retailers because no retailer, regardless of location, is permitted to deliver alcohol by common carrier. See id. The court did not address whether the common-carrier restriction, although neutral on its face, has a discriminatory effect or purpose.
When all was said and done, the district court granted the defendants’ motion for summary judgment and denied the plaintiffs’ cross-motion. This timely appeal followed.
II
We review an order granting or denying summary judgment de novo. See Minturn v. Monrad, 64 F.4th 9, 13 (1st Cir. 2023). “The pendency of cross-motions for summary judgment does not alter the standard of review.” Conlogue v. Hamilton, 906 F.3d 150, 154 (1st Cir. 2018). “Cross motions simply require us to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed.” Barnes v. Fleet Nat‘l Bank, N.A., 370 F.3d 164, 170 (1st Cir. 2004) (quoting Wightman v. Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996)).
III
The Constitution grants Congress the power “[t]o regulate Commerce . . . among the several States.”
Even so, states are afforded greater leeway when regulating alcohol because of the authority granted to them by the Twenty-first Amendment. See Tenn. Wine, 139 S. Ct. at 2470. Section 2 of the Twenty-first Amendment provides:
The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.
It follows, we think, that when assessing whether a state‘s law regulating alcohol runs headlong into the dormant Commerce Clause, a court first must determine whether the challenged law discriminates -- either on its face, in effect, or in purpose -- against interstate commerce. See Or. Waste Sys., Inc., 511 U.S. at 99; Fam. Winemakers of Cal., 592 F.3d at 9-10, 13. If it does, the inquiry then shifts to whether the challenged lаw “serve[s] a State‘s legitimate [section] 2 interests” such as addressing “the public health and safety effects of alcohol use.” Tenn. Wine, 139 S. Ct. at 2469, 2474. To prove as much, the state may not rely on either “mere speculation” or “unsupported assertions” but, rather, must proffer “concrete evidence” demonstrating that the main effect of the law is the advancement of, say, public health and safety, not economic protectionism.
Id. at 2474 (quoting Granholm, 544 U.S. at 490, 492). If the law‘s predominant effect is protectionist in nature, such that it cannot be upheld under the Twenty-first Amendment, the court must then determine whether the law “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” Granholm, 544 U.S. at 489 (quoting New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 278 (1988)).
With this legal framework in place, we move from the general to the specific. The plaintiffs asseverate that Rhode Island‘s issuance оf licenses only to retailers who maintain a physical presence within the state unconstitutionally discriminates against out-of-state retailers who are thus prohibited from delivering alcohol directly to Rhode Island consumers. See
We first pause to note, though, that the plaintiffs do not appeal the district court‘s determination that Rhode Island‘s requirement that licensed retailers purchase alcohol only from licensed in-state wholesalers, see
A
Rhode Island law facially discriminates against out-of-state retailers by authorizing the issuance of retail licenses exclusively to state residents or in-state businesses. See
Despite that impediment to interstate commerce, the district court upheld the in-state-presence requirement on the ground that it is integral to Rhode Island‘s three-tier system of alcohol regulation and, thus, a valid exercise of the state‘s authority under the Twenty-first Amendment. See Anvar, 633 F. Supp. 3d at 598-99. In announcing this holding, the court relied in part on a Supreme Court dictum describing the three-tier system of alсohol regulation in favorable terms. See id.
We do not gainsay that the Supreme Court has, in the past, described the implementation of a three-tier system as an appropriate use of a state‘s authority under the Twenty-first Amendment. See Granholm, 544 U.S. at 489 (“We have previously recognized that the three-tier system itself is ‘unquestionably legitimate.‘” (quoting North Dakota v. United States, 495 U.S. 423, 432 (1990))); see also Cherry Hill Vineyard, LLC v. Baldacci, 505 F.3d 28, 30 (1st Cir. 2007).3 But the
Here, the district court concluded that the in-state-presence requirement is an essential feature of Rhode Island‘s three-tier system because it allows state officials to conduct on-site inspections to ensure compliance with the law. Seе Anvar, 633 F. Supp. 3d at 599. But the court arrived at that conclusion based on an expert report affirming that principle in the abstract, together with the naked fact that retailers are required by law to maintain certain sales records for inspection. See
Nor did the district court explicitly consider whether the plaintiffs’ arguments or proffered evidence were sufficient to rebut the defendants’ stated justification for the in-state-presence requirement. Cf. Lebamoff Enters. Inc. v. Whitmer, 956 F.3d 863, 879 (6th Cir. 2020) (McKeague, J., concurring) (upholding alcohol regulation because plaintiffs failed to produce “sufficient countervailing evidence” rebutting state‘s showing that law promoted public health). The plaintiffs offer data and reports ostensibly demonstrating that states that allow out-of-state retail deliveries of alcohol do not experience a correspоnding erosion in public health and safety. They also insist that Rhode Island‘s rationale for imposing an in-state-presence requirement on retailers is undercut by the exception available to out-of-state manufacturers, who can deliver directly to consumers as long as consumers make their purchases from the manufacturer‘s premises. See
The short of it is that a discriminatory aspect of a state‘s version of the three-tier system cannot be given a judicial seal of approval premised either on the virtues of three-tier systems generally or on the basis of a theoretical benefit to public health and safety associated with the challеnged regulation. See Tenn. Wine, 139 S. Ct. at 2474-75. After all, there is nothing inherent in the three-tier system -- which aims at preventing vertical integration between alcohol producers, wholesalers, and retailers -- that necessarily demands an in-state-presence requirement
B
We add a coda. The plaintiffs argue vociferously that the district court applied the wrong legal standard by not considering whether nondiscriminatory alternatives to the challenged laws were available. That argument, however, conflates the proper Twenty-first Amendment inquiry with a traditional analysis under the dormant Commerce Clause. See supra Part III. The district court may find the existence of alternatives relevant in assessing whether the challenged laws in fact promote public health and safety, but the mere existence of possible alternatives does not, for purposes of a Twenty-first Amendment inquiry, necessarily invalidate a challenged law. See B-21 Wines, Inc., 36 F.4th at 225-26 (“Although consideration of nondiscriminatory alternatives could have some relevance to [the Twenty-first Amendment] inquiry, it does not transform the applicable framework into the test that ordinarily applies to a dormant Commerce Clause challenge when the Twenty-first Amendment is not implicated.“).
C
That ends this aspect of the matter. We vacate the district court‘s entry of summary judgment as to the constitutionality of the in-state-presence requirement for retailers, and we remand that issue for a fuller consideration of the parties’ respective offers of proof. The district court may, of course, take additional evidence on this issue if it sees fit.
V
The plaintiffs concede that their challenge to Rhode Island‘s common-carrier restriction, sеe
Below, the district court -- despite upholding the in-state-presence requirement -- proceeded to address the plaintiffs’ challenge to the common-carrier restriction. The court ruled that the latter requirement was nondiscriminatory because the relevant statutory and regulatory provisions made no distinction between in-state and out-of-state retailers. See Anvar, 633 F. Supp. 3d at 599. That portion of the district court‘s judgment also must be vacated. We explain briefly.
Even if a law does not appear to be discriminatory on its face, it still may
Should the district court deem the in-state-presence requirement unconstitutional -- a matter on which we take no view -- it must then reassess whether the plaintiffs have sufficiently demonstrated that the common-carrier restriction has a discriminatory effect or purpose. See id. at 10, 13. If so, the court must proceed to analyze whether the law is a permissible exercise of Rhode Island‘s authority under the Twenty-first Amendment. See Tenn. Wine, 139 S. Ct. at 2474-75.
VI
We need go no further. For the reasons elucidated above, the judgment of the district court is affirmed in part, vacated in part, and remanded for further proceedings consistent with this opinion. All parties shall bear their own costs.
So Ordered.
SELYA
CIRCUIT JUDGE