Arnold's Wines, Inc. v. Boyle

INC., WINES, Kahn’s ARNOLD’S d/b/a/ Inc., Buy Rite, Spirits, &

Fine Wines Liquors,

Doing as Crown Business Silber, Block, Plain- T. Sharon

Joshua

tiffs-Appellants, BOYLE,

Daniel B. Chairman Authority, Liquor York capacity, Lawrence J. Ged-

his official

da, of the Division of Commissioner Control, Beverage in his of-

Alcoholic Li- capacity, New York State

ficial Authority, Defendants-Appellees,

quor Corp., Brothers Wine &

Eber Industries, Inc., Metropoli-

Charmer Inc., Associates, Package In-

tan Store

tervenor-Defendants-Appellees.

No. 07-4781-cv. Appeals, Court of

United States Circuit.

Second 20, 2009.

Argued: Jan. July

Decided: Phillips, Sidley LLP,

Carter G. Austin Washington, (Jacqueline Cooper, G. DC Austin, LLP, DC, Sidley Washington Wolf, Moak, Craig Joanne and Karin Moore, Spirits Wine & Wholesalers of America, Inc., DC, Washington, of coun- sel), Spirits for Amici Curiae Wine & America, Inc., Wholesalers of National LLP, Seidman, Milberg Peter E. New Association, Beer Wholesalers and Sazerac (Sanford York, NY, Dumain, Milberg P. Company. LLP, York, NY, Tanford, New A. James Law, Bloomington, Indiana Univ. School WALKER, CALABRESI, Before: IN, Epstein, Epstein and Robert D. Cohen WESLEY, Judges. Circuit Mendes, IN, Indianapolis, Donahoe & counsel), Plaintiffs-Appellants. for WESLEY, Judge: Circuit Dearing,

Richard P. Assistant Solicitor This case asks us to chart a course (Barbara Underwood, General D. Solicitor between two constitutional General, Belohlavek, and Michael Senior S. delineate power the boundaries of a state’s Counsel, Opinions, Division Appeals & commerce, regulate express one an counsel), Cuomo, for Andrew M. Attor- grant, the other an implied limitation. York, ney General of the State of New Twenty-first Section York, NY, Defendants-Appellees. New for provides: transportation importa- “The or State, tion into Territory, posses- or Davison & O’Mara, O’Mara, John F. sion delivery of the United States for (Harris P.C., Elmira, PLLC, N.Y. Beach intoxicating liquors, use therein of in viola- Pittsford, NY, counsel), for Intervenor- thereof, hereby tion of the laws prohibit- is Defendant-Appellee Eber Bros. Wine & Const, XXI, § ed.” U.S. amend. Liquor Corp. Congress Commerce Clause reserves for Graff, LLP, Howard Shapiro Dickstein power regulate ... “[t]o Commerce York, NY, New for Intervenor-Defendant- States,” among implicitly the several thus Industries, Appellee Charmer Inc. limiting states’ do so. U.S. Gardner, Gardner, Aan J. Verini & New Const, Here, art. cl. 3. we must York, NY, Intervenor-Defendant-Ap- determine whether New York’s alcohol pellee Metropolitan Package Store Associ- regulatory regime properly within the ation, Inc. scope of Twenty-first section Olson, Wildman, Harrold, Sarah L. Alen Amendment, such that it does not run (Richard & Dixon, LLP, IL Chicago, Har- afoul of the dormant Commerce Clause. rison, Westerman Ball Ederer Miller & We conclude that challenged regime Sharfstein, LLP, Mineóla, NY, counsel), permissible under DeCelle, for Athur J. Executive Vice Amendment insofar it requires that all President and General Counsel of the Beer liquor sold within the New York Institute, DC, Washington, for Amicus Cu- pass through regu- New York’s three-tier riae The Beer Institute. latory system. Anthony Coté, Kogut, Willingham S. & BACKGROUND P.C., MI, Lansing, East for Amicus Curiae Beverage Wines, Inc., The American Appellant Licensees Associ- Anold’s doing ation. Spirits, business as Kahn’s Fine Wines & sold, delivered, shipped, two stores in the or trans- operating wine retailer area, would like to Indianapolis, ported pass Indiana to a New York consumer first directly to New York con- products entity sell its licensed the State of T. Block and 100(1) Joshua states, sumers. York. “No per- Section residents, Silber, York would New Sharon manufacture for sale or son shall sell buy to and receive wine like to be able alcoholic beverage wholesale retail Appel- out-of-state retailers. directly from obtaining ap- within the state without brought this action the Unit- lants thus by propriate required license therefor this District Court for the Southern ed States chapter.” N.Y. Aleo. Bev. Cont. Law New York the New District of 100(1) (McKinney Supp.2006).1 § 2000 & Liquor Authority and individu- York State provisions illegal The other two make to Liquor of the New York State al officials ship beverages alcoholic to an unlicensed § pursuant U.S.C. Authority, consumer). (i.e., entity within the declaratory judgment finding seeking a 102(l)(a)-(b). §Id. 102(l)(b) 100(1), 102(l)(a), and sections part These are of the three- Beverage York’s Alcoholic Control New licensing tier structure for the sale and Law”) (“ABC to the unconstitutional Law beverages distribution alcoholic estab- they prohibit out-of-state wine extent shortly pas- in New York after the lished selling delivering and retailers from wine sage Twenty-first Amendment. The directly to New York consumers. Two system purpose wholesalers and an as- main of the three-tier licensed New York sys- of licensed New York retailers of a “tied” preclude sociation existence appear retailers, leave to as interve- granted were producers tem between and nor-defendants. system generally orga- believed to enable industry. nized crime to dominate the The (Holwell, J.), in court a well- The district (1) (2) the producer, three tiers are: decision, mo- granted defendants’ reasoned (3) wholesaler, distributor or and the re- dismiss, holding challenged that the tion to producer this system, tailer. Under integral part of the three- sections are wholesaler, who sells to a licensed in-state regulatory system consistent tier alcohol excise taxes and delivers the alcohol pays York authority granted with the New retailer. The retail- to a licensed in-state Amendment. Arnold’s consumers, er, turn, sells the alcohol to Wines, Boyle, F.Supp.2d Inc. v. collecting applicable. sales taxes where (S.D.N.Y.2007). timely 413-14 York, only in-state and out-of-state appeal. filed may bypass system the three-tier wineries 79-c, §§ Id. ship directly to consumers. Regulatory A. New York’s Scheme producers All other out-of-state and 79-d. 102(l)(b) whole- 102(l)(a), ship sellers must to state-licensed 100(1), Sections system. require that all salers within the three-tier of New York’s ABC Law 100(1), 100(2). wineries, §§ Manufac- exception see id. tailers. See id. 1. With the 79-c, 79-d, state, products §§ all manufacturers' operating turers outside system. state, pass the three-tier must similarly not licensed therefore operating within the State of Manufacturers ship products their to a licensed in-state must required a license New York are to obtain to New York wholesaler or retailer for resale state, granted by well their as distribute 100(2), 102(1). §§ See id. consumers. products through licensed wholesalers and re- 102(l)(a)-(b); Wines, see also Arnold’s out-of-state retailers discriminates F.Supp.2d 403-04. against interstate commerce and thus vio- lates the Commerce Clause. The Com- licensing This scheme allows the state to provides merce Congress Clause has relationships among the financial oversee manufacturers, wholesalers, retailers, “regulate Commerce with Nations, §§ foreign see N.Y. Aleo. Bev. Cont. Law and among the several 105(16)-(17), 106(13)-(14), as well as the States, and with the Indian Tribes.” U.S. Const, ways price goods entities these and make 8,§I art. cl.3. It is well established 101-b(2)-(3). sales, 101-aa, §§ see id. implies that the affirmative negative, Authority may inspect any and that the Commerce Clause establishes alcoholic premises beverages where are a “dormant” constraint on the of manufactured, stored, sold, or as well as legislation the states to enact that inter- kept the books and records prem- on such feres with or burdens interstate com- 18(4), 103(7), 104(10), §§ 105(15), ises. Id. See, e.g., Higgins, merce. Dennis v. 498 106(12). New York asserts that the three- 447, 439, 865, 111 112 L.Ed.2d regulatory system tier allows the state to (1991). Thus, may pass states efficiently prevent collect taxes more and laws that discriminate out-of-state the sale of alcohol to minors. economic interests unless those laws “ad- case, Relevant particular this New legitimate purpose local vanced retailers, York-licensed the final tier in the adequately by cannot be served reasonable system, three-tier may state’s obtain off- nondiscriminatory alternatives.” New En- premises permitting licenses them to deliv- Limbach, ergy Co. Ind. v. 486 U.S. of er directly alcohol to consumers’ “in homes 108 S.Ct. 100 L.Ed.2d 302 operated vehicles owned by and such lieen- (1988). see[s], operated by or hired and such licen- trucking from a or transportation see[s] However, Court has made company registered liquor with the author- clear that Twenty-first Amendment al- 105(9). ity.” § Id. New York retail off- ters dormant Commerce analysis Clause of premises comply licensees must with a set governing state laws importation highly regulations governing detailed beverages. alcoholic E.g., Granholm v. location, characteristics, physical and Heald, 460, 488-89, 544 U.S. 125 S.Ct. operating premises, hours of their as well 1885, 161 L.Ed.2d 796 Ratified in as their financial relationships pro- with Twenty-first Amendment re- wholesalers, ducers and and the manner in pealed Eighteenth Amendment and they keep which books and records for all ended Prohibition. Section 2 of the 105(l)-(23). their transactions. Out- provides: Amendment transportation “The of-state opera- retailers without an in-state State, importation or into Territory, or tion cannot obtain a New York retail off- possession of the United States for deliv- premises license. It is this distinction— ery or use therein intoxicating liquors, retailers, that New York-licensed but not thereof, in violation of the laws hereby retailers, out-of-state may liquor deliver prohibited.” purpose The section was directly to Ap- New York residents —that protect certain core interests of the pellants challenge in this case. states in “promoting temperance, ensuring DISCUSSION conditions, orderly market raising rev- enue” argue through regulation production by York’s ban on direct sales to consumers beverages. distribution of alcoholic States, liquor If regulations. v. 495 U.S. state state North Dakota United L.Ed.2d measure discriminates favor in-state (1990) opinion). producers products, regulatory re- (plurality gime automatically is not saved Twenty-first Amendment Twenty-first simply by virtue Clause, the Commerce thus in tension with special regu- the product nature of virtually “grants the States as section lated. See id. at 125 S.Ct. 1885. whether complete permit control over Rather, if the court finds the law discrimi- liquor how to importation or sale if natory, upheld it will be it reason- system.” distribution structure the ably legitimate state advances interests S.Ct. 1885 “that cannot served adequately rea- (quoting Cal. Retail Dealers Ass’n nondiscriminatory sonable alternatives.” Aluminum, Inc., Midcal (quoting Lim- (1980)) 937, 63 L.Ed.2d bach, 1803) 486 U.S. at (internal omitted). quotation marks But (internal omitted). quotation marks powers under limitation; framework, Applying not without Amendment are the Granholm not reg the Amendment does immunize all Court struck laws in New York down beverages ulation alcoholic Michigan exceptions from Com that created to the scrutiny. Id. policies merce Clause State systems, states’ three-tier distribution al- Twenty-first are under the only “protected lowing bypass in-state wineries the pro when treat liquor directly consumers, three tiers ship out of state the same its domestic duced while preventing out-of-state wineries from 489, equivalent.” Id. at 1885. S.Ct. doing so. at 1885. S.Ct. The found Court the “differential treat- Heald, recently, in Most Granholm v. wine, requiring] ment all out-of-state but the Supreme Court addressed the difficul- wine, all an pass through not in-state in- ties inherent the intersection of these state wholesaler and retailer before reach- provisions. Analyzing two constitutional ing impermissibly consumers” discrimi- the Webb-Kenyon Act and Wilson against nated commerce. Id. interstate pre-Prohibition that in- Act—two statutes 473-74, 1885; S.Ct. see also id. drafting of section 2 of the fluenced Thus, 125 S.Ct. the Court 1885. found Twenty-first Amendment —the con- Court Michigan the New York and laws purpose cluded that section 2’s was to by were not immunized return to the states the Commerce Amendment. immunity provided by Clause those two Acts. Id. at 125 S.Ct. The 1885. Having challenged concluded that Twenty-first Amendment intended “to by laws were not authorized the Twenty- allow to maintain effective and States Amendment, first the Granholm Court system controlling liquor by uniform for next undertook the standard dormant regulating transportation, importation, analysis, Commerce Clause determining give The Amendment use. did discriminatory whether the statutes served authority pass States nonuniform legitimate purpose local that could not be laws in order to discriminate out- accomplished through nondiscriminatory 484-85, goods.” of-state Id. at 125 S.Ct. means. See 125 S.Ct. id. 1885. The Court noted that there were number by nondiscriminatory practices Court set forth the test which Granholm determining constitutionality goals the states achieve their stated could facilitating preventing Application tax collection and A. the Granholm Analy- sis to New York’sABC Law consuming minors from alcohol. See id. at 489-93, Accordingly, challenge provisions Michigan struck down the New York and that make no liquor distinction between laws as violative of the Commerce Clause. produced in New York and pro 493,125 Id. at S.Ct. 1885. duced out may of the state: both shipped directly to New York consumers conclusion, In reaching its the Court by licensed in-state retailers. See Gran repeatedly emphasized that the three-tier 1885; holm 544 U.S. at 125 S.Ct. systems place in both states did not Inst., Healy 324, 335-37, v. Beer 491 U.S. Spe- themselves violate the Constitution. (1989); 105 L.Ed.2d 275 cifically, the Court stated that it is “un- Brown-Forman Distillers Corp. v. N.Y. questionably legitimate” for a state to bar Auth., importation beverages alcoholic if it 90 L.Ed.2d 552 consumption bans sale and of alcohol Dias, Imports, Bacchus Ltd. v. altogether, or to “funnel sales 82 L.Ed.2d 200 system.” three-tier (1984). Appellants seek to mimic the con 1885. Granholm is best seen as an at- cerns addressed in Granholm contend tempt prior to harmonize holdings ing that the New York law is invalid be regarding power of the states regu- grants cause it in-state retailers benefits late alcohol within their borders —a not afforded to out-of-state retailers. This specifically granted to the states argument up comes short under Granholm Twenty-first Amendment —with the broad for several reasons. policy concerns of the Commerce Clause. First, because in-state up retailers make See, Dakota, e.g., North at U.S. the third tier in New York’s three-tier 1986; Cable, 110 S.Ct. Capital Cities Inc. regulatory system, Appellants’ challenge to 691, 712-13, v. Crisp, 467 U.S. the ABC Law’s requiring all (1984); Midcal, 81 L.Ed.2d 580 445 wholesalers and present retailers be in and at U.S. 100 S.Ct. 937. Granholm state, by licensed the N.Y. Aleo. Bev. Cont. policies validates evenhanded state regu- 100(1), Law is a frontal attack on the lating importation the and distribution of constitutionality of system the three-tier alcoholic beverages Twenty-first under the However, itself. the spe- Granholm Court Amendment. It is where states create cifically acknowledged the vital role of the discriminatory exceptions to the three-tier system three-tier in the exercise of states’ system, in-state, allowing but not out-of- powers. section 2 The Court reaffirmed state, liquor to bypass the three regulatory that the system three-tier is an “unques- tiers, that subject their laws are to invali- tionably legitimate” exercise of the states’ dation based on the Commerce Clause. powers under Twenty-first the Amend- Granholm, 1885; 544 U.S. at regulate ment to importation the and use Vassar, see also Brooks v. 462 F.3d alcohol. 544 U.S. at (4th Cir.2006). 351-53 125 S.Ct. 1885.2 Appellants’ argument is 2. specifically beer, The Granholm dissenters en- of the manufacture and sale of and constitutionality dorsed the prohibit of the three-tier competing importations, either all system as well. discourage importation 125 S.Gt. 1885 by laying heavy im- (Stevens, J., ("Can dissenting) post, it be doubted importations or channelize by desired might that a State monopoly confining establish a state single consignee?”) (quot- them to a delivering the retailer no cost to the li- directly foreclosed Gran- adds therefore express quor equally applied affirmation the to the consumer holm Court’s Rather, system. liquor. the to in-state the New York three-tier legality that both in- regulatory scheme mandates language reply that liquor pass through state and out-of-state system the three-tier endorsing Granholm system the same three-tier before ultimate Granholm, the merely dicta. states delivery to the consumer. challenged regu- argued that the explicitly This is in contrast chal- were essential elements of stark to the lations system. They attempted jus- lenged regulations three-tier Granholm. by citing prior Michigan York down tify regulations their Su- New laws struck acknowledged specific preme Court cases Court Granholm created system legitimate exceptions sys- as a exercise to the states’ three-tier three-tier producers. Twenty-first favoring of state under tems in-state In reaching holding, the U.S. at This was Amendment. exactly the challenged type protectionist Court noted that of economic Granholm discriminatory exceptions policy sought were regulations the Commerce Clause of, forestall, to, un- integral parts rather than and where the Granholm Court id. at derlying systems. three-tier See Had drew line. See id. system Twenty-first

the three-tier itself been unsustain- 1885. While the Amendment, grants powers broad regulate able under the states sale, have transportation, Court would had no the use of alcohol the Granholm borders, impermissi- within distinguish simply it from their does not need Judge regulations attempts As Holwell immunize to discriminate in fa- ble issue. below, Id.; “if opinion producers. in his vor of products stated dicta this local Bacchus, be, persuasive it is of most kind.” see also Wines, challenged F.Supp.2d regulations Arnold’s S.Ct. 3049. The here permissibly are evenhanded and Second, Law New York’s ABC treats in- “combat[ing] aimed at the perceived evils liquor evenhandedly state and out-of-state of an traffic rather liquor,” unrestricted system, state’s under the three-tier and accomplishing pro- than “mere economic complies with thus Granholm’s nondiscri- Bacchus, tectionism.” principle. mination See Thus, New S.Ct. 3049. York’s alcohol 1885. New York properly falls within regulatory scheme that all requires liquor originat- —whether powers granted by of state’s section ing pass through in state or out of state — the Twenty-first Amendment. system. N.Y. the three-tier Aleo. Bev. §§ seq. system Law Alcohol sold York’s Cont. et Because New three-tier directly liquor in-state retailers to consumers in treats and in-state out-of-state same, already passed through York has not against and does discriminate producer two and products producers, first wholesaler— out-of-state we tiers — regulated accordingly. analyze regulation taxed need not and been and further liquor Requiring pass principles. out-of-state under Commerce Clause Sec- 102(l)(b) 102(l)(a), 100(1), through a licensed in-state wholesaler and tions and of Equalization “widespread, ing Young’s unquestioned Bd. Cal. v. tence ac- of of Co., Mkt. ceptance system liquor the three-tier of (1936)); L.Ed. 38 id. at 125 S.Ct. 1885 regulation”). J., (Thomas, dissenting) (affirming the exis- integral part good are an There is evidence that when the New York’s ABC Law Twenty-First Amendment was first system.3 three-tier Be- New York’s evenhandedly reg- adopted, laws section two of that amendment cause New York’s importation give ulate the and distribution of intended to states near-total con- state, they regulation. we hold that within the trol over alcohol That com- do run afoul the Commerce plete exception not Clause. control stark was a to the scope

otherwise limited of state commerce CONCLUSION regulation. ensuing decades howev- 102(l)(b) er, 100(1), 102(l)(a), as attitudes toward alcohol have Sections Beverage changed commerce New York’s Alcoholic Control has become Law, nationalized, instituting system Supreme a three-tier for the more has Court regulation beverages, do increasingly Twenty-First alcoholic read producers discriminate ouLof-state against narrowly, Amendment more and excluded in violation of the Commerce Clause of the protection any from its number Constitution, I, that, United States Article sure, Sec- regulatory schemes to be dis- tion are Clause thus a valid criminated interstate commerce. rights exercise of the state’s under the This “updating” Twenty-First For the forego- Amendment. important theoretical raises reasons, ing court’s order district of questions role of about the courts inter- granting October defendants’ mo- preting may constitutional hereby tions dismiss is well have become anachronistic. But Affirmed. issues, apart “legal from process” these CALABRESI, Judge, Circuit the jurisprudence that the concurring: has updating presents created join I fully Judge Wesley’s opinion. problems. Regrettably, I other it often separately emphasize write the unusual leaves lower a loss in seeking courts judicial interpretation figure Twenty-First nature of out what the Amend- Amendment, Twenty-First constitutional ment means and what if governing that, provision seventy-five years, principles may over derived from High has been defined and redefined to Court’s accommo- Amendment deci- changing date social needs and sions. norms. Appellants’ complaints of discrimination licensed Indiana wholesalers. See Ind.Code ring. 7.1-3-14-4, Although 3—15—3(a). have somewhat of a hollow §§ But if even 7.1— willingness comply assert a with New challenge in their succeed to the regulatory York’s scheme if allowed to deliver York, requirements in-state retailer of New consumers, liquor directly York to New this law, existing under York Arnold’s Wines virtually impossible would be without either qualify a would not retail license because result, operational dismantling absurd or a operations eligible are not multi-store for re- system. of New York's three-tier entire For tail licenses in New York. See N.Y. Aleo. Bev. example, they comply were to with the exist- 79(2). course, 63(5), §§ Cont. L. Of the mul- ing system, Indiana-based Arnold’s Wines operations ti-store restriction is written in the required purchase would liquor be to its in- Ultimately, context of retailers. in-state be- wholesalers, ventory from New York to demonstrably impossible cause it is for out-of- ship country the wine back the across to New comply state retailers like Arnold's Wines to York consumers. See N.Y. Aleo. Bev. Cont. L. scheme, existing with New York's three-tier 102(3-b). § willing Even if were granting them the relief seek would re- arrangement, to live with this rather absurd quire us to invalidate New York’s three-tier requiring would violate Indiana laws licensed system altogether. liquor inventory purchase retailers to from

193 Act, They by passing this the I. did Wilson “All ... which li- intoxicating stated A. quors liquids transported or into State history regulation of alco state “The ... in Territory upon or arrival shall such long from before beverages dates holic subject Territory opera- to the State or Amendment.” Eighteenth the adoption of tion of the laws of and effect such State or Boren, 205, 190, Craig v. in the Territory enacted exercise of its (1976). early 451, As as L.Ed.2d 397 50 police powers, to the same extent How.) (5 504, Cases, 46 U.S. the License though liquids the manner as such same (1847), 579, Supreme 12 L.Ed. 256 liquors produced had been in such State or authority in “recognized a broad Court Territory....” 27 121. This U.S.C. regulate the trade of governments state recently act—as described Granholm— beverages within their borders alcoholic regulate imported liquor allowed states “to implied restrictions under the free from liquor” on the same terms as domestic but Craig, 429 U.S. at Clause.” Commerce allow “did not States to discriminate however, enough, 97 451. Soon S.Ct. Granholm, liquor.” out-of-state away at Court started to trim Supreme 478,125 544 S.Ct. U.S. Thus, that regulatory power. edges many interpretive posed The Wilson Act century, late Su nineteenth challenges for the courts. The text of the began to the theo preme “undercut Court literally permit statute —-read —seemed underpinnings the License retical anti-protec- around obvious end-runs And, Supreme while Cases.” Court, aims. The howev- tionist permit states to ban alcohol continued er, readily light the act in interpreted Heald, altogether, see v. 544 Granholm Donald, Thus, in Scott v. purpose. 125 161 L.Ed.2d U.S. S.Ct. 165 17 41 L.Ed. U.S. S.Ct. 632 Kansas, (2005); Mugler v. U.S. (1897), down, a the Court struck as viola- (1887), 31 L.Ed. 205 S.Ct. Act, tion of Wilson South Carolina Court, during in a series of cases liquor regulatory required scheme that all 1880s, down on dormant Commerce struck liquor sales be channeled banning laws or bur grounds Clause state liquor commissioner. South dening imported liquor. the sale of See Carolina Act commissioner instructed the 476-77, 125 U.S. “purchase his supplies from brewers cases); also, (collecting e.g., Leisy see prod- this State when their distillers Hardin, U.S. required uct standard this reaches Chicago L.Ed. 128 Bowman v. & Provided, supplies Act: can be pur- Such Co., Ry. Nw. from cheaply chased such brewers and L.Ed. 700 distillers as elsewhere.” 1895 1890, Congress tried to resolve the S.C. Acts 732. And South law Carolina “bind” had created: doctrinal the Court markup locally pro- the State’s on limited production states “could ban the of domes- 10-percent profit wines to a but duced tic ... these were ineffec- but laws in the imposed cap import- no such case of liquor tive out-of-state was im- because 93, ed at 17 S.Ct. 265. wines. U.S. any regulation long mune from state as The of discrimi- result all this was invalid in original package.” remained against liquor. nation out-of-state Granholm, 478, 544 U.S. at 125 S.Ct. 1885. time, Act legislators explained The Court that the Wilson At the same tried to upon any was protectionism. of state “not intended confer address schemes injuriously tation’ where it afoul State the discriminate runs against products of States in other generally applicable State’s laws governing articles whose manufacture and use are sale, receipt, possession, use.” or Gran- are, forbidden, therefore, not and which holm, 482, (in- 125 S.Ct. U.S. subjects legitimate commerce.” Id. omitted). quotation ternal marks The re- 100, 265. Court further The sult was that prohibit states could direct held mandated “equal- that the Wilson Act “shipments alcohol to consumers for ity uniformity of treatment under or state use, personal provided that the States laws,” and did allow South Carolina to liquor treated in-state and out-of-state on unjust provide preference” prod- to its “an the same terms.” Id. at products ucts “as similar 1885. other States.” 265. In century, the late nineteenth states B. regulate liquor by also attempted ban- In Eighteenth personal use, ning shipment, its direct for prohibition was ratified and began. In from out-of-state sources to citizens within 1933, however, prohibition repealed by was state. But the Court soon passage of the Twenty-First Amend- interpreted the as prohibiting Wilson Act ment. While section the Twenty- one of such laws. See v. Vance W.A. Van- merely repealed First Amendment prohi- Co., dercook bition, two section did more. That section Iowa, L.Ed. 1100 Rhodes stated that or transportation impor- “[t]he 42 L.Ed. 1088 (1898). any tation delivery into State ... Congress responded or liquors, use therein of in passing Webb-Kenyon intoxicating Act which viola- pro- thereof, shipment transportation hereby hibits tion of the laws prohibit- “[t]he or ... ... any intoxicating any § ed.” U.S. Const. Amend. XXI 2. State, Territory, kind from one or District language section two is rather State, ... any into other Territory, or terms, opaque. In its it does not authorize District ... purpose [for the of being] any just state regulation but rather forbids received, sold, possessed, man- people from transporting alcohol into a ner ... of any used violation law of state in ways violate that state’s laws.1 State, Territory, such or District.” Courts, nevertheless, consistently have (codified Stat. 699-700 27 U.S.C. (and understandably) read the section to 122). It not precisely clear what kind authorize regulation. broad state regulation Webb-Kenyon Act meant But, to allow. as it There is interpreted— evidence that the intent of sec- much later —in tion give the Webb-Ken- two was to complete regulatory yon Act ‘shipment or transpor- authority “forb[ade] to the states over alcohol.2 Dur- Larry quipped, As once Really Tribe "there are Trying, two stitution Without 12 Const. ways, ways only, Commentary and two in which an ordi- citizen, nary private acting under her own however, noteworthy, It is that the text of law, steam and under color of no can violate "closely section two follows Webb-Ken- the United States Constitution. One is to Acts,” yon similarity and Wilson that the somebody.... bring enslave The other is to has, times, Supreme Court recent more beer, wine, bottle of or bourbon into a State "express[ed] held clear framers' intention beverage of its violation control laws.” constitutionalizing the Commerce Clause Tribe, Lawrence H. How Violate the To Con- framework under those established statutes.”

195 Young’s Board v. Mar 1424 debate about section congressional the ing Co., 59, 64, 77, 57 81 that 299 S.Ct. two, example, senator stated ket U.S. for one Brandeis, 2 is restore for ex of L.Ed. 38 Justice “purpose section the Young’s amendment in Market that by ample, constitutional observed States [Twenty-First] over interstate control in effect construe the Amend absolute “to liquors affecting intoxicating may saying, as in effect: The State commerce ment of the States.” intoxicating confínes of li importation which enter the prohibit (1933) (statement of Rec. Cong. 4143 provided prohibits it the manufac quors Blaine). Black, who And Justice borders; if Senator sale but ture and within passage in the participated a sale, while Senator it must permits such manufacture and in the Twenty-First Amendment of the compete the do imported liquors let with Senate, clearly two section believed equal on terms .... involve mestic would “ ‘absolute control’ intended to return was Amendment, but not a construction of States, of all free traffic to 62, at rewriting it.” Id. 57 S.Ct. the Commerce Clause which restrictions C. imposed.” time have

might before that Voyage Liquor Bon v. Idlewild Hostetter Supreme extent To the Court’s 1293, Corp., 377 U.S. S.Ct. correct, however, early interpretation was (1964) (Black, J., dissenting) L.Ed.2d “rewriting” exactly happened. what 1964, therefore, Voyage v. Bon the Su- Hostetter Idlewild surprisingly, Not 324, Corp., early Liquor clear in the 377 U.S. 84 S.Ct. “made preme Court (1964), Twenty- 12 L.Ed.2d 350 years following adoption regulate passage that a cannot pro- of its held Amendment that virtue first point that state when the totally liquor through unconfined a State is visions duty-free concession delivery limitations of final Commerce Clause traditional state, example, delivery on importation of intoxi- within it restricts the when use, distribution, airplane regulated by an the cus- or con- board destined for cants Hostetter, sec- interpreted service. The Court borders.” toms sumption within its 1293; “repealing] the Commerce at accord tion two 84 S.Ct. 377 U.S. And, intoxicating regulation of 97 S.Ct. 451. Clause wherever Craig, 429 U.S. at concerned,” an interpretation upheld liquors near-total period, in this the Court simplifi- by that the Court called “absurd over alcohol commerce control domestic cation,” of the states, but rather stated that each opening point even wars two “must considered “liquor-related political trade door Tribe, other, in the light H. context among the states.” Lawrence 6-27, at at con- issues interests stake American Constitutional Law 331-32, (3d see, ed.2000); e.g., Indianapolis crete case.” Id. at 84 S.Ct. omitted). Comm’n, (internal Rely- quotation marks Control Brewing Co. v. (and per- heavily legislative history on ing 83 L.Ed. he had (1939) knowledge his own what Michigan’s haps (upholding prohibition intended), strongly Black disa- selling made in Justice beer in-state beer dealers Indiana); greed. Triner See id. Mahoney Joseph J., And, (Black, in a dissenting). 82 L.Ed. Corp., 304 U.S. 451; ac- Craig, 429 cord

196 equal protection 585, case hold- sales in other notable for states. 476 U.S. at 106 ing, Supreme Court reaffirmed the 2080. S.Ct.

point Craig, made in Hostetter. 429 See 206, (reasoning U.S. at 97 S.Ct. 451 that D. exception section “created an to the two Court’s most recent foray operation normal the Commerce question into the applicability of the pro repeal not Clause” but “does tanto Twenty-First Amendment to the dormant Clause”). Commerce in Commerce Clause came Granholm v. 1980s, In a of cases in series Heald, 460, U.S. principle seemingly Court applied to L.Ed.2d 796 light of the rather powers upon narrow further conferred regulation extensive deference to state Twenty-First states Amendment. alcohol, developed, there even in recent First, Dias, Imports, in v. Bacchus Ltd. times, complex state statutes that made it 82 L.Ed.2d to purchase difficult alcohol from out of (1984), struck down Ha- state. These rise gave statutes to the waii exemption tax that certain favored question constitutional of whether states was, locally-produced alcohol and that up regimes could set regulatory where the admission, the state’s own to intended be “object and effect” “to allow in-state protectionist. The Court reasoned that directly to wineries sell wine to consumers protectionism pur- was not “the central in prohibit that State but to out-of-state pose” of two section and that “[s]tate laws or, so, doing least, wineries from at the that mere protection- constitute economic make impractical direct sales from an eco- ism are ... not entitled to the same defer- standpoint.” nomic 544 U.S. at per- ence as laws enacted to combat the 466,125 S.Ct. 1885. ceived evils of traffic in unrestricted liquor.”3 Id. at 104 S.Ct. 3049. Jus- At portions issue Granholm were tice vigorously objected, Stevens and de- New York’s and Michigan’s regu- alcoholic scribed an inquiry into the purpose latory laws. The Court described these “a totally law as novel approach to regimes as creating system a three-tier the Twenty-First Amendment.” Id. at “is, in that broad and with terms refine- 287,104 (Stevens, S.Ct. 3049 dissenting). J. discussed, ments only mandated ... from sales

Next, out-of-state wineries.” 544 in Brown-Forman Distillers U.S. Under Corp. Auth., v. 1885. Michi- N.Y. State gan’s then-existing regime, (1986), out-of-state L.Ed.2d 552 Inst., producers wine Healy required Beer were “distrib- (1989), S.Ct. ute their wine through 105 L.Ed.2d wholesalers” producers Court struck on whereas in-state down dormant could obtain a commerce grounds two laws license sell required directly li- to consumers. quor producers to they affirm were S.Ct. 1885. Under New time, any higher regime charging prices York’s those wineries could states than in other ship states. The Court consumers New York if the reasoned that Amend- could establish a physical presence in ment permit regulate does not states to New York primarily grapes used and/or "obscurity The Court described the language.” Market as "broad two,” legislative history of section and dis- opinion missed Young’s Justice Brandeis’s

197 “ system” insofar Twenty-first New Id. at tier as grown ‘[t]he in York. grants Amendment the virtually 1885. States complete whether permit control over (without the observing explaining After importation liquor or sale of and how to fact) had significance of the that states ” liquor the system.’ structure distribution reciprocal trade for di- agreements formed Id. at 125 S.Ct. 1885 (quoting Califor ongoing, of “an low- shipping, part rect as Retail nia Dealers Ass’n v. Midcal war,” at level trade id. Inc., Aluminum, 97, 110, 100 Michigan’s regime the found that Court (1980)). L.Ed.2d S.Ct. 63 233 And the out- expressly prevented direct sales from stated, day, clear that three- Court as “the and that of-state wineries consumers system is ‘unquestionably legiti tier itself a regime York’s created sometimes (quoting mate.’” Id. North Dakota v. on prohibitive burden out-of-state wineries States, 495 United U.S. directly to consumers. that wished to sell (1990)). 1986, 109 Indeed, L.Ed.2d 420 the (This presence a physical included burden cited Justice Scalia’s concurrence in Court something which dor- requirement, about and, in judgment the Dakota in North an long cases had mant Commerce Clause quoted explanatory parenthetical, Justice 473-76, expressed id. at 125 suspicion, “ statement that ‘The Scalia’s 1885). S.Ct. Amendment ... empowers North Dakota Twenty- the determining whether require that all sold for in liquor use the protected Michigan First Amendment purchased from licensed in-state schemes, the regulatory and New York ” Granholm, 544 wholesaler.’ U.S at analyzed the Wilson Webb- Dakota, (quoting 125 S.Ct. 1885 North Acts, Twen- Kenyon which asserted the (Scalia, J„ at U.S. S.Ct. ty-First had “constitutional- Amendment Court, concurring judgment)). in The (quoting iz[ed].” S.Ct. however, concluded this affirmation 451). Craig, S.Ct. “[sjtate by system stating three-tier that The aim of the “[t]he Court concluded protected Twenty- are under policies allow Twenty-first Amendment was to they liquor first Amendment when treat States to maintain an effective uniform produced out of state the same as its do system controlling liquor regulating for equivalent” mestic but that instant “[t]he use,” transportation, importation, cases, contrast, in straightforward involve give did “[t]he but that Amendment not attempts to discriminate in favor local authority to nonuniform pass States the producers.” Id. in order discriminate out- laws goods, had not privilege of-state II.

enjoyed earlier time.” at 484- The Court cited sever- evolving interpretation of the Twen- cases, Healy, relatively including al recent ty-First important raises Brounu-Forman, and Bacchus as Imports, questions about the role of It courts. for that “state standing proposition possible that Amend- non- regulation alcohol limited was originally ment intended and under- of the Commerce principle discrimination complex shape to have the that it stood has Clause,” But, past assumed few decades. however, many distinguished justices also have

Interestingly, the Court contend- holding initially opinions into that its would “call the Court and wrote ed— question constitutionality recently three- more dissent —it seems more Twenty-First Amendment, likely legal out of bounds.” It was their unsat- enacted, isfactory experience out with that meant carve from method when scrutiny giving that resulted in Clause exclu- dormant Commerce Nevertheless, place sive constitutional law as a com- regulation. area of alcohol modity transportation governed that whose is appears has by special provision. a increasingly “updated” Twenty-First constitutional Amendment, judicial process and it is Put 62 S.Ct. 311. different- wish, I briefly, that to address. ly, might even those who think that certain liquor regulation pose kinds of no benefit

A. safety to still temperance public or wanted broad, a overinclusive authorization Twenty-First When the Amendment regulation, prevent state as to adopted interpreted and so courts was first courts Congress chipping away from virtually to section two authorize limitless regulate. states’ to regulation, United States was a than it is place today. different Laws fre- however, In the atti- ensuing decades “morals,” regulated quently and alcohol tudes changed, towards alcohol have and often viewed as immoral. And was even its commerce more has become national- aside, setting prevailing “morals” view ized. As Justice Stevens in his observed product alcohol that it was a unique was dissent, “[t]oday many Granholm Ameri- posed dangers, directly that unusual both cans, particularly those members of the intoxicant, indirectly, as and a younger generations policy who make deci- stream of that generated commerce cor- sions, regard ordinary alcohol as an article ruption and crime.4 It was therefore left commerce, subject substantially decide, light to individual states to in legal same market controls and as other values, needs, their own local experi- and products.” consumer 544 U.S. ences, product. how to contend with that (Stevens, 125 S.Ct. 1885 J. dissent- But, ing). definitely was not the “[t]hat Justice Jackson described this under generations view of the policy that made standing when he that wrote “[t]he Eighteenth 1919 when the Amendment people of the United States knew that was ratified or in 1933 when it re- liquor is a lawlessness unto itself.” Duck pealed by Amendment.” Arkansas, 390, 398, worth v. (1941) (Jackson, J., L.Ed. result). concurring Jackson reasoned Nowadays, prohibited alcohol that those who created the state,5 any industry and the beer one that parks orga- runs theme rather than that gov-

determined should be It surprising, [alcohol] nized crime dens. is not therefore, by specific particular '60s, erned and consti- when courts They '70s, '80s, tutional provision. today did not leave it consider notion special the courts to a Twenty-First devise distortions Amendment that author- general as to rules interstate com- izes state regulation, regulation even liquor’s “tendency merce to curb get clearly that would otherwise violate the Stuntz, Race, Class, especially interesting 4. For Drugs, discussions of liam J. vice, Stuntz, Colum. L.Rev. 1795 criminalization of see J. William Law, Pathological Politics Criminal governments 5. There are still some local Mich. L.Rev. 572-76 and Wil- entirely. do alcohol ban context Clause, dangerous in the they find it more difficult and Commerce dormant cannot law. For court rule. of constitutional a constitutional to fathom such hard said, political branches easily Jus- assume that But, quoting Stevens as Justice egregious able even consti- Marshall, not will be correct does Constitution “[t]he tice interpretative errors. stupid enacting from tutional legislatures prohibit Lopez Bd. Elec. N.Y. State laws.” were constitutional Some Torres, 196, 128 S.Ct. Eighth over time. The written evolve (2008) (Stevens, concur- J. L.Ed.2d 665 un- prohibition on cruel and Amendment’s ring). little if punishment would mean usual comb simply were expected courts B. what, history books determine courts deal problem of how should This century, eighteenth late the framers in the provi- seemingly legal anachronistic with Fourth Amend- thought was “cruel.” The judges scholars one with which and sions is prohibition on ment’s “unreasonable” a may It to long struggled. appear have and similarly permits evolution searches “born legal provision that a is judge provision that constitutional from prevents Vacco, Quill F.3d age,” another another Con- becoming tethered to time.6 Cir.1996) (Calabresi, (2d J., concurring versely, provisions some were not written result), is he to do? what or she in the but updated. be The President of the Unit- to statutes, years at least old. ed States must be In the context of anachronistic adjust- number to be sug- That is not “inflation judges and have made varied scholars Calabresi, They Young do. have See Steven G. Too about to ed.” gestions what Job?, Trib., July in- the No. Chi. any approaches number of considered for at C cluding perhaps draconian adherence — origi- a over-adherence —to statute’s even But what are courts to do when a consti- rewriting meaning; updating; bold and nal provision clearly neither invites tutional evolution; interpretive use common-law clearly prohibits updating? Some nor political prefer- that current tools reflect argued interpret that courts should have ences; sending particularly dubious See, e.g., in a common law fashion. them legislatures for a “second statutes back to Strauss, A. David Common Law Constitu- See, Calabresi, e.g., A Com- Guido look.” Interpretation, 63 U. Chi. L.Rev. tional Age Law for the Statutes mon (1996). have that Others asserted (1982). 31-43,163-66 sense, respond, should some to courts Constitution, See, e.g., Larry D. popular with re- will. Interpreting the Court, Kramer, The provi- 2000 Term— to out-of-date constitutional spect Court, sions, We L.Rev. complex set of chal- Foreword: Harv. presents a more Pop- Reva Siegel, is so 4 Robert Post & lenges. Because the U.S. Constitution Constitutionalism, amend, Departmentalism, has provision a ular difficult L.Rev. likely Supremacy, and Judicial Cal. anachronistic is even less become (2004). some branches than And contend repaired political be can, adhere, as best But courts courts should is an out-of-date statute. while (whatever that original understanding in a may, perhaps, engaging viewed as be be) See, question. may provision dialogue political with branches when Scalia, Originalism: Antonin e.g., “updating” anachronistic statutes Evil, dialogue a is far Lesser 57 U. Cin. L.Rev. 849 “interpretation,” such is, course, Whether, when, legislatures another and as to what question. updating courts such should be carried out sure, as a in the context of the pecially apparent To be the Constitution whole Moreover, Twenty-First can as the Amendment: It leave does and must evolve. legislatures lower courts may federal have done its recent read- Amendment, understanding with no firm what the ings his- actually law is. When one clear rule sim- tory bringing can be into a made tool rule, replaces previous ply law the Charter into line with current needs. easy enough understand. But when the fancy But with judges are not historians High exception Court carves one after out life historical rein- robes and tenure. And another, it know how becomes difficult to terpretation always poses the risk that any individual case should come out. readily “imagine past too courts will vantage point ap- From the court of [to] remember the future.”7 fixed; peals, frequently the law and then fundamentally, regardless More readily follow Supreme we Court. But tool,8 history whether is the chosen area, a perfectly analogous in this absent may sort of updating dangerous. can It case, we all left to frequently try are too courts, permit especially well-meaning guess currently applicable rule from ones, to substitute their own notions of juris- evolving jurisprudence, Court’s a majority. modern needs for those of the prudence up- that seems more focused on Moreover, rereading when a results in the dating than meaning constitutional with barrier, may erection aof constitutional it principled judgments. To the student and remove serious issues from the democratic law, appears teacher of the it clear that the legislative process and from deliberation. meaning of III, Guns, J. Harvie Wilkinson Cf Of But changing. just it is difficult to know Abortions, Unraveling and the Rule of Supreme how much the Court wants that Law, (2009); A. Va. L.Rev. Richard to amendment evolve. Posner, In Looseness: The Su- Defense of This leaves lower courts in a difficult Control, Gun preme Court and New Re- situation; interpret we strive to what the Aug. public, 32. knowing law “is” while well that there Additionally, updating this sort of pres- only no “is” but a direction. such cir- problem, cumstances, ents another and one that is es- that can best we do is to Namier, 7. See history. suggested Lewis B. Conflicts: Studies I once Justice Felix (1942)("When History Contemporary 69-70 Frankfurter that the clause in the Constitution discoursing writing history, [people] about requiring that the "a President be natural imagine experience, of in terms their own born Citizen ... of the United States” meant trying gauge and when the future cite only person a that if was bom of out wedlock till, supposed analogies past: from the (i.e. born”) "naturally person that had to be process repetition, they imagine double of eligible Citizen at birth to be to be President. future.”). past and remember Alexander Frankfurter, jokingly, knowing didI that quoted Bickel has Namier's discussion of his- me, added, like had been born abroad. I tory approval analysis judicial with fancifully, even more the clause was like- Bickel, lawmaking. See Alexander M. ly Presidency there to exclude from the Supreme Progress Court and the Idea admired, feared, much but also Alexander Scharffs, see Brett also G. Law as Hamilton, "illegiti- who said to Craft, (2001) 54 Vand. L.Rev. 2314-15 scholar-justice immediately mate” birth. The (asserting position that I have taken a similar and then added— n answered, that,” buy “I'll course). teaching when a common-law jest, anyway I not in believe—"and it’s have, occasion, goes Distinguished jurists good history 8. on as most what on this skeptical been even more of court Court!” uses decided the bulk of cases look PILGRIM, Plaintiff-Appellant, Prince special care read with Court and

Supreme moment, Gran- latest decision—at For, direction of general while the holm. has been to- jurisprudence Supreme Court Officer, LUTHER, David Corrections any discriminatory state prohibiting ward Facility, Sing Sing Ed Correctional say court it is for our regulation, Sergeant, Sing Sing Vaughn, ward along should move or how fast we how far Facility, Joseph T. Correctional result, we must look to As that vector. Deputy Superintendent, Smith, First cases have the run Sing Facility, Sing Def Correctional then regulation, broad state permitted endants-Appellees.* exceptions, existing particu- consider and limited larly those both described 07-1950-pr. No. Docket and, case, controlling recent Granholm basis, decide. on that Appeals, Court of United States that, can come out we do we When Second Circuit. sure, the case before us way. To be

one June Submitted: merely step a small viewed as could be fact, But, in for the beyond Granholm. July 6, Decided: Wesley’s ably given Judge opin- reasons law under ion, down the state to strike time, would, us require at the same

review background ju- much ignore too extend trend well

risprudence ignoring while some of

beyond Granholm language. specific

its most sort is not for us to

An extension might argue well Although one

make. updating notions deeper

that some

underlying suggest the Su- Granholm ultimately go further will

preme Court did, cannot decide the

than it there we of such prog- us on the basis

case before If Court wishes

nostications. meld Amend-

further to land- into the broad constitutional

ment be it. But unless until

scape, so

does, analysis seems to me Judge Wesley’s I exactly right, gladly join his

to be

opinion.

* ing parties above. of Court is directed amend The Clerk caption to reflect the list- in this case official

Case Details

Case Name: Arnold's Wines, Inc. v. Boyle

Court Name: Court of Appeals for the Second Circuit

Date Published: Jul 1, 2009

Citation: 571 F.3d 185

Docket Number: 07-4781-cv

Court Abbreviation: 2d Cir.