November 21, 2018
Petitioner side briefing is complete in support of the Tennessee Wine and Spirits Retailers (Tennessee Retailers) Association’s appeal before the Supreme Court of the United States.
The primary brief was filed by the Jones Day law firm on behalf of the Tennessee Retailers. This legal brief highlights the errors made by the 6th Circuit Court of Appeals and applauds the rationale proffered by dissenting Judge Sutton below. It notes that the 6th Circuit Court of Appeals’ opinion has wide-ranging negative contexts and is a departure from the Supreme Court’s support for in state alcohol distribution and retail sale. The brief gives a comprehensive history of alcohol laws as well as the history of the 18th and 21st Amendment. The brief also discusses the term “core” state powers to regulate alcohol and the Court’s use of that term. Whether core is in or out of favor, the brief notes that challenged law is in fact core and central to the system of alcohol sale in Tennessee. The state of Tennessee has notified the court of its complete support for this brief and adopts the positions taken in it.
Fourteen diverse interests filed amicus briefs in support of overturning the 6th Circuit’s decision below. These parties both supported the positions of the Tennessee Retailers, and offered other perspectives to paint a more complete story for the Supreme Court’s consideration. The briefs’ discuss the proper levels of deference owed to a state on alcohol policy choices, how alcohol is a product with significant externalities requiring different regulatory models, and the timeless relevance of Toward Liquor Control which was the leading thought piece on how to regulate alcohol post Prohibition. Many of the briefs noted that while this specific Supreme Court case is on the issue of durational residency laws, the 6th Circuit’s opinion represents a slippery slope that could extend far beyond the residency issue into areas such as physical presence laws. In fact, this argument has already found favor with one district court.
Groups filing in support of the Petitioners include:
Thirty six state attorney generals filed an amicus brief led by the Illinois Attorney General. Illinois is awaiting a decision in another high profile dormant Commerce Clause matter pending before the 7th Circuit Court of Appeals. In their brief the attorneys general defend residency laws and also note the broader negative implications of the 6th Circuit decision on other alcohol laws. It concludes; “In light of the distinction between presence requirements and durational-residency requirements, even if this Court finds that durational residency requirements are invalid, it should reaffirm the viability of presence requirements for liquor retailer.”
A coalition of more than 30 national and local public health groups weighed in with a brief to highlight the dangers of a court cavalierly treating alcohol as a regular product in commerce. The brief cautions the Supreme Court to avoid looking at these issues with narrow economic blinders and to take into account the historical nature of alcohol regulation as well as the damage of alcohol misuses and abuse causes in American society.
The Center for Alcohol Policy filed a brief highlighting the importance of the book Toward Liquor Control to the passage of the 21st Amendment and subsequent alcohol policy. Most of the other amicus briefs have cited to this book written by Fosdick and Scott while the nation was debating repeal of the 18th Amendment and passage of the 21st Amendment. The Center notes that the Court utilizes the Federalist Papers to understand the debate about the creation of our Constitution. The 21st Amendment was not around when the Federalist Papers were written but Toward Liquor Control serves as that type of leading intellectual treatise for the Court to consider as it interprets the meaning of the 21st Amendment.
Alcohol regulators from the National Alcohol Beverage Control Administration and National Liquor Law Enforcement Association filed a brief noting the importance of laws like residency requirements in the day-to-day administration of state alcohol laws and the worthy goals it helps effectuate in state regulation.
The State and Local Legal Center filed a brief on behalf of the National Conference of State Legislators, National Association of Counties, National League of Cities, U.S. Conference of Mayors, International City/County Management Association, and the International Municipal Lawyers Association. This brief suggests that the Court should not evaluate alcohol laws under a strict dormant commerce standard but consider it more in line with equal protection review. The brief also noted that many other state laws that require residency which could be impacted by this case.
Consumer Action filed a brief highlighting the lack of consumer harm from the Tennessee law. While there may be individuals whose business models are impacted by the Tennessee law, there is nothing in the Court’s record to suggest that Tennessee consumers or competition are suffering because of the regulation. It also highlights the recent U.S. Justice Department review of a beer merger and its understanding of the importance of limits on vertical foreclosure. Additionally, the brief points out that with a product like alcohol, more state regulation protects consumers rather than less regulation.
A brief filed by the Open Markets Institute takes a higher level review of the roles of states and federal government and decries the efforts of the Court to shortchange state experimentation in setting up healthy markets. It urges the Court to protect competition by restoring the most power to the states to regulate alcohol as envisioned by the 21st Amendment.
The National Beer Wholesalers Association brief walks through the history of the Court’s 21st Amendment and dormant Commerce Clause cases. This brief dedicates three pages of string cites to the various retailer and wholesaler residency laws across the United States. Approximately half the states have some form of a residency law. The brief also highlights the confusion expressed by good circuit judges from both the left and the right when trying to interpret the text and intent of the 21st Amendment versus modern court jurisprudence. These respected circuit judges warn against turning the courts into a super legislature to resolve these issues. Rather, as the brief notes, state legislatures are dealing with alcohol policy on a regular basis. There have been 1,700 changes to alcohol laws signed into law the past six years showing that the Constitution is working, states are addressing this issue and the Court is not the proper forum to resolve alcohol policy disputes. The brief used 8,999 of the 9,000 words allowed.
The Wine and Spirits Wholesalers of America brief provides a comprehensive overview of 21st Amendment case law. It also discusses how previous rulings by the Supreme Court have settled on protection for in-state alcohol distribution and sale but has not supported discrimination against out of state producers. The brief further examines how residency requirements protect state interests with a strong defense of the 8th Circuit Court of Appeals’ decision upholding residency laws at the wholesale level in Southern Wine & Spirits of Am. Inc. v. Div. of Alcohol and Tobacco Control.
The brief for American Beverage Licensees likewise notes the Granholm decision was properly limited to producer level discrimination. It notes how residency laws are a critical component of establishing an in-state distribution system, but that the 6th Circuit below potentially destroys most meaningful efforts to structure that system despite Supreme Court endorsement of the three-tier system.
Additional amicus briefs were also filed by the Tennessee Wine and Spirits Wholesalers who also have a residency law, the Michigan Beer and Wine Wholesalers Association, a private holding company in Texas and Major Brands from Missouri.
One interesting aside: Many observers including myself have been calling this the “Byrd” case as Clayton Byrd was the primary respondent from the caption of the case below. Well Mr. Byrd has now retired and been replaced by Zachary Blair as the interim Director of the Tennessee Alcohol Beverage Control Agency. So now many are calling it the “Blair” case. However, a new Tennessee governor takes office in January with the option to appoint a new director so a third name could be inserted in January necessitating yet another name change. Perhaps we should just stick to calling it the Tennessee Retailers case since they aren’t going anywhere.
Briefs for and in support of the Respondents in this matter are due in mid to late December. The normal gang of economic libertarians and “alcohol is same as toothpaste” crowd will file briefs including those seeking to expand this decision far beyond the narrow issue of residency.
More details on filings before the court can be found at this link. Oral arguments in this case will be next year in mid-January or mid-February. A decision from the Supreme Court will be announced by June 2019.
The Supreme Court will hear the appeal of the Tennessee Retailers Association. On September 27, 2018 the court granted the petition filed earlier this summer. The question presented to the court is “Whether the Twenty-first Amendment empowers States, consistent with the dormant Commerce Clause, to regulate liquor sales by granting retail or wholesale licenses only to individuals or entities that have resided in-state for a specified time.” Briefing for this case will due later this year with oral arguments most likely next January or February. This will be the first alcohol case before the 21st Amendment since the Court’s 2005 Granholm v. Heald decision.
A few weeks ago the Tennessee Retailers filed a great reply brief which presumably helped convince four judges to vote to take this case.
This is a huge development in the regulation of alcohol and this website will address this in further posts.
In February 2018, the 6th Circuit ruled in a mostly 2-1 decision to uphold a district court’s finding that the alcohol retail residency laws of the state of Tennessee violated the dormant Commerce Clause. The 6th Circuit case is captioned Byrd, et. al v. Tennessee Retailers Association 883 f.3d 608 (6th Cir. 2018). The Tennessee law required those seeking alcohol retail licenses to be a resident for two years and to renew a license to be a resident for at least ten years. The effect of these laws was to essentially create a nine year residency law to open a retail liquor store.
The previous state Attorney General issued two separate opinion letters that questioned the constitutionality of the laws and when challenges to license applications manifested itself, the Attorney General’s office brought a declaratory action to resolve the constitutionality of the laws. The odd posture of the state in not aggressively defending its own laws did not help the defense of the laws but Judge Sutton’s dissent noted that the core powers of the 21st Amendment should mean more than zero and he would have saved much of the state laws.
The Tennessee Retailers Association is taking this case to the Supreme Court and has filed a petition of writ for certiorari. In its brief the association noted that various federal circuit courts have interpreted the language of the 2005 Granholm v. Heald case differently requiring Supreme Court clarification. An intervening retailer, Total Wine and More, has filed a brief in opposition to the petition for certiorari. They argued that there is no conflict and taking this case will not clarify issues below. The State of Tennessee and the other intervening retailer waived the filing of a response to the petition of writ for certiorari.
The Supreme Court is expected to decide whether to take the case, ask the state or federal government to brief the case, or deny taking the case at some point in October when the Supreme Court resumes for the 2018-2019 term. Statistically, most petitions are rejected. There were over 8,000 cases filed with the court but the Supreme Court considers less than 100. There have been articles in recent years noting this trend of few cases.
Since the 2005 Granholm decision, the Supreme Court has passed on other petitions from the 5th and 6th Circuits to revisit issues surrounding the 21st Amendment.