Source: Wine & Spirits Daily
January 10, 2018
The state of Illinois and an Indiana retailer will soon get another chance to present their arguments for and against Illinois’ direct-to-consumer shipping laws during an appeal hearing set for February 16.
WHAT TO KNOW. Under current Illinois law, alcohol retailers in the state must obtain a license and go through the state’s three-tier system. However, in-state retailers are allowed to deliver or ship alcohol to consumers, while out-of-state retailers are not.
Indiana-based retailer Lebamoff Enterprises filed suit against the state last year over the aforementioned shipping law. Lebamoff argues it is in violation of the Commerce Clause, and the Privileges and Immunities Clause because in-state retailers are allowed to ship DTC.
Basically the retailer is claiming the fundamentals of this case are the same as the 2005 Granholm case, which determined that state laws permitting in-state wineries to ship wine directly to consumers, but prohibited out-of-state wineries from doing the same, was unconstitutional.
CASE DISMISSED. Last summer a US district court judge dismissed Lebamoff’s case because the retailer could not show that Illinois “provides for differential treatment of in-state and out-of-state economic interests” [see WSD 06-13-2017]. The judge said this case differs from Granholm because Illinois requires all alcohol sold by retailers directly to residents must pass through the Illinois three-tier system, something out-of-state retailers shipping direct would not have to do.
THE APPEAL. Lebamoff then filed for an appeal, calling for the dismissal to be reversed and the case be remanded and assigned to a new judge because the retailer was not given the opportunity to file an amended complaint.
In response, the state claimed any amendment to the original complaint “would have been futile,” because if Lebamoff were allowed to ship directly to Illinois residents it would allow “out-of-state retailers to bypass entirely the three tier system and ship unregulated alcoholic liquor from their inventory in Indiana directly to Illinois consumers,” per court documents.
THE BIGGER PICTURE. A good indicator that this story is bigger than just Illinois, is the fact that national trade groups on both sides of the aisle (WSWA, NBWA, ABL etc.) attempted to intervene in the case. Though all were denied because their interests were already represented by the state-base trade groups for each tier.
We’ll have more once the appeals court hands down its decision. We are also keeping an eye on a similar case Lebamoff is involved in with the state of Michigan.