Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Sunday, May 22, 2005

State restrictions on out of state wine sales violate dormant commerce clause

In a 5-4 decision, the US Supreme Court struck down Michigan and New York state laws that prevented direct sales to consumers from out of state wineries.  The case focused on the relationship between the dormant commerce clause and the 21st amendment.   

The majority opinion was authored by Justice Kennedy and held that the state laws discriminated against out of state businesses without a legitimate local purpose.  The states had justified the restrictions under the state's powers to regulate the market for alcohol and the ability of out of state sales to evade state taxes. 

The four dissenting justices (Stevens, Thomas, O'Connor, and  Rehnquist) argued that the state regulations were justified by the history of prohibition.  Justice Thomas read the history, particularly the Webb-Kenyon Act from the prohibition era, to leave the regulation of alcohol to state law and take the issue away from federal judges and Congress.   Justice Stevens and O'Connor signed onto Justice Thomas's dissenting opinion but also had a separate shorter dissent in which they argued that while the majority's opinion might vindicate the philosophy of Adam Smith at the time of the drafting  of the constitution, state regulation of alcohol needs to be understood in terms of the country's history with prohibition.  This last comment is a nice jab at originalism as an interpretative mode.

Whatever one thinks of originalism, however,  my opinion is that the decision is an important victory for commerce clause jurisprudence. 

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