Monday, July 15, 2019

Liquor Retailers, the Commerce Clause, and Federalism (Oh, My!)

In Tennessee Wine and Spirits Retailers Assn. v. Thomas, the SCOTUS affirmed decisions of the Sixth Circuit and Federal District Court of Middle Tennessee finding Tennessee’s 2-year residency requirement applicable for retail liquor store license applicants unconstitutional as a violation of the Commerce Clause that is not saved by the 21st Amendment.  Specifically, in an opinion dated June 26, 2019, Justice Alito concluded that "Tennessee’s 2-year durational-residency requirement plainly favors Tennesseans over nonresidents" and, addressing the claim that Tennessee's regulation nevertheless is valid under Section 2 of the 21st Amendment, found that "the record is devoid of any 'concrete evidence' showing that the 2-year residency requirement actually promotes public health or safety; nor is there evidence that nondiscriminatory alternatives would be insufficient to further those interests."  This is a huge win for the alcoholic beverage retail industry nationwide, even of it is a deemed loss for smaller local liquor retailers in Tennessee who were protected by the stringent residency requirements (although the Tennessee Alcoholic Beverage Commission had stopped enforcing the requirements against new applicants).

[Note: BLPB reader Tom N. predicted this result in his comment to this Josh Fershee post earlier in the year.]

A number of things about the Court's opinion interest me and also may interest you.  First, the Petitioner, a trade association, chose to only challenge the Sixth Circuit's opinion on only one of the two residency requirements struck down at the Sixth Circuit level.  Second, the Petitioner chose not to argue that the initial application residency requirement could be sustained under the dormant Commerce Clause as a narrowly tailored measure designed to “advance a legitimate local purpose.”  Rather, the Petitioner chose to argue that the law could be sustained under Section 2 of the 21st Amendment because the residency requirement promoted public health and safety.  And finally, the Court's opinion includes some interesting history on alcohol regulation (including Prohibition) and the dormant Commerce Clause.

The dissent, written by Justice Gorsuch (joined by Justice Thomas), takes a states' rights viewpoint under Section 2 of the 21st Amendment.  The concluding text (citations have been omitted for readability) is somewhat passionate.

Like it or not, those who adopted the Twenty-first Amendment took the view that reasonable people can disagree about the costs and benefits of free trade in alcohol. They left us with clear instructions that the free-trade rules this Court has devised for “cabbages and candlesticks” should not be applied to alcohol. Under the terms of the compromise they hammered out, the regulation of alcohol wasn’t left to the imagination of a committee of nine sitting in Washington, D. C., but to the judgment of the people themselves and their local elected representatives. State governments were supposed to serve as “laborator[ies]” of democracy, with “broad power to regulate liquor under §2,” If the people wish to alter this arrangement, that is their sovereign right. But until then, I would enforce the Twenty-first Amendment as they wrote and originally understood it.

Nevertheless, I am more persuaded by the majority opinion.

Regardless, the opinions both offer some fun reading for those interested in the dormant commerce clause or in alcohol regulation.

[Editorial Note: I found a few typos in this after posting--enough that it bears mention here that I corrected them.  Thanks to coblogger Ann Lipton for spotting a particularly egregious spellcheck-generated error.]

https://lawprofessors.typepad.com/business_law/2019/07/in-tennessee-wine-and-spirits-retailers-assn-v-thomas-the-scotus-affirmed-decisions-of-the-sixth-circuit-and-distrcit-cour.html

Constitutional Law, Joan Heminway | Permalink

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