Back in October we wrote about Michigan’s Lebamoff decision and the win it represents for nationally open markets and alcohol delivery. You can read the entry on the District Court’s opinion allowing out-of-state alcohol retailers to deliver to in-state consumers here, as well as the follow-up describing the stay granted for allowing the State of Michigan the chance to appeal the decision to open the beverage retail market for shipping from out-of-state liquor retailers here.
The case is part of the slow plod in bringing Commerce Clause equality to the alcohol industry taking place in the wake of Tennessee Wine v. Thomas.
By way of a quick recap of this Lebamoff case (surprise, it’s like the others):
A group of advocates using the Commerce Clause to dismantle state regulations sued the state of Michigan over Michigan’s discriminatory practice of allowing in-state wine retailers to ship alcohol by third-party carrier to residents, but prohibiting out-of-state wine retailers from doing the same. The District Court found in favor of the liquor retailers holding that Michigan’s claims that the restriction on out-of-state retailers advanced these four state interests was bogus:
- Product Safety
- Tax Collection
- Youth Access
- Administrative Overburdening
The State Michigan is appealing the opinion, where the District Court dismantles, in step-by-step fashion, each of those four major arguments advanced by 3-tier advocates as “justifications” for allowing a liquor control authority in the Republic to violate the constitutional fair-and-equal-play principles of the Commerce Clause.
You can read Michigan’s Appellate Brief here.
In the brief, the state makes some claims that parties worried about the dissolution of a three-tier monopoly should study. These arguments will be some of the main points we see made in these out-of-state liquor retailer delivery and shipping cases for the foreseeable future. That is, until the Supreme Court weighs in on this issue, or until all the circuits properly interpret the Commerce Clause as prohibiting states from banning out-of-state retailers from shipping into their states when they allow in-state liquor retailers that privilege. Here are two major arguments:
- There’s something inherently magical about forcing your in-state distributors to buy their alcohol from in-state wholesalers (leave aside that this is swiss cheese given most states various self-distribution laws for manufacturers). So out-of-state retailers are not “similarly situated” under the Commerce Clause analysis since they do not buy their liquor from in-state wholesalers like in-state retailers do. This argument shows that the state is 100% against their citizenry’s choice and consumer rights and absolutely just litigating to try and save the business interests of alcohol wholesalers. States can license these out-of-state retailers and collect taxes from them. No state revenue would get lost. In fact, the state would likely see an increase as new products become available given nationwide access to brands. Every other lawful commodity does this. Shower curtains, foodstuffs, you can order anything online and have it shipped to you except alcohol.
- The in-state restriction on shipping keeps kids from getting access to liquor and buying through wholesalers means liquor is safe. Not only did the District Court debunk these, your own experience and understanding show you they’re BS. The same method of delivery through shipping companies is used by in and out-of-state retailers – that shipping company is confirming age, not anyone else and if you want them to confirm, they can. In-state retailers do nothing more than out-of-state retailers to confirm age. And fake alcohol is a red herring – a straw man set up by states with nothing left to argue. There are no cases outside a few limited instances (and the super-elite world of collectors like Kurniawan) – the Federal government regulates production and bottling and does a great job. AND SERIOUSLY MICHIGAN don’t think we can’t read that the only examples the brief puts forward of bad alcohol harming people are from other countries. (See Brief at pp. 47-48.)
The state’s brief attempts to make an argument by merely repeating, without evidence, the buzzwords of Tennessee Wine “health, safety and welfare” in some weird jedi-mind-trick method of hoping that if they use them enough, an appellate court just might think they’re true or amount to an argument. Honestly, do a search in the brief. Health and safety pop up at least six times in conclusory fashion.
Also, Michigan AGs, what’s with the snark? (See Brief at p.9.) Doust is a wine merchant. You attempting to belittle him with your tone and parenthetical “self-proclaimed” modifier is not only a petulant barb beneath the argument style of a STATE, it’s improper for any counsel, but especially for those who are entrusted with the representation of the citizens of the state of Michigan.
And finally, for those readers with a keen interest in other liquor matters, note the use of the recent Michigan case about bonded transfers as a citation for how the state can seize liquor and protect the public when in-state mandates apply. (See Brief at p.9.) Never mind Michigan allows out-of-state manufacturers limited self-distribution and direct wine sales – so arguments that it couldn’t license out-of-state retailers fall flat.
A rant here. This brief falls back on that same argumentative and fact-lacking style of quoting dicta from Granholm and North Dakota that ended up getting undermined by the Tennessee Wine opinion. You cannot cite that dicta (originally it was the legitimacy of the three-tier system quote, now that other opinions have called attorneys to task for citing that as unfounded and irrelevant dicta, these arguments are looking to other dicta, (See Brief at p.47.) like the buying liquor from wholesalers statement) as though it was a holding or a ruling about how things should be or must be – it never wins out and its intellectually lazy – that was not what the case was about and the sttement isn’t law.
Just admit we need delivery – citizens want delivery and choice and a restrictive 3-tier system is broken – people working who don’t have time to go to the store; connoisseurs looking for hard-to-find items they cannot get in their states; those with disabilities unable to travel.
As for using the bogeyman of a “Tied House” as justification for 3-tier – to say that a tied-house is even a problem, a concern, or could present an issue that would be unwanted in today’s society is to make an unproven claim about something from over 100 years ago in a different time and culture and utilize it as a club to bludgeon societal advancement for the benefit of rent-seeking economic interests to the detriment of voters.
States should start offering out-of-state retailers licenses and start collecting taxes on liquor sold into their states. Wasting precious resources and limited funds protecting wholesaler’s business interests at the expense of consumer choice is no way to exercise the public trust.
I’m calling this one for Lebamoff. Which means the similar case now progressing in the Northern District of Illinois should be his as well. The state’s arguments don’t hold up under scrutiny. The state’s heavy citation to self-serving affidavits that weren’t tested through expert testimony, cross-examination, scientific study and a trier of fact certainly won’t withstand the rigors of a trial if the case is remanded for one.
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