Tennessee Wine Case: Will the Supreme Court decide to put an end to Checkerboard Justice?

 

The liquor world awaits the Supreme Court’s decision anxiously and we wonder how the case will turn out? Will the decision be narrow and limited to the facts of the case, or could we have a major decision that shakes the liquor world to its core?

The deciding factor on how far the Court could go, may depend not on the case at hand, but what could result if the Court does not decide boldly!

 

Could the Court live with checkerboard justice?

Based on the issue of wine shipping, we could and probably will be back before the Court in a couple of years, unless, something influences the Justices to make a bold move! Several wine shipping cases exist at the Circuit Court level where there are splits in opinion.

The 6th and 7th  Circuits which will allow interstate wine shipments (this is based on the 6th Circuit following the Byrd precedent as indicated in the Lebamoff v. Michigan case which extends Granholm to retailers, and in the 7th it’s based on Judge Wood’s strong opinion against Illinois’ wine shipping law) while in the 2nd and 8th Circuits wine shipments will not be permitted.

If the Court does not make a bold decision there will exist checkerboard justice in the liquor world, where interstate wine shipping is legal or illegal based on what geographic circuit the state is located. Checkerboard justice is not something anyone wants to see prevail. Further, the permissibility of wine shipping will not be decided by state legislatures or the Supreme Court but by federal judges on inferior courts located in a specific geographic region.

During oral arguments the Justices seem to grapple with this dilemma.

Justice Kagan admitted she is wrestling with how the Court could decide on Tennessee Wine without continuing the mess.

“But, to go back to Justice Gorsuch’s question, I mean, I’m trying to figure out what kind of opinion we could write, Mr. Phillips, that says you win, but then, when the next case comes along and the next case is somebody that says we don’t like this brick-and-mortar stuff, we don’t want to have any physical presence at all, and the state is preventing that, and in doing so, the state is discriminating against out-of-state companies. And, you know, you’ve said that that’s not valid, so we’re entitled to do what we want to do too.”

When Total Wine’s attorney told her, she could essentially decide the issue narrowly, and leave the rest of the issues for another day. Justice Kagan answered that “Well, we’re leaving a lot of things for another day, but they all seem to be demanded by the principles that you’re asking us to adopt.”

Additionally, Justice Gorsuch felt perplexed on where the Dormant Commerce Clause scrutiny would lead to. “Mr. Phillips, I’d agree with you on that, but I would think that the next case would be — much as we’ve reexamined Quill, for example, and the requirement of physical presence in state, that the next lawsuit would be that, yes, this three-tier system is, in fact, discriminatory by requiring some sort of physical presence in state. And under the dormant Commerce Clause jurisprudence, you have a point. You have a good point. So I — why isn’t this just the camel’s nose under the tent?”

The Court has come to the position that a narrow decision can decide this case but the Court’s precedent will become negligible. So, the question becomes, does the Court want to make a decision with limited force, or do they want to draw the legal line in the sand?

 

Conclusion

I participated on a constitutional law panel at a liquor conference back in October, all four members believed that the Supreme Court would not grant cert in this case. We all believed that the messy durational residency requirements were not something the Court wanted to deal with and that they would wait to take a much cleaner case. Clearly, we were wrong!

After oral arguments, my view and the consensus view shared by those in the liquor industry were that the durational residency requirements would fail and that this decision would not decide whether Granholm applies to retailers.  Could we be wrong again?

After thinking about the concept of checkerboard justice and the Court acknowledging they will be back in the future talking about the same principles to a different problem, I think there is a distinct possibility that the Court will shock the consensus and go for a far-reaching ruling!

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