A couple of weeks ago, I spoke to Professor Alex Tanford, who clearly is on the opposite side of WSWA. Professor Tanford successfully argued the Granholm case at the U.S. Supreme Court, which overturned New York and Michigan’s laws that restricted out-of-state wineries from shipping into their states.
After posting the WSWA press release yesterday and presenting their point of view, I thought it would only be fair to present Professor Tanford’s views. This interview was conducted at a time before the release of WSWA’s press release, so as to avoid a situation where one party spends their time ripping apart the other side, as opposed to providing their side and educating the public about their philosophy.
What is Byrd and why is it important?
The Granholm decision overturned the New York and Michigan laws that restricted out-of-state wineries from shipping into these states. Problematically, the decision left a gaping hole of ambiguity in the liquor legal scene. We all asked, “is Granholm limited to out-of-state wineries being able to ship into a state, or does it also allow out-of-state retailers to ship into the state?”
This unanswered question has inspired many legal challenges to state statutes that restrict out-of-state retailers from shipping into the state, while at the same time allowing in-state retailers the right to ship to customers.
I had the privilege of discussing with Professor Tanford his views on how Byrd will evolve and how it could shape the future of the liquor world.
Will this case decide the Granholm issue?
It always seemed that this case was an odd one to decide whether Granholm extended to retailers. In fact, Tennessee’s statute could be challenged on its durational residency requirements without even delving into the issue of whether out-of-state retailers can ship product into a state.
Irish Liquor Lawyer: Will this case decide the Granholm issue?
Professor Tanford: They will take up Granholm and it will not be limited to the Tennessee residency issue. The cert petition lays out the general confusion among the circuits that no two decisions are consistent on how far, if at all Granholm extends outside of wineries. How expansive or narrow Granholm is read, depends on how they can get a majority.
Irish Liquor Lawyer: Were you surprise they took Byrd and not any of the Lebamoff cases that you are arguing or some other case out there?
Professor Tanford: No, even though Lebamoff (http://irishliquorlawyer.com/lebamoff-takes-on-the-state-of-illinois/) is a cleaner question, there is no conflict yet amongst the circuits. (In the Lebamoff cases out Michigan, Missouri, and Illinois, Tanford challenged the laws that allow in-state retailers to ship to customers while denying this privilege to out-of-state retailers).
With the residency requirements issue, there already is clear and existing conflict amongst the circuits. There is the Cooper case out of the 5th Circuit that affirms after Granholm that residency requirements Post-Granholm violate the Constitution. Cooper v. Texas Alcoholic Beverage Comm’n, 820 F.3d 730 (5th Cir. 2016)
And then there is the 8th Circuit decision in Southern Wine and Spirits, where the Circuit upheld the residency requirement for the wholesaler license. And the 8th circuit said that in their view Granholm didn’t mean anything. Southern Wine and Spirits of America, Inc. v. Di-vision of Alcohol and Tobacco Control, 731 F.3d 799 (8th Cir.2013)
In their grant of cert, they talk about the residency requirements for wholesalers and retailers, even though Byrd didn’t involve a wholesaler residency requirement. Clearly, they are thinking about the 8th circuit wholesaler case.
It looks from the cases cited in the cert petition and the nature of the case, that if they can get agreement, that they will look at it more broadly than the peculiar Tennessee issue.
Modern commerce view and will it change Justice Thomas
Justice Thomas was in the dissenting opinion in Granholm and sided with the state regulators. He is one of three justices still on the court from that decision. The other two being Ginsburg and Breyer, which both ruled in the majority and against the state.
Since the decision in 2005 the world has changed. My beloved White Sox have not won another World Series and e-commerce has rapidly developed, which has shaped many people’s outlook including judges.
In Lebamoff, Chief Judge of the 7th Circuit Diane Wood questioned the State of Illinois’ position and stated that Illinois’ laws were hampering modern commerce.
Closer to home for Justice Thomas, he ruled with the majority in the Wayfair decision, which taxed internet sales even without the previously necessary physical presence requirement. In the majority opinion Justice Anthony Kennedy overturned legal precedent by relying on the theory of a changing and modern economy.
Irish Liquor Lawyer: So it begs the question, does this change Justice Thomas’ view and does he switch from siding with the state to siding with this modern commerce theory and how the laws may be behind the times?
Professor Tanford: It will be interesting to see, when Granholm came up, the most liberal and conservative judges on the 6th Circuit agreed with each other. When it came up to the U.S. Supreme Court it was not the liberal/conservative split. It had Scalia and Thomas on other sides, Ginsburg and Stevens on other sides. My experience going through Granholm, is it’s impossible to predict, how will they will vote.
The people that took the hard line state’s rights stance on the 21st Amendment are off the court now, that was Stevens and Rehnquist. Stevens opinion in Granholm throws all legal reasoning out the window.
No two circuit opinions have gone the same direction.
The Commerce Clause, always an interesting question
Irish Liquor Lawyer: How could this case transform the Commerce Clause?
Professor Tanford: States have used the argument that the system is necessary because they don’t have the resources to regulate an industry and it is required for public safety. And the courts laughed at them and said hire more people then!
The only argument they have is that the 21st Amendment gives us the power to engage in economic protectionism.
If the Court decides that the core of the Commerce Clause is getting product to market, then we limit Granholm to getting product to market, it would radically change the Commerce Clause.
The Commerce Clause gives Congress the power to regulate commerce, why the hell haven’t they done anything the last 25 years. They could solve this problem.
The Kavanaugh effect
Irish Liquor Lawyer: Any prediction on how Kavanaugh will decide in Byrd?
Professor Tanford: Kavanaugh’s particular bias is unpredictable with this issue. But he didn’t come up out of a state court environment system. Justice O’Connor who was in the Granholm dissent ruled this way because she believed in state and local authority and was skeptical of federal power. Kavanuagh is the opposite and believes in the almighty federal power. If the solicitor general weighed in, he would side that way, if not, we don’t know. All he wrote about on the D.C. Circuit was federal regulation, he is not an anti-government Republican.