Takeaways

The Court took an absolute Commerce Clause position and relied on a U.S. Supreme Court case, which permits discrimination only when absolutely necessary.

The Court further dismissed the state’s claim that the 21st Amendment shields state discriminatory laws from Commerce Clause challenges. It held that the state misreads U.S. Supreme Court precedent and that an evidentiary standard exist and that direct shipping does not threaten the three-tier system.

Introduction

A federal judge strongly dismissed the State of Washington’s motion to dismiss a case (Washington distiller case), which challenged Washington’s discriminatory distiller shipping law.

The state made the claim that the plaintiff’s lawsuit failed to state a claim in which relief can be granted, because even if the law is discriminatory, it promotes a legitimate state interest under the 21st Amendment.

The Court disagreed holding that Supreme Court precedent is in line with the plaintiff’s challenge.

Under Washington law, a distiller with a physical retail location may ship into the state, based on the physical presence requirement out-of-state distillers, which lack a physical presence, cannot ship.

Legal Conclusion

The Court roundly rejected the state’s claim and held that the case against the state is inline with U.S. Supreme Court precedent in Granholm and Tennessee Wine. 

As the state was making the argument that the 21st Amendment acts as a shield to discrimination and holds sway over the Commerce Clause, the Court was taking an absolute Commerce Clause position. The Court limited the Commerce Clause exception not to the 21st Amendment but to the legal principle that “a presumptively invalid discriminatory law may survive if the State “demonstrate[ s] both that the statute serves a legitimate local purpose, and that this purpose could not be served as well by available nondiscriminatory means,” or with the usual exceptions of congressional authorization or market participation.” Interestingly the Court cited for legal support Maine v. Taylor, which is a Supreme Court case standing for the proposition that discrimination could only occur when there is no reasonable nondiscriminatory alternatives available.

The Court is signaling that it is throwing in with a strong Commerce Clause position.

The state made the common arguments that courts have recognized numerous legitimate 21st Amendment concerns, such as the state’s interest in preserving the three-tier system and that the “the three-tier system itself is ‘unquestionably legitimate’” and the plaintiff’s challenge represents a threat to the three-tier system, because it allows distillers to bypass Washington’s regulated market. “

The Court noted that “the legitimacy of Washington’s three-tier system is not put in issue by a scheme which allows in-state distributors to eschew the standard three-tier scheme requirements and sell directly to consumers while denying out-of-state distributors the same privilege.” It also noted the Supreme Court precedent in Tennessee Wine and Granholm do not align with the state’s position.

The Court held that Granholm’s facts are nearly identical to the case at hand and in Tennessee Wine the Supreme Court required more than mere speculation and unsupported assertions.

This opinion stands for the proposition that Tennessee Wine along with Granholm rejects the legal theory that preserving the state’s 21st Amendment interest acts as a shield against discriminatory laws.