In Lochner v. New York, Judge Oliver Wendell Holmes, wrote one of the most famous lines in America legal history when he stated:

“The Fourteenth Amendment does not enact Mr. Herbert Spencer’s Social Statics” Lochner v. New York, 198 U.S. 45, 75 (1905)

Mr. Spencer’s book Social Statics was a defense of Social Darwinism, and the concept of survival of the fittest where the strong survive and the weak don’t.

In Lochner, the Supreme Court overturned a New York law which limited hours for bakers to 60 hours pure week. The Court held that the New York law violated the right of bakers’ freedom to contract with their employer under the 14th Amendment.

Justice Holmes criticized this decision, because he believed it was based on economic theories espoused in Mr. Spencer’s book rather than legal principles. Judge Holmes did not take issue with the economic theories of Mr. Spencer, but with the method the majority employed to come to their decision.

“But a constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the State or of laissez faire” Lochner v. New York, 198 U.S. 45, 75 (1905).

Almost one-hundred and twenty years later, the 9th Circuit Court of Appeals Judge Milan Smith wrote an opinion upholding Arizona’s discriminatory wine retailer shipping law by espousing the lineage of Social Darwinism as a means to the end of not finding discrimination under the Commerce Clause.

The issue revolved around whether Arizona’s instate retailer physical presence requirement as a condition for obtaining the right to direct-to-consumer (DTC) ship to Arizona residents was discriminatory. Post-Tennessee Wine there has been a yes consensus, the issue is whether it could be justified by a legitimate non-discriminatory state interest.

The consensus mainly exists because in Granholm the Supreme Court held that the “in-state presence requirement runs contrary to our admonition that States cannot require an out-of-state firm ‘to become a resident in order to compete on equal terms.’” Granholm v. Heald, 544 U.S. 460, 475

In Granholm, New York tried to justify discrimination by stating that a permit was available in New York for out-of-state residents that developed a physical presence in the state and would provide them with the same benefit as New York wineries. The Supreme Court roundly rejected this theory under the premise that you can’t require a company maintain a location within the state to gain access to the market. Also, the Court noted the extra and unnecessary financial burden hoisted onto the out-of-state competitor.

As the Granholm Court noted:

“For most wineries, the expense of establishing a bricks-and-mortar distribution operation in 1 State, let alone all 50, is prohibitive.” Granholm v. Heald, 544 U.S. 460, 475 (2005)

Judge Milan Smith not impressed by Granholm’s reasoning decided to rewrite with a new legal standard which included elements of Social Darwinism.

He first rejects Granholm because unlike the case at hand, the 9th Circuit is not dealing with an exception to the three-tier system. Unlike the Supreme Court which extended Granholm beyond producers to retailers and wholesalers, Judge Smith concluded, which is a first in the post-Tennessee Wine world, that the Granholm principle on physical presence does not extend to wholesalers and retailers.

Instead, he makes the case that the burden on retailers is not a major burden and this is evidenced by the fact that Sam’s Club and Total Wine are out-of-state residents, but still maintain a physical presence in Arizona. In other words, if you are not economically large enough to play here physically, then the market privileges are not open to you. Here are some excerpts from Judge Smith’s opinion.

“The district court noted that the presence requirement does not outright prevent an out-of-state retailer from obtaining a license, pointing out that several large companies such as Walmart, Sam’s Club, and Total Wine had acquired licenses and opened retail premises in Arizona even though they are headquartered elsewhere. Day v. Henry, No. 23-16148, at 14 (9th Cir. Mar. 4, 2025)

“We conclude that Plaintiffs have not met their burden of showing that the liquor laws at issue here are discriminatory. Arizona’s laws apply even-handedly to all wine retailers, no matter whether that retailer is headquartered, incorporated, or otherwise based in another state. While Plaintiffs claim that Arizona directly discriminates…”  Id. at 15.

“Arizona gives licensed retailers the privilege of directly shipping to customers. The requirement that a retailer establish a physical premise in Arizona that is managed by an Arizona resident to obtain a license applies to all retailers, not just those based in another state.” Id. at 15.

Judge Smith instead of following the precedent in Granholm and Tennessee Wine, has now established the survival-of-the-fittest test for market access, if you can pay, the government allows you to play. If you are too small, too bad, come back and get more resources. The element associated with cost and burden set forth by Granholm does not exist anymore and equal and fair access to the marketplace does not depend on the free flow of commerce as enshrined in the Constitution, but on some new fad Social Darwinist theory that seems to apply only to the alcohol industry.

Judge Smith intends to enshrine in the 21st Amendment not a careful scrutiny analysis when it clashes with the Commerce Clause, but rather a Social Darwinist Leviathan that completely abrogates the Commerce Clause.

It has been nearly 120 years since the Great Oliver Wendell Holmes penned the dissent in Lochner, and criticized the majority for enacting Mr. Spencer’s Social Statistics into the 14th Amendment. Sadly 120 years later Milan Smith ignored legal precedent and began the process of enacting his theories on Social Darwinism into the 21st Amendment.