Important factors

Before going into a summary of the legal decision, I wanted to provide some major points on why this decision, Block v. Canepa, is of paramount importance.

The first post Tennessee Wine decision on wine retailer shipping was Lebamoff v. Whitmer, where the Sixth Circuit found Michigan’s discriminatory wine retailer shipping law was constitutionally permissible and withstood a Commerce Clause challenge.

The Fourth and Eighth Circuit, which were the 2nd and 3rd wine retailer shipping cases post Tennessee Wine, relied heavily on the Sixth Circuit’s precedent in Lebamoff.

The Sixth Circuit in Block essentially neuters the legal precedent in Lebamoff, when it holds that although controlling, Lebamoff is not dispositive. Dispositive connotates something akin to legal certainty, whereas controlling means a legal decision that can be relied on.

It held that Lebamoff was limited and its decision did not rest on a definitive legal doctrine, but on its own unique facts and circumstances.

The Court held that the district court failed to examine all the necessary evidence and instead short circuited its analysis by holding that Lebamoff precluded it from examining all the evidence.

In summary, the Sixth Circuit distinguished and neutered Lebamoff to the point where Lebamoff is limited in its impact

The second major issue was on Ohio’s transportation limits statute, which makes it illegal to import more than 4.5 liters of wine into the state. The district court dismissed the plaintiff’s claim for lack of standing, as it determined that the plaintiff could not prove it suffered injury in fact.

The Sixth Circuit refuted the lower court and reversed its dismissal. It did not deal with the other standing issues as the lower court did not address them.

The Sixth Circuit requires either the lower court prove how standing was not satisfied on the other grounds or that it determines whether the transportation limits are constitutionally permissible.

Interestingly enough if the transportation limits from out-of-state are deemed unconstitutional by the Sixth Circuit, this will set up a circuit split, as the Fourth Circuit held in Brooks v. Vassar, that Virginia’s personal importation laws passed constitutional muster.

In the end, if the Sixth Circuit finds Ohio’s shipping law unconstitutional, it sets up a schism within the Sixth Circuit, which would probably require an en banc hearing. If the Sixth Circuit finds the transportation limits unconstitutional, we have a circuit split with the Fourth and the potential for a trip to the Supreme Court.

The Constitutionality of the Direct Ship Restriction

The Sixth Circuit in Block v. Canepa reversed and remanded a district court decision, which upheld Ohio’s discriminatory wine retailer shipping law.

The lower court based its decision on the Sixth Circuit’s decision in Lebamoff v. Whitmer, which held that Michigan’s discriminatory wine retailer shipping law was constitutionally permissible.

In Block, the district court held that the Ohio law was substantively identical to Michigan’s law, and hence Lebamoff was not only controlling but dispositive.

The Sixth Circuit in Block disagreed with this assessment when it stated, “Thus, although the district court correctly observed that Lebamoff is “controlling,” it incorrectly deemed the decision “dispositive.”

The Block decision stated that a discriminatory state law can withstand a Commerce Clause challenge if it meets the Tennessee Wine test. (1) It “can be justified as a public health or safety measure or on some other legitimate nonprotectionist ground,” and (2) its “predominant effect” is “the protection of public health or safety,” rather than “protectionism,” Tenn. Wine, 139 S. Ct. at 2474.

According to the Sixth Circuit, Lebamoff permitted the Michigan law to withstand a Commerce Clause challenge, because the plaintiffs “failed to provide sufficient evidence that Michigan’s direct ship restriction failed the Tennessee Wine test.” However, the Lebamoff decision did not foreclose other challenges to retailer shipping bans. Further, the Court concluded that Lebamoff was limited to its specific facts and circumstances and was not dispositive.

The Block Court utilizing the concurring instead of the majority opinion in Lebamoff, held that Lebamoff’s holding was limited to the evidence before the Court and that the state prevailed because “the plaintiffs failed to “produce[] sufficient countervailing evidence showing that [Michigan’s] public health concerns are ‘mere speculation’ or ‘unsupported assertions,’ or that the ‘predominant effect’ of the in-state retailer requirement is not the protection of public health.”

The Sixth Circuit went onto state that plaintiffs provided evidence detailing how the law support protectionism and the defense submitted evidence suggesting that the restrictions promoted public health, and that “The district court should have considered how that evidence stacks up against the Tennessee Wine test.”

On these grounds the Sixth Circuit reversed the district court’s summary judgment ruling upholding the constitutionality of the wine retailer shipping restrictions.

The Sixth Circuit instructed the lower court on remand to determine if the Ohio wine retailer shipping statute “1) “can be justified as a public health or safety measure or on some other legitimate nonprotectionist ground,” and whether (2) their “predominant effect” is “the protection of public health or safety,” rather than “protectionism.” Tenn. Wine, 139 S. Ct. at 2474.

Transportation Issue

Under Ohio law, Ohio could enforce an action against a resident that imports more than 4.5 liters of wine into the state for personal consumption.

In the district court, the plaintiffs challenged the transportation issue but the challenge was dismissed because the plaintiffs “fail[ed] to sufficiently allege a factual predicate establishing a credible threat of prosecution ” with respect to the Transportation Limit.” The district court dismissed the plaintiff’s challenge because it held the plaintiff lacked standing.

Under Article III to satisfy standing requirements a plaintiff must show “(1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.”

The lower court held that the plaintiff “fail[ ed] to sufficiently allege a factual predicate establishing a credible threat of prosecution for the transport count. Thus, he does not show an injury in fact for Article III standing.”

Plaintiffs provided evidence that Miller faced a threat of prosecution, including, “1) a 2020 post on the website Reddit in which a poster claimed to have been charged with illegally transporting a bottle of bourbon into Ohio from Kentucky; (2) a 2019 press release by the Ohio Investigative Unit and Liquor Control detailing charges they brought against five Ohioans for illegally reselling liquor; (3) law firm webpages offering to defend individuals against charges brought under the Transportation Limit, along with Miller’s sworn declaration that “[i]n [his] experience, lawyers do not advertise specific services unless there is a need for them, which means people are being arrested for unlawful transportation of alcohol,” Miller Deel., R. 34-5, Page ID #303; (4) Yost’s interrogatory response explaining that the Transportation Limit could be enforced if an individual was transporting wine into the State to unlawfully sell at retail, if the individual was transporting illegal narcotics in addition to an excess amount of wine, or if the illegal transportation resulted in serious death or injury; and (5) spreadsheets produced during discovery showing several arrests and one administrative citation for violations of the Transportation Limit between July 2017 and July 2020.”

The lower court determined that because the criminal proceedings were against those importing liquor or beer and not wine, there was not a credible threat for prosecution. Thus, standing was not satisfied.

The Sixth Circuit disagreed and held the district court was flawed because the plaintiff need only to show he reasonably feared actions might be taken against him, he was required to show that fear of prosecution was not imaginary or speculative. The plaintiff succeeded because he provided evidence that Ohio prosecutes transportation violations, and the state provided evidence that it could and would prosecute violations.

With this decision, Ohio will either need to prove a lack of standing on the other two elements or rule on the constitutionality of the transportation/importation statue.