Wine News Supreme Court Opens Another Case of Wine

Supreme Court Opens Another Case of Wine

The nine Supreme Court justices will look to stamp their authority on the issue once and for all.
© SCOTUS | The nine Supreme Court justices will look to stamp their authority on the issue once and for all.
It looks like the thorny subject of interstate shipping is heading back to the US Supreme Court.
By W. Blake Gray | Posted Wednesday, 25-Nov-2020

Last year, while hearing arguments for what looked like a landmark ruling, several US Supreme Court justices said they wanted to be done with wine cases for a while.

But now it's possible that the issue of wine shipping will be back in the Supreme Court as soon as next spring, with the case of Lebamoff vs. Whitmer. If so, the Court might finally directly answer the question that it seemed to answer last year: whether a state can allow its own retail stores to ship to its residents, but forbid stores in other states from doing so.

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You might say, "I thought that was already decided," when the Supreme Court ruled 7-2 in Tennessee Wine & Spirits Retailers Association vs. Thomas that a state cannot discriminate against out-of-state wine businesses.

But that case was about residency requirements, not shipping. So Jeffrey Sutton, a judge in the Sixth Circuit Court of Appeals – one step below the Supreme Court – apparently decided that, after being on the losing side in last year's Tennessee case, he was going to take exactly the same position again in the Lebamoff case, even though the Supreme Court had expressly rejected his reasoning.

"Once the line was drawn, everyone thought that would be the deciding factor," said Sean O'Leary, an attorney who filed an amicus brief in the Lebamoff case with the Supreme Court in August. "Then, all of a sudden, you get Judge Sutton out of the blue changing the standard. The state didn't even bring up the argument that Sutton used in his opinion. I was completely floored by this decision. I thought, the Supreme Court was going to put the standard on it. The circuits would follow along."

That's the way it's supposed to work, but we're apparently seeing one more example of the breakdown of the American system of government by an official who simply refuses to accept precedent.

Circuit vs, Supreme

Sutton is an arch conservative who was nominated to the appeals court by George W. Bush in 2001. The nomination was controversial enough that it took two years for him to be approved.

In 2014, Sutton wrote an opinion that reversed six district court rulings to uphold same-sex marriage bans in Michigan, Ohio, Tennessee and Kentucky. That made the sixth circuit incompatible with previous rulings striking down same-sex marriage bans in four other circuits, leading to the Supreme Court taking up the issue. The Supreme Court subsequently overturned Sutton in spectacular fashion in Obergefell v. Hodges, which guaranteed same-sex couples the right to marry in all 50 states.

Sutton has been well-respected by the Supreme Court, as he is one of the justices who sends the most law clerks to work at the Court. But he does not return that respect; his opinion in Lebamoff includes this snarky little line that seems to deny the Supreme Court's authority: "But the Twenty-first Amendment leaves these considerations to the people of Michigan, not to federal judges."

Amy Coney-Barrett's elevation to the Supreme Court shouldn't affect the outcome.
© Gallup | Amy Coney-Barrett's elevation to the Supreme Court shouldn't affect the outcome.

Lebamoff seems like a very simple case. The Indiana wine shop Cap n' Cork, owned by Lebamoff Enterprises, wants to ship to Michigan residents. Michigan has a law preventing this, while allowing in-state retail stores to ship. Michigan was on the losing side in the 2005 Supreme Court case Granholm v. Heald, which said states could not discriminate against out-of-state wine producers when it comes to wine shipping. But, the state contended, retail stores were not covered by the Granholm decision.

To most people reading last year's Tennessee decision, written by Justice Samuel Alito, it seemed pretty clear that a law discriminating against out-of-state retailers could not stand. Alito wrote: "Section 2 of the Twenty-first Amendment grants the States latitude with respect to the regulation of  alcohol, but it does not allow the States to violate the nondiscrimination principle." He also wrote: "[The 21st Amendment] allows each State leeway to enact measures to address the public health and safety effects of alcohol use and other legitimate interests, but it does not license the States to adopt protectionist measures with no demonstrable connection to those interests."

Sutton was on the losing side in the circuit court decision of the Tennessee case. Alito specifically mentioned – and rejected – Sutton's dissent in two places in his decision.

Sutton appeared to ignore Alito's opinion. Alito also writes three times in his Tennessee opinion that the state offered no evidence to back up its arguments, which seems to indicate that he wanted to see some.

"[Sutton's] argument in the 6th Circuit was that someone could sell something below cost in Indiana but you can't do that in Michigan," O'Leary said. "So you could flood the market with cheap booze. The reason why there's no evidence is that it's not a sustainable business model. If we're talking about the dangers of cheap liquor, why would I order something from out of state? It's more available on your store shelves of local shops than it would be for shipping. These arguments just stink of insincerity. That's why it's hard for the state regulations to be upheld. You can't prove this. You can't sit there and say, we've noticed stuff."

Coming back for more

Sutton's opinion captured the attention of at least one Supreme Court justice (we don't know which, but it could be Alito) because the Court asked in September for briefs in the case. This is already a big step toward being heard. The Supreme Court receives more than 5000 petitions a year and hears less than 3 percent of them.

On Monday, the Supreme Court decided not to hear a different wine case, Walmart Stores vs. Texas Alcoholic Beverage Commission. Texas has a law banning public corporations from owning a liquor license, which Walmart claims discriminates against out-of-state businesses. But the law applies equally to Texas corporations. The Supreme Court denied certiorari – the term for when it takes or doesn't take a case – without comment.

Robert Epstein, the lead attorney for Lebamoff, told Wine-Searcher that the Court's refusal to hear the Walmart case increases the chance that it will hear Lebamoff. It's possible that the Court wants to address wine shipping head-on, as there are seven similar cases pending in the lower courts. Moreover, after Sutton's ruling in Lebamoff, the Sixth Circuit is in conflict with the Seventh Circuit on whether or not states can discriminate against out-of-state retailers. One of the main reasons for the Supreme Court to take a case is to resolve conflicts between circuit courts of appeals.

"Lebamoff is a much more clean Commerce Clause case than was Walmart," Epstein told Wine-Searcher. "The issue as far as the Supreme Court is concerned is, do they want to hear this case and decide it now, or do they want to let it percolate up through the system."

Since the Tennessee decision, Justice Ruth Bader Ginsburg died and was replaced by Amy Coney Barrett. However, this shouldn't affect the coalition of votes needed for a decision, because the justices voted 7-2 against discrimination in the Tennessee case. Also, alcohol issues don't usually break down along traditional liberal-conservative lines. Alito is one of the Court's more conservative members and he wrote the Tennessee decision.

The Supreme Court has wide discretion to act as it likes and it is possible that it could simply remand the case to the Sixth Circuit for reconsideration. It could also ignore the Lebamoff ruling, deny certiorari, and wait another year or more to take up the issue. But with appeals courts in conflict, it seems likely that the Supreme Court will have to take action at some point. That point could be as soon as next spring.

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