Supreme Court Petitioned on Wine Shipping

A Florida retailer is appealing to the US Supreme Court to uphold an earlier decision.
© iStock | A Florida retailer is appealing to the US Supreme Court to uphold an earlier decision.
Once again, lower courts are defying a Supreme Court decision and the higher court is being asked to intervene.
By W. Blake Gray | Posted Monday, 05-Jul-2021

Wine shipping cases for the US Supreme Court are like whack-a-mole: the justices think they have slammed down a decisive ruling when, oops, another state defies their precedent. The question this summer is whether the justices feel ready to get out the hammer again.

Sarasota Wine Markets has asked the Court to hear its appeal of a strange ruling out of Missouri, in which neither a district court judge nor a federal appeals court allowed any evidence to be presented. Instead, in Sarasota Wine Markets v Schmitt, they both simply ruled that Florida wine shops cannot ship wine to Missouri customers, even though Missouri shops can.

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This seems to directly contradict the 2019 Supreme Court ruling in Tennessee Wine & Spirits Retailers Association vs. Thomas, which basically declared that a state cannot discriminate against out-of-state wine businesses.

And it's not the only such lower-court ruling to ignore SCOTUS. Michigan's legislature has seemingly never accepted that the state lost the 2005 Granholm v Heald ruling that opened the nation to direct wine shipping. It found a sympathetic judge in 2020 who declared in Lebamoff v Whitmer that "the Twenty-first Amendment leaves these considerations to the people of Michigan, not to federal judges". One would think that Supreme Court justices wouldn't like being told where their authority ends by lower-court judges. But SCOTUS did not grant certiorari in that case, meaning that they simply refused to hear it one way or the other.

Sarasota Wine Markets has applied for certiorari in the Missouri case, and perhaps it won't be accepted either, as only about 3 percent of all petitions are granted. Four of the nine Supreme Court justices would have to agree to hear the case. We probably won't know for several months whether or not they will.

"I think we have to push issues forward with the Supreme Court," said Sean O'Leary, an Illinois-based beverage alcohol attorney who may write an amicus brief in the Missouri case supporting the Florida retailer's right to ship. "The 6th circuit decision [in Lebamoff] was bad enough, but at least [the Michigan court] looked through the record and went through a commerce clause analysis. I'm not saying they did it well, but at least they did it. In the 8th circuit [Missouri], they didn't even go through a commerce clause analysis. We need to call this out."

Discrimination

The reason wine shipping cases keep ending up in court is because of a conflict between the 21st Amendment, which repealed Prohibition, and what's known as the dormant commerce clause of the US Constitution. Under the latter, states are not allowed to discriminate against businesses or people from other states: a car dealer in Las Vegas must be allowed to sell cars in Arizona or California. However, the 21st Amendment allowed states wide latitude to regulate alcohol sales.

The Supreme Court's ruling in Granholm v. Heald in 2005 seemed to establish the principle that states could not favor their own alcohol industries, but the ruling mentioned "producers", so the upshot was that wineries could ship directly, but a gray area existed for wine retail shops. The 2019 Tennessee case seemed to close that loophole – SCOTUS ruled that Tennessee could not impose residency requirements on liquor shop owners because that is discriminatory – but obviously not in the minds of some federal judges.

O'Leary said that SCOTUS' ruling in the Tennessee case requires states to prove that their regulations do not violate the dormant commerce clause, but the Missouri federal courts didn't even ask them to try.

Judges who don't like the Supreme Court's decisions on wine frequently cite a phrase Anthony Kennedy used in writing the Granholm v Heald decision: "The three-tier system is unquestionably legitimate." The judge in the Missouri case said in effect his ruling is valid because Sarasota Wine is challenging Missouri's three-tier system, and therefore the commerce clause isn't an issue.

"The judge in the 8th circuit says that the requirement that a retailer be in-state is an essential element of the three-tier system," said Tom Wark, executive director of the National Association of Wine Retailers. "Why don't out-of-state wineries have to be located in the state? Eventually we're going to get a decision out of the Supreme Court that just spanks these judges for these mendacious decisions."

But the question is, will it come from the Missouri case? Though the ruling does seem egregious, the Supreme Court took 14 years after Granholm v. Heald to hear another case on the commerce clause-21st Amendment conflict, and its decision cited precedents back to the 1700s. The Supreme Court simply does not move on the same time cycle as the rest of us.

"You can never predict the court," O'Leary said. "I was on a constitutional law panel two weeks before they took Tennessee Wine. We all said there's no way they take Tennessee Wine because it's too weird. They'll wait for a cleaner case. But they took it. Now the conventional wisdom is they'll wait. You never know, especially if something really gets on their radar."

O'Leary said the length of time the Court spent considering the certiorari application last year in the Lebamoff case shows they took it very seriously.

"It got denied, but they held it over to look at it," O'Leary said. "There are hot button Supreme Court issues. Abortion, voting rights stuff. That's the hot button stuff that they're going to take. But maybe the court sees an issue bubbling and says: 'We've got to take this right now. It's not being covered the right way.' We don't know the minds of nine people. But we only need four."

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