Post-Granholm Challenge to Tennessee Wine Regs:

The U.S. Court of Appeals for the Sixth Circuit gave a little bit of good news to Tennessee oenophiles today in Jelovsek v. Bredesen. Judge Norris, writing for a unanimous three-judge panel, summarized the opinion as follows:

These consolidated cases ask the question whether Tennessee laws governing the wine industry violate the dormant commerce clause of the Constitution. This is one of several lawsuits filed across the country after the Supreme Court invalidated wine-related laws in Michigan and New York which allowed only in-state wineries to sell and ship wine directly to consumers. Granholm v. Heald, 544 U.S. 460 (2005). . . .

The district court granted defendants’ Fed. R. Civ. P. 12(c) motion for judgment on the pleadings. Jelovsek v. Bresden, 482 F. Supp. 2d 1013, 1023 (E.D. Tenn. 2007). The district court concluded that since both in- and out-of-state wineries are prohibited from selling and shipping wine directly to Tennessee consumers, this case is distinguishable from Granholm. The invalidated laws in Granholm denied only out-of-state wineries the ability to ship to consumers, a disparate treatment that the Supreme Court ruled unconstitutional.

We agree with the district court that the Tennessee shipping restrictions are distinguishable from those struck down in Granholm and affirm the district court’s judgment as to the Tennessee ban on the direct shipment of alcohol to consumers, including wine. However, the wineries make a broader challenge to the Tennessee regulatory scheme for alcohol, specifically wine. As discussed below, we conclude that certain other challenged laws are discriminatory on their face, and thus vacate the district court judgment as to those laws, and remand for further proceedings.

UPDATE: I should have provided more detail on the laws at issue in the initial post (and made sure that the link to the case worked). The other rules at issue are those imposed under the Tennessee Grape and Wine Law. The Sixth Circuit concluded that these rules are facially discrminatory. The Court described the relevant law as follows:

The Grape and Wine Law, inter alia, restricts winery licenses to individuals who have been Tennessee residents for at least two years, or to corporations whose stock is wholly owned by Tennessee residents of at least two years; and permits Tennessee wineries which use a sufficient percentage of Tennessee-grown grapes in their wine production to serve complimentary samples to patrons, and to sell at retail directly to customers without any additional license. Id. § 207(d), (f). The Grape and Wine Law also provides that, notwithstanding the transportation restrictions in other statutes, wine purchased at a Tennessee winery may be transported within the state of Tennessee. Id. § 207(i).

As I noted above, holding that this law is discriminatory is only a "little" victory for wine lovers in Tennessee. The court remanded the question to the district court for further proceedings in which the state will have the opportunity to argue that the rules serve some legitimate local purpose for which there is no non-discriminatory alternative. The Sixth Circuit also left open whether the remedy should be eliminating the de facto exemptions for in-state wineries, or extending the exemptions to out-of-state wineries. How the district court addresses these questions will ultimately determine how beneficial the decision is for Tennessee oenophiles, as will the legislature's response to the court's reminder that wine sale regulation cannot discriminate against out-of-state producers.

pwedza (mail):
As a Tennessean - I say 'about time.'
10.24.2008 11:45am
PatHMV (mail) (www):
What impact does Section 2 of the 21st Amendment have on cases like this?

The transportation or importation into any state, territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

It would seem to me, on the face of it, that one could decide the case quickly, based just on that provision.
10.24.2008 11:47am
TruePath (mail) (www):
What other laws? Why?
10.24.2008 12:11pm
PatHMV (mail) (www):
Jonathan, a link to the case would be very helpful, you know...
10.24.2008 12:17pm
10.24.2008 12:29pm
Here's the opinion:
10.24.2008 12:31pm

According to the Sixth Circuit's opinion, the Supreme Court has held that a state's rights under the 21st amendment do not include the right to discriminate against nonresidents or out-of-state businesses. They can regulate as they wish, as long as they do it even-handedly.
10.24.2008 12:41pm
LM (mail):
Typo in the post's title Tennessee.
10.24.2008 3:43pm