Summary
The court held that Michigan laws permitting in-state wine retailers to ship wine directly to Michigan consumers while prohibiting out-of-state retailers from doing so discriminated against interstate commerce. It rejected the State’s reliance on the Twenty-First Amendment and found that the asserted administrative, youth-access, tax-collection, and product-safety interests could be achieved through reasonable nondiscriminatory alternatives. The court granted plaintiffs’ summary-judgment motion, declared the relevant provisions unconstitutional, and permanently enjoined their enforcement against out-of-state wine retailers.
Topics
Practice areas
Questions Presented
- Whether Michigan's wine-shipping laws, which permitted in-state retailers to ship wine directly to Michigan consumers while prohibiting out-of-state retailers from doing so, violated the dormant Commerce Clause.
- Whether the Twenty-first Amendment authorized Michigan to maintain the discriminatory distinction between in-state and out-of-state wine retailers.
- Whether the court should extend the benefits of Michigan's direct-shipping law to otherwise compliant out-of-state retailers as the remedy.
- Whether plaintiffs' Privileges and Immunities Clause claim should be reached.
Holdings
- Michigan's statutory scheme discriminated against interstate commerce because it allowed in-state wine retailers to use common carriers to ship directly to Michigan consumers while denying the same privilege to out-of-state retailers.
- The Twenty-first Amendment did not authorize Michigan to discriminate against out-of-state wine retailers because the discrimination was not inherent in Michigan's three-tier alcohol-distribution system.
- Michigan failed to demonstrate that administrative regulation, preventing sales to minors, collecting taxes, or ensuring product safety required discrimination against out-of-state wine retailers.
- The court extended the direct-shipping benefits to otherwise compliant out-of-state wine retailers rather than nullifying the benefit for in-state retailers.
Key quotations
“Distinctions between in-state and out-of-state retailers and wholesalers are permissible only if they are an inherent aspect of the three-tier system.” (at 308)
“Michigan is therefore operating an unjustifiable protectionist regime in its consumer wine market, a privilege unsanctioned by the Twenty-first Amendment and forbidden by the dormant Commerce Clause.” (at 311)
“This order shall not prevent the State of Michigan from collecting all appropriate taxes due on the sale of the wine or from requiring licenses and permits for direct interstate sales and deliveries.” (at 312)
Factual background
Michigan's 2016 Public Act 520 allowed Michigan specially designated merchant licensees to ship wine directly to Michigan consumers through common carriers or other delivery methods, while out-of-state wine retailers were ineligible for the relevant license and were barred from shipping wine to Michigan customers. Lebamoff Enterprises operated fifteen wine and liquor stores in Indiana and had Michigan customers who wanted to purchase wine from it. Individual Michigan plaintiffs wished to order wine from out-of-state retailers, including because desired vintages were allegedly unavailable in Michigan.
Procedural history
Plaintiffs filed the action in January 2017 and an amended complaint in February 2017. The Michigan Beer & Wine Wholesalers Association intervened as a defendant. After briefing and a September 6, 2018 hearing on cross-motions for summary judgment, the court resolved the case as a matter of law.