Beskind v. Easley
| Decision Date | 08 April 2003 |
| Docket Number | No. 02-1432.,02-1432. |
| Citation | 325 F.3d 506 |
| Parties | Donald H. BESKIND; Karen Bluestein; Michael D. Casper, Sr.; Michael Q. Murray; D. Scott Turner; Michael J. Wenig; Mary A. Wenig; Oakstone Winery, Incorporated, Plaintiffs-Appellees, and I. Roger Scarborough, Plaintiff, v. Michael F. EASLEY, in his official capacity as Governor of North Carolina; Roy Cooper, in his official capacity as Attorney General of North Carolina; Bryan E. Beatty, in his official capacity as Secretary of the North Carolina Department of Crime Control and Public Safety; Ann Scott Fulton, in her official capacity as Interim Chairman of the North Carolina Alcoholic Beverage Control Commission, Defendants-Appellants. National Alcohol Beverage Control Association, Incorporated; State of Michigan; National Conference of State Liquor Administrators; Wine & Spirits Wholesalers of America, Incorporated; National Association of Beverage Importers; National Association of Beverage Retailers; National Beer Wholesalers Association; National Licensed Beverage Association; Presidents' Forum of The Beverage Alcohol Industry, Amici Supporting Appellants. Juanita Swedenburg; Swedenburg Winery; David Lucas; The Lucas Winery; Family Winemakers of California; Coalition For Free Trade, Amici Supporting Appellees. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: James Peeler Smith, Special Deputy Attorney General, North Carolina Department of Justice, Raleigh, North Carolina, for Appellants. James Alexander Tanford, Indiana University School of Law, Bloomington, Indiana, for Appellees. ON BRIEF: Roy Cooper, Attorney General of North Carolina, Isaac Avery, Special Deputy Attorney General, Amy Yonowitz, Assistant Attorney General, Brian Blankenship, Assistant Attorney General, North Carolina Department of Justice, Raleigh, North Carolina, for Appellants. Robert D. Epstein, Epstein & Frisch, Indianapolis Indiana, for Appellees. James M. Goldberg, Goldberg & Associates, P.L.L.C., Washington, D.C., for Amici Curiae Beverage Control Association, et al. Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, Irene M. Mead, Assistant Attorney General, Michigan Department of Attorney General, Lansing, Michigan, for Amicus Curiae Michigan. Louis R. Cohen, C. Boyden Gray, Scott A. Shepard, Wilmer, Cutler & Pickering, Washington, D.C.; M. Craig Wolf, Wine & Spirits Wholesalers of America, Inc., Washington, D.C., for Amici Curiae Wholesalers, et al. Clint Bolick, William H. Mellor, Steven M. Simpson, Institute for Justice, Washington, D.C., for Amici Curiae Swedenburg, et al. Tracy S. Carlin, Foley & Lardner, Jacksonville, Florida; Kevin M. Fong, Pillsbury Winthrop, L.L.P., San Francisco, California, for Amici Curiae Winemakers, et al.
Before NIEMEYER, LUTTIG, and TRAXLER, Circuit Judges.
Affirmed in part, vacated in part, and remanded by published opinion. Judge NIEMEYER wrote the opinion, in which Judge LUTTIG and Judge TRAXLER joined.
The plaintiffs, a California winery and individual oenophiles, commenced this action challenging the constitutionality of North Carolina's Alcoholic Beverage Control ("ABC") laws as they apply to the direct shipment of wine to consumers, which prohibit the importation of wine into North Carolina except through a highly regulated three-tiered structure. The plaintiffs alleged that portions of these laws, even though adopted pursuant to the Twenty-first Amendment, are unconstitutional by virtue of the dormant Commerce Clause because the laws favor local wine manufacturers, who are permitted to sell and ship their wine directly to consumers, and correspondingly discriminate against out-of-state wine manufacturers and sellers, who must sell and ship through the more costly three-tiered structure.
The district court held that North Carolina's ABC laws unconstitutionally discriminated against out-of-state wine manufacturers and sellers and were not saved by the Twenty-first Amendment. Accordingly, the court enjoined their enforcement with the effect that out-of-state wine manufacturers would be permitted to sell and ship directly to North Carolina residents.
On appeal, North Carolina maintains that the aspect of its ABC laws authorizing local wine manufacturers to sell and ship directly to North Carolina consumers falls within the authority conferred on it by the Twenty-first Amendment. It claims that, in any event, the district court abused its discretion in striking down the core of the laws' prohibition against the direct shipment of wine and other alcoholic beverages when the alleged discrimination could be eliminated simply by striking down the single provision that favors local wine manufacturers.
For the reasons that follow, we affirm the district court's conclusion that the ABC laws unconstitutionally discriminate against out-of-state wine manufacturers and sellers and vacate its remedy striking down the core provisions of North Carolina's direct-shipment prohibitions.
Following the repeal of Prohibition with the adoption of the Twenty-first Amendment, many states, including North Carolina, enacted laws to prohibit the importation of alcoholic beverages except through a highly regulated structure created by ABC laws. As in many states that implemented the Twenty-first Amendment, the structure in North Carolina is a familiar three-tiered one in which out-of-state sellers of alcoholic beverages may sell their alcoholic beverages only to licensed wholesalers, who in turn may sell only to other wholesalers and licensed retailers.
Specifically, North Carolina General Statutes § 18B-102.1 provides that it is unlawful "for any person who is an out-of-state retail or wholesale dealer in the business of selling alcoholic beverages to ship or cause to be shipped any alcoholic beverage directly to any North Carolina resident who does not hold a valid wholesaler's permit," N.C. Gen.Stat. § 18B-102.1(a), and a violation of this section is punished as a felony, id. § 18B-102.1(e). Addressing the importation of wine in particular, the North Carolina ABC laws provide that a non-resident wine vendor must have a permit and then may sell wine in North Carolina "only to wholesalers, importers, and bottlers licensed under this Chapter," id. § 18B-1114, and only these wholesalers and importers are subject to excise taxes on wine sold, id. § 105-113.83. In addition to prohibiting out-of-state wine manufacturers from selling directly to residents in North Carolina, the ABC laws also prohibit North Carolina residents from receiving out-of-state wine without a wholesale permit. Id. § 18B-109. The licensed wine wholesaler who purchases wine from an out-of-state supplier may then resell the wine only to another licensed wholesaler or a licensed retailer. Id. § 18B-1107. And only a licensed retailer may sell to consumers. Id. § 18B-1000 et seq. The ABC laws also require that wholesalers and retailers be distinct persons. Thus, a manufacturer, bottler, or licensed wholesaler is prohibited from having any direct or indirect financial interest in a licensed retailer. Id. § 18B-1116(a)(2).
In sum, under laws that North Carolina first enacted in 1937 pursuant to the Twenty-first Amendment, an out-of-state wine manufacturer or seller wishing to sell wine to North Carolina residents must sell through the three-tiered system with (1) the first sale to a licensed wholesaler, (2) the second sale by a licensed wholesaler to a licensed retailer, and (3) the third sale by the licensed retailer to the consumer. And it is "unlawful for any person to manufacture, sell, transport, import, deliver, furnish, purchase, consume, or possess any alcoholic beverages except as authorized by the ABC law." Id. § 18B-102.
As part of its revision of its ABC laws in 1981, the North Carolina legislature enacted a provision, in the context of an emerging local wine industry, that authorized instate wine manufacturers to sell and ship their products directly to consumers. Id. § 18B-1101(3). It is the juxtaposition of this provision with the provisions regulating out-of-state wine manufacturers that gives rise to the issue in this case.
The plaintiffs, some of whom wish to purchase wine directly from out-of-state wineries and some of whom are out-of-state sellers or shippers who wish to sell or ship wine directly to consumers in North Carolina, commenced this action in June 2000, challenging North Carolina's ban on direct shipment of out-of-state wine, alleging that it unconstitutionally discriminates against interstate commerce. Donald H. Beskind, a North Carolina resident and a collector of fine wines, would like to purchase rare and unusual wines that are not available in North Carolina except by direct shipment. Karen Bluestein, a North Carolina resident, would like to be able to purchase wine while visiting small out-of-state wineries and have the wine shipped back to her home in North Carolina. Michael D. Casper, Sr., a resident of Calabash, North Carolina, which is a small town with only a very limited selection of wine available locally would like to be able to receive direct shipments of wine from out-of-state suppliers. Michael Q. Murray, Mary A. Wenig, and Michael J. Wenig, also North Carolina residents, would like to purchase and receive wines by direct shipment that are not available through North Carolina retailers. D. Scott Turner, a Michigan resident, would like to be able to ship wine from Michigan to his parents in North Carolina as a gift. And Oakstone Winery, Inc., a small winery in Fair Play, California, asserts that it is economically infeasible for it to distribute its wine through a wholesaler and that it relies principally on Internet sales and direct shipments. It has received requests for wine from North Carolina customers, including Beskind, but cannot fill them without violating North Carolina's ABC laws. It has indicated it would be...
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