ALABAMA ALCOHOL. BEV. BD. v. HENRI-DUVAL WINERY

• Decision Date: 19 September 2003
• Citation: 890 So.2d 70
• Parties: ALABAMA ALCOHOLIC BEVERAGE CONTROL BOARD v. HENRI-DUVAL WINERY, L.L.C.
• Court: Alabama Supreme Court

890 So.2d 70

ALABAMA ALCOHOLIC BEVERAGE CONTROL BOARD v. HENRI-DUVAL WINERY, L.L.C.

1010070.

Supreme Court of Alabama.

September 19, 2003.

As Modified on Denial of Rehearing April 30, 2004.

William H. Pryor, Jr., atty. gen.; and James H. Anderson and Daniel O. Rodgers, deputy attys. gen., of Beers, Anderson, Jackson, Hughes & Patty, P.C., Montgomery, for appellant.

J. Doyle Fuller, Montgomery; and Robert B. Roden of Shelby & Cartee, Birmingham, for appellee.

Mary E. Pons, Montgomery, for amicus curiae Association of County Commissions of Alabama, in support of the appellant.

SEE, Justice.

The State of Alabama levies excise taxes on wine under the Alabama Table Wine Act, § 28-7-1 et seq., Ala.Code 1975; it formerly levied excise taxes under the Alabama Native Farm Winery Act, § 28-6-1 et seq., Ala.Code 1975. The Alabama Alcoholic Beverage Control Board ("the Board") appeals from the judgment of the Montgomery Circuit Court holding that § 28-7-16, Ala.Code 1975, the Code section pursuant to which the excise tax is levied, violates the Commerce Clause and is therefore unconstitutional. We reverse and remand.

Historically, all wine sold in Alabama was taxed under the general taxation provisions in § 28-3-200 et seq., Ala.Code 1975. In 1979, the Legislature passed the Native Farm Winery Act, which levied an excise tax of $.05 per gallon on all native farm wine sold in Alabama or dispensed as free samples at a native farm winery.¹ § 28-6-4(b), Ala.Code 1975. The Native Farm Winery Act also exempted native farm wine from all other taxes, including those levied under § 28-3-200 et seq.² § 28-6-4(b), Ala.Code 1975.

In 1980, the Legislature enacted the Alabama Table Wine Act. The Table Wine Act levied an excise tax of $.45 per liter on all table wine "sold to [a] wholesale licensee or [the Board], to be collected from the purchaser by the [Board] or by a licensed retailer." § 28-7-16, Ala.Code 1975.³ The Table Wine Act stated that "the tax levied is in fact a levy on the consumer." § 28-7-16(b), Ala.Code 1975. The Table Wine Act repealed all other taxes on wine, but it did not repeal the tax-exemption provision in the Native Farm Winery Act.⁴ § 28-7-24, Ala.Code 1975. In March 2001, Henri-Duval Winery, L.L.C. ("Duval"), sued the Board, alleging that § 28-7-16, Ala.Code 1975, imposed an unconstitutional excise tax on wine moving in interstate commerce in violation of the Commerce Clause. Duval argued that Alabama's table-wine tax scheme discriminated against wine produced outside Alabama because it exempted from the excise tax Alabama native farm wine.⁵ Duval sought a declaration that § 28-7-16, Ala.Code 1975, was unconstitutional. Duval also sought injunctive relief, a refund of wrongfully collected taxes, and certification of a class composed of all producers, manufacturers, importers, and distributors of table wine to participate in any damages award. The Board filed a counterclaim stating that the excise-tax provisions of the Table Wine Act do not discriminate against foreign wine, and arguing that if the trial court found Alabama's excise-tax scheme for table wine unconstitutional, the trial court should uphold the excise tax in the Table Wine Act, § 28-7-16, Ala.Code 1975, and instead find the tax exemption in the Native Farm Winery Act, § 28-6-1 et seq., Ala.Code 1975, unconstitutional.

Duval moved for a partial summary judgment on the issue whether § 28-7-16, Ala.Code 1975, violated the Commerce Clause and was therefore unconstitutional. The trial court granted Duval's motion and held that the excise tax in § 28-7-16, Ala.Code 1975, was discriminatory and unconstitutional; that the Native Farm Winery Act, § 28-6-1 et seq., Ala Code 1975, is not subject to the Commerce Clause because it regulates intrastate commerce; and that the Board lacked standing to contest the constitutionality of the Native Farm Winery Act. The trial court certified that summary judgment as final pursuant to Rule 54(b), Ala. R. Civ. P., and ordered that all taxes collected pending the appeal of its decision be placed in escrow. The Board now appeals.

"`The standard of review applicable to a summary judgment is the same as the standard for granting the motion, that is, we must determine whether there was a genuine issue of material fact and, if not, whether the movant was entitled to a judgment as a matter of law. Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and resolve all reasonable doubts against the movant. Wilson v. Brown, 496 So.2d 756, 758 (Ala.1986); Harrell v. Reynolds Metals Co., 495 So.2d 1381 (Ala.1986). See also Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990).'"

Gonzalez, LLC v. DiVincenti, 844 So.2d 1196, 1200-01 (Ala.2002)(quoting Brewer v. Woodall, 608 So.2d 370, 372 (Ala.1992)). "For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).

The Board argues on appeal (1) that it has standing to ask the trial court to determine the constitutionality of the Native Farm Winery Act; (2) that the trial court erred in declaring the excise-tax provision in the Table Wine Act unconstitutional; (3) that the trial court erred in holding that the Native Farm Winery Act was not governed by the Commerce Clause; and (4) that the trial court erred by ordering that any excise taxes collected under the Table Wine Act be held in escrow.

Duval takes no position in this appeal on the issue of standing. Duval argues that the trial court's rulings on the constitutional issues are correct and that the escrow order will be mooted by this Court's decision on the constitutional questions.

Standing

The Board argues that the trial court erred when it found that the Board lacked standing to challenge the constitutionality of the Native Farm Winery Act under the Commerce Clause. Duval takes no position on that issue on appeal, but Duval argued to the trial court:

"How have the Defendants in this case suffered an injury from the provisions of the Native Farm Wine Tax? It's simple; they have not. Hence they do not have standing to assail it and hence, there is no case or controversy. At the same time, [Duval] has not suffered an `injury directly arising' from the Native Farm Wine Tax, hence we have no standing to attack it and have not attacked it. We have standing to assail on the tax applied to our products. That is the Table Wine Tax. While it may be that we have been injured because of the existence of the Native Farm Wine Tax, and its exemptions of those wines from the Table Wine Tax, we have been injured by the tax imposed on us by the Table Wine Tax Act."

A party establishes standing to bring a challenge under the Commerce Clause when it demonstrates the existence of (1) an actual, concrete and particularized "injury in fact" — "an invasion of a legally protected interest"; (2) a "causal connection between the injury and the conduct complained of"; and (3) a likelihood that the injury will be "redressed by a favorable decision." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). A party must also demonstrate that "he is a proper party to invoke judicial resolution of the dispute and the exercise of the court's remedial powers." Warth, 422 U.S. at 518, 95 S.Ct. 2197.

In Stiff v. Alabama Alcoholic Beverage Control Board, 878 So.2d 1138, 1144 (Ala.2003), this Court held that Stiff, a consumer of table wine, had standing to challenge the tax scheme established in the Table Wine Act and the Native Farm Winery Act because the Table Wine Act requires consumers to pay the taxes levied therein. See also City of Mobile v. M.A.D., Inc., 684 So.2d 1283 (Ala.1996)(finding that the Legislature intended that consumers pay the tax on table wine); Bridenbaugh v. Freeman-Wilson, 227 F.3d 848, 850 (7th Cir.2000)(finding that the consumers had standing under the Commerce Clause to challenge discriminatory state laws regulating the out-of-state purchase of alcohol because "every interstate sale has two parties, and entitlement to transact in alcoholic beverages across state lines is as much a constitutional right of consumers as it is of shippers"). Duval does not have standing to bring this action to seek a refund, because, as it asserted to the trial court, the Table Wine Act requires that consumers pay an excise tax on Duval's product.⁶ Cf. Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. I.R.S., 845 F.2d 139, 142 (7th Cir.1988)(holding that "only the person legally liable for paying a given federal tax may bring a refund suit"); United States v. Williams, 514 U.S. 527, 115 S.Ct. 1611, 131 L.Ed.2d 608 (1995)(noting that common-law action of assumpsit for money had and received provided a remedy for those who had paid taxes they did not owe); Cook Oil Co. v. United States, 919 F.Supp. 1556 (M.D.Ala.1996)(finding that taxpayer who paid disputed taxes had standing to sue for a refund).⁷ Duval has standing to seek a declaration that the excise-tax scheme for table wine violates the Commerce Clause because the Table Wine Act, operating together with the Native Farm Winery Act, may injure Duval's business by placing Duval's product at a competitive disadvantage. ⁸ See Johnson Bros. Wholesale Liquor Co. v. Comm'r of Revenue, (Nos. 4264 and 4332, Oct. 1, 1986) (Minn. Tax Ct.1996)(unpublished)(finding that the proper method to determine the injury to winemakers was to measure the adverse impact of the tax-rate differential on the out-of-state winemakers' business). The Board has standing to bring its counterclaim seeking a declaration that the Native Farm Winery Act violates the Commerce Clause because Duval has questioned Alabama's entire excise-tax scheme for...