Dickerson v. Bailey

• Decision Date: 11 February 2000
• Docket Number: No. CIV. A. H-99-1247.,CIV. A. H-99-1247.
• Parties: C.A. DICKERSON, Roland R. Pennington, and David Vukovic, Plaintiffs, v. Doyne BAILEY, in his Official Capacity as Administrator of the Texas Alcohol Beverage Commission and John Cornyn in his Official Capacity as Attorney General of the State of Texas, Defendants.
• Court: U.S. District Court — Southern District of Texas

87 F.Supp.2d 691

C.A. DICKERSON, Roland R. Pennington, and David Vukovic, Plaintiffs, v. Doyne BAILEY, in his Official Capacity as Administrator of the Texas Alcohol Beverage Commission and John Cornyn in his Official Capacity as Attorney General of the State of Texas, Defendants.

No. CIV. A. H-99-1247.

United States District Court, S.D. Texas, Houston Division.

February 11, 2000.

Mark C Harwell, Cotham Harwell et al, Houston, TX, for C A Dickerson, Roland R Pennington, David Vukovic, plaintiffs.

Walter Reed Lockhoof, Asst. Atty General, Office of Attorney General, Austin, Austin, TX, for Doyne Bailey, in his official capacity as administrator of the Texas Alcoholic Beverage Commission, John Cornyn, in his official capacity as Attorney General of the State of Texas, defendants.

MEMORANDUM AND ORDER

HARMON, District Judge.

Pending before the Court in the above referenced action, challenging as violative of the Commerce Clause of the federal Constitution Texas Alcoholic Beverage Code Ann. § 107.07 (Vernon 1995), prohibiting Texans from importing for their personal use more than three gallons of wine without being required to hold a permit unless that resident "personally accompan[ies] the wine or liquor as it enters the state," are Plaintiffs C.A. Dickerson, Roland R. Pennington, and David Vukovic's motion for summary judgment (instrument # 8) and Defendant Doyne Bailey's cross motion for summary judgment (# 18).¹

Plaintiffs "seek a declaration that Section 107.07 deprives them of their constitutional right to participate in interstate commerce in violation of the dormant commerce clause and their civil rights under 42 U.S.C. § 1983."² The relevant portions of the statute provide (a) A Texas resident may import for his own personal use not more than three gallons of wine without being required to hold a permit.... A person importing wine under this subsection must personally accompany the wine ... as it enters the state ....

(f) Any person in the business of selling alcoholic beverages in another state or country who ships or causes to be shipped any alcoholic beverage directly to any Texas resident under this section is in violation of this code.

Violations of § 107.07 are punishable as crimes. Tex. Alco. Bev.Code Ann. § 1.05.

Plaintiffs, who are wine consumers, have tried to purchase wines from Wiederkehr Wine Cellars in Altus, Arkansas that are unavailable in Houston markets, but Wiederkehr will not ship wines in violation of the statute. They also wish to tour wineries in other states, many of which produce wines unavailable here, and to ship wines to their homes from out-of-state. Although it is legal for them to buy and consume wine inside and outside of Texas, they assert with supporting affidavits that the statute creates a significant burden to interstate commerce and bars them and all other Texans from engaging in their fundamental liberty of interstate commerce in shipping wines from outside Texas to their homes. Defendant Doyne Bailey has indicated that he intends to and will enforce the statute with criminal prosecutions. Plaintiffs contend that the statute regulates or discriminates against interstate commerce or has the effect of favoring instate economic interests over out-of-state interests and is therefore a per se violation of the commerce clause. They maintain that Texas' interests under the twenty-first amendment³ do not supersede Plaintiffs' civil right to engage in interstate commerce.

Plaintiffs point to the United States Supreme Court's two-tiered analysis of state regulation under the commerce clause:

When a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor instate economic interest over out-of-state interests, we have generally struck down the statute without further inquiry. When, however, a statute has only indirect effects on interstate commerce and regulates even handedly, we have examined whether the State's interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits.

Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986).

Plaintiffs observe that using this analysis, the Supreme Court has stricken as unconstitutional alcoholic beverage statutes with the same direct impact upon interstate commerce as the one challenged here: Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 104 S.Ct. 3049, 82 L.Ed.2d 200 (1984)(state's exemption of locally produced alcoholic beverages from state's wholesale excise tax); Brown-Forman, 476 U.S. 573, 106 S.Ct. 2080, 90 L.Ed.2d 552 ("affirmation law" requiring the alcoholic beverage producer to affirm that prices set for local wholesalers are no higher that the lowest prices in other states); Healy v. The Beer Institute, Inc., 491 U.S. 324, 109 S.Ct. 2491, 105 L.Ed.2d 275 (1989)(an affirmation statute requiring brewers and importers to affirm that their posted prices were no higher than their prices in bordering states and which allowed out-of-state brewers and importers to change their out-state prices). Furthermore, using this analysis, the Fifth Circuit struck down Texas Alcohol Beverage Code Ann. §§ 11.46(a)(11), 11.61(b)(19), 28.04, and 109.53, which allowed the Texas Alcoholic Beverage Commission ("TABC") to refuse a liquor permit to persons who had not been Texas citizens for three years. Cooper v. McBeath, 11 F.3d 547 (5th Cir. 1994), cert. denied, 512 U.S. 1205, 114 S.Ct. 2675, 129 L.Ed.2d 810 (1994). Plaintiffs maintain that the same analysis shows that § 107.07 is unconstitutional.

On its face the statute directly regulates interstate commerce, Plaintiffs claim, because it prohibits Texas residents from personally transporting more than three gallons of wine over the border, thus directly impacting wine sales outside of Texas only. It also prohibits non-Texas wine sellers from selling wines to Texas residents if the wines are shipped or caused to be shipped into Texas.

Plaintiffs contend that the statute discriminates against interstate commerce. First, it discriminates by prohibiting a Texas resident from personally transporting more that three gallons of wine over the border, but not prohibiting a resident from transporting more than three gallons inside the state.⁴ Similarly, the statute prohibits non-Texas wine sellers from shipping wines or causing wines to be shipped to Texas residents, but not local Texas wineries⁵ or Texas retailers⁶ from shipping wines or causing wines to be shipped to Texas residents.

Furthermore, argue Plaintiffs, the statute favors in-state economic interests over out-of-state interests. They explain that in Texas, there is a three-tier system for distribution of alcoholic beverages. Suppliers, i.e., distilleries, wineries and breweries, manufacture the alcoholic beverages. The suppliers may only sell the beverages to wholesalers/distributors, which constitute the second tier. Finally, the wholesalers may only sell the alcoholic beverages to other wholesalers or to retailers, the third tier, which may only purchase the beverages from wholesalers. Plaintiffs contend that the Texas direct shipment statute prevents circumvention of the Texas wholesaler by barring sales directly from an out-of-state winery to a Texas consumer, thereby protecting the Texas wholesalers' monopoly over in-state sales as well as Texas' tax revenue, which is collected from the wholesalers. Such interests are purely in-state economic interests and are unrelated to temperance. "State laws that constitute mere economic protectionism are therefore not entitled to the same deference as laws enacted to combat the perceived evils of an unrestricted traffic in liquor." Bacchus, 468 U.S. at 276, 104 S.Ct. 3049.

Plaintiffs insist that a statute that directly regulates or discriminates against interstate commerce can survive a commerce clause challenge only if the state proves the existence of "a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives." New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 278, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988).

Established local interests traditionally include (1) collection of taxes otherwise avoided by the circumvention of the three-tier distribution system, (2) prohibiting delivery of alcoholic beverages to dry areas, and (3) prohibiting delivery of alcoholic beverages to minors. For each there are reasonable, nondiscriminatory alternatives, including other more narrowly drawn statutes, to the disputed statute's over-inclusive total ban on shipping. See, e.g., Tex. Alco. Bev.Code Ann. § 106.03 (Class A misdemeanor to sell alcoholic beverages to a minor); § 106.06 (Class B misdemeanor to make alcoholic beverages available to a minor); § 107.03 (prohibits any carrier from transporting and delivering liquor to a person in a dry area); § 101.31 (prohibits alcoholic beverage transportation, delivery or possession with intent to sell within any dry area).

Instead, Plaintiffs charge that Defendant's alleged concerns are "nothing but a pretextual rationale ... for economic protectionism." Quality Brands v. Barry, 715 F.Supp. 1138, 1143 (D.D.C.1989), aff'd, 901 F.2d 1130, 1990 WL 51795 (D.C.Cir. 1990).

Plaintiffs also contend that the state's revenue interest may not serve as a "legitimate" basis for a per se violation of the commerce clause since there are other reasonable and nondiscriminatory alternatives. The state may easily impose an alternative collection of revenue on out-of-state wine sales, such as requiring the wineries or shippers to collect and pay the taxes. They note that Louisiana requires an out-of-state shipper to purchase a $150 permit, while Hawaii allows a buyer to receive up to five gallons per year with the purchase of a permit at a nominal fee.

Plaintiffs cite Maine v. Taylor, 477 U.S. 131, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986) for an example of the kind...