Dickerson v. Bailey

• Decision Date: 17 July 2002
• Docket Number: No. CIV.A.H-99-1247.,CIV.A.H-99-1247.
• Citation: 212 F.Supp.2d 673
• 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

212 F.Supp.2d 673

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.

July 17, 2002.

Mark C. Harwell, Cotham Harwell et al., Houston, TX, Sterling W. Steves, Sterling Steves PC, Fort Worth, TX, for plaintiffs.

Walter Reed Lockhoof, Asst. Atty General, Office of Attorney General, Austin, TX, for defendants.

MEMORANDUM AND ORDER

HARMON, District Judge.

Pending before the Court in the above referenced action, seeking a declaratory judgment and injunctive relief in Plaintiffs C.A. Dickerson, Roland R. Pennington, and David Vukovic's challenge to the constitutionality of Texas' statutory ban on direct importation of out-of-state wine by Texas residents for personal consumption, are Plaintiffs' supplemental motion for summary judgment (instrument # 42) and a [supplemental] cross motion for summary judgment (instrument # 47) filed by Defendant Rolando Garza, successor to Doyne Bailey as Administrator of the Texas Alcohol Beverage Commission.¹

On February 10, 2000, after reviewing the evolution of jurisprudence dealing with the relationship of the dormant commerce clause² and § 2 of the twenty-first amendment³ in the course of the twentieth century, this Court reached the following conclusions: (1) that Texas Alcoholic Beverage Code Ann. § 107.07(a) and (f)(Vernon 1995 and Supp.1998)⁴ facially violated the commerce clause of the federal constitution; (2) that the statute was not saved by the twenty-first amendment because its purpose was economic protection of the state's in-state liquor wholesalers, retailers, and wine industry at the expense of out-of-state wine sellers, while the statute failed to serve the legitimate goal of temperance; and (3) that Plaintiffs' motion for summary judgment should be granted and Defendant's cross motion, denied (# 24). The discussion of the law in that memorandum and order is hereby incorporated into this one.

After the Court issued its decision, the Seventh Circuit, reversing a district court case⁵ relied upon by this Court, concluded that an Indiana statute prohibiting direct shipments from out-of-state sellers of alcoholic beverages directly to Indiana consumers was within the powers delegated to the state in § 2 of twenty-first amendment. Bridenbaugh v. Freeman-Wilson, 227 F.3d 848 (7th Cir.2000), cert. denied sub nom. Bridenbaugh v. Carter, 532 U.S. 1002, 121 S.Ct. 1672, 149 L.Ed.2d 652 (2001).

This Court's memorandum and order and Judge Frank Easterbrook's opinion in Bridenbaugh appear to have motivated both sides to reframe their claims. The Court granted Defendant's motion to reconsider to allow further briefing on Bridenbaugh and any additional new cases, as well as the Twenty-first Amendment Enforcement Act, Pub.L. 106-386, codified at 27 U.S.C. § 122a, enacted on October 26, 2000 and effective January 25, 2001,⁶ and an accompanying statement of legislative intent by the bill's sponsor, Senator Orrin Hatch, which Defendant characterized as a "wholesale adoption of both the holding and reasoning of" Judge Frank Easterbrook's opinion in Bridenbaugh, 227 F.3d 848.

Furthermore, the Court also granted Plaintiffs' motion for leave to amend their complaint.⁷ Plaintiffs complained that only after this Court issued its summary judgment, did Defendant for the first time, in his motion to reconsider (# 30, pars.19-24, 26-28), contend that the prohibition against direct shipment of wine by out-ofstate wineries to ultimate-consumer, instate residents also applies to in-state wineries under the Texas Alcoholic Beverage Code.⁸ In essence, Defendant argued that because both in-state and out-of-state wineries are treated in the same way, there is no discrimination.

Subsequently, however, Texas enacted the Texas Wine Marketing Assistance Program Act ("Marketing Act"), Tex. Alco. Bev.Code §§ 110-001-110.055 (West Supp. 2002), effective as of September 1, 2001. Quoting the purpose statements⁹ from the legislative bills underlying the Marketing Act in their motion for leave to amend, Plaintiffs argued that the new statute "assist[s] Texas wineries in capturing a greater part of the market for wine, at the expense of out-of-state wineries" and confirms Plaintiffs' contention that "the Texas legislative scheme banning the shipment of wine in Texas represents point-blank discrimination between in-state and out of state commerce." Plaintiffs' motion for leave to amend at 2, 1. They focus upon Texas Alcoholic Beverage Act § 110.053 (when person is physically present at the winery, he may ship wine in accordance with § 107.12; when the person is not physically present at the winery, he may order the winery to ship wine to a participating package store near the consumer where the consumer may pick it up or the consumer may arrange with the package store to have it shipped by that store to the purchaser's home). Section 107.12, entitled "Direct Shipment of Wine," provides,

Notwithstanding Section 107.07, a person who purchases wine while at a winery located in this state may ship or cause to be shipped the wine to the person's residence if the winery verifies that the person purchasing the wine is 21 years of age or older. The person must be present when the wine is delivered to the person's residence.

The Texas Alcoholic Beverage Code thus allows consumers to purchase wines from Texas wineries and to have the wines shipped to their homes, but expressly forbids such activity with respect to out-of-state wineries. Id. In other words, according to Plaintiffs, in the Marketing Act the Texas Legislature ratified the purpose of economic protectionism of § 107.07 of the Texas Alcoholic Beverage Code.

In addition, Plaintiffs' amended pleading expands the scope and clarifies the nature of the relief they seek with respect to the Texas Alcoholic Beverage Code as a whole. In addition to their allegation that § 107.07(f) is unconstitutional on its face, Plaintiffs now charge that other portions of the Act and the structure of other "duplicative" statutes or regulations to the extent that they restrict Plaintiffs' right to order directly out-of-state wines to be shipped to their homes for their personal consumption, are unconstitutional as applied. These duplicative statutes include Tex. Alco. Bev.Code §§ 6.01 (permitting inter alia importation of alcoholic beverages only if the person importing has first obtained a license or permit); § 11.01 (outlawing the importation of liquor, including wine, without a permit); § 37.03 ("A nonresident seller's permit is required of any distillery, winery, importer, broker, or person who sells liquor to permittees authorized to import liquor into this state, regardless of whether the sale is consummated inside or outside the state."); § 107.05(a) ("No person may import liquor into the state and deliver it to a person not authorized to import it."); and § 107.07(a) (permitting nonpermitted individuals to bring no more than three gallons of wine into the state and may do so only if the wine is personally transported over the border).

This Court has reviewed the extensive briefing submitted since the motion to reconsider was granted and has conducted its own research into the issues before it. Because the issues are essentially matters of law, rather than repeating arguments of the parties the Court presents its analysis, conclusions, and the reasoning underlying its determinations.

As a threshold matter, the Court concludes that the Twenty-first Amendment Enforcement Act, 27 U.S.C. § 122a, amended the Webb Kenyon Act merely by providing a civil cause of action to state Attorneys General in federal court to seek injunctive relief barring interstate shipments of liquor if such shipments violate the law of the receiving state. Section (e) provides in pertinent part,

This section shall be construed only to extend the jurisdiction of Federal courts in connection with State law that is a valid exercise of power vested in the States —

(1) under the twenty-first article of amendment to the Constitution of the United States as such article of amendment is interpreted by the Supreme Court of the United States including interpretations in conjunction with other provisions of the Constitution of the United States; ...

This Court finds that the plain language of the statute makes it clear that this statute merely created a federal forum for obtaining injunctive relief where constitutionally valid state statutes regulating importation and distribution of alcoholic beverages may be enforced, and it does not affect the determination of whether such a statute passes constitutional muster. See, e.g., Bolick v. Roberts, 199 F.Supp.2d 397, 412-13 (E.D.Va.2002).

Furthermore, as evidenced by the text, there is no evidence supporting Defendants' contention that Senator Orrin Hatch represented that the new act is a wholesale adoption of Judge Easterbrook's opinion in Bridenbaugh. Senator Hatch even states that the Senators "worked hard with representatives of the wineries on language to further clarify that this bill does not, even unintentionally, somehow change the balancing test employed by the Courts in reviewing State Liquor laws. We were able to reach agreement and incorporated those changes in the bill." Statement of Sen. Orrin G. Hatch at 1. As will be discussed, Judge Easterbrook eschewed mentioning, no less, utilizing that balancing test. While Senator Hatch personally praises Judge Easterbrook's opinion, he makes clear that the new legislation serves to provide a federal forum to enforce valid laws of the state receiving shipments of alcohol without "jurisdictional roadblocks," something lacking under the Webb-Kenyon Act. Id. at 3-4 ("The legislation passed today removes...