Lebamoff Enters., Inc. v. Huskey, No. 11–1362.

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtPOSNER
Citation666 F.3d 455
PartiesLEBAMOFF ENTERPRISES, INC., et al., Plaintiffs–Appellants, v. Alex HUSKEY, in his official capacity as chairman of the Indiana Alcohol and Tobacco Commission, Defendant–Appellee.
Decision Date17 January 2012
Docket NumberNo. 11–1362.

666 F.3d 455

LEBAMOFF ENTERPRISES, INC., et al., Plaintiffs–Appellants,
v.
Alex HUSKEY, in his official capacity as chairman of the Indiana Alcohol and Tobacco Commission, Defendant–Appellee.

No. 11–1362.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 13, 2011.Decided Jan. 17, 2012.


[666 F.3d 456]

Robert D. Epstein, James E. Porter, II, Attorneys, Epstein Cohen Seif & Flora, Indianapolis, IN, Morton Siegel, Attorney, Siegel, Moses & Schoenstadt, P.C., Chicago, IL, James A. Tanford (argued), Attorney, Indiana University, School of Law, Bloomington, IN, for Plaintiffs–Appellants.

David L. Steiner (argued), Attorney, Office of the Attorney General, Indianapolis, IN, for Defendant–Appellee.

Before POSNER, SYKES, and HAMILTON, Circuit Judges.

[666 F.3d 457]

POSNER, Circuit Judge.

A company (trade name Cap N' Cork) that owns retail liquor stores in the Fort Wayne area of northern Indiana brought this suit, joined by two consumers of wine who live in Indianapolis, to challenge the constitutionality of an Indiana state law that prevents Cap N' Cork from shipping wine to its customers via a motor carrier, such as UPS. Ind.Code § 7.1–3–15–3(d). With an exception, explained below, that is inapplicable to Cap N' Cork, the statute forbids deliveries other than by the seller of the wine or an employee of the seller—and Indianapolis is a 130–mile drive from Fort Wayne, well beyond Cap N' Cork's feasible delivery range.

The company challenges the state law on two grounds. The first is that it is inconsistent with, and therefore preempted by, a federal statute, the Federal Aviation Administration Authorization Act of 1994, 108 Stat. 1605–06, 7, enacted in 1994, that provides that a state “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier,” 49 U.S.C. § 14501(c)(1), with the principal exception of laws concerned with safety. § 14501(c)(2)(A); City of Columbus v. Ours Garage & Wrecker Service, Inc., 536 U.S. 424, 441, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002); VRC LLC v. City of Dallas, 460 F.3d 607, 612–14 (5th Cir.2006).

Since everything in an open economy relates to everything else, the term “related to” cannot be interpreted literally, especially since the statute had a focused aim—to prevent states from nullifying the repeal, by the Motor Carrier Act of 1980, 94 Stat. 793, a statutory component of the deregulation movement, of the federal laws that had made truck transportation a heavily regulated industry, like the railroads and airlines, which were also being deregulated. Rowe v. New Hampshire Motor Transport Ass'n, 552 U.S. 364, 368, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008). Rowe read the 1994 law to forbid a state to require that a tobacco retailer deliver a tobacco product to a consumer only by a carrier that verified that the recipient was of legal age to consume tobacco; the state was attempting to regulate a service (delivery of tobacco products) provided by motor carriers. See also DiFiore v. American Airlines, Inc., 646 F.3d 81, 86–87 (1st Cir.2011).

The state law challenged in the present case does not regulate motor carriers, but it forbids liquor stores to use motor carriers to deliver wine (also beer and liquor, Ind.Code §§ 7.1–3–5–3(d), 7.1–3–10–7(c), products that Cap N' Cork also sells, but for unexplained reasons the company doesn't challenge the beer and liquor provisions), and the effect is to prohibit motor carriers from offering a service they'd like to offer. True, one major carrier, at least, is offering it in Indiana (see UPS, “Shipping Wine,” www. ups. com/ wine (visited Nov. 28, 2011)), but only to wineries that have verified in person the age of the Indiana residents to whom they ship.

In a case challenging another Indiana regulation of wine, we said that “we know from Rowe ... that states cannot [consistently with the 1994 act] require interstate carriers to verify the recipients' age.” Baude v. Heath, 538 F.3d 608, 613 (7th Cir.2008). But the Supreme Court had had no occasion in Rowe—a case about the delivery of tobacco products rather than of alcoholic beverages—to address, and did not address, the possible bearing on the Motor Carrier Act of section 2 of the Twenty–First Amendment, which states that “the transportation or importation into any State ... for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”

[666 F.3d 458]

Like all other states, Indiana forbids the sale of alcoholic beverages to anyone under the age of 21. The Twenty–First Amendment authorizes a state to enforce that prohibition, but not, the Supreme Court has held, by means that seriously impair the federal government's constitutional powers. E.g., Granholm v. Heald, 544 U.S. 460, 486, 125 S.Ct. 1885, 161 L.Ed.2d 796 (2005); 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 516, 116 S.Ct. 1495, 134 L.Ed.2d 711 (1996); Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 712, 104 S.Ct. 2694, 81 L.Ed.2d 580 (1984). And those powers include the power to regulate transportation by interstate motor carriers.

In seeking to resolve the tension between the Twenty–First Amendment and the Supremacy Clause, which in the absence of the amendment would invalidate a state law that conflicted with a federal statute, the Supreme Court has thought it important that the “core ... power” conferred on the states by section 2 of the Twenty–First Amendment is the power of “regulating the times, places, and manner under which liquor may be imported and sold.” Capital Cities Cable, Inc. v. Crisp, supra, 467 U.S. at 716, 104 S.Ct. 2694. Indiana's prohibition of the delivery of wine by motor carriers is within that power, because it is an aspect of “regulating the ... manner under which [wine] may be ... sold.” One might have thought that since the Twenty–First Amendment postdates the Supremacy Clause, anything within the core power of the amendment (or within the scope of the amendment, period—forget cores) must trump an inconsistent federal statute. But while the Supreme Court will accord “a strong presumption of validity” to regulations within the core, “strong” is not “conclusive.” North Dakota v. United States, 495 U.S. 423, 432, 110 S.Ct. 1986, 109 L.Ed.2d 420 (1990) (plurality opinion); cf. Capital Cities Cable, Inc. v. Crisp, supra, 467 U.S. at 716, 104 S.Ct. 2694. “Even though [the challenged statute] represents the exercise of a core state power pursuant to the Twenty-first Amendment, a balancing of state and federal interests must be conducted.” U.S. Airways, Inc. v. O'Donnell, 627 F.3d 1318, 1330 (10th Cir.2010).

So whereas ordinarily a federal law preempts a conflicting state law, if the state law regulates alcoholic beverages the court must balance the federal and state interests; for just as the federal interests derive constitutional protection from the supremacy clause, the state interests derive constitutional protection from the Twenty–First Amendment, unlike the usual case in which federal preemption is asserted. And if the state interests are within the core powers that the Twenty–First Amendment confers on the states, there is a thumb on the scale—that is the “strong presumption” of validity.

We're about to see the strong presumption carry the day for the challenged Indiana statute, and that makes us reluctant to get ahead of the Court and declare the “presumption against preemption” that the Court has lately applied in cases, unaffected by the Twenty–First Amendment, in which Congress has legislated in a field traditionally occupied by the states, see, e.g., Altria Group, Inc. v. Good, 555 U.S. 70, 77, 129 S.Ct. 538, 172 L.Ed.2d 398 (2008), conclusive in the field of state regulation of alcoholic beverages, on the ground that the amendment makes it a field of law emphatically occupied (since 1933) by the states.

Indiana requires drivers employed by liquor retailers to be trained in and tested on Indiana's alcohol laws and also trained in the recognition of phony IDs. See Ind.Code §§ 7.1–3–1.5–1, –6, –13, 7.1–3–18–9. It is because the state doesn't require

[666 F.3d 459]

similar training of motor carriers' drivers that those carriers aren't permitted to deliver alcoholic beverages to a consumer unless, prior to shipping, the consumer's age is personally verified by an employee of the winery from which the consumer is buying. Ind.Code § 7.1–3–26–9(1)(A); Baude v. Heath, supra, 538 F.3d at 612. Motor carriers are required to obtain “carriers' alcoholic permits” in order to be allowed to transport alcohol on public highways in Indiana, but their drivers are not required to obtain permits and there is no training requirement either. See Ind.Code §§ 7.1–3–18–1 et seq. Allowing motor carriers to deliver wine could therefore undermine the state's efforts to prevent underage drinking, the state having decided not unreasonably that requiring face-to-face age verification by someone who has passed a state-certified training course should reduce the prevalence of that drinking.

The fact that Indiana allows direct deliveries by carriers to wine consumers, where the seller has previously verified the consumer's age in person, but not other such deliveries, might seem to undermine the state's rationale, since there is no training requirement for employees of wineries. But the statute imposes other requirements on the wineries designed to assure accurate age verification, see Ind.Code § 7.1–3–26–9, and it would hardly be feasible for Indiana (and would indeed be severely discriminatory) to require that employees of out-of-state wineries undergo training in Indiana before being permitted to ship to an Indiana consumer.

We might have a different case if a motor carrier were asking the state to allow it to opt into the same training requirement imposed on drivers employed by retailers of wine. That would both weaken the attempt to justify the challenged law on the basis...

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  • Wal-Mart Stores, Inc. v. Tex. Alcoholic Beverage Comm'n, 1:15–cv–134–RP
    • United States
    • United States District Courts. 5th Circuit. Western District of Texas
    • March 20, 2018
    ...Twenty-first Amendment's conferral of the authority to regulate the alcohol industry to the states. See Lebamoff Enters., Inc. v. Huskey , 666 F.3d 455, 467 (7th Cir. 2012) (Hamilton, J., concurring) ("In my view of the applicable law, the Twenty-first Amendment to the Constitution should f......
  • Appert v. Morgan Stanley Dean Witter, Inc., No. 11–1095.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • March 8, 2012
    ...purpose of the statute, however, doesn't suggest that “concerning” was intended to be read that way. See Lebamoff Enter., Inc. v. Huskey, 666 F.3d 455, 457 (7th Cir.2012) (explaining that “related to” cannot be interpreted literally, especially where the statute at issue has a “focused aim”......
  • Grant–Hall v. Cavalry Portfolio Servs., LLC, No. 11 C 1832.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • February 24, 2012
    ...commerce; to the contrary, it applies with equal force to in-state and out-of-state debt collectors. See Lebamoff Enters. v. Huskey, 666 F.3d 455, 460 (7th Cir.2012); Baude, 538 F.3d at 611;Cavel Int'l, Inc. v. Madigan, 500 F.3d 551, 555 (7th Cir.2007); Alliant I, 330 F.3d at 916. Nor does ......
  • Legato Vapors LLC v. Cook, 1:15-cv-00761-SEB-TAB
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)
    • June 30, 2016
    ...in relation to local benefits to be like asking "whether a blue race-car is clearly faster than it is blue." Lebamoff Enter. v. Huskey, 666 F.3d 455, 468–69 (7th Cir.2012) (Hamilton, J., concurring).8 See e.g., Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 523–24, 55 S.Ct. 497, 79 L.Ed. 103......
  • Request a trial to view additional results
27 cases
  • Wal-Mart Stores, Inc. v. Tex. Alcoholic Beverage Comm'n, 1:15–cv–134–RP
    • United States
    • United States District Courts. 5th Circuit. Western District of Texas
    • March 20, 2018
    ...Twenty-first Amendment's conferral of the authority to regulate the alcohol industry to the states. See Lebamoff Enters., Inc. v. Huskey , 666 F.3d 455, 467 (7th Cir. 2012) (Hamilton, J., concurring) ("In my view of the applicable law, the Twenty-first Amendment to the Constitution should f......
  • Appert v. Morgan Stanley Dean Witter, Inc., No. 11–1095.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • March 8, 2012
    ...purpose of the statute, however, doesn't suggest that “concerning” was intended to be read that way. See Lebamoff Enter., Inc. v. Huskey, 666 F.3d 455, 457 (7th Cir.2012) (explaining that “related to” cannot be interpreted literally, especially where the statute at issue has a “focused aim”......
  • Grant–Hall v. Cavalry Portfolio Servs., LLC, No. 11 C 1832.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • February 24, 2012
    ...commerce; to the contrary, it applies with equal force to in-state and out-of-state debt collectors. See Lebamoff Enters. v. Huskey, 666 F.3d 455, 460 (7th Cir.2012); Baude, 538 F.3d at 611;Cavel Int'l, Inc. v. Madigan, 500 F.3d 551, 555 (7th Cir.2007); Alliant I, 330 F.3d at 916. Nor does ......
  • Legato Vapors LLC v. Cook, 1:15-cv-00761-SEB-TAB
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Southern District of Indiana)
    • June 30, 2016
    ...in relation to local benefits to be like asking "whether a blue race-car is clearly faster than it is blue." Lebamoff Enter. v. Huskey, 666 F.3d 455, 468–69 (7th Cir.2012) (Hamilton, J., concurring).8 See e.g., Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 523–24, 55 S.Ct. 497, 79 L.Ed. 103......
  • Request a trial to view additional results

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