Tennessee Wine And Spirits Retailers Association v. Thomas, 062619 FEDSC, 18-96

Docket Nº:18-96
Opinion Judge:ALITO JUSTICE.
Party Name:TENNESSEE WINE AND SPIRITS RETAILERS ASSOCIATION, PETITIONER v. RUSSELL F. THOMAS, EXECUTIVE DIRECTOR OF THE TENNESSEE ALCOHOLIC BEVERAGE COMMISSION, ET AL.
Judge Panel:ALITO, J., delivered the opinion of the Court, in which ROBERTS, C. J., and Ginsburg, Breyer, Sotomayor, Kagan, and Kavanaugh, JJ., joined. GORSUCH, J., filed a dissenting opinion, in which THOMAS, J., joined. JUSTICE GORSUCH, with whom JUSTICE THOMAS joins, dissenting.
Case Date:June 26, 2019
Court:United States Supreme Court
 
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588 U.S. ____ (2019)

TENNESSEE WINE AND SPIRITS RETAILERS ASSOCIATION, PETITIONER

v.

RUSSELL F. THOMAS, EXECUTIVE DIRECTOR OF THE TENNESSEE ALCOHOLIC BEVERAGE COMMISSION, ET AL.

No. 18-96

United States Supreme Court

June 26, 2019

Argued January 16, 2019

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Tennessee law imposes durational-residency requirements on persons and companies wishing to operate retail liquor stores, requiring applicants for an initial license to have resided in the State for the prior two years; requiring an applicant for renewal of a license to reside in the State for 10 consecutive years; and providing that a corporation cannot obtain a license unless all of its stockholders are residents. Following the state attorney general's opinion that the residency requirements discriminated against out-of-state economic interests in violation of the Commerce Clause, the Tennessee Alcoholic Beverage Commission (TABC) declined to enforce the requirements.

Two businesses that did not meet the residency requirements (both respondents here) applied for licenses to own and operate liquor stores in Tennessee. Petitioner Tennessee Wine and Spirits Retailers Association (Association)-a trade association of in-state liquor stores-threatened to sue the TABC if it granted the licenses, so the TABC's executive director (also a respondent) filed a declaratory judgment action in state court to settle the question of the residency requirements' constitutionality. The case was removed to Federal District Court, which found the requirements unconstitutional. The State declined to appeal, but the Association took the case to the Sixth Circuit. It affirmed, concluding that the provisions violated the Commerce Clause. The Association petitioned for certiorari only with respect to the Sixth Circuit's decision to invalidate the 2-year residency requirement applicable to initial liquor store license applicants.

Held: Tennessee's 2-year durational-residency requirement applicable to retail liquor store license applicants violates the Commerce Clause and is not saved by the Twenty-first Amendment. Pp. 6-37. (a) The Commerce Clause by its own force restricts state protectionism. Removing state trade barriers was a principal reason for the adoption of the Constitution, and at this point no provision other than the Commerce Clause could easily do that job. The Court has long emphasized the connection between the trade barriers that prompted the call for a new Constitution and its dormant Commerce Clause jurisprudence. See Guy v. Baltimore, 100 U.S. 434, 440; Granholm v. Heald, 544 U.S. 460, 472. Pp. 6-10.

(b) Under the dormant Commerce Clause cases, a state law that discriminates against out-of-state goods or nonresident economic actors can be sustained only on a showing that it is narrowly tailored to "advanc[e] a legitimate local purpose." Department of Revenue of Ky. v. Davis, 553 U.S. 328, 338. Tennessee's 2-year residency requirement plainly favors Tennesseans over nonresidents. P. 10.

(c) Because the 2-year residency requirement applies to the sale of alcohol, however, it must be evaluated in light of §2 of the Twenty-first Amendment. Pp. 10-20.

(1) Section 2's broad text-the "transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited"-could be read to prohibit the transportation or importation of alcoholic beverages in violation of any state law. But the Court has declined to adopt that reading, instead interpreting §2 as one part of a unified constitutional scheme and in light of the provision's history. History teaches that §2's thrust is to "constitutional-iz[e]" the basic structure of federal-state alcohol regulatory authority that prevailed prior to the Eighteenth Amendment's adoption. Craig v. Boren, 429 U.S. 190, 206. Pp. 10-12.

(2) This Court invalidated many state liquor regulations before the Eighteenth Amendment's ratification, and by the late 19th century it had concluded that the Commerce Clause both prevented States from discriminating "against citizens and products of other States," Walling v. Michigan, 116 U.S. 446, 460, and "prevented States from passing facially neutral laws that placed an impermissible burden on interstate commerce," Granholm, 544 U.S., at 477. State bans on the production and sale of alcohol within state borders were rendered ineffective by the "original-package doctrine," which made "goods shipped in interstate commerce . . . immune from state regulation while in their original package." Ibid. Congress responded by passing the Wilson Act, which provided that all alcoholic beverages "transported into any State or Territory" were subject "upon arrival" to the same restrictions imposed by the State "in the exercise of its police powers" over alcohol produced in the State, i.e., bona fide health and safety measures. This Court, however, narrowly construed the term "arrival" in the Wilson Act as arrival to the consignee rather than arrival within the State's borders, which allowed consumers to continue to receive direct shipments of alcohol from out of State. Congress passed the Webb-Kenyon Act to close that loophole. But, as this Court's decision in Granholm determined, the Webb-Kenyon Act was not intended to override the rule barring States from discriminating against out-of-state citizens and products, nor the traditional limits on state police power. Thereafter, the Eighteenth Amendment was ratified, prohibiting the manufacture, sale, transportation, and importation of alcoholic beverages across the country. Pp. 12-20.

(d) Section 2 of the Twenty-first Amendment grants the States latitude with respect to the regulation of alcohol, but it does not allow the States to violate the "nondiscrimination principle" that was a central feature of the regulatory regime that the provision was meant to constitutionalize. Granholm, supra, at 487. Pp. 20-32.

(1) The Twenty-first Amendment ended nationwide Prohibition, but §2 gave each State the option of banning alcohol if its citizens so chose. Its text "closely follow[ed]" the Webb-Kenyon Act's operative language, suggesting that it was meant to have a similar meaning. Craig v. Boren, 429 U.S., at 205-206. The provision was meant to "constitutionaliz[e]" the basic understanding of the extent of the States' power to regulate alcohol that prevailed before Prohibition. Id., at 206. And during that period, the Commerce Clause did not permit the States to impose protectionist measures clothed as police-power regulations. Pp. 20-22.

(2) At first, the Court did not take account of this history. But it has since recognized that §2 cannot be interpreted to override all previously adopted constitutional provisions, scrutinizing state alcohol laws for compliance with, e.g., the Free Speech Clause, 44 Liq-uormart, Inc. v. Rhode Island, 517 U.S. 484; the Establishment Clause, Larkin v. Grendel's Den, Inc., 459 U.S. 116; the Equal Protection Clause, Craig v. Boren, supra; the Due Process Clause, Wisconsin v. Constantineau, 400 U.S. 433; and the Import-Export Clause, Department of Revenue v. James B. Beam Distilling Co., 377 U.S. 341. Section 2 also does not entirely supersede Congress's power to regulate commerce, see, e.g., Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 333-334, nor is its aim to permit States to restrict the importation of alcohol for purely protectionist purposes, see, e.g., Granholm, supra, at 486-487. Pp. 22-23.

(3) Protectionism is not a legitimate §2 interest shielding state alcohol laws that burden interstate commerce. Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 276. The Court has applied that principle to invalidate state alcohol laws aimed at giving a competitive advantage to in-state businesses. See, e.g., id., at 274. Pp. 24-26.

(4) The Association and the dissent's overly broad understanding of §2 is unpersuasive. They claim that, while §2 does not give the States the power to discriminate against out-of-state alcohol products and producers, a different rule applies to state laws regulating instate alcohol distribution. There is no sound basis for this distinction. The Association and the dissent also claim that discriminatory distribution laws, including in-state residency requirements, long predate Prohibition and were adopted by many States following the Twenty-first Amendment's ratification. State laws adopted soon after ratification, however, may have been based on an overly expansive interpretation of §2 that can no longer be defended, and many state laws adopted before Prohibition were never tested in this Court. Nor have States historically enjoyed absolute authority to police alcohol within their borders. Section 2...

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