Judy Freeman v. Jerry Fischer

Filing 920101217

Opinion

P R E C E D E N T IA L U N IT E D STATES COURT OF APPEALS F O R THE THIRD CIRCUIT

Nos. 08-3268 and 08-3302 __________ R O B E R T FREEMAN; JUDY FREEMAN; WALTER HANSEL WINERY, INC.; OLIVER WINE COMPANY, INC.; MEYER FRIEDMAN; BEVERLY FRIEDMAN v. J O N S. CORZINE, Governor of New Jersey; A N N E MILGRAM, Attorney General of New Jersey; JERRY FISCHER, Director of the New Jersey D iv is io n of Alcoholic Beverage Control R & R MARKETING, L.L.C.; ALLIED BEVERAGE G R O U P , L.L.C.; FEDWAY ASSOCIATES, INC. (P u rs u a n t to F.R.A.P. 43(c)) J e rry Fischer, Director of the New Jersey Division of Alcoholic Beverage Control, A p p e lla n t in 08-3268 R o b e rt Freeman; Judy Freeman; Walter Hansel Winery, Inc. Meyer Freeman; Beverly Freeman, A p p e lla n ts in 08-3302 1

_____________ A p p ea ls from the United States District Court f o r the District of New Jersey (D.C. No. 03-3140) D is tric t Judge: Honorable Katharine S. Hayden

Argued F e b r u a r y 1, 2010 B e f o re : McKEE and HARDIMAN, Circuit Judges, a n d POLLAK, District Judge.* (F ile d : December 17, 2010)

J a m es A. Tanford [ARGUED] In d ian a University M a u re r School of Law 2 1 1 South Indiana Avenue B lo o m in g to n , IN 47405 R o b e rt D. Epstein E p s te in Cohen Donahoe Mendes 5 0 South Meridian Street, Suite 505 In d ia n a p o lis , IN 46204

Honorable Louis H. Pollak, Senior Judge of the U n ite d States District Court for the Eastern District of P e n n s ylv a n ia , sitting by designation. 2

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G a r y S. Redish W in n e , Banta, Hetherington, Basralian & Kahn P.C. 2 1 Main Street H a c k en s a c k , NJ 07602 C o u n sel for Appellees/Cross-Appellants Robert Freeman, e t al. A n n e Milgram L is a Hibner Tavani [ARGUED] L o rin d a Lasus O f f ic e of the Attorney General of New Jersey 1 4 0 East Front Street P .O . Box 087 T re n to n , NJ 08625 C o u n s e l for Appellant/Cross-Appellee Jerry Fischer D e b o ra h A. Skakel [ARGUED] D ic k s te in Shapiro, LLP 1 6 3 3 Broadway N e w York, NY 10019-6708 C a rm in e R. Villani, Esq. V illa n i & DeLuca 7 0 3 Richmond Avenue P o in t Pleasant Beach, NJ 0 8 7 4 2 -0 0 0 0 C o u n se l for Intervenor-Appellee R&R Marketing, LLC R o s s A. Lewin [ARGUED] D r in k e r Biddle & Reath LLP 1 0 5 College Road East P r in c e to n , NJ 08542 C o u n sel for Intervenor-Appellee Fedway Associates, Inc. 3

OPINION OF THE COURT POLLAK, District Judge P la in tif f s ­ two New Jersey wine enthusiasts, a New J e rs e y couple who seeks access to more Kosher wines, and a C a lif o rn ia winery ­ have brought suit in the United States D istrict Court for the District of New Jersey against Jerry F isc h e r, New Jersey's Director of Alcoholic Beverage Control, a lleg in g that several aspects of New Jersey's Alcoholic B e v e ra g e Control Law ("ABC Law") infringe on the dormant C o m m e rc e Clause in violation of 42 U.S.C. § 1983. I. N e w Jersey law, like the laws of many states, e sta b lis h e s a "three-tier" structure for alcohol distribution and sa les . Pursuant to that structure, alcoholic beverages are sold b y (1) suppliers and manufacturers to (2) wholesalers, who in tu rn sell to (3) retailers, who then sell alcohol to consumers. 4

In Granholm v. Heald, 544 U.S. 460 (2005), the Supreme C o u rt reaffirmed the view expressed by five justices in North D a k o ta v. United States, 495 U.S. 423 (1990), that such a "th re e-tier system . . . is `unquestionably legitimate.'" G ra n h o lm , 544 U.S. at 489 (citing North Dakota, 495 U.S. at 4 3 2 (plurality op.) & id. at 447 (Scalia, J., concurring in the ju d g m e n t)). The Granholm Court nevertheless cautioned that " stra ig h tf o rw a rd attempts to discriminate in favor of local p ro d u c e rs " of alcoholic beverages by, for instance, " su b je c tin g out-of-state [producers], but not local ones, to the th re e -tie r system," are "contrary to the Commerce Clause and . . . not saved by the [states' authority to regulate alcoholic b e v e ra g e s under] the Twenty-first Amendment." Id. at 474, 4 8 9 (internal quotation marks omitted). Plaintiffs filed this suit in 2003, contending that five a sp e c ts of New Jersey's laws regulating wine contravene this n o n d is c rim in a tio n principle in violation of the dormant 5

C o m m e rc e Clause. The first two statutory provisions at issue in v o lv e privileges relating to the sale of wine to consumers a n d retailers that are afforded to wineries that obtain New J e rs e y plenary or farm winery licenses, but not to wineries la c k in g such licenses. Plenary licenses may be obtained by p r o d u c e r s that "grow[] and cultivat[e] grapes . . . on at least th re e acres on, or adjacent to, the winery premises," but only if the wine "is produced, blended, fortified, or treated by the lic e n se e on its licensed premises situated in the State of New Jerse y." N.J. Stat. Ann. § 33:1-10(2a). Farm winery lic e n se s, meanwhile, are available to wineries which produce le ss than 50,000 gallons of wine per year and which, "for the f irs t five years of the operation of the winery," produce wine th a t is "from at least 51% grapes or fruit grown in the State" o f New Jersey. Id. § 33:1-10(2b). Holders of either type of lice n se ("in-state wineries") may sell their wines "at retail to c o n su m e rs " at the winery and at "six salesrooms apart from 6

th e winery premises." Id. §§ 33:1-10(2a) & (2b).1 In-state w in eries are also permitted to sell their wines "to wholesalers a n d retailers." Id. Wineries that do not hold either a plenary o r a farm winery license ("out-of-state wineries"), by contrast, m u s t funnel their wines through the three-tier system by s e llin g to wholesalers. P lain tiff s also challenge two aspects of New Jersey's ru le s regarding the personal importation of wine. N.J. Stat. § 3 3 :1 - 2 ( a ) provides in pertinent part as follows: A lco h o lic beverages intended in good faith s o le ly for personal use may be transported, by th e owner thereof, in a vehicle other than that of th e holder of a transportation license, from a p o in t outside this State to the extent of . . . one g a llo n of wine . . . within any consecutive

The statute also provides that "one salesroom p e r county may be jointly controlled and operated by at least tw o plenary or farm winery licensees for the sale of the p ro d u c ts of any plenary or farm winery licensee for c o n su m p tio n on or off the premises." N.J. Stat. §§ 33:11 0 (2 a ) & (2b). Plaintiffs do not challenge this provision on a p p e a l. 7

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p e rio d of 24 hours; provided, however, that e x c ep t pursuant to and within the terms of a lic e n se or permit issued by the director, no p e rs o n shall transport into this State or receive f ro m without this State into this State, alcoholic b ev era g es where the alcoholic beverages are tra n sp o rte d or received from a state which p ro h ib its the transportation into that state of a lc o h o l ic beverages purchased or otherwise o b ta in e d in the State of New Jersey. If any p e rso n or persons desire to transport alcoholic b e v e ra g e s intended only for personal use in q u a n titie s in excess of those above-mentioned, a n application may be made to the director who m a y, upon being satisfied of the good faith of th e applicant, and upon payment of a fee 2 . . . is s u e a special permit limited by such conditions a s the director may impose, authorizing the tra n sp o rta tio n of alcoholic beverages in q u a n titie s in excess of those above-mentioned. P la in tif f s challenge both the one-gallon cap on importation a n d the reciprocity provision prohibiting importation of wine f ro m states that bar the entry of New Jersey wine. F in a lly, plaintiffs seek to invalidate New Jersey's ban

While the language of the statute sets the fee at $ 2 5 , see N.J. Stat. § 33:1-2(a), defendant's certification to the D is tric t Court indicates that the fee is $50. 8

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o n direct shipments of wine from wineries to consumers via c o m m o n carrier. When plaintiffs filed suit in 2003, the ABC L a w allowed in-state, but not out-of-state, wineries to make s u c h shipments. However, in anticipation of Granholm, w h ic h invalidated similar provisions of Michigan and New Y o rk law, the New Jersey legislature rescinded this privilege, re su ltin g in a ban on all direct shipments of wine from p r o d u c e r s to New Jersey residents. A f te r three New Jersey wholesalers ­ Fedway A s s o c ia te s, R&R Marketing, and Allied Beverage Group ­ in te rv e n e d in the District Court on behalf of the defendant, the p a rtie s filed cross-motions for summary judgment, contesting (1 ) plaintiffs' standing to sue, and (2) the validity of the above p o rtio n s of New Jersey's ABC Law. The District Court held th a t plaintiffs met the applicable standing requirements, and th a t the challenged provisions were largely constitutional. Both sides appealed. We have jurisdiction pursuant to 28 9

U .S .C . § 1291.3 II. " S tan d in g implicates both constitutional requirements a n d prudential concerns." Common Cause of Pa. v. P e n n sy lva n ia , 558 F.3d 249, 257 (3d Cir. 2009). Constitutional standing, which should be considered "before e x a m in in g issues of prudential standing," Joint Stock Soc'y v. U D V N. Am., Inc., 266 F.3d 164, 175 (3d Cir. 2001), includes th re e well-known elements: "(1) an injury in fact (i.e., a concrete and p a rtic u la riz e d invasion of a legally protected in ter e st); (2) causation (i.e., a fairly traceable c o n n e ctio n between the alleged injury in fact a n d the alleged conduct of the defendant); and (3 ) redressability (i.e., it is likely and not merely s p e c u la tiv e that the plaintiff's injury will be re m e d ie d by the relief plaintiff seeks in bringing s u it) ."

28 U.S.C. § 1291 provides "[t]he courts of a p p e a ls " with jurisdiction over, inter alia, "all final decisions o f the district courts of the United States." 10

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C o m m o n Cause of Pa., 558 F.3d at 258 (quoting Sprint C o m m c 'n s Co. v. APCC Servs., Inc., 128 S. Ct. 2531, 2535 (2 0 0 8 )). "`The party invoking federal jurisdiction bears the b u rd e n of establishing these elements,'" and, on summary ju d g m e n t, "the plaintiff cannot rely on mere allegations `but m u st set forth by affidavit or other evidence specific facts'" d e m o n s tra tin g that these requirements have been met. Joint S to ck Soc'y, 266 F.3d at 175 (quoting Lujan v. Defenders of W ild life , 504 U.S. 555, 561 (1992)) (internal quotation marks an d citation omitted). A n injury-in-fact must be "a palpable and distinct h a rm " that, even if "widely shared," "`must affect the plaintiff in a personal and individual way.'" Toll Bros., Inc. v. Twp. of R e a d in g to n , 555 F.3d 131, 138 (3d Cir. 2009) (quoting D e fen d e rs of Wildlife, 555 U.S. at 560 n.1). The causation p ro n g then "focuses on who inflicted [the] harm." Id. at 142. While "[t]he plaintiff must establish that the defendant's 11

c h a lle n g e d actions, not the actions of some third party, caused th e plaintiff's injury," "[t]his causal connection need not be as c lo s e as the proximate causation needed to succeed on the m e rits of a tort claim," and "an indirect causal relationship w ill suffice." Id. Finally, the redressability prong "looks f o rw a rd " to determine whether "`the injury will be redressed b y a favorable decision.'" Id. (quoting Friends of the Earth, In c . v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 181 (2000)). "Redressability is not a demand for mathematical certainty," b u t it does require "a `substantial likelihood'" that the injury in fact can be remedied by a judicial decision. Id. at 143 (q u o tin g Vt. Agency of Natural Res. v. U.S. ex rel. Stevens, 5 2 9 U.S. 765, 771 (2000)). " T h e requirements of prudential standing," meanwhile, "se rv e `to avoid deciding questions of broad social import w h e re no individual rights would be vindicated and to limit a c c e ss to the federal courts to those best suited to assert a 12

p a rtic u la r claim.'" Joint Stock Soc'y, 266 F.3d at 179 (q u o tin g Conte Bros. Auto., Inc. v. Quaker State-Slick 50, In c ., 165 F.3d 221, 225 (3d Cir. 1998)). Prudential standing "require[s] that (1) a litigant assert his [or her] o w n legal interests rather than those of third p a r tie s, (2) courts refrain from adjudicating a b s tra c t questions of wide public significance w h ic h amount to generalized grievances, and (3) a litigant demonstrate that her interests are a rg u a b ly within the zone of interests intended to b e protected by the statute, rule, or constitutional p ro v is io n on which the claim is based." O x fo rd Assocs. v. Waste Sys. Auth. of E. Montgomery County, 2 7 1 F.3d 140, 146 (3d Cir. 2001) (quoting Davis v. Phila. H o u s . Auth., 121 F.3d 92, 96 (3d Cir. 1997)) (emphasis o m itte d ). Although "the zone of interests `test denies a right o f review if the plaintiff's interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress intended to p e rm it the suit,'" "`[t]he test is not meant to be especially d e m a n d in g .'" Davis, 121 F.3d at 98 (quoting Clarke v. Secs. 13

In d u s. Ass'n, 479 U.S. 388, 399-400 (1987)). A. W e first consider whether plaintiffs Robert and Judy F r e e m a n have standing to sue. The Freemans describe th e m s e lv e s as "wine collectors" and "home winemakers" who tra v e l to the west coast several times each year in order to v is it wineries. They allege that the ABC Law has prevented th e m from obtaining several wines they would like to drink, b u t which are unavailable in New Jersey stores. The F r e e m a n s state that they would ideally like to receive direct s h ip m e n ts from wineries, but they also assert that (1) New J e rs e y law allows them to buy in-state, but not out-of-state, w in e s directly from producers at wineries and storefronts, and (2 ) traveling to distant wineries in order to return with small q u a n titie s of wine is highly impracticable. (1 ) T h e Freemans argue that they are unable to obtain 14

w in e s that they desire via interstate commerce. In addressing th e same argument, the Seventh Circuit has concluded that w h e n "plaintiffs want to drink [wines that] are not carried by [ in - s ta te ] resellers" and are prevented from otherwise o b ta in in g those wines by state law, they have "establishe[d] in ju ry in fact." Bridenbaugh v. Freeman-Wilson, 227 F.3d 8 4 8 , 849 (7th Cir. 2000); accord Baude v. Heath, No. 05-cv7 3 5 , 2007 WL 2479587, at *7-*8 (S.D. Ind. Aug. 29, 2007), r e v 'd in part on other grounds, 538 F.3d 608 (7th Cir. 2008); C h e rr y Hill Vineyards, LLC v. Hudgins, 488 F. Supp. 2d 6016 0 7 -0 8 (W.D. Ky. 2006), aff'd sub nom. Cherry Hill V in e y a rd s, LLC v. Lilly, 553 F.3d 423 (6th Cir. 2008). We a g re e . The Freemans are directly constrained by the p ro v is io n s of the ABC Law preventing the importation of (1) m o re than a gallon of out-of-state wine without a special p e rm it, and (2) any wine from states that prohibit the im p o rta tio n of New Jersey wines. Moreover, although the 15

F re e m a n s are "not in the business of selling alcoholic b ev era g es and therefore could not violate" the other statutory p ro v is io n s at issue "if they tried," Bridenbaugh, 227 F.3d at 8 4 7 , "cognizable injury from unconstitutional discrimination a g a in s t interstate commerce does not stop at members of the c la ss against whom a State ultimately discriminates," Gen. M o to r s Corp. v. Tracy, 519 U.S. 278, 286 (1997). Rather, " c u sto m e rs of that class may also be injured." Id. As a result, th e Freemans ­ who allege that New Jersey law discriminates ag ain s t the out-of-state wineries of which they are customers ­ have suffered an injury in fact. T h e question then becomes whether the Freemans' in ju ry is fairly traceable to the statutes at issue. As an initial m a tter, we reject defendant's contention that the traceability p ro n g is not met because New Jersey's statutory scheme does n o t, in fact, offend the dormant Commerce Clause. "`Standing in no way depends on the merits of the plaintiff's 16

c o n te n tio n that the particular conduct is illegal . . . .'" Marion v . TDI, Inc., 591 F.3d 137, 149 (3d Cir. 2010) (quoting Warth v . Seldin, 422 U.S. 490, 500 (1975)). The question for p u rp o s e s of the traceability prong is not whether the ABC L aw is unconstitutionally discriminatory, but rather whether, b e it even-handed and constitutional or not, it is causally c o n n e cte d to plaintiffs' injury in fact. We thus consider w h e th e r plaintiffs have presented evidence that each of the c h a lle n g e d provisions impedes their ability to purchase wine in interstate commerce. T h e first two of plaintiffs' challenges are to provisions o f New Jersey law that effectively allow in-state wineries to se ll directly to consumers and retailers, but forbid out-of-state w in e r ie s from engaging in sales to anyone but wholesalers. T h e question as to traceability is whether these provisions e x c lu d e wine from New Jersey that would otherwise appear o n the market, thereby limiting the number of out-of-state 17

w in e s that the Freemans may purchase. Cutting against the v ie w that the Freemans are traceably injured by their resultant in a b ility to purchase a wide array of out-of-state wines is the f a ct that the record does not clearly establish that any out-ofs ta te wineries would, but for the statute, open retail sales ro o m s in New Jersey. Pointing in the other direction is record e v id e n c e that many out-of-state wineries have attempted, w ith o u t success, to interest New Jersey wholesalers in their w in e s, and that other out-of-state wineries will not try either to (1) enter the three-tier system via a wholesaler, because d o in g do so would cut deeply into profits,4 or (2) obtain their

For example, Edward O'Keefe, Sr., the owner o f Chateau Grand Traverste, a Michigan winery, stated the f o llo w in g : "Our winery does not currently have a distributor in New Jersey. If we were to obtain a distributor, we would b e forced to give up approximately 40-50% of our profits to th e distributor. Our business model is based on both sales out o f the tasting room, use of distributors in specific states, and d ire c t shipment. It is our experience that direct sales to the c o n su m e r either at the tasting room or through delivery by c o m m o n carrier is the most profitable to us." JA 222 18

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o w n wholesaler license, which can be prohibitively expensive. Plaintiffs, in other words, have presented evidence that n u m e ro u s out-of-state wineries have, without success, sought a lte rn a tiv e ways to enter the New Jersey marketplace. We c o n c lu d e that, taken in the aggregate, this evidence suffices to sh o w that part of plaintiffs' injury is traceable to New Jersey's c h o ice to deny out-of-state wineries the ability to sell directly b o th to retailers and to consumers. P lain tiff s have also presented evidence that they would re tu rn from their winery trips with more wine if New Jersey la w so allowed. Accordingly, part of their inability to buy c e rta in wines may be traced to the transportation restrictions in the ABC Law.5 And there is little question that the

(O'Keefe affidavit ¶¶ 9-13) (numbering omitted). D e f e n d a n t and intervenors attempt to resist this c o n c lu s io n by arguing that the state has never enforced the tra n sp o rta tio n restrictions when individuals import wine in t e n d e d for personal use. We reject this argument, because 19
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F re e m a n s ' injury partially traces to the direct shipment ban. They have attempted to order wine shipments from at least f iv e out-of-state wineries, each of which has refused to make th e shipments. Plaintiffs have also presented evidence, both d ra w n from their own experience and in the form of a Federal T ra d e Commission report, that a sizeable number of wineries s e ll their wine exclusively via direct shipment. Taken to g e th e r, this evidence is more than adequate to demonstrate th a t there is a "fairly traceable connection between the alleged in ju ry in fact and" the direct shipment ban. Toll Bros., 555 F .3 d at 142 (internal quotation marks omitted). T h e same evidence that demonstrates causation

defendant has not presented any official, binding assurance th a t the statute will not be enforced as written. Moreover, we n o te that the ABC Law has been repeatedly amended by the le g is la tu re without any alteration of the transportation restrictio n s, a fact which suggests that, whatever defendant's c u rre n t practice regarding the statute, the New Jersey le g is la tu re intends for it to be enforced. 20

s u f f ic e s, in this case, to demonstrate redressability: Removing th e restrictions placed by the ABC Law on consumers and o u t-o f -s ta te wineries would, on this record, lead to greater a v a i la b i lity of a greater number of wines that plaintiffs wish to purchase.6 (2 ) T h e Freemans also have prudential standing to challenge th e statutory provisions at issue. While defendant argues that th e Freemans, who knew plaintiffs' counsel in this case before it was filed, are thereby without a personal stake in its outcome, th e re is no evidence that the Freemans' oenophilia, upon which

Intervenors argue that the redressability prong is n o t met as to the direct shipment ban because all wineries are p ro h ib ite d from making direct shipments, meaning that in v a lid a tin g the ban would necessarily entail the creation of n e w rights. But assuming that plaintiffs are correct in their a rg u m e n t that the direct shipment ban disproportionately a f fe c ts out-of-state wineries, striking down the ban would do n o more than vindicate the well-recognized rule that state la w s may not discriminatorily favor intrastate commerce over in te rs ta te commerce. 21

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th e ir standing is grounded, is anything but sincere, or that they a re actually attempting to litigate an interest held by their a tto rn e ys . Similarly, there is no indication that the Freemans h a v e come to court with a generalized grievance; their injury as w in e enthusiasts who wish to purchase certain wines is a highly p a rtic u la riz e d one. The remaining question as to the Freemans, then, is w h e th e r or not they fall within the "zone of interests" protected b y the dormant Commerce Clause. Insofar as the regulations " d ire c tly affect[]" the Freemans as individuals "participating in c o m m e rc e ," they have standing to redress "their dormant C o m m e rc e Clause right to access interstate markets." Oxford A s s o c s ., 271 F.3d at 148. The Freemans may accordingly

p r o c e e d with their challenge to the importation restrictions, w h ich directly regulate their participation in interstate c o m m e rc e . The other provisions, by contrast, directly regulate 22

p ro d u c e rs, not consumers,7 and we have not previously a d d r e ss e d the issue of whether dormant Commerce Clause p lain tiff s have prudential standing when they are not directly re g u la te d by the statute at issue. See id. at 148 n.4 (reserving th is question). We now hold that such plaintiffs can come w ith in the zone of interests if their "ability to freely contract w ith out-of-state companies was directly infringed by local r e g u la t io n ." Id. at 149 (Barry, J., dissenting). We adopt this ru le because such plaintiffs seek to vindicate interests related to t h e protection of interstate commerce. In particular, plaintiffs w h o seek to protect "the right as a consumer to purchase . . . s e rv ic e s across State boundaries" assert interests closely related to the purposes of the dormant Commerce Clause. Huish

D e ter g e n ts, Inc. v. Warren County, 214 F.3d 707, 711 (6th Cir.

It is arguable that consumers are also directly re g u la te d by the direct shipment ban, but we will assume, a r g u e n d o , that they are not. 23

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2 0 0 0 ). See also, Oehrleins, Ben Oehrleins & Sons & Daughter v . Hennepin County, 115 F.3d 1372, 1381 (8th Cir. 1997) (s u g g e stin g that standing is appropriate where plaintiffs "s[eek] to protect their own rights to purchase goods or do business a c ro ss state borders"). By contrast, plaintiffs are without

p ru d e n tia l standing if their interest is unrelated to the asserted " b a rrie r to interstate commerce." On the Green Apartments L .L .C . v. City of Tacoma, 241 F.3d 1235 (9th Cir. 2001) (in te rn a l quotation marks omitted). For instance, plaintiffs who " a lleg e only that a party with whom they contract is subject to a n undue burden on its ability to freely participate in interstate c o m m e rc e " are not within the zone of interests protected by the d o rm a n t Commerce Clause. Oxford Associates, 271 F.3d at 149 (B a rry, J., dissenting). Neither are plaintiffs whose interest is m e re ly one in avoiding a passed-on fee or cost. See Individuals fo r Responsible Gov't, Inc. v. Washoe County, 110 F.3d 699, 7 0 3 (9th Cir. 1997); Oehrleins, 115 F.3d at 1380; see also, e.g. 24

C i t y of Los Angeles v. County of Kern, 581 F.3d 841, 848 (9th C ir. 2009) ("As the name implies, the zone of interest test turns o n the interest sought to be protected, not the harm suffered by th e plaintiff."). In challenging the prohibitions on direct sales by out-ofs ta te wineries and the direct shipment ban, the Freemans present th e m se lv e s as in-state consumers wishing to access out-of-state p ro d u c ts . Their interest in overturning these features of New J e rs e y law therefore dovetails with the commerce-protective p u rp o s e of the dormant Commerce Clause. The Freemans

a c co rd in g ly satisfy the zone-of-interest test as to all of the c h a lle n g e d provisions of the ABC Law. B. " [ T ] h e presence of one plaintiff with standing is s u f f ic ie n t to satisfy that requirement." Forum for Academic & In stitu tio n a l Rights v. Rumsfeld, 390 F.3d 219, 228 n.7 (3d Cir. 2 0 0 4 ) (citing Bowsher v. Synar, 478 U.S. 714, 721 (1986)), 25

r e v 'd on other grounds, 547 U.S. 47 (2006). Accordingly, h a v in g concluded that the Freemans possess both constitutional a n d prudential standing to raise all of the claims at issue, we do n o t consider the standing of the other plaintiffs. I I I. " T h e dormant Commerce Clause `prohibits the states f ro m imposing restrictions that benefit in-state economic in t e r e s ts at out-of-state interests' expense, thus reinforcing the p rin c ip le of the unitary national market.'" Am. Trucking Ass'ns v . Whitman, 437 F.3d 313, 318 (3d Cir. 2006) (quoting C lo v e rla n d -G r e e n Spring Dairies, Inc. v. Pa. Milk Mktg. Bd., 2 9 8 F.3d 201, 210 (3d Cir. 2002)) (internal quotation marks o m itte d ). The clause "therefore prohibits a state from impeding f re e market forces to shield in-state businesses from out-of-state c o m p e titio n ." Id. A n y statute that "discriminates against interstate c o m m e rc e on its face or in effect" is thus "subject to heightened 26

s c ru tin y." Id. at 319. "The party challenging the statute has the b u rd e n of proving" that the statute is discriminatory, C lo v e r la n d -G r e e n Spring-Dairies, Inc. v. Pa. Milk Mktg. Bd., 4 6 2 F.3d 249, 261 (3d Cir. 2006) ("Cloverland II"), but if the p la in tif f meets that burden, "the State must demonstrate (1) that th e statute serves a legitimate local interest, and (2) that this p u rp o s e could not be served as well by available nond is c rim in a to ry means," Am. Trucking Ass'ns, 437 F.3d at 319. If the plaintiff does not meet its burden of showing that the s ta tu te is discriminatory, we instead use "the balancing test set f o rth in Pike v. Bruce Church, Inc., 397 U.S. 137 (1970), to d e te rm in e whether the burdens on interstate commerce su b stan tially outweigh[] the putative local benefits." Cloverland II, 462 F.3d at 258. H is to ric a lly, courts have struggled with the question of to what extent the dormant Commerce Clause applies in the c o n te x t of alcoholic beverage restrictions, given the broad 27

re g u la to ry authority granted to states by section 2 of the TwentyF irs t Amendment.8 In Granholm, however, the Supreme Court re ite ra te d that dormant Commerce Clause principles apply in the c o n te x t of regulations on the shipment of wine. In fact, in the C o u r t ' s view, it is "essential to the foundations of the Union" th a t "in all but the narrowest circumstances, state laws violate th e Commerce Clause if they mandate `differential treatment of in -s ta te and out-of-state economic interests that benefits the f o rm e r and burdens the latter.'" Granholm, 544 U.S. at 472 (q u o tin g Or. Waste Sys., Inc. v. Dep't of Envtl. Quality of Or., 5 1 1 U.S. 93, 99 (1994)). Thus, the Court held that "Section 2 d o e s not allow States to regulate the direct shipment of wine on te rm s that discriminate in favor of in-state producers," id. at 476,

Section 2 of the Twenty-First Amendment p ro v id e s that "[t]he transportation or importation into any S ta te , Territory, or possession of the United States for d e liv e ry or use therein of intoxicating liquors, in violation of th e laws thereof, is hereby prohibited." 28

8

a n d that "straightforward attempts to discriminate in favor of lo c a l producers" are "not saved by the Twenty-first

A m e n d m e n t," id. at 489. As a result, unless the state "show[s] th a t `the discrimination is demonstrably justified,'" statutes re g u la tin g alcohol that discriminate against interstate commerce m u s t be invalidated. Id. at 492 (quoting Chem. Waste Mgmt., In c . v. Hunt, 504 U.S. 334, 344 (1992)). The Granholm Court, h o w e v e r, also held that "the three-tier system itself is `u n q u estio n ab ly legitimate,'" and that "[s]tate policies are p ro te c te d under the Twenty-first Amendment when they treat liq u o r produced out of state the same as its domestic e q u iv a le n t." Id. at 489 (quoting North Dakota, 495 U.S. at 432). A. W e first consider plaintiffs' challenges to the statutory p ro v isio n s allowing only in-state wineries to sell directly to r e ta ile r s and consumers. (1 ) 29

In Granholm, the Supreme Court clarified that "[t]he m e re fact of nonresidence should not foreclose a producer in o n e State from access to markets in other States." 544 U.S. at 4 7 2 . In particular, when "all out-of-state wine, but not all ins ta te wine, [must] pass through an in-state wholesaler and retailer before reaching consumers," "[t]he discriminatory c h a ra c te r of a system is obvious." Id. at 473-74. Thus, direct a n d indirect methods "of subjecting out-of-state wineries, but n o t local ones, to the three-tier system" contravene the d o rm a n t Commerce Clause. Id. at 474. T h e ABC Law violates this rule by allowing in-state, b u t not out-of-state, wineries to sell directly to consumers. Ins ta te wineries are thereby allowed to skip the first two tiers ­ w h o le s a le r s and retailers ­ while out-of-state wineries must in v o lv e both of these tiers in order for their wine to reach co n su m ers. Accordingly, these aspects of the ABC Law are s u b je c t to strict scrutiny as discriminatory on their face. 30

D e f en d a n t and intervenors raise three arguments to the c o n tra ry, none of which is persuasive. First, defendant argues th a t, because each location at which an in-state winery sells w in e is considered to be a part of the winery premises, all sales a re technically "on-premises" ­ meaning that the law is nond is c rim in atory, because, by definition, only New Jersey wineries h a v e premises in New Jersey. This transparent attempt at

o b fu sca tio n is, however, squarely at odds with the statutory lan g u a g e allowing in-state wineries to sell wines "in six s a le s ro o m s apart from the winery premises." N.J. Stat. §§ 33:11 0 (2 a ) & (2b) (emphasis supplied). Second, defendant and intervenors asseverate that the law is non-discriminatory because out-of-state wineries may sell d i re c tly to consumers on their own premises in their home states. T h is argument misconceives the demands of the dormant C o m m e rc e Clause. The dormant Commerce Clause does not p ro te c t the rights of all wineries to engage in the same form of 31

c o m m e rc e ; it prohibits states from treating in-state-wineries d if f e re n tly from out-of-state wineries. See, e.g., Granholm, 544 U .S . at 472. Because this regulation mandates differential

tre a tm e n t, it is discriminatory, even if the wineries are, in some s e n s e , competing on an equal footing. Finally, intervenors argue that Cherry Hill Vineyard, LLC v . Baldacci, 505 F.3d 28 (1st Cir. 2007), which upheld p riv ile g e s given by Maine to small wineries against a Commerce C lau se challenge, should persuade us to uphold the direct-sale p ro v is io n s of the ABC Law. The statute in Baldacci, however, m a d e "[f]arm winery licenses . . . available on equal terms to ins ta te and out-of-state vineyards alike." Id. at 36. In fact, the B a ld a c c i court explained that this aspect of the Maine law was w h a t protected it from the charge that it "explicitly d is c rim in a te [ s] against interstate commerce." Id. Because New J e rs e y allows only in-state wineries to sell directly to consumers, p re c ise ly this 32

e q u a l-h a n d e d n es s is absent from the direct-sales provisions of th e ABC Law. Baldacci supports our view that the direct-sale p ro v is io n s of the ABC Law are facially discriminatory.9 (2 ) N e w Jersey law also authorizes in-state wineries to b yp a ss wholesalers and sell directly to retailers. This privilege a g a in allows in-state, but not out-of-state, wineries to c irc u m v e n t portions of the three-tier system. As a result, it, too, is facially discriminatory against interstate commerce. C o n tra ry to the District Court's conclusion, the d is c rim in a to ry character of these provisions would not be cured b y allowing out-of-state wineries to become licensed

The District Court partially upheld the directsa le provisions on the ground that out-of-state wineries could o b ta in wholesaler licenses that would allow them to sell wine d ire c tly to consumers. Both plaintiffs and defendant argue th a t this interpretation of the ABC Law is flawed, and we a g re e . In keeping with the three-tier structure, wholesale lic e n se s only allow the licensee to sell "to wholesalers and retailers, " not to consumers. N.J. Stat. §§ 33:1-11(2a) & (2b). 33

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w h o le s a le rs .1 0 Assuming, arguendo, that an out-of-state winery m a y, under New Jersey law, eliminate the use of third-party w h o lesalers by purchasing such a license, any winery purchasing a wholesale license would nevertheless, unlike in-state p ro d u c e rs , be forced to proceed through each of the tiers of the th r e e -tier system. Moreover, a wholesaling license comes at a h ig h e r cost than a winery license, and with a different bundle of p riv ile g e s ­ many of which a winery seeking only to sell its own p ro d u c ts to retailers would not use. In short, this path is simply a n "indirect way of subjecting out-of-state wineries . . . to the th re e -tie r system," Granholm, 544 U.S. at 474, and the

While upholding the provisions allowing insta te- w in e rie s, but not out-of-state wineries, to sell directly to re ta ile rs , the District Court invalidated New Jersey's fee s c h e d u le for retail and wholesale licenses on the ground that w h o les a le licenses ­ the only type available to out-of-state w in e rie s ­ are more expensive. In light of our conclusion that th e relevant portions of the statute (§§ 33:1-10(2a) and (2b)) a re not saved by the ability of out-of-state wineries to obtain w h o le sa le licenses, we need not reach this issue. 34

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p ro v isio n s allowing in-state, but not out-of-state, wineries to sell d irec tly to retailers without using a wholesaler are therefore d i s c r i m i n a t o r y. (3 ) N e ith e r defendant nor intervenors attempts to save the p ro v is io n s of the ABC Law allowing in-state wineries to make d irec t sales to consumers and retailers by arguing that they are n e c e s s a ry to serve some legitimate local purpose. Accordingly, w e hold that these portions of the ABC Law violate the dormant C o m m e rc e Clause. B. A s discussed above, N.J. Stat. Ann. § 33:1-2(a) caps the im p o rta tio n of out-of-state wine for personal use at one gallon u n le ss the importing individual secures a special permit. Absent s u c h a permit, the statute also bans the importation of any a lco h o lic beverages from states that refuse to allow individuals to enter with alcohol from New Jersey. Plaintiffs again argue 35

th a t these provisions facially discriminate against interstate c o m m e rc e . (1 ) N o party contends that the one-gallon cap on the im p o rta tio n of out-of-state wine is facially non-discriminatory, a n d that provision does, in fact, treat in-state and out-of-state w in e differently in a way that harms interstate commerce. S p e c if ica lly, the requirements that any individual seeking to en ter New Jersey with a greater amount of wine (1) apply for a s p e c ia l permit, and (2) pay a fee for the permit, directly burden in te rs ta te , but not intrastate, commerce. Moreover, since New J e rs e y wineries are currently able to sell unlimited quantities of w in e to residents, this provision operates to limit the amount of o u t-o f -s t a te , but not in-state, wine that may circumvent the th re e -tier system. Accordingly, this provision is also subject to

36

s tric t scrutiny.1 1 D efendant nevertheless argues that the permit

re q u ir e m e n t serves local purposes that would not be as well s e rv e d by non-discriminatory legislation. In particular, Fischer a d o p ts the District Court's conclusion that "the . . . special p e r m it serves as a registration mechanism, providing the state th e authority to keep track of on-premises interstate sales for the p u rp o se s of taxation and, to a much lesser extent, to prohibit ille g a l activity." Freeman v. Fischer, 563 F. Supp. 2d 493, 504 (D .N .J . 2008). But the District Court, which apparently raised th e s e issues sua sponte, cites to no evidence in the record for th is proposition. Neither does Fischer, and our independent

Our holding in this regard is not contrary to the F o u r th Circuit's analysis in Brooks v. Vassar, 462 F.3d 341 (4 th Cir. 2006). The Fourth Circuit did not address the B r o o k s plaintiffs' argument that Virginia's similar one-gallon im p o rta tio n limit was unconstitutional, instead holding that th e issue was rendered moot by the Virginia legislature's d e c is io n to prevent in-state wineries from making direct sales to consumers. See id. at 349-50. 37

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rev iew of the record has not uncovered any evidence to support th e notion that the permit serves local interests in tracking sales a n d squelching illegal activity. This absence of evidence is d i s p o s itiv e , because "[t]he burden is on the State to show that th e discrimination is demonstrably justified," and we may " u p h [ o ]ld state regulations that discriminate against interstate co m m erce only after finding, based on concrete record evidence, th a t a state's nondiscriminatory alternatives will prove u n w o r k a b le ." Granholm, 544 U.S. at 492-93 (emphases

su p p lied and omitted and internal quotation marks omitted). T h e District Court's unsupported assertion does not "satisf[y] th is exacting standard," id. at 493, and we accordingly hold that th e permit requirement violates the dormant Commerce Clause. (2 ) T h e reciprocity provision of § 33:1-2(a) also facially d isc rim in a tes against interstate commerce. As with the permit f e e , the reciprocity requirement prevents certain wine ­ in this 38

c a se , wine from specified jurisdictions ­ from entering the state o u t s id e the strictures of the three-tier system, while local w in e m a k e rs are free to sell as much wine as they can directly to N e w Jersey residents. Moreover, as the Supreme Court has n o te d , reciprocity provisions like New Jersey's "risk[] g e n e ra tin g the trade rivalries and animosities, the alliances and e x c lu s iv ity, that the Constitution and, in particular, the C o m m e r c e Clause were designed to avoid." Granholm, 544 U .S . at 473. T h e District Court nonetheless held that the reciprocity p ro v isio n is constitutional because defendant interprets it not to a p p ly to wine imported for personal use. "When considering a f a cia l challenge to a state law, `a federal court must, of course, c o n sid e r any limiting construction that a state court or e n f o rc e m e n t agency has proffered.'" Brown v. City of

P itts b u r g h , 586 F.3d 263, 274 (3d Cir. 2009) (quoting Vill. of H o ffm a n Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 39

4 8 9 , 494 n.5 (1982)). But we will only adopt a proffered lim itin g construction when the statute is actually "susceptible to a construction that avoids constitutional difficulties." Brown, 5 8 6 F.3d at 275. In this case, defendant's narrowing

i n te rp re ta tio n is contrary to the plain meaning of the statute. T h e statute provides in part that [a]lcoholic beverages intended in good faith s o le ly for personal use may be transported, by the o w n e r thereof . . . from a point outside this State to the extent of . . . one gallon of wine . . . within a n y consecutive period of 24 hours; provided, h o w e v e r, that except pursuant to and within the term s of a license or permit issued by the director, n o person shall transport into this State or receive f ro m without this State into this State, alcoholic b ev era g es where the alcoholic beverages are tra n sp o rte d or received from a state which p ro h ib its the transportation into that state of a lc o h o l ic beverages purchased or otherwise o b ta in e d in the State of New Jersey. N .J . Stat. § 33:1-2(a). The reciprocity provision is thus a

p ro h ib ito ry exception from the rule delineating the quantities of a lc o h o l that may otherwise be imported for personal use. As a

40

re su lt, the provision cannot be read to contain an exception a ll o w i n g importation for personal use, because to imply that e x c e p tio n would read the reciprocity clause out of the statute e n tire ly. We therefore reject defendant's limiting interpretation a n d subject the reciprocity provision to strict scrutiny. A s with the provisions regarding sales to consumers and re ta ile rs , no party has provided us with any argument that the re c ip ro c ity provision is necessary to effectuate some legitimate l o c a l interest. We thus hold it unconstitutional as violative of th e dormant Commerce Clause. C. F in a lly, plaintiffs seek to invalidate New Jersey's ban on d ire c t shipments of wine from any winery, whether in-state or o u t-o f -sta te, to consumers.1 2 While plaintiffs concede that this

In their reply brief, plaintiffs argue that the ban o n ly applies to out-of-state wineries, because N.J. Stat. § 3 3 :1 -2 8 provides that "[l]icensees . . . may transport alcoholic b e v e ra g e s in their own vehicles, solely, however, for their 41

12

b a n is not facially discriminatory, they argue that it is d is c rim in a to ry in effect. To prevail on this argument, plaintiffs m u s t "show that the challenged state statute has extraterritorial

own respective business in connection with and as defined in th e ir respective licenses, without possessing a transportation lic e n se ." New Jersey winery licenses, however, do not allow th e licensees to transport wine to consumers. As discussed ab o v e, the plenary winery license permits sales to consumers o n ly "on the licensed premises of the winery for consumption o n or off the premises" and "in six salesrooms apart from the w in e ry premises for consumption on or off the premises." Id. § 33:1-10(2a). The language of the farm winery provision is s lig h tly different; it allows sales "at retail to consumers for c o n su m p tio n on or off the licensed premises" and "in six s a le sro o m s apart from the winery premises for consumption o n or off the premises." Id. § 33:1-10(2b). Plaintiffs argue th a t the first of these phrases allows the shipment of wine to c o n su m e rs ­ essentially reading "on or off the premises" to a p p ly to the location of the sale, not the location of the c o n su m p tio n . But that reading ignores the parallel use of "on o r off the premises" to apply to consumption in both the p le n a ry license provision and the salesroom portion of the fa rm winery license language. Moreover, if a farm winery c o u ld sell "at retail to consumers" anywhere, the separate lan g u a g e allowing sales at six salesrooms across the state w o u ld be surplusage. Accordingly, although the language of th e farm and plenary winery license provisions differs s lig h tly, we interpret the two types of licenses as providing id e n tic a l privileges concerning direct sales to consumers. 42

e f fe c ts that adversely affect economic production (and hence in terstate commerce) in other states, thereby forcing `producers o r consumers in other States [to] surrender whatever competitive a d v a n ta g e s they may possess.'" Cloverland II, 462 F.3d at 261 (q u o tin g Brown-Forman Distillers Corp. v. N.Y. State Liquor A u th ., 476 U.S. 573, 580 (1986)). In their attempt to meet this burden, plaintiffs note that s o m e wineries sell their goods only by direct shipment. But the c h o ic e by certain producers to conduct sales only by direct s h ip m en t is irrelevant to the constitutionality of the ABC Law, b e c au s e the Commerce Clause does not place New Jersey under a n obligation to cater to the preferred marketing practices of outo f - s ta te businesses. See A.S. Goldmen & Co. v. N.J. Bureau of S e c s ., 163 F.3d 780, 787 (3d Cir. 1999) (holding that "questions o f the market's `structure' and its `method of operation' are q u ite simply beyond the concern of the Commerce Clause") (q u o tin g Exxon Corp. v. Governor of Md., 437 U.S. 117, 127-28 43

(1 9 7 8 )) . Plaintiffs also contend that the direct shipment ban d i sp r o p o r tio n a te ly affects out-of-state wineries because those p ro d u c e rs must funnel all of their wine through the three-tier syste m . But, assuming that this requirement disadvantages outo f - s ta te producers, it is not an effect of the direct-shipment ban ­ which even-handedly forces all wine sales out of one channel a n d into other available channels ­ but by the features of the A B C Law invalidated above, which allow New Jersey wineries to circumvent the three-tier system. This argument therefore a lso fails to demonstrate that the direct shipment ban is d isc rim in a to ry in effect. F in a lly, plaintiffs contend that many consumers cannot, o r will not, undertake to travel to distant locations to purchase w in e . Even if true, this fact, standing alone, does not

d e m o n stra te that the direct shipment ban harms interstate c o m m e rc e by privileging in-state producers at the expense of 44

o u t-o f -s ta te wineries. And while several types of evidence c o u ld show such an effect, plaintiffs have failed to present any c o m p e te n t evidence that the ban burdens interstate commerce. T h e Federal Trade Commission report on which they rely,1 3 th o u g h critical of direct shipment bans, is silent as to the effects o f New Jersey law. Plaintiffs also have not produced any other e v id e n c e that so much as "a single penny of losses" incurred by a n y out-of-state producer is "attributable to the allegedly d is c rim in a to ry" ban. Baldacci, 505 F.3d at 37. Further,

a lth o u g h the ban might be unconstitutional in its effects if it led to more New Jersey wines, and fewer out-of-state wines, being s o ld in New Jersey, the record reflects that less than 1% of wine s o ld in New Jersey is grown in New Jersey ­ a fact that gives ris e to the inference that no displacement of out-of-state wines

The Report, "Possible Anticompetitive Barriers to E-Commerce: Wine," is available at h ttp ://w w w .f tc .g o v /o s /2 0 0 3 /0 7 /w in e re p o rt2 .p d f (last visited Ju ly 15, 2010). 45

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h a s occurred. Plaintiffs have also failed to present evidence that (1 ) "consumers substitute wines purchased directly from [ins ta te ] vineyards for wines that they otherwise would have p u rc h a se d from out-of-state producers," or, in fact, that (2) a n yo n e besides the Freemans purchases "any wines at all . . . d ire c tly from [in-state] vineyards." Id. at 36. Nor do "plaintiffs . . . adduce[ any] evidence that would in any way undermine the p la u sib le impression that" New Jersey "consumers (like im b ib e rs everywhere) view trips to a winery as a distinct e x p e rie n c e incommensurate with ­ and therefore, unlikely to be re p la c e d by ­ a trip to either a mailbox or a retail liquor store." Id . at 37. In short, the record contains no evidence that New J e rs e y's direct shipment ban harms interstate commerce in favor o f intrastate commerce. In fact, the gravamen of plaintiffs' argument is not that n o n -N e w Jersey wines are excluded from the market, but rather th a t a subset of those wines, which are produced by small 46

w in e r ie s that do not have much volume or perhaps capital, w o u l d only be able to enter the New Jersey market via direct s h ip p in g , which is prohibited. But, as with wineries that deliver e x c lu siv e ly by mail order, the fact that consumers cannot obtain a subset of out-of-state wines because of the otherwise-neutral stru c tu re of the market and the business plans of the wineries in q u e stio n does not render New Jersey's direct-shipment ban c o n s titu tio n a lly infirm. See A.S. Goldmen & Co., 163 F.3d at 7 8 7 . And because plaintiffs bear the burden on this issue, "the m e re fact that a statutory regime has a discriminatory potential i s not enough to trigger strict scrutiny." Baldacci, 505 F.3d at 3 7 ; see also Ass'd Indus. of Mo. v. Lohman, 511 U.S. 641, 654 (1 9 9 4 ) (noting that the Supreme Court has "never deemed a h ypo thetical possibility of favoritism to constitute discrimination th a t transgresses constitutional commands"). We accordingly h o ld that plaintiffs have not met their burden of demonstrating th a t the direct shipment ban discriminates against interstate 47

c o m m e rc e in violation of the dormant Commerce Clause.1 4 B e c au s e plaintiffs do not argue in the alternative that the d ire c t shipping ban fails the balancing test of Pike v. Bruce C h u r c h , Inc., 397 U.S. 137 (1970), we reject their challenge to t h e direct shipping ban and affirm the District Court's opinion in so f a r as it held that ban to be constitutional. IV . H a v in g determined that the provisions of the ABC Law (1 ) allowing in-state wineries to sell directly to consumers and re ta il e rs , and (2) limiting the importation of out-of-state wine

We note that the Sixth Circuit, in Cherry Hill V in e y a rd s, LLC v. Lilly, 553 F.3d 423 (6th Cir. 2008), struck d o w n , on an arguably similar record, a Kentucky statutory p ro v isio n permitting individuals to receive direct shipments f ro m small wineries if the consumer had ordered the wine w h ile physically present at the winery. The Lilly court's h o ld in g , however, rested on the conclusion that "small K e n tu c k y wineries benefit[ted] from less competition from o u t-o f -s ta te wineries" "[b]ecause of the economic and lo g is tic a l barriers caused by the in-person requirement." Id. at 4 3 3 . No such requirement is present in New Jersey law, and L illy is therefore distinguishable. 48

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in te n d e d for personal consumption into New Jersey violate the d o rm a n t Commerce Clause, we turn to the issue of the proper re m e d y. The invalid statutory provisions are constitutionally u n d e rin c lu siv e , in that their provision of privileges to in-state w in e rie s alone renders them invalid. This deficiency can be re m e d ie d in one of two ways ­ either by "declar[ing the o ff en d in g provisions] a nullity and order[ing] that [their] b e n e f it s not extend to the class that the legislature intended to b e n e fit, or [by] extend[ing] the coverage of the statute to include th o s e who are aggrieved by the exclusion." Heckler v.

M a tth e w s, 465 U.S. 728, 738 (1984). In this case, neither the p a rtie s nor the District Court has expressly considered the c h o ic e between extension and nullification. For this reason, and b e c a u se the choice between extension and nullification is " w ith in the constitutional competence of a federal district c o u rt," id. at 739 n.5, we will remand to the District Court for a d e te rm in a tio n of the appropriate remedy. See also, e.g., SEC v. 49

G r a y sto n e Nash, Inc., 25 F.3d 187, 194 (3d Cir. 1994) (s u g g e stin g remand "[w]hen significant factors" were not p re v io u s ly "weighed in" choosing a remedy). V. F o r the foregoing reasons, we (1) affirm the District C o u r t ' s determination that the Freemans have standing to sue, (2 ) vacate the District Court's invalidation of New Jersey's fee s c h e d u le for retail and wholesale licenses, (3) reverse the D is tric t Court's determination that the direct sales and im p o rta tio n provisions of New Jersey law comport with the d ic tate s of the dormant Commerce Clause, (4) affirm the District C o u rt's conclusion that New Jersey's ban on direct shipments of w in e is constitutional, and (5) remand for a determination of the p ro p e r remedy.

50