Lebamoff Enterprises, Inc. et al v. Snyder et al
Filing
43
OPINION AND ORDER DENYING 33 Defendants' Motions for Summary Judgment, DENYING 34 Intervenor's Motion for Summary Judgment, and GRANTING 31 Plaintiffs' Motion for Summary Judgment. Signed by District Judge Arthur J. Tarnow. (AChu)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
LEBAMOFF ENTERPRISES, ET AL.,
Case No. 17-10191
Plaintiffs,
SENIOR UNITED STATES DISTRICT
JUDGE ARTHUR J. TARNOW
v.
SNYDER, ET AL.,
MAGISTRATE JUDGE STEPHANIE
DAWKINS DAVIS
Defendants,
MICHIGAN WINE & BEER
WHOLESALERS ASSOCIATION
Intervening Defendant.
/
OPINION AND ORDER DENYING DEFENDANTS’ MOTIONS FOR SUMMARY
JUDGMENT [33], DENYING INTERVENOR’S MOTION FOR SUMMARY JUDGMENT
[34], AND GRANTING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT [31]
Plaintiffs—individual wine consumers (Jack Strike, Jack Schulz, and Richard
Donovan), an individual wine merchant (Joseph Doust), and an Indiana corporation
that operates fifteen alcohol retail stores in Indiana (Lebamoff Enterprises, Inc.)—
filed this 42 U.S.C. § 1983 action to challenge the constitutionality of Michigan
Senate Bill 1088, 2016 Mich. Pub. Laws Act 520 (“2016 PA 520”). They claim that
Defendants—Governor of Michigan Rick Snyder, Attorney General William
Schuette, and Chairperson of the Michigan Liquor Control Commission (“MLCC”)
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Andrew J. Deloney—have violated their rights under the Commerce Clause and the
Article IV Privileges and Immunities Clause of the United States Constitution.
Plaintiffs ask the Court to declare 2016 PA 520 unconstitutional to the extent
that it amends M.C.L § 436.1203 to prohibit non-Michigan wine retailers from 1)
selling and distributing wine directly to Michigan consumers, and 2) obtaining
licenses and engaging in their occupations in Michigan. They seek an injunction
prohibiting Defendants from enforcing 2016 PA 520 and requiring them to allow
out-of-state wine retailers to distribute wine directly to consumers in Michigan.
FACTUAL BACKGROUND
The laws governing wine retailing in Michigan were amended by 2016 PA
520 on March 29, 2017. The old laws allowed licensed Michigan retailers, and
retailers from other states with similar licenses, to ship wine to Michigan consumers
only by using their own employees and not by using a third party-delivery service.
M.C.L.A. 436.1203, effective from March 25, 2014 to March 28, 2017. The new
laws permit certain Michigan wine retailers to sell, ship, and deliver alcoholic
beverages directly to Michigan customers by using a licensed third party carrier, but
they prohibit out-of-state retailers from shipping to Michigan customers by any
means. M.C.L.A. 436.1203. The law thus expanded the shipping rights of Michigan
retailers while eliminating the shipping rights of out-of-state retailers.
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The MLCC, by way of the Michigan Liquor Control Code, controls and
regulates the sale and importation of alcohol through a three-tier distribution system
of suppliers, wholesalers, and retailers. Licensed suppliers sell beer, wine, and mixed
spirits to licensed wholesalers, who in turn sell these products to licensed retailers.
Licensed retailers may only purchase wine from licensed Michigan wholesalers.
Licensed retailers then sell alcohol to consumers. The MLCC exercises its powers
over the three tiers of distribution to regulate the behavior of market participants.
For instance, retailers are forbidden to negotiate volume discounts with wholesalers
or purchases on credit. Mich. Comp. L. § 436.1609a(5); Mich. Admin. Code, R,
436.1625(5), 436.1726(4). Michigan also requires wholesalers to “post-and-hold”
prices to police against industry favoritism or covert volume discounts. Mich.
Admin. Code, R. 436.1726.
PLAINTIFFS’ LAWSUIT
Plaintiffs challenge the new version of M.C.L. § 436.1203(2), as enacted on
January 5, 2017. The law permits retailers who obtain specially designated merchant
(“SDM”) licenses to deliver wine to Michigan consumers using a common carrier,
their own vehicle, or a third-party facilitator. M.C.L. §§ 436.1203(3), (12), and (15).
These provisions do not apply to Lebamoff Enterprises, Inc., however, because as
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an “outstate seller of wine,” it is ineligible to become “licensed as a specially
designated merchant.” M.C.L. § 436.1607(1).
Plaintiff Lebamoff Enterprises, Inc. (“Lebamoff”) operates fifteen retail wine
and liquor stores—called Cap n’ Cork—in the Fort Wayne, Indiana area. Many of
Lebamoff’s customers live in cities in southwest Michigan and have requested that
Lebamoff ship wine to them. (Pls.’ Ex. 2 at ¶ 2). Lebamoff is unable to do so
however, despite being fully equipped to ship and deliver wine. (Id. at ¶ 6). Plaintiff
Joseph Doust is a wine merchant and one of the co-owners of Lebamoff Enterprises.
Plaintiffs Richard Donovan, Jack Strike, and Jack Schulz are Michigan wine
consumers who wish to be able to order wine from out-of-state retailers. They prefer
to order wine on the internet, and they allege that many of their desired vintages are
not available in the Michigan market. (Pls. Ex. 5, 6, & 7).
PROCEDURAL HISTORY
Plaintiffs filed a Complaint [1] on January 20, 2017 and an Amended
Complaint [5] on February 6, 2017.
On March 17, 2017, the Michigan Beer & Wine Wholesalers Association
moved, unopposed, to intervene as a defendant. The Court entered an Order
permitting intervention [13] on April 6, 2017.
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Plaintiffs filed a Motion for Summary Judgment [31] on February 28, 2018.
Intervenors and the original Defendants filed Motions for Summary Judgment [33,
34] on April 2, 2018. The motions have been fully briefed, and a hearing was held
before the Court on September 6, 2018.
LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). Defendants bear the burden
of establishing that there are no genuine issues of material fact, which may be
accomplished by demonstrating that Plaintiffs lack evidence to support an essential
element of their case. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Plaintiffs
cannot rest on the pleadings and must show more than “some metaphysical doubt as
to the material facts.” Matsushita Elec. Indus. Co., Ltd., 475 U.S. at 586-87.
Plaintiffs must “go beyond the pleadings and by . . . affidavits, or by the ‘depositions,
answers to interrogatories, and admissions on file,’ designate ‘specific facts showing
that there is a genuine issue for trial.’” Celotex Corp., 477 U.S. at 324 (quoting Fed.
R. Civ. P. 56(e)); see also United States v. WRW Corp., 986 F.2d 138, 143 (6th Cir.
1993).
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ANALYSIS
A.
The Commerce Clause gives Congress the power “[t]o regulate Commerce
with foreign Nations, and among the several States.” U.S. Const., art. I, § 8, cl. 3.
The United States Supreme Court has “interpreted the Commerce Clause to
invalidate local laws that impose commercial barriers or discriminate against an
article of commerce by reason of its origin or destination out of state.” C & A
Carbone, Inc., v. Town of Clarkstown, N.Y., 511 U.S. 383, 390 (1994). Relatedly,
the Commerce Clause “encompasses an implicit or ‘dormant’ limitation on the
authority of the States to enact legislation affecting interstate commerce.” Healy v.
The Beer Institute, Inc., 491 U.S. 324, 326 n.1 (1989). The dormant Commerce
Clause prevents states from “unjustifiably [] discriminat[ing] against or burden[ing]
the interstate flow of articles of commerce.” Or. Waste Systems, Inc. v. Dep’t of
Env’t Quality of Or., 511 U.S. 93, 98 (1994).
The dormant Commerce Clause inquiry is two-fold. First, the Court must
determine whether the statute at issue “directly regulates or discriminates against
interstate commerce, or [whether] its effect is to favor in-state economic interests
over out-of-state interests.” Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 338
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(2008); Int’l Dairy Foods Ass’n v. Boggs, 622 F.3d 628, 644 (6th Cir. 2010).
Plaintiffs bear the burden of showing that Michigan’s law is discriminatory. Id.
If Plaintiffs prove that the law discriminates against interstate commerce, the
law “will survive only if it advances a legitimate local purpose that cannot be
adequately served by reasonable alternatives.” Dep’t of Revenue of Ky., 553 U.S at
338; see also Or. Waste Systems, 511 U.S. at 100. If the defendant fails to meet its
burden at this stage of the inquiry, the law is upheld “unless the burden it imposes
upon interstate commerce is clearly excessive in relation to the putative local
benefits.” Int’l Dairy Foods Ass’n, 622 F.3d at 644 (citations and quotation marks
omitted); see also Tenn. Scrap Recyclers Ass'n v. Bredesen, 556 F.3d 442, 449 (6th
Cir. 2009) (“Protectionist laws are generally struck down without further inquiry,
because absent an extraordinary showing the burden they impose on interstate
commerce will always outweigh their local benefits.”) (Citations omitted).
B.
Plaintiffs have met their burden of proving that the regulatory system created
by 2016 PA 520 discriminates against interstate Commerce. The new statute permits
only those who “hold a specially designated merchant license located in this state”
to use a common carrier to ship to consumers in Michigan. 2016 PA 520 § 203(3).
Though Defendants argue that Plaintiffs have every right to open a retail location in
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Michigan and ship from that store while maintaining their Indiana residency, courts
have “viewed with particular suspicion state statutes requiring business operations
to be performed in the home State that could more efficiently be performed
elsewhere.” Pike v. Bruce Church, Inc., 397 U.S. 137, 145 (1970). In 2005, the
Supreme Court ruled that Michigan and New York laws permitting direct shipment
of wine from in-state wineries, but forbidding the same from out-of-state wineries,
violated the Commerce Clause. Granholm v. Heald, 544 U.S. 460 (2005). Michigan
and New York both argued in Granholm that excluding out-of-state wineries from
selling directly to their consumers unless they had a physical presence in the state
was nondiscriminatory because wineries need only open up an in-state storefront.
The Court rejected the states’ argument, referencing the “prohibitive” costs of
establishing brick-and-mortar distribution centers in states that require retailers to
do so. Id. at 475.
Defendants argue that a ruling for the Plaintiffs would allow Lebamoff to do
what no Michigan retailer may do: ship wine to Michigan consumers that has not
passed through the Michigan three-tier system. The dormant Commerce Clause is
enforced against states, however, and the constitutionality of state action is of
primary concern in this case. The governing question, therefore, is whether Michigan
is permitted to enforce a statute that explicitly denies out-of-state retailers a privilege
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available to their in-state competitors. The answer at this stage must be no, for
“[s]tate laws that discriminate against interstate commerce face a ‘virtually per se
rule of invalidity.” Granholm, 544 U.S. at 476 (quoting Phila. v. New Jersey, 437
U.S. 617, 624 (1978)).
Michigan departed from a hermetically-sealed three-tier system when it chose
to permit its wine retailers to join the digital marketplace and engage in direct
shipping to customers. The State created a market for Michigan consumers that
implicated interstate commerce in a manner above-and-beyond that of a traditional
three-tier system. These same laws then closed off this Michigan-sized portion of
American interstate commerce to out-of-state competition. State laws that so favor
in-state business presumptively violate the dormant Commerce Clause because they
undermine “strong federal interests in preventing economic Balkanization.”
Bacchus Imps. v. Dias, 468 U.S. 263, 276 (1984) (finding that a tax exemption for
an indigenously produced Hawaiian brandy, Okolehao, skewed competition within
the liquor market and therefore was subject to the Commerce Clause).
C.
Because this case concerns the regulation of alcohol, the Court must undertake
an additional step in its analysis before determining whether Defendants meet their
burden on the second prong of the Commerce Clause test. The Court must determine
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“whether the interests implicated by a state regulation are so closely related to the
powers reserved by the Twenty-first Amendment that the regulation may prevail,
notwithstanding that its requirements directly conflict with express federal policies.”
Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 276 (1984). Section Two of the
Twenty-first Amendment provides, “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.” U.S.
Const. amend. XXI, § 2.
Courts have interpreted the Amendment “to allow states to maintain an
effective and uniform system for controlling liquor by regulating its transportation,
importation, and use.”
Granholm, 544 U.S. at 484; see also Brown-Forman
Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (1986) (“[T]he Twentyfirst Amendment and the Commerce Clause ‘each must be considered in light of the
other and in the context of the issues and interests at stake in any concrete case.”
(quoting Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 332 (1964)).
The Granholm Court rejected the two states’ contention that Section Two of the
Twenty-first Amendment immunized laws that discriminated against out-of-state
wineries. “The Amendment did not give States the authority to pass non-uniform
laws in order to discriminate against out-of-state goods.” Granholm, 544 U.S. at
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484-85. The Court went on to reiterate its holdings in Bacchus, Brown-Forman, and
Healy that “state regulation of alcohol is limited by the nondiscrimination principle
of the Commerce Clause.” Id. at 487.
The question here is whether discrimination against interstate commerce on
the retail tier—as opposed to the producer tier at issue in Granholm—is forbidden
by the Commerce Clause or sanctioned by the Twenty-first Amendment.
Courts have answered this question in different ways. In Siesta Village
Market, LLC v. Granholm, 596 F.Supp.2d 1035 (E.D. Mich. 2008), this court
declined to distinguish between retailers and producers when determining the
constitutionality of a very similar Michigan statute, and ultimately enjoined the
enforcement of Michigan laws that discriminated against out-of-state wine shippers.
Following this decision, the Michigan legislature repealed the problematic
provisions of the statute and the Court vacated the decision as moot.
By contrast, the Second Circuit declined to interpret Granholm as authorizing
a Commerce Clause challenge to a New York state wine retail shipment law that
privileged in-state retailers. Arnold’s Wines, Inc. v. Boyle, 571 F.3d 185 (2nd Cir.
2009). The Eighth Circuit went further and held that residency requirements for
wholesalers are permissible under the Commerce Clause. S. Wine and Spirits of Am.,
Inc. v. Div. of Alcohol & Tobacco Control, 731 F.3d 799 (8th Cir. 2013). Implicit to
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both the Second and Eighth Circuit’s decisions was their refusal to extend the logic
of Granholm from the producer tier to the retailer tier.
This bright-line distinction between producer and retailer tiers is incompatible
with Sixth Circuit precedent. In Byrd, the Sixth Circuit found that Tennessee
residency requirements for the owners of retail businesses applying for alcoholic
beverage licenses did in fact violate the Commerce Clause, and it embraced the Fifth
Circuit’s interpretation of Granholm as “reaffirming the applicability of the
Commerce Clause to state alcohol regulations, but to a lesser extent when the
regulations concern the retailer or wholesaler tier as distinguished from the producer
tier, of the three-tier distribution system.” Byrd v. Tenn Wine and Spirits Retailers
Ass’c, 883 F.3d 608 (6th Cir. 2018), cert. granted, (U.S. Sep. 27, 2018) (No. 18-96),
(quoting Cooper v. Texas Alcoholic Beverage Comm’n, 820 F.3d 730, 743 (5th Cir.
2016)).
The Sixth Circuit held that whether the Twenty-first Amendment saves a
dormant commerce clause violation will depend on “whether the interests implicated
by a state regulation are so closely related to the powers reserved by the Twentyfirst Amendment that the regulation may prevail, notwithstanding that its
requirements directly conflict with express federal policies.” Id. at 621-22. Put
another way, “[d]istinctions between in-state and out-of-state retailers and
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wholesalers are permissible only if they are an inherent aspect of the three-tier
system.” Id. This is the test the Court applies to Michigan’s retail wine shipment
laws.
Michigan fails this test because it cannot demonstrate that permitting in-state
retailers to ship directly to consumers while denying out-of-state retailers the right
to do the same is inherent to its three-tier system. Michigan retains its Twenty-first
Amendment powers to maintain a closed three tier system, just as it remained free
after Granholm to prohibit wineries from shipping directly to consumers. But when
it starts carving exceptions out of that system, it must do so without resorting to
economic protectionism. The State’s Twenty-first Amendment powers do not extend
so far as to spare protectionist laws from the Commerce Clause. See Granhom, 544
U.S. at 487 (2005) (holding that “regulation of alcohol is limited by the
nondiscrimination principle of the Commerce Clause.”). A law favoring local
businesses that strays too far from the protection of the Twenty-first Amendment
must withstand a Commerce Clause challenge on its own merits.
D.
Defendants therefore must defend their regulatory regime on the second prong
of the dormant Commerce Clause analysis. A facially discriminatory law will only
be upheld if it “advances a legitimate local purpose that cannot be adequately served
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by reasonable alternatives.” Dep’t. of Revenue of Ky., 553 U.S. at 328. Given that
simply outlawing retail wine shipping without providing an exception for SDMs
would likely accomplish the following four objectives, and that the State has
operated a non-discriminatory retail regime in the past, Defendants seem foreclosed
from meeting their burden.
Nevertheless, Defendants argue that four legitimate local purposes will save
wine retailer-delivery discrimination from a Commerce Clause challenge. The Court
considers each in turn.
1. Administrative Overburdening
The State argues that Michigan cannot feasibly regulate a nationwide market
of wine retailers. The MLCC opines that 338,000 retailers nationwide could be
eligible for licenses and references the heavy burden that licensing and regulating
out-of-state wine retailers will entail. (Defs.’ Ex. B, at ¶ 13). Plaintiffs argue that
only a tiny fraction of these retailers will in fact apply for a license, as was the case
in New Hampshire, and that the costs of running a shipping business will prevent
the market from becoming saturated with out-of-state retailers. (Pls.’ Ex. 14 & 15).
It is impossible to know just how many applicants an expanded SDM license
eligibility would create, but the State has not demonstrated that no reasonable
alternatives exist to prevent administrative overflow. The MLCC could for instance
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tighten regulations with other non-discriminatory requirements or increase its
application fees. The State cannot justify restricting market access to local
businesses merely by pleading regulatory frugality and pointing out that Michigan
has fewer potential licensees than the whole country.
2. Youth Access
The State argues that licensing out-of-state retailers to deliver wine would
substantially increase the risk of minors obtaining alcohol. Defendants provide
evidence that out-of-state direct shippers have sold more wine to minors during
investigatory control sales. (Defs.’ Ex. D at ¶ 18; Ex. C at ¶ 14). The Granholm
Court already considered and rejected the justification of preventing youth access
for winery direct shipments, finding that the states needed not only to show that a
problem existed but also that alternative mechanisms could not solve that problem.
Granholm, 544 U.S. at 489-91 (finding that online wine shipping is an unattractive
means for minors to procure alcohol, and noting less restrictive alternatives to
foreclosing youth access to wine).
Preventing underage wine sales fails as a justification because the point-ofenforcement is on the delivery end. Michigan law provides that wine must be
shipped in a specially marked package, and that only someone at least 21 years of
age can accept delivery. M.L.C. 436.1203(15). Third party shippers must be
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approved by the MLCC and must keep records of their shipments for inspection.
M.L.C. 436.1203(20)-(21). Michigan does not advance any theory on how its wine
retailing websites better screen out minors than their out-of-state rivals, and in fact
both websites would be equally accessible to Michigan officials seeking to
investigate underage sales, as would both company’s deliveries (presumably
accomplished by the same common carrier). Further, as Plaintiffs argue, there are
many forms of leverage the state can hold over out-of-state retailers short of the
threat of property abatement. Bonds can be required from retailers where the MLCC
sees fit, and, along with the SDM license itself, subject to forfeiture where necessary.
The Granholm Court found that Michigan failed in 2005 to make the “clearest
showing” that was necessary to justify discrimination. Granholm, 544 U.S. at 48991 (quoting C&A Carbone, Inc., 511 U.S. at 393). The state has not adequately
demonstrated that replacing wineries with wine retailers has made a significant
enough difference.
3. Tax Collection
The State argues that collecting Michigan taxes from out-of-state retailers
would be unworkable. Defendants base this conclusion off the MLCC’s experience
taxing out-of-state wineries. Direct shipper licensees pay the excise tax directly to
the MLCC, but the Commission believes itself to be unable to collect the full taxes
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owed on such transactions. (Defs.’ Ex. E). Defendants advance evidence that out-ofstate wineries have disproportionately failed to timely file required tax
documentation and have routinely underpaid taxes. Id. The fact that much of
Michigan’s evidence comes from winery direct shipping suggests that the State’s
problem lies with Granholm itself, a problem that this Court is not in a position to
remedy.
Indeed, the Court in Granholm found that there were reasonable alternative
methods available to collect taxes without burdening interstate commerce. Michigan
can simply require retailers to post a bond for taxes, as it already does in certain
circumstances, and condition continued licensing on proper payment of taxes.
Granholm, 544 U.S. at 491 (“If licensing and self-reporting provide adequate
safeguards for wine distribution through the three-tier system, there is no reason to
believe that they will not suffice for direct shipments.”); see also Mich. Comp. L.
436.1801 on current wine retailing bond requirements. Indeed, tax collection is
substantially less of a justification now than it was in 2005, when the nexus
requirements of Quill Corp v. North Dakota, 504 U.S. 298 (1992) were still in effect.
South Dakota v Wayfair, 138 S. Ct. 280 (2018) overruled Quill and allowed states
to collect taxes from out-of-state retailers delivering goods to their citizens “as if the
seller had a physical presence in the states.” Id. Michigan has every right to demand
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out-of-state sellers collect taxes from its Michigan customers and remit those taxes
to the state.
4. Product Safety
Michigan argues that permitting out-of-state retailer delivery would defeat the
MLCC’s product safety function. The only U.S.-specific research the defendant
cited for this argument was an article that concluded that fake alcohol is not a large
problem in the U.S. precisely because of the efficacy of state and federal regulation.
See Robert M. Tobiassen, The Fake Alcohol Situation in the United States: The
Impact of Culture, Market Economics, and the Current Regulatory System, CENTER
FOR
ALCOHOL POLICY (2014) at https://www.centerforalcoholpolicy.org/wp-
content/uploads/2015/04/The_Fake_Alcohol_Situation_in_the_UnitedStates_compressed.pdf (last visited Sep. 24, 2018). The one case of unsafe retailed
wine reported by the article was that of certain wines containing diethylene glycol,
that were recommended for recall by the Federal Bureau of Alcohol, Tobacco,
Firearms and Explosives. See Banfi Products Corp. v. United States, 41 Fed. Cl. 581
(1998). While the success of regulation should never undermine the regulation that
made it possible, Michigan has not demonstrated that the regulatory efforts of the
Federal Government and other state governments is so deficient as to require
Michigan to keep all retail shippers within its state lines. Defendants have not
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demonstrated that they lack alternative mechanisms (such as collecting wine samples
or barring the shipment of suspect wines) for achieving their goal of product safety.
The product-safety justification thus lacks merit.
E.
Defendants have not proven that the discriminatory elements of 2016 PA 520
advance a legitimate local objective that can only be met through discriminating
against out-of-state commerce. Michigan is therefore operating an unjustifiable
protectionist regime in its consumer wine market, a privilege unsanctioned by the
Twenty-first Amendment and forbidden by the dormant Commerce Clause.
REMEDY
Plaintiffs urge the Court to remedy the unconstitutionality of 2016 PA 520 by
extending the benefits of the bill to out-of-state retailers. The Sixth Circuit has held
that district courts have broad discretion in fashioning the terms of injunctive relief,
including in wine commerce clause cases.
When a district court finds that a statute is constitutionally
defective, the court may either declare [the statute] a nullity and
order that its benefits not extend to the class that the legislature
intended to benefit, or it may extend the coverage of the statute
to include those who are aggrieved by the exclusion.
Cherry Hill Vineyards, LLC v. Lilly, 553 F.3d 423, 435 (2008) (citations omitted).
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Extension is generally preferred over nullification. See Welsh v. United States,
398 U.S. 333, 361 (1970) (“Where a statute is defective because of under-inclusion
there exist two remedial alternatives: a court may either declare it a nullity and order
that its benefits not extend to the class that the legislature intended to benefit, or it
may extend the coverage of the statute to include those who are aggrieved by
exclusion.”) Therefore the Court chooses to extend the provisions to Plaintiffs.
CONCLUSION
With an aim to creating minimal interference in the complex and
interdependent statutory infrastructure of Michigan alcohol, the Court holds that
2016 PA 520 is unconstitutional insofar as the Act, in conjunction with MLCC
Section 436.1607 (restricting SDM licensees to Michigan entities) precludes out-ofstate sellers of wine from shipping to Michigan customers. The law as amended by
the Act—which allows sellers of wine who hold a “specially designated merchant
license located in this state…to use a common carrier to deliver wine to a consumer
in this state…”—may remain unaltered insofar as it permits otherwise compliant
out-of-state wine retailers to either apply for and receive SDM licenses or ship to
Michigan customers with comparable out-of-state licenses. Finding the Commerce
Clause sufficient grounds for relief, the Court declines to reach Plaintiffs’ Privileges
and Immunities claim.
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The Court finds that there are no genuine issues of material fact which would
preclude judgment as a matter of law in this case that 2016 Public Act 520—read in
conjunction with MLCC Section 436.1607—violates the dormant Commerce
Clause.
Consequently, Plaintiffs’ Motion for Summary Judgment [31] IS HEREBY
GRANTED.
IT IS FURTHER ORDERED that Defendants’ and Intervenor’s Motions for
Summary Judgment [33, 34] are DENIED.
For the reasons stated herein, the Court DECLARES that Michigan’s wine
retail shipping laws are unconstitutional insofar as they forbid out-of-state retailers
from shipping wine to Michigan customers.
Therefore,
IT IS HEREBY ORDERED that Defendants Michigan Governor Rick
Snyder and Michigan Attorney General Bill Schuette, in their official capacities, and
the State of Michigan ARE PERMANENTLY RESTRAINED AND ENJOINED
from enforcing provisions of M.C.L. §§ 436.1607 and 436.1203 to preclude out-ofstate retailers of wine from shipping through interstate commerce to Michigan
customers. This order shall not prevent the State of Michigan from collecting all
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appropriate taxes due on the sale of the wine or from requiring licenses and permits
for direct interstate sales and deliveries.
SO ORDERED.
s/ Arthur J. Tarnow
Dated: 9/28/2018
Arthur J. Tarnow
Senior United States District Judge
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