The Sixth Circuit considered whether the dormant Commerce Clause prevented the state of Michigan from treating in-state and out-of-state wineries differently with respect to home delivery of wine. The case was originally brought as a civil rights action by wine connoisseurs, wine journalists, and a small California winery in the Eastern District federal court of Michigan. The district court ruled against the plaintiffs, granting summary judgment for the state. The plaintiffs’ motion to reconsider on evidence grounds was denied. The summary judgment ruling was appealed to the Sixth Circuit Court of Appeals.
The plaintiffs argued that the law favoring in-state wineries was facially discriminatory and therefore impermissible under the Commerce Clause of the U.S. Constitution. Michigan defended the law as being allowed under the 21st Amendment, which repealed prohibition and gave states the power to regulate the importation of alcohol. (The amendment reads that “the importation … into any state … of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”) The appeals court resolved the constitutional conundrum by ruling that the state had not met its burden to invoke its powers under the 21st Amendment.
In determining whether a state law is allowed under the Commerce Clause, the first issue is whether the statute “directly, in effect, or in purpose treats in-state and out-of-state interests differently.” The statute is allowable if there is in fact no discrimination. However, if there is discrimination, the state’s motives are subject to strict scrutiny: Does the statute advance a “legitimate local purpose,” and is there no reasonable non-discriminatory alternative to accomplishing the same goal? These legitimate local purposes might be any number of things, but in the context of the 21st Amendment, the “core concerns” have been articulated in prior case law as being the promotion of temperance, the ensurance of orderly market conditions, and the raising of state revenue. The strict standard of the Commerce Clause ensures that states have legitimate reasons for erecting trade barriers, not mere protectionism of local industry.
The court found that the Michigan law treated in-state and out-of-state wineries differently. In-state wineries need only apply for a $25 permit to sell wine directly to consumers, while out-of-state wineries need sell through wholesalers and retailers. The court then considered whether the statute is constitutional despite being facially discriminatory. The court found that there was no evidence in the record that the discrimination furthers any of the 21st Amendment core concerns, let alone that there exists no reasonable non-discriminatory means of accomplishing the same objective. It reversed the grant of summary judgment and remanded the case for entry of judgment for the plaintiffs.
Heald v. Engler, 2003 Fed. App. 0308P (6th Cir. Aug 28, 2003)