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Supreme Court to hear oral arguments in Tennessee retail residency case January 16

by Kerana Todorov
January 04, 2019

The U.S. Supreme Court is scheduled to soon consider arguments in a case centered around the 21st Amendment and the three-tier system.

Oral arguments in Tennessee Wine and Spirits Association v. Zachary W. Blair et AL. are scheduled for Jan. 16. The U.S. Supreme Court on Sept. 27 accepted to hear the case – whether or not a state law that requires a retailer to be a resident of the state of Tennessee for at least two years in order to have a license to sell wine, beer or distilled spirits, is legal.

Attorneys of record as of Thursday include: Shay Dvoretzky, partner at Jones Day in Washington D.C., is the attorney on record for the petitioner, Tennessee Wine and Spirits Retailers Association.

Carter G. Phillips, partner, at Sidley Austin LLP of Washington, D.C., is counsel of record for Total Wine Spirits Beer and More; Michael Eugene Bindas, senior attorney at Institute for Justice, of Seattle, represents Affluere Investments Inc.

The case pitches the Tennessee Wine and Spirits Association, a trade association representing alcohol store owners, against Total Wine and More, a growing alcohol retailer, and a liquor store company in Memphis owned by newcomers to the state of Tennessee. Lower courts have ruled Tennessee’s residency requirement unconstitutional.

The petitioner, Tennessee Wine and Spirits Association, which represents more than 600 business owners in the state, is appealing after losing its case before the US Court of Appeals to the Sixth Circuit.

Total Wine & More has requested 20 minutes while Affluere Investments Inc., which operates as Kimbrough Fine Wine and Spirits, a family-owned business in Memphis, asked for 10 minutes, according to court filings.
The State of Illinois has requested 10 minutes to speak on behalf of 34 states in support of the petitioner. “This case deals with the States’ core sovereign interests, reaffirmed by the text of the Twenty-first Amendment, to regulate ‘the delivery or use’ of alcohol within their borders,” Lisa Madigan, attorney general for the state of Illinois stated in her motion.

Total Wine and More has argued that the Tennessee residency requirement violated the dormant Commerce Clause and is unconstitutional.

The Institute of Justice, a libertarian organization, represents Doug and Mary Ketchum. The Ketchums moved to Memphis Tennessee to operate a liquor store whose corporation is Affluere Investments Inc, according to news reports. Institute of Justice argued the two-year requirement discriminates against newcomers.

The Tennessee Wine and Spirits Retailers Association threatened to sue the Tennessee Alcoholic Beverage Commission which recommended the couple be granted a license to operate the store, according to news reports. The commission then filed suit to seek a court ruling on the legalization of the residency requirement. The lower courts ruled the state law was against the U.S. Constitution.

The American Beverage Licensees is among the groups that have filed a brief in support of the Tennessee Wine and Spirits Association. The trade association argued that Tennessee’s residency requirement is legal under the 21st Amendment. It asked the U.S. Supreme Court to reverse the Sixth Circuit Court of Appeals’ ruling.

The trade association stated the U.S. Supreme Court has recognized the dormant commerce clause applies differently in the context of alcohol regulation under the 21st Amendment. Granholm v Heald was limited to the first tier of alcohol producers, according to the trade association. “Granholm reaffirmed that the three-tier system is ‘unquestionably legitimate’ and recognized that case dealt with just the first tier of alcohol production – not wholesale or retail tiers,” that association state in a written statement in November.

Among those who support the respondents is Retail Litigation Center, a public policy organization that represents retailers nationwide, including liquor companies. The public policy organization argued in its brief that Tennessee’s durational residency law amounts to protectionism “that shields local sellers from out-of-state competition.”

“The Twenty-first Amendment puts an array of regulatory tools on the table. But the Commerce Clause makes clear that protectionism Is not one of them,” according to the brief.

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