The Twenty-First Amendment Enforcement Act isn’t the boon for state enforcement of antiquated and Commerce Clause violating direct shipping restrictions that regulators might think it is. These Ohio alcohol shipping cases are about to show that.
An Ohio Federal Court has marked two wine shipping cases as related. One suit has the State of Ohio as the plaintiff suing Wine.com and other online retailers in an attempt to stop the out-of-state liquor retailers from selling and shipping liquor direct to Ohioans and the other case is a wine direct shipping case from the same legal group pressing wine direct shipping cases across the country.
In the State of Ohio case, the Attorney General is looking for a preliminary and then permanent injunction to halt alcohol direct to consumer sales by companies advertising “wine delivered right to your door” or selling “cocktail kits” online. To accomplish this, the Attorney General is suing under the Twenty-First Amendment Enforcement Act (27 U.S.C. § 122a(b)) – never heard of it? Don’t worry, it’s not some novel theory, it’s simply an enforcement mechanism of the Federal Alcohol Administration Act and it is severely curtailed by it’s subsection (e) – the rules of construction:
(e) Rules of construction
This section shall be construed only to extend the jurisdiction of Federal courts in connection with State law that is a valid exercise of power vested in the States-
(1) under the twenty-first article of amendment to the Constitution of the United States as such article of amendment is interpreted by the Supreme Court of the United States including interpretations in conjunction with other provisions of the Constitution of the United States; and
(2) under section 122 of this title as such section is interpreted by the Supreme Court of the United States; but shall not be construed to grant to States any additional power.
That’s right – nothing novel, and completely bound by Supreme Court precedent, so while prognosticators may claim something here is different from the general Commerce Clause cases – they’d be wrong. The Supreme Court precedent on Commerce Clause interaction with the Twenty-First Amendment will control – explicitly. Which means that while this case provides a direct mechanism for state Attorneys General to achieve injunctions over what they believe are violations of valid state laws, those state laws are still subject to the same challenges that the defendants in these cases might have brought as plaintiffs if they’d struck first. Subsection (e) will most certainly relegate every lawsuit under the “Twenty-First Amendment Enforcement Act” to a challenge to the constitutionality of whatever law the pressing attorney general is seeking to enforce. Even better for advocates for direct-shipping and proponents of the Commerce Clause’s domination of protectionist state restrictions premised on the Twenty-First Amendment – the law has no real financial teeth as the suits are only for injunctive relief and even better, the granting or denial of the injunction leads to immediate appellate review – thus setting up a fast-track to Circuit Court and ultimately potential Supreme Court consideration.
So advocates of change to State Law restrictions entrenched in 19th and 20th Century understandings and principles should thank any Attorney General looking to enforce those laws in the 21st Century under the Twenty-First Amendment Enforcement Act for providing a state funded immediate vehicle for expedited challenge that will not have the detriment of forcing Plaintiffs to bear a burden beyond potential injunctive relief.
The motion for preliminary injunction filed by the State is completely devoid of an acknowledgment of the Rule of Construction (Subsection (e)). The law set down in Granholm and Tennessee Wine will control – and while at least one panel of the 6th Circuit may be a tad confused about the holdings of those cases, the rest of the Circuit and potentially other Circuits and the Supreme Court likely are not. States allowing their in-state retailers the ability to ship direct to residents can just as easily offer licenses to out-of-state retailers to allow them the same privilege. Arguments regarding enforcement, undrage drinking, and tainted or counterfeit products are disproven time and again in these cases. But I digress.
You can read the complaint in this Ohio liquor direct shipping suit here.
In that case, a group of interested parties – residents of Ohio and an out-of-state wine shipper – are suing under Section 1983 alleging the restrictions on out of state sales while allowing in-state retailers to ship direct to Ohio residents discriminates against interstate commerce, and amounts to the protectionist measures the Commerce Clause prohibits. They’re asking for a declaration that the prohibition on out-of-state liquor delivery in Ohio be declared unconstitutional and that the out-of-state wine retailers be allowed to “sell, ship, and deliver wine to Ohio consumers from their premises located outside the state.” As we’ve seen in a few other state wine-shipping lawsuits, the State of Ohio has an in-state facility requirement mandating that for the plaintiff wine-retailer in this case to ship wine direct to residents in Ohio, that the company establish an in-state warehouse and presence.
While the cases have not been consolidated. Because the underlying principles and subject matter are related enough, they have both been assigned to the same judge for adjudication.