On Thursday, September 27, 2018, the Supreme Court granted cert to a new case involving Granholm-like issues for the alcohol beverage wholesale and retail tiers. See Certiorari Granted.
The case, Tennessee Wine and Spirits vs. Byrd Clayton, stems from a Tennessee law which requires in-state retail license applicants to satisfy residency requirements. The law requires that an individual applying for a retail license in Tennessee be a resident of the state for at least two years before applying for a license. TN Code § 57-3-204(b)(2)(A). Further, the state’s law prohibits capital stock from being owned by individuals who have not been residents of Tennessee in the last two years. TN Code § 57-3-204(b)(3)(B). The case questions whether the state’s residency requirements discriminate against out-of-state residents and thus violate the Dormant Commerce Clause of the U.S. Constitution.
The Sixth Circuit originally ruled that Tennessee’s laws violated the Dormant Commerce Clause, affirming the district court decision. Tennessee Retailers Association filed a Petition For A Writ Of Certiorari before the Supreme Court, which granted the petition. Interested industry members can expect the case to be argued before the Supreme Court in 2019.
While the specific case at issue is not a straightforward direct-to-consumer retailer shipping case, the outcome of the Supreme Court’s decision could certainly shed light on treatment of retailers with respect to direct shipping. The practice of retailer direct shipping, and (some) state discriminatory treatment of out-of-state retailers, has been an industry debate since the Granholm decision in 2005 (which did not apply to retailers). Stay tuned as we report on highlights of the case and summarize important updates.
For more information on wine law, alcohol law, or trademark law, please contact Lindsey Zahn.
DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.