Healthcare, The Supreme Court and Wine

Supreme_courtFor the past decade or more, Article 1, Section 8 of the United States Constitution, otherwise known a the "Commerce Clause" has been a key issue in the somewhat obscure realm of wine politics and law. It has been a the center of the wine direct shipping legal and political battles. The question for alcohol beverage attorneys, reporters and other interested parties in the wine industry has been "how can the Commerce Clause, which grants the federal government the power to regulate interstate commerce, play nicely with the 21st Amendment to the Constitution, which gives the states the right to regulate the sale and transportation of alcohol in their borders?"

So it's notable that this week, Americans will hear more about the "Commerce Clause" then they ever cared to hear as the Supreme Court takes up the issue of the Constitutionality of the Affordable Care Act—known to some as "Obamacare". The Supreme Court will hear arguments over three days this week concerning exactly how much power the Commerce Clause gives the federal government.

It's interesting and important to note that even after the Supreme Court, in the case of Granholm v. Heald, ruled on the relationship between the Commerce Clause and the 21st Amendment, many issues as to what their ruling really means remain in play. Does the principle that the states have broad authority to regulate the sale and distribution of alcohol as long as they do so in an even handed manner where in-state and out-of-state business are concerned only apply to wineries? Or does that principle also apply to wine stores too? Does it apply to wholesalers too? Does the 21st Amendment somehow endorse a three tier system that is inherently discriminatory?

I note these open question when I consider what the ruling of the Supreme Court on the Affordable Healthcare Act will eventually mean. Will they answer all the questions? Or will their ruling, likley to come in June or July, simply lead to more legal questions?

In the case of the open wine questions, many interested parties confirmed that the Supreme Court's ruling left many questions unanswered. In fact, America's beer and wine wholesalers were so concerned with the open questions left after the 2005 Granholm v. Heald Supreme Court decision that they convinced their many friends in Congress to sponsor a bill that would end the questions by stripping wine stores of their fundamental commerce clause protections against state-based discrimination. In fact, the bill (HR 1161) would give states the power to enact legislation that barred out-of-state retailers from shipping wine purely for the reasons of protecting in-state wholesalers and for no other reason.

The wholesalers' reaction to the questions left open by the Supreme Court can only be characterized as a "hail mary" pass that demonstrated a sincere degree of disrespect for America's judicial system as well as for consumers. However, with nearly every sector of the alcohol beverage industry calling the wholesalers on their ploy to pass a "wholesaler protection act" and with consumers across the country as well as media chiming in on HR 1161's obscene provisions, the bill appears to be dead in its tracks, dying the kind of ugly death that all purely special interest legislation deserve to undergo.

It's hard to say if the decision the Supreme Court will render on the Affordable Health Care Act will have any impact on future wine-related litigation. I don't think it will since the Court is dealing with the Commerce Clause's direct grant of power to the federal government to regulate interstate commerce. The wine-related litigation that led to Granhom v. Heald and subsequent litigation focused on the "Dormant Commerce Clause", the implied negative effect the Commerce Clause has on the states: If the federal government has the right to regulate commerce, then the states are equally forbidden to do so.

But you never know what might turn up in a Supreme Court decision. Consider Granholm v. Heald.

In that decision, Justice Anthony Kennedy wrote in passing that the three tier system is "unquestionably legitimate". He pulled this piece of dictum from a concurring opinion written and endorsed by a single Supreme Court justice in an early ruling known as "North Dakota v. United States", a Supreme Court decision that was not a case dealing either with the Commerce Clause or the Dormant Commerce Clause. This passing remark in Granholm was not part of the official holding where the Court offers its ruling and reasons for the ruling. Yet, this passing remark has played a key role in decisions concerning direct shipping by other federal courts.

That's how a small, innocent remark can have a great impact on future litigation that impactw the way business is concducted and how consumers pursue (or are prevented from pursuing) their interests.

I'm very confident that this passing remark concerning the "unquestionably legitimate" nature of the Three Tier System will eventually be determined to not have the same meaning that some courts have invested it with. There is a great deal of excellent scholarship that suggests that this notion of unquestioned legitimacy of the three tier system is simply bad law, bad legal reasoning and has been used to underpin federal court rulings that simply can't be sustained by reason or law.

The point is that those who concern themselves with the legal framework that supports the sales, marketing and distribution of alcohol in America ought to keep their eye on the eventual Supreme Court ruling on the Affordable Care Act now being argued in front of the Supreme Court. One never knows what kind of nugget will be deeply buried in the coming ruling that will be used by others to hurt or help wine consumers.


9 Responses

  1. Vino - March 27, 2012

    Very interesting article!

  2. Andrea Wilson - March 27, 2012

    Fantastic reading. Thank you!

  3. Thomas Pellechia - March 28, 2012

    The health Care case will pivot not so much on the rights of the Commerce Clause but on the question of mandate.
    “Can the federal government use the Commerce Clause to mandate that citizens buy a product or service?”
    That narrow question is related to the Three Tier system, which is riddled with state mandates, but the health care case deals only with federal mandates, and it says nothing about fairness or blockage of commerce–at least that’s my understanding.

  4. Donn - March 28, 2012

    It the Supes uphold the Obama health care mandate, let’s hope Congress does not pass a Wholesaler uber alles bill next.

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