Trump’s Supreme Court Nominee and Wine

With the recent retirement of Supreme Court Associate Justice Anthony Kennedy, all eyes turn to President Trump, Kennedy’s soon-to-be-appointed replacement and the battle that will follow. But it should not be forgotten as that battle begins that it was Justice Kennedy who authored the 2005 Granholm v. Heald Supreme Court decision that ushered in a sea change in the direct shipment of wine.

Kennedy wrote the opinion for the 5-4 majority in which the Court held, “that the laws in both States [New York and Michigan] discriminate against interstate commerce in violation of the Commerce Clause, Art. I, §8, cl. 3, and that the discrimination is neither authorized nor permitted by the Twenty-first Amendment.”

With Kennedy’s departure from the Court only three justices remain on the court from 2005: Justice Ruth Bader Ginsburg and Justice Stephen Bryer (both of whom voted with the majority) and Justice Clarence Thomas (who voted with the minority and penned a dissent in the case). The other members of the majority were Scalia and Souter.

Kennedy’s opinion was helpful to consumers who, after the ruling, began to see more wine shipped directly from wineries. However, the Granholm opinion left open the question of whether or not states could discriminate against interstate commerce where wholesalers and retailers were concerned. Subsequent to the 2005 ruling lower courts have ruled differently on this question.

Recently Marc Sorini, a close observer of court cases concerning alcohol wrote in an article that a number of recent cases “add incrementally to the pressure for the US Supreme Court to hear a case involving the application of the dormant Commerce Clause to a state alcohol beverage law regulating the wholesale-or retail-tier.”

How such a case would play out is very difficult to know. There is no guarantee that the two remaining justices that sided with the majority in the Granholm case would extend that ruling’s non-discrimination principle to the retail and wholesale tier. However, there is every reason to believe that Thomas would not given his vigorous dissent in Granholm. Additionally, Justice Sonia Sotomayor, appointed to the high court by President Obama in 2009, was a member of the majority in the 2nd Circuit Court of Appeals case (Swedenburg v Kelly)  that ruled states had the power to discriminate against interstate commerce where winery shipments were concerned. She was overruled by the Granholm court. The current remaining members of the court, Chief Justice John Roberts and Associate Justices Kagen, Alito, and Gorsuch, have more opaque views concerning the interplay of the Commerce Clause and the 21st Amendment.

Kennedy’s opinion in Granholm v. Heald has been a boon for attorneys. Despite what many believe about the non-applicability of the Granholm non-discrimination principle as applied to wholesalers and retailers, the retiring justice was entirely unclear on that point. And as Sorini points out, various courts have interpreted differently how Granholm might apply to state discrimination against wholesalers and retailers.

Two issues in particular have been most impacted by Kennedy’s vagueries: the question of residency requirements for wholesalers and retailers and the question of wine shipments from out-of-state wine retailers. Can a state impose a residency requirement on those applying for a wholesale or retail permit? Can states discriminate against out-of-state retailers by banning shipments from them while allowing it from in-state retailers?

Whether Kennedy’s retirement and his coming replacement will have a big impact on the court’s view of these questions is impossible to know. So, we wait.

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