"If at first you don't succeed, try, try again."
Attorney James Tanford has been trying to take down state prohibitions on out-of-state retailers shipping to their residents. Tanford's attempts to do just that have been rejected by the Fourth, Sixth and Eighth Circuits in cases he's brought previously.
Wednesday, Tanford, an attorney with Epstein Cohen Seif & Porter in Indianapolis, tried again. This time he made his pitch to the U.S. First Circuit Court of Appeals in Boston in a case involving Rhode Island. If Tanford is successful, he will create a split between the circuits, making it more likely the U.S. Supreme Court will take up the matter and possibly overturn its position that the 21st Amendment clearly gives states the right to regulate the importation of alcoholic beverages into their states.
(It apparently hasn't occurred to Tanford that the Supreme Court today has an originalist majority. That means they look to what a statute meant when it was written. The 21st Amendment gives the states vast power to regulate the importation and sale of alcohol into their borders, a position that was reinforced with one exception in the Granholm case in which the Court allowed producers to ship wines into states.)
Tanford may have found a sympathetic ear in U.S. Circuit Judge Bruce Selya, who told the attorney representating Rhode Island, “You can’t seriously dispute there’s a discriminatory effect. It’s clear that the law treats out-of-state retailers differently.”
When the Rhode Island attorney argued the state's rules were necessary to prevent tainted products and keep minors from accessing them, Tanford responded:
“There’s no evidence that any of these things has ever actually happened. The state said those problems might arise in the future, but speculations are not adequate. There must be evidence that there’s an actual problem. And if it were, you’d see it in other states.”
In addition to a general law prohibiting out-of-state direct sales, Rhode Island also has laws requiring out-of-state producers to sell to wholesalers and requiring all wine deliveries to be made by liquor company employees tather than by a common carrier such as FedEx or UPS.
Rhode Island's attorney said the general law is needed because “Rhode Island doesn’t have the resources or the authority to inspect producers in 49 other states.”
“We’re not talking about rum-runners in the Caribbean,” Tanford replied. “All these other states regulate and license the wineries.”
An attorney representing Rhode Island wholesalers said requiring shipments to wholesalers important so wholesalers can make sure the products aren't tainted.
“Do they test the wines?” Selya asked.
“No, but they could get word from the manufacturer,” said Skakel, who practices with Blank Rome in New York and represents the Rhode Island Responsible Beverage Alcohol Coalition.
“So why is the wholesaler essential in this?” the judge responded. “I don’t mean to be rude … but I don’t see any concrete evidence that this causes any problems. There are some theoretical problems but no evidence in the other states that there was a problem.”
Another circuit judge noted Rhode Island has an exception for people who order wine in person at an out-of-state winery. Rhode Island's attorney said because there's a face-to-face transaction at the winery. But it's not any different at point of delivery, the judge responded. "How do you distinguish that?"
"You're right," he responded and said eliminating the wholesale requirement might enable the retailer to avoid state taxes. The judge noted that other states collect taxes from out-of-state retailers, and said that proves it's not a problem.