Sarasota Wine Mkt., LLC v. Schmitt

987 F.3d 1171

SARASOTA WINE MARKET, LLC, et al., Plaintiffs - Appellants

v.Eric S. SCHMITT, Attorney General of Missouri, et al., Defendants - Appellees

Wine & Spirits Wholesalers of America, Inc.; American Beverage Licensees ; National Beer Wholesalers Association; Missouri Beer Wholesalers Association, Amici on Behalf of Appellees

No. 19-1948

United States Court of Appeals, Eighth Circuit.

Submitted: September 24, 2020

Filed: February 16, 2021

Rehearing and Rehearing En Banc Denied March 24, 2021

Robert D. Epstein, Kristina Marie Swanson, Epstein & Cohen, Indianapolis, IN, Alan S. Mandel, MANDEL & MANDEL, Saint Louis, MO, James Alexander Tanford, Epstein & Cohen, Bloomington, IN, for Plaintiffs-Appellants.

Zachary Bluestone, Assistant U.S. Attorney, U.S. Attorney's Office, Eastern District of Missouri, Saint Louis, MO, Dean John Sauer, Attorney General's Office, Jefferson City, MO, Katherine S. Walsh, Attorney General's Office, Saint Louis, MO, for Defendants-Appellees.

Jacob Hegeman, Jo Moak, Wine & Spirits Wholesalers of America, Scott Allen Keller, Lehotsky & Keller, Jeremy Evan Maltz, Baker & Botts, Washington, DC, for Amicus on Behalf of Appellee Spirits Wholesalers of America, Inc.

Scott Allen Keller, Lehotsky & Keller, Jeremy Evan Maltz, Baker & Botts, Washington, DC, for Amicus on Behalf of Appellee American Beverage Licensees.

Brandt F. Erwin, Michael Dean Madigan, Madigan & Dahl, Minneapolis, MN, Paul Edward Pisano, Alexandria, VA, for Amicus on Behalf of Appellee National Beer Wholesalers Association.

Brandt F. Erwin, Michael Dean Madigan, Madigan & Dahl, Minneapolis, MN, for Amicus on Behalf of Appellee Missouri Beer Wholesalers Association.

Before LOKEN, SHEPHERD, and ERICKSON, Circuit Judges.

LOKEN, Circuit Judge An amendment to the Missouri Liquor Control Act permits licensed in-state retailers to deliver alcohol directly to Missouri consumers. This is an action by four plaintiffs -- Sarasota Wine Market LLC, a Florida-licensed wine retailer; Heath Cordes, its owner-operator; and Michael Schlueter and Terrence French, two Missouri residents who would like to have direct delivery of wines not sold in the State (collectively, "Sarasota") -- against three Missouri officials acting in their official capacities -- Attorney General Eric Schmitt; Dorothy Taylor, Supervisor of the Missouri Division of Alcohol and Tobacco Control;¹ and Governor Michael Parson (collectively, "the Officials"). Sarasota seeks prospective relief, alleging that Missouri's liquor control laws, by preventing out-of-state retailers from shipping directly to Missouri consumers, discriminate against interstate commerce and citizens of other States in violation of the "dormant" Commerce Clause, art. I, § 8, cl. 3, and the Privileges and Immunities Clause, art. IV, § 2, cl. 1. The district court² dismissed Sarasota's Amended Complaint, concluding it failed to state viable claims under the Commerce Clause or the Privileges and Immunities Clause when construed together with Section 2 of the Twenty-first Amendment. Sarasota appeals. Concluding their claims are foreclosed by Supreme Court and circuit precedents that presently govern these issues, we affirm.

I. Background

Regulation by the States and the federal government of the manufacture, sale, and transportation of alcoholic beverages has a long, turbulent, controversial history, a history that continues to provoke disagreement among Justices of the Supreme Court and others. See generally Tenn. Wine & Spirits Retailers Ass'n v. Thomas, ––– U.S. ––––, 139 S. Ct. 2449, 2462-70, 204 L.Ed.2d 801 (2019), and 2476-82 (Gorsuch, J., dissenting); Granholm v. Heald, 544 U.S. 460, 476-86, 125 S.Ct. 1885, 161 L.Ed.2d 796 (2005), and 498-514 (Thomas, J., dissenting). Our task of course is to apply the law as it exists today, not to take sides on these historical debates, but an understanding of this history is important in framing the issues we must decide. Cf. Arnold's Wines, Inc. v. Boyle, 571 F.3d 185, 192 (2d Cir. 2009) (Calabresi, J., concurring); Bridenbaugh v. Freeman-Wilson, 227 F.3d 848, 853 (7th Cir. 2000).

The Eighteenth Amendment, ratified in 1919, was a rather brief experiment with a nationwide ban on the "manufacture, sale, or transportation" of alcohol. The Twenty-first Amendment, ratified in 1933, ended Prohibition. Section 1 of the Twenty-first repealed the Eighteenth Amendment. Section 2, which is central to the issues before us, provides: "The transportation or importation into any State ... for delivery or use therein of intoxicating liquors, in violation of the laws thereof , is hereby prohibited." (Emphasis added.) Acting in response to the Twenty-first Amendment, Missouri promptly enacted the Liquor Control Act. 1933-34 Mo. Laws, Extra Session, pp. 77-95, now codified at Mo. Rev. Stat. Ch. 311. The Act is "a comprehensive scheme for the regulation and control of the manufacture, sale, possession, transportation and distribution of intoxicating liquor."

John Bardenheier Wine & Liquor Co. v. City of St. Louis, 345 Mo. 637, 135 S.W.2d 345, 346 (1939).

Prior to Prohibition, some States enacted laws adopting a "three-tiered distribution model." A primary purpose of this model is to prevent a return to "the English ‘tied-house’ system" in which alcohol producers monopolized distribution from producer to consumer, a system widely perceived as causing or at least contributing to the social ills of excess alcohol consumption and consumption by minors. See Tenn. Wine, 139 S. Ct. at 2463 n.7. Under the three-tiered model,

the producer sells to a licensed in-state wholesaler, who pays excise taxes and delivers the alcohol to a licensed in-state retailer. The retailer, in turn, sells the alcohol to consumers, collecting sales taxes where applicable.

Arnold's Wines, 571 F.3d at 187. A central feature of the separated tiers is to prohibit a member of one tier from having a financial interest in a member of a higher or lower tier. In the Liquor Control Act, Missouri -- like many States -- adopted a version of the three-tiered distribution model in implementing its authority under Section 2 of the Twenty-first Amendment. See S. Wine & Spirits of Am., Inc. v. Div. of Alcohol & Tobacco Control, 731 F.3d 799, 802 (8th Cir. 2013).³

Though there are no longer completely "dry" States, some States severely limit liquor sales and distribution by private individuals and companies. In Utah, for example, the State is the sole importer and main retailer of all alcoholic products other than light beer; in Michigan, the State is the only wholesaler for liquor but not for wine and beer.⁴ Missouri, like most States, permits private retailers to sell alcohol to the public if they qualify for the appropriate license and comply with Missouri's three-tier restrictions. See Mo. Rev. Stat. §§ 311.050, 311.060.1. Among other qualifications, an individual licensee must be a "qualified legal voter and a taxpaying citizen of the county, town, city or village," while a corporate licensee's "managing officer" must be a "qualified legal voter and taxpaying citizen of the county, town, city or village." Mo. Rev. Stat. § 311.060.1. In addition, a licensed retailer must operate from physical premises in Missouri named in the license, see Mo. Rev. Stat. §§ 311.220.3, 311.240.3 ; and must purchase liquor exclusively from Missouri-licensed wholesalers, Mo. Rev. Stat. § 311.280.1.

In 2007, Missouri amended the Liquor Control Act to allow in-state and out-of-state wine producers to ship wine directly to Missouri consumers. See Mo. Rev. Stat. § 311.185. A later amendment -- a principal focus of Sarasota's broad challenge in this case -- allows licensed Missouri in-state retailers to ship wine and other alcoholic beverages directly to consumers, provided the sale is made in-person, online, or by phone at the retailer's licensed premises. See Mo. Rev. Stat. § 311.300.2 ; Mo. Div. of Alcohol & Tobacco Control, Guidelines for Retailers Who Want to Deliver Alcohol (2020), citing Mo. Rev. Stat. § 311.240.3 and Mo. Code Regs. Ann. tit. 11, § 70-2.140(11).⁵

Sarasota Wine Market is a Florida-licensed wine retailer doing business as Magnum Wine and Tastings in Sarasota, Florida. Sarasota Wine has received orders on its website for direct shipments to Missouri residents. It declines these sales because it is an out-of-state retailer with no physical presence in Missouri, and Missouri only permits direct wine shipments by licensed in-state retailers. Missouri residents Schlueter and French have attempted to order wines that Missouri retailers do not carry directly from out-of-state retailers like Sarasota Wine, but these retailers refuse to fulfill these orders because Missouri law prohibits direct shipments to Missouri consumers. Sarasota Wine and Cordes have not applied for a Missouri retailer license because they are not willing to open a physical store in Missouri and purchase wines sold to Missouri consumers from licensed Missouri wholesalers.

Sarasota alleges the Chapter 311 restrictions on out-of-state retailers shipping wine directly to Missouri consumers, including the residency and physical presence license requirements, violate the Commerce Clause because they discriminate against interstate commerce and constitute protectionism of local businesses. In addition, Cordes individually alleges that Missouri's statutory scheme violates the Privileges and Immunities Clause because Cordes is a Florida resident being denied a retailer license needed to practice his trade as a wine merchant in Missouri. The Officials argue that these regulations are permissible components of a three-tiered system that the Supreme Court has blessed as "unquestionably legitimate" under Section 2 of the Twenty-first Amendment. Granholm, 544 U.S. at 488-89, 125 S.Ct. 1885. In addition, they argue, Cordes's claim must fail because selling alcohol is not a fundamental right protected by the Privileges and Immunities Clause, and, in any event, the restrictions further...