Supreme Court Should Clarify Granholm

A few months ago, a notable case in the 8th Circuit Court of Appeals once again affirmed that the 2005 Supreme Court decision of Granholm v. Heald only applies to producers of alcohol (i.e. wineries), as it relates to the Dormant Commerce Clause’s nondiscrimination principle, effectively overriding the 21st Amendment’s decree to allow states to have full reign over the regulation of alcohol.

In effect, Granholm stands for the principle that, while states are allowed a large amount of flexibility to regulate alcohol within their borders, that power is not unfettered, and states cannot craft regulations that favor commerce of in-state wineries at the expense of out-of-state wineries.

Since 2005, the next big question that has been asked (but not answered) is whether the decision applies only to wineries, or if the same principle should extend to distributors and retailers. So far, the Supreme Court has not taken a case to look at the question directly, and consequently, the Courts of Appeals have struggled to answer it. A few of the circuits have erred on the side of caution by not extending Granholm, instead relying on decades of precedent on the side of the 21st Amendment’s broad leeway that states enjoy.

Each circuit, though, in making these rulings, expresses that the answer is unclear, and that the high court should ultimately weigh in.

The public at large may not realize this, but the most likely instances where the Supreme Court will take a stance on a topic is when derisive decisions at the lower court levels exist, such that the Court is forced to grant cert and address the issue. Therefore, it would be nice if a few circuits (or one of the more prominent ones) would rule oppositely than the way the 8th Circuit did here, which would create a circuit split.

The Court almost always grants questions to resolve circuit splits, desiring a uniform federal law. In order to do this, large retailers and/or distributors will need to challenge state laws in federal court in the circuits where the question has not yet been answered.

(This posting is not to be construed as legal advice. If any of the information in this posting relates to legal issues that you are facing, you should contact an attorney.)

© All rights reserved Kevin Guidry 2014.

This entry was posted in Direct to Consumer Wine Sales, Distributors, Federal Regulations, Granholm v. Heald, Regulatory/Administrative Law, Wine Sales/Marketing. Bookmark the permalink.

2 Responses to Supreme Court Should Clarify Granholm

  1. Ah, clarification for Granholm. That would be nice, wouldn’t it? But don’t you think, as so many other attorneys have told me, that they don’t want the Surpreme Court to make things more clear because it will overturn or limit Granholm?

    • Kevin Guidry says:

      True. I see clarification and pulling back on it as different things, but certainly the Supreme Court could do both or either. The Court could answer the question about how Granholm applies to non-producers, and leave the doctrine untouched otherwise. Such would be a very narrow holding, which the Court does at times. Or, the Court could pull back on the doctrine and do something that guts it or even overturns it. It has been known to do that as well. But I will say that when they do the latter, they don’t do it lightly. Granholm is still not even 10 years old, so I would be surprised if they overturned it now. Thanks for the comment.

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