Cengage Advantage Books: Foundations of the Legal Environment of Business 3rd Edition by Marianne Jennings

تمرين 7

Granholm v. Heald 544 U.S. 460 (2005)
Whining about Wine
Facts
Both the regulations and statutory frameworks in New York and Michigan prohibit out-of-state wine producers from selling their wines directly to consumers there. In-state wineries can sell directly to consumers. Outof- state wine producers are required to pay wholesaler fees and cannot compete with in-state wine producers on direct-to-consumer sales. The direct-to-consumer sales avenue, especially through the Internet, has been a means for small wineries to compete.
Several out-of-state wine producers as well as consumers in both Michigan and New York filed suit in their federal districts challenging these laws that prohibit direct shipment. From different circuit decisions, Michigan and the out-of-state wine producers barred from New York appealed.
Judicial Opinion
KENNEDY, Justice
We consolidated these cases and granted certiorari on the following question: "Does a State's regulatory scheme that permits in-state wineries directly to ship alcohol to consumers but restricts the ability of out-of-state wineries to do so violate the … Commerce Clause …?"
State laws violate the Commerce Clause if they mandate "differential treatment of in-state and out-ofstate economic interests that benefits the former and burdens the latter." This rule is essential to the foundations of the Union. The mere fact of nonresidence should not foreclose a producer in one State from access to markets in other States. States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses.
Laws of the type at issue in the instant cases contradict these principles. They deprive citizens of their right to have access to the markets of other States on equal terms. The current patchwork of laws- with some States banning direct shipments altogether, others doing so only for out-of-state wines, and still others requiring reciprocity-is essentially the product of an ongoing, low-level trade war. Allowing States to discriminate against out-of-state wine "invite[s] a multiplication of preferential trade areas destructive of the very purpose of the Commerce Clause."
The discriminatory character of the Michigan system is obvious. Michigan allows in-state wineries to ship directly to consumers, subject only to a licensing requirement. Out-of-state wineries, whether licensed or not, face a complete ban on direct shipment. The differential treatment requires all out-of-state wine, but not all in-state wine, to pass through an in-state wholesaler and retailer before reaching consumers. These two extra layers of overhead increase the cost of out-of-state wines to Michigan consumers.
The New York regulatory scheme differs from Michigan's in that it does not ban direct shipments altogether. Out-of-state wineries are instead required to establish a distribution operation in New York in order to gain the privilege of direct shipment. This, though, is just an indirect way of subjecting out-of-state wineries, but not local ones, to the three-tier system. It comes as no surprise that not a single out-of-state winery has availed itself of New York's direct-shipping privilege.
We have no difficulty concluding that New York, like Michigan, discriminates against interstate commerce through its direct-shipping laws.
We affirm as to judgment of the Sixth Circuit Court of Appeals; reversed and remanded as to judgment of the Second Circuit Court of Appeals.
[NOTE: There was a strong dissent in the case that indicated that because of the Twenty-First Amendment the federal government (and the court) could not be involved in state liquor regulation.]
Case Questions
1. What do the Michigan and New York statutes require?
2. Why did the U.S. Supreme Court grant certiorari in the cases? Why do you think the court heard and decided the two cases together?
3. What is the economic impact of the statutes on wineries, both in- and out-of-state? On wholesalers? On consumers?