January 27, 2021

Volume XI, Number 27

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Supreme Court Denies Certiorari in Challenge to Michigan’s Alcohol Delivery Law

On Monday the Supreme Court addressed—or, perhaps more to the point, chose not to address—an issue close to the hearts of many in the midst of a pandemic: home delivery of fine wine and spirits.  The Court declined to review the Sixth Circuit’s decision in Lebamoff v. Whitmer, which upheld the State of Michigan’s alcohol delivery laws in the face of a dormant Commerce Clause challenge.

Like many states, Michigan employs a “three-tier system” for alcohol distribution.  State-licensed alcohol producers and manufacturers (first tier) sell their products to licensed wholesalers (second tier), who in turn distribute the product to licensed retailers (third tier).  Participants in each tier are heavily regulated by the State, which retains the authority to impose price controls, taxes, and other health-and-safety regulations.  By requiring all alcohol entering the State to pass through this three-tier system, Michigan ultimately controls the amount of alcohol sold within its borders.

In 2016 Michigan enacted a statute permitting licensed retailers (the third tier) to offer home delivery.  While consumers undoubtedly welcomed this development (particularly on those harsh winter weekends when they were facing—and losing to—the Ohio State Buckeyes), retailers in neighboring states apparently were not impressed.  An Indiana retailer, Lebamoff Enterprises, sued the State, arguing that the statute violated the dormant Commerce Clause by allowing in-state—but not out-of-state—retailers to deliver alcohol to Michigan residents.

The Sixth Circuit rejected Lebamoff’s argument this past April, holding that the statute was a valid exercise of the State’s authority to regulate the importation of alcohol under the Twenty-first Amendment. Writing for the Court, Judge Sutton explained that “when faced with a dormant Commerce Clause challenge to an alcohol regulation,” the relevant question is simply “whether the law can be justified as a public health and safety measure or on some other legitimate nonprotectionist ground.”  Michigan’s decision to limit home delivery to licensed retailers readily satisfied that test, as it ensured such sales would continue to take place within the three-tier system (i.e., from a licensed retailer who purchased the product from a licensed wholesaler).  Plaintiff’s alternative, on the other hand, would “create a sizeable hole in the three-tier system” by allowing alcohol into the State that “passes through out-of-state wholesalers or for that matter no wholesaler at all.”  As Judge Sutton pointed out, the difference is not merely theoretical.  States impose vastly different levels of taxation and regulatory burden on the wholesale tier.  Allowing out-of-state liquor into the State without passing through Michigan’s wholesale tier “leaves too much room for out-of-state retailers to undercut local prices and to escape the State’s interests in limiting consumption.”

For those with an interest in alcohol control law and the Twenty-first Amendment, the full opinion is definitely worth a read.  The Supreme Court’s decision to deny certiorari ensures that the standards described in the opinion will continue to govern similar challenges in the Sixth Circuit.

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© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 13
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Scott Coyle Government Investigations Litigation Attorney Squire Patton Boggs Cincinnati, OH
Senior Attorney

Scott Coyle’s practice focuses on government investigations, white collar criminal defense and appellate litigation. He has successfully represented clients in high-profile criminal investigations and administrative proceedings and has extensive experience drafting briefs in state and federal appellate courts. He also advises clients on compliance with US trade sanctions programs and the Foreign Corrupt Practices Act (FCPA).

Prior to joining us, Scott was a litigation associate with full-service law firms in Washington DC and San Francisco. He represented elected officials and...

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Benjamin C. Glassman Trial Attorney Squire Patton Boggs Cincinnati, OH & Columbus, OH
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Former US Attorney Benjamin Glassman helps clients with some of their most difficult and sensitive problems -- whether by providing strategic advice, leading internal investigations or representing them at trial or on appeal. He divides his time between the Cincinnati and Columbus offices.

Ben served as the US Attorney for the Southern District of Ohio from 2016 to 2019, working in both Democratic and Republican administrations. As the chief federal law enforcement official for the more than 5 million residents of Ohio’s southern 48 counties, he oversaw the work of approximately 65...

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