'EVEN-HANDED' STATE POLICY
The U.S. Supreme Court recognized in Granholm v. Heald, 544 U.S. 460 (2005), that §2 "grants the states virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system."
In Granholm, Judge Wesley explained, the Court struck down exceptions to three-tiered systems in New York and Michigan that allowed in-state wineries to ship directly to consumers, but prevented out-of-state wineries from doing the same.
"Granholm validates evenhanded state policies regulating the importation and distribution of alcoholic beverages under the Twenty-first Amendment," Judge Wesley said. "It is only where states create discriminatory exceptions to the three-tier system, allowing in-state, but not out-of-state, liquor to bypass the three regulatory tiers, that their laws are subject to invalidation based on the Commerce Clause."
Judge Wesley called the lawsuit "a frontal attack on the constitutionality of three-tier system itself," which he said the Supreme Court in Granholm found "unquestionably legitimate."
He said New York's law "treats in-state and out-of-state liquor evenhandedly," and "thus complies with Granholm's nondiscrimination principle."
The reason, he said, was that all liquor, whether in or out of state, must pass through the system.
"Alcohol sold by in-state retailers directly to consumers in New York has already passed through the first two tiers -- producer and wholesaler -- and been taxed and regulated accordingly," he said.
Judge Calabresi issued a 17-page concurring opinion "to emphasize the unusual nature of judicial interpretation of the Twenty-first Amendment, a constitutional provision that, over 75 years, has been defined and redefined to accommodate changing social needs and norms."
Howard Graff of Dickstein Shapiro represented Charmer Industries.
"I think this is an important clarifying decision that was extremely well-reasoned," Graff said. "This particular case is the first of its kind to be decided with an appellate court dealing with cross-border shipping by retailers."
Peter E. Seidman of Milberg LLP represented the plaintiffs.
Assistant Solicitor General Richard P. Dearing represented New York state.