WSWA Backs Tennessee Law in Residency Case Against Total Wine

November 21, 2018
Shaken News Daily

The Wine & Spirits Wholesalers of America (WSWA) has filed an amicus brief in the highly anticipated Supreme Court case of Tennessee v. Byrd, for which oral arguments could begin in January. The case concerns Total Wine & More’s challenge to Tennessee’s residency requirement for beverage alcohol retailers, but could have far-reaching implications for wineries, wholesalers, retailers, and consumers. The WSWA is backing the Tennessee law, arguing for states’ authority to regulate beverage alcohol free from the constraints of the Constitution’s Commerce Clause, which governs interstate commerce.

Total Wine challenged Tennessee’s residency requirement successfully on Commerce Clause grounds in both federal district and appeals courts, and opened its first store in Knoxville this summer. But Tennessee’s Wine and Spirits Retailers Association (TWSRA) petitioned the Supreme Court and won a hearing on the matter. The TWSRA said the case provides an opportunity for the court to clarify the legality of such residency requirements, which are in effect in at least 21 other states, as well as other effects stemming from the landmark Granholm v. Heald decision that declared it illegal for states to discriminate between in-state and out-of-state wineries when it comes to direct-to-consumer wine sales. The TWSRA asserted that a Supreme Court decision “will provide much needed guidance to courts that have struggled to understand Granholm’s implications for other restrictions that states impose on retailers and wholesalers.”

In its brief, the WSWA argues in favor of Tennessee’s authority to impose a residency requirement, stating, “As the history of the Twenty-first Amendment demonstrates, apart from repealing Prohibition, the whole point of the
Amendment was to create an exception to the normal operation of the Commerce Clause. Thus, it has long been understood that the Amendment reserves to the States power to impose burdens on interstate commerce in intoxicating liquor that, absent the Amendment, would clearly be invalid under the Commerce Clause.”

The WSWA brief continues, “In this setting, a party who challenges a state liquor regulation as ‘discriminatory’ in violation of the Commerce Clause is, as a practical matter, advancing a claim the Amendment was expressly designed to extinguish … Like many states, Tennessee has chosen to include durational-residency requirements as core components of its liquor distribution system. These requirements … fall squarely within the zone of state regulatory authority protected by the Twenty-first Amendment from scrutiny under the dormant Commerce Clause.”

On the other side, amicus briefs supporting Total Wine’s challenge to the Tennessee residency requirement are due in the coming weeks. The National Association of Wine Retailers has announced that it will be among those filing briefs, noting, “Though the case is directly about durational residency requirements for wine retailers in Tennessee, it is also very likely to answer whether the same non-discrimination principles outlined in the 2005 Granholm v. Heald case also apply to wine retailers.” Specifically, the court could address whether or not state bans on interstate retailer shipping are constitutional, taking on a hot-button topic in the industry.