Podcast: The Tennessee Wine Case and the 21st Amendment

Jeffrey Rosen: [00:00:00] I'm Jeffrey Rosen, president and CEO of the National Constitution Center, and welcome to We the People, a weekly show of constitutional debate. The National Constitution Center is the only institution in America chartered by Congress to increase awareness and understanding of the Constitution among the American people and on this episode we explore the pending Supreme Court case, Tennessee Wine and Spirits Retailers Association against Blair, and in the course of that we will unpack the fascinating and often forgotten texts in the history of the twenty-first amendment. Joining us to dive into the technical, but completely fascinating, constitutional issues surrounding not only the 21st amendment for a special Valentine's Day episode, but also the dormant Commerce Clause to end any Valentine's like celebrations and the Privileges and Immunities Clause which is always an occasion for celebration and champagne toasts, are two of America's leading Supreme Court Advocates have been especially involved in the case and we're honored to have them. Michael Bendis is a senior attorney with the Institute for Justice. He litigates in courts nationwide, in court cases involving freedom of speech, economic liberty and educational choice and he directs the Institute for Justice's National Food Freedom Initiative. Michael was the counsel of record in this case for the respondents ,the Ketchum family. Michael, thank you so much for joining.

Michael Bindas: [00:01:31] Thank you for having me, Jeff.

Rosen: [00:01:33] And John Nieman is a member of the Maynard Cooper General litigation group and chair of the firm's appellate practice group. He focuses on constitutional and regulatory litigation and he was the former solicitor general of the state of Alabama. John filed an amicus brief in support of petitioners in this case, on behalf of the center for alcohol policy. John, it's great to have you with us.

John Neiman: [00:01:55] Thank you very much, jeff. Glad to be here.

Rosen: [00:01:57] Michael you argued this case. Tell us about the facts. Who are Doug and Mary Ketchum? What is their claim in the state of Tennessee? And what is the texts in history say about whether or not they should have to live in the state of Tennessee for two years before they can operate a liquor store?

Bindas: [00:02:17] Well, Doug and Mary Ketchum will go back a couple of years here back into to just that 2016 were living in Salt Lake City, Utah. They have a daughter in her 30s who is severely disabled. She is a quadriplegic. She has severe cerebral palsy and she suffered a lung collapse from the temperature inversion in the Salt Lake Valley. Doug and Mary were advised by their doctor at that point that they needed to leave the Salt Lake Valley. The air quality was not good for their daughter. She wasn't expected to live much longer. And so they started looking for an opportunity outside of Salt Lake somewhere that would be a better environment for their daughter Stacy but also an economic opportunity. The opportunity that would allow them to care for her and also enable them to support their family. And so they found this opportunity in Memphis, Tennessee. It was a retail liquor shop that was coming up for sale. And they thought this would be an excellent opportunity would give them the flexibility. They needed to care for Stacy, while also enabling them to support themselves. And so with the intention of purchasing the store, using most of their retirement funds, they applied for a liquor license in Tennessee. And that's when things started to get interesting. Tennessee has a law on the books pertaining to the licensing of retail liquor establishments retail liquor stores. These are what you would typically consider package stores. In order to get a license to own and operate one of these stores you have to have been a resident of the state for two years. You can then get a license- that license expires after one year. And then to renew it, you have to have been a resident of the state for 10 years. So you do the math here- it doesn't quite add up. And that's the very purpose of this- its to prevent outsiders, like Doug and Mary, from coming into the state and opening a store that would compete with existing retail stores in the state. Doug and Mary knew about this law before they moved out there, but they weren't concerned because the Tennessee attorney general had twice opined in 2012 and 2014 that this law was unconstitutional in violation of the Commerce Clause of the United States Constitution, and because of that the state had not been enforcing it for several years. Doug and Mary were assured it would not be a problem and so they applied for the license and they were about to get it around the same time Total Wine, the national retailer, was also applying for a license in Tennessee. And they likewise  were owned by out-of-state persons, but they were assured as well that this residency requirement would not be a problem for them because the state was not enforcing it. That was all fine. The licenses were being processed when lo and behold the Tennessee Wine and Spirit Retailers Association threatened to sue the state if it issued licenses to the Ketchum's and to Total Wine and at that point the State, not sure what it should do, went to court and filed an action in State Court basically asking a judge to tell the State whether or not these residency requirements were constitutional and the the real underlying question there was whether or not these Provisions violate the Commerce Clause of the United States Constitution, which prohibits States from discriminating against out-of-state entities, industries or instead whether these laws were justified by the 21st Amendment of the Constitution which gives States certain power over the regulation of alcohol in in their borders. And the case was removed to Federal Court. The District Court held that these laws were unconstitutional and violate the Commerce Clause. That decision was affirmed by the Sixth Circuit Court of Appeals and at that point the Retailers Association asked the US Supreme Court to take up the case, which it did and the case was argued this past January, January 16th.

Rosen: [00:01:34] Thank you for setting us up. So well and 14 up the conflict between the Commerce Clause and the twenty-first amendment. John, can you describe the arguments about but why the Tennessee law allegedly violates the Commerce Clause or what's known as the dormant Commerce Clause which prohibits States from discriminating against out-of-staters. Tell us what the dormant Commerce Clause is and then tell us about the claim that the 21st amendment gives states such broad authority to regulate alcohol that it may represent a kind of exception to the dormant Commerce Clause prohibition on out-of-state discrimination and then tell us how you think that conflict between the two Clauses should be.

Neiman: [00:02:18] Sure. Well, I would say a couple of things about the facts of the case and the issues that are in front of the court. One really important component of all this is that the 10-year requirement for renewals for licenses is almost certainly not in front of the Court at this point in time. The petitioners in this case, the Tennessee Wine Retailers, did not seek to defend that component of the law. They did not see the Supreme Court's review of the Sixth Circuit's decision on the 10-year requirement and instead limited the question presented to whether the the two-year durational residency requirement for persons or entities that want to sell basically hard liquor in Tennessee violates the dormant Commerce Clause. That I think that reality will be very important in terms of the way that the Court decides the case and there are certainly issues about whether the Court will address the 10-year component at all, and I'm happy to talk about that in more detail a little bit later. The other component of the facts that I think is really important to understand at the outset is I don't think that it's accurate to say that the purpose of this Tennessee law was simply to prevent outsiders from competing with in-state retailers. There was a remarkable moment in the oral argument of this case in January when Justice Breyer, who is hardly thought of as sort of the history Hawk on the Court, stopped Total Wines Council Carter Philip and said effectively we have a ton of history here militating in favor of the state's ability to do precisely what it is done here with respect to a two year requirement. Justice Breyer is is not thought of as a Justice who focuses much on history. He tends to ask questions about the practical aspects of the law and pragmatic issues. So, it was quite a remarkable moment when Justice Breyer almost played the role of a Justice Scalia or Justice Thomas and said we need to focus on the history here and I think a full understanding of the facts requires us, if Justice Breyer is sort of like Doc Brown in Back to the Future, to get into the Constitutional DeLorean with Justice Breyer and go back to two really, really important dates that tell us something about the meaning of the twenty-first amendment and also its interaction with the dormant Commerce Clause. Those two dates are 1919 on the one hand and 1933 in the other. So why is 1919 important? Well, in the years leading up to that the United States had been struggling with the question of what to do about alcohol. It's kind of difficult from our vantage point in 2019 to conceive of how significant a problem alcohol was. Part of the reason why it was such a problem before 1919 is that many of the economic actors, many of the retailers who were controlling alcohol distribution in the country, at that time didn't have ties to local communities. They were focused solely on profit motives and boosting consumption by individuals and not focused on the problems that excessive drinking can uniquely have on local neighborhoods and local communities. Many states at that time responded to those economic actors by experimenting with all out prohibition, but something stood in the way and that was a little thing that you've already alluded to, Jeff, called the dormant Commerce Clause. Everybody in 1919 understood that states had virtually complete control over the way that alcohol would be distributed within their states. But under the Supreme Court's understanding of the dormant Commerce Clause at that time, it was believed that states had no control over alcohol that was shift into a state from another state. In other words, the understanding of the dormant Commerce Clause was States could not regulate alcohol in a way that affected interstate commerce. That would be a matter solely for Congress. So you had Court decisions particular from the Supreme Court holding as much, preventing States from keeping other states from shipping alcohol into their borders. So it created this unworkable system in which states on the one hand were trying to effectuate Prohibition within States or at least heavily regulate alcohol and, on the other hand, they couldn't do anything about alcohol that was coming into their states from out of state. So Congress enacted a couple of laws, federal statutes, that made clear that states could in fact turn off the TAPS in this regard and could regulate the flow of alcohol into their border, so long as they treated out-of-state alcohol the same as in-state alcohol. So that gives us the 1919 the first really important year for the purposes of the facts. In this case, I think in that year the American people said even the system that Congress had effectuated where States had some control over the interstate flow of alcohol wasn't enough. Americans said we need a national prohibition on the use of alcohol and that led to the 18th Amendment, which was ratified 100 years to the date before the parties ended up arguing at the US Supreme Court the case at hand. So what happened next over the 14 years that followed, it became apparent that the 18th Amendment had been a mistake. It wasn't that people all of a sudden decided that alcohol didn't cause a grave social problems, far from it, but it became apparent that prohibition itself wasn't feasible. People were circumventing the law through speakeasies, through organized crime and the like, so a national consensus developed around two ideas. The first is prohibitions are not going to work, but the second is that if we are going to allow alcohol, we need to regulate the heck out of it. We need to have sort of a heavy duty type of regulation that we don't see it from any other legal commodity. So that brings us to the second really important date for historical background purposes here. That's 1933. In that year the people of the United States take what is an extraordinary step of amending the Constitution, something that seems very difficult to do today. That amendment was the 21st amendment and that Amendment did two things. It effectuated the two ideas that I just discussed. At first it repealed the 18th Amendment, but it also restored the state's powers to exercise virtually complete control over the liquor markets within their particular localities. So in the wake of that Amendment, which effectively immunized State alcohol regulation from scrutiny under the dormant Commerce Clause, the States at that time tried to regulate alcohol in one of two ways. One is that they develop government-owned monopolies that would sell the alcohol themselves. We still see remnants of those monopolies in ABC Stores, which I believe control the alcohol sale. For example the sale of hard liquor at least in Pennsylvania, the state you're in, Jeff. They also control the sale of alcohol in the state I'm talking to you from, Alabama. They also control the sale of hard liquor in the state the Ketchum's lived in before they moved to, Tennessee, Utah. So that was one option States employed. Another option was to license private companies to sell alcohol for the state, but states were very careful in light of all the problems that surrounded alcohol distribution before prohibition to limit the number of licenses that would be available and also to make sure that they were very careful about whom they granted licenses to. So, nearly all of the states that adopted a licensing system at the time decided that among the qualifications for a retailer would be a residency requirement, not unlike the two-year durational residency that Tennessee imposed when it decided to go wet in 1939. So all those laws were in place for many, many years before we got to 2016 and the  specific facts that gave rise to this case developed and the floor the Ketchum's company, along with Total Wine, this company that basically wants to become the Walmart of alcohol throughout the United States, challenge these provisions as violating the dormant Commerce Clause, even though they had been around for decades .

Rosen: [00:00:00] Thank you very much for taking us into the Constitutional DeLorean, as you put it, with Justice Breyer and for that great history lesson. As you know, Justice Breyer said in the oral argument today 34 states, according to my count, have rules just like this except maybe not the same number of years. So, Michael, what to make of that history and what has the court said about those 34 laws with residency requirements in the past? And what is the argument now before the court about how the text and history of the twenty-first amendment don't create an economic protectionism exception to the dormant Commerce Clause, as has one of the justices called it, but instead allow the regulation? And just in the interest of putting the text on the table because we love to do that on We the People, I will read the text of Section 2 of the 21st Amendment: The transportation or importation into any state, territory, or possession of the United States for delivery or use therein of intoxicating liquors in violation of the laws thereof is hereby prohibited.

Bindas: [00:01:03] And the text is certainly the first place to start in understanding  the amendment ,Jeff. As Justice Alito and Justice Kavanaugh return to the text several times during the argument and focused on what it actually prohibits and that is the transportation or  importation into a state of alcohol in violation of its laws. And that is what the amendment was designed primarily to do. If a state wanted to remain dry after the repeal of prohibition, it needed to ensure its ability to number one prohibit the production and sale of alcohol within the state, but also prevent out-of-state alcohol from coming in and that's what the amendment was primarily designed to do. That's a much different thing than enacting restrictive discriminatory restrictions on who can do business within the state. Now recall the ketchum's are now residents of the state of Tennessee. They have resided there since 2016. Yet, they are still being told that they cannot own and operate a liquor store in the state because they haven't lived there sufficiently long enough in the eyes of the Tennessee Wine and Spirit Retailers Association and presumably the State. Now, let's let's look at that restriction in comparison to some of those other 34 examples that that you spoke of before. Tennessee is on the extreme end of this type of restriction. One thing I didn't mention when I when I set this up at the outset, is that when it comes to a corporate applicant someone like Total Wine or a FloorInvestments, the Ketchum's company, those two and ten-year residency requirements apply, not just to the individual applicant, they apply in the case of a corporate applicant to every officer, director, and stockholder of the corporation. There are to be sure residency requirements in other states, but when you have the combination of the two and ten year requirements, that extreme durational period, as well as this 100 percent stockholder officer director component, Tennessee really is an outlier here. Now, what does the fact that these provisions exist in other states mean? It doesn't mean anything and so far as whether or not they're constitutional obviously, the existence of laws, including laws that that exist in a number of states throughout the country, is no guarantee that those laws are constitutional. Moreover, even if there was some legitimate justification for those types of laws in the 1930s, right as prohibition was repealed, any such justification no longer exists. Presumably these were enacted because back in the 1930s you didn't have such things as computerized background checks, where by the licensing Authority can very quickly assess the background of an applicant and ensure that they don't have any kind of criminal history or anything like that. We have that now, obviously, that was not available in the 1930s. And so even if you assume that the existence of these types of laws speaks to their constitutionality, the fact that they existed in the 30s speaks to their constitutionality, things have changed, circumstances have changed and the Supreme Court has repeatedly made clear that due to changed circumstances, a law that was constitutional at one point in the past can become unconstitutional. And so again, the existence of these laws, the fact that they were around in the early 30s, really doesn't have much to say about whether they are constitutional today. What does speak to their constitutionality today is the Supreme Court's most recent dive into this area that came back in a case called Granholm vs. Healed, back in 2005 in which the Supreme Court held that the twenty-first amendment does not somehow save or immunize a law that discriminates against out-of-state economic interests. In that case, you had a law that allowed or two laws, one in New York  and one in Michigan, that allowed in-state wineries to skip directly to Consumers, but that prohibited out-of-state wineries from doing the same. Essentially, wineries in-state were allowed to act as their own retailers and send directly to consumers, but those from outside the state could not do the same. The Supreme Court held that that violated the dormant Commerce Clause because it blatantly discriminated against out-of-state economic interests. And the court went through this extensive history, the same history that John just recounted, and concluded that the 21st amendment was not meant to somehow act as a blank check enabling the states to discriminate against out-of-state actors. And in that light, it tried to reconcile the 21st amendment and the Commerce Clause and it held squarely that the non-discrimination principle of the Commerce Clause is not somehow upended by the 21st amendment, and likewise, that the twenty-first amendment cannot save a law that discriminates against interstate commerce. And so we're confident that the Court is going to apply Granholm very straightforwardly here and invalidate Tennessee's requirements, which do exactly the same thing. They discriminate against out-of-state applicants as well as newly arrived in state applicants, like Doug and Mary Ketchum, and the fact that there are some other states that have these laws on the books is neither here nor there, that doesn't mean they're constitutional. They're not and we're sure that the Supreme Court is going to hold as much.

Rosen: [00:00:02] Thank you so much for that. The Grandholm case, which you mentioned was a five to four decision with a really unusual line-up. It was Kennedy joined by Scalia, Souter, Ginsburg, and Breyer and the dissent was Stevens, O'Connor, Thomas, and Rehnquist suggesting the cross- partisan nature of this case. John, what is the response to Michael's suggestion that there the 21st amendment doesn't create an economic protectionism exception to the dormant Commerce Clause? Justice Kagan, during the argument, said wouldn't it be a better idea if we said the dormant Commerce Clause does apply and then let the state come back and say we can meet that test: we have real health and safety concerns and here are laws well-tailored to address those concerns. In other words, what are the actual interests aside from economic protectionism that the state is trying to achieve here and could it assert those interests under the dormant Commerce Clause?

Neiman: [00:00:57] Yeah, Jeff, I think it's really important to emphasize that the state here is not claiming, or the states that support the petitioner as well as the petitioner itself, they are not claiming that there is an economic protectionism exception to the dormant commerce clause or they're certainly not conceding that the law at issue here is protectionist. These laws had a long pedigree precisely because they were designed as of 1933 in the repeal of prohibition to make sure that the crisis of 1919 did not recur again. So in addition to the states that used licenses to use a licensing system to regulate the retail sale of hard liquor, at that point in time, almost every state adopted something called  the three-tier system. This is a system in which the three tiers of alcohol distribution and production, wholesaling / distribution, and retailing are separate. If you are a manufacturer of alcohol, generally, you cannot be a distributor of alcohol. Likewise, if you are a distributor of alcohol or if you're an owner or a wholesaler who has a fleet of trucks that ships alcohol from a producer to a particular retailer, you can't own either part of the producer or any of the retailer as well. Each one of those tiers, well, particularly the wholesale and the retail tier, almost inherently have to be physically present in a state for the system to work and the Court has repeatedly recognized that a physical presence requirement for wholesalers and retailers is unquestionably legitimate in the Grandholm decision that you and Michael just mentioned. Justice Kennedy in writing the majority opinion went out of his way to say that the three-tier system is unquestionably legitimate. Justice Kennedy quoted a Justice Scalia concurrence from an earlier case called Healy, in which Justice Scalia said, of course, it would be constitutional for a state to require all alcohol to be funneled through in- state wholesalers. So there's no doubt that the Constitution in the twenty-first Amendment accountance a system in which states require alcohol to be funneled through in-state entities entities that are physically present in the state. The problem that the respondents counsel, Total Wines, counsel at oral argument faced was a barrage of questions from justices who said look and light up a history in light of all these decisions where we've said this little presence is unquestionably legitimate and and unquestionably constitutional. How can your view of what Granholm held, in other words that there can be no laws that make any distinctions between out-of-state and in-state business be a plausible one, and Total Wine had no response at all. The reason is that Granholm did not hold that all laws that make distinctions between out-of-state and in-state businesses that relate to alcohol violate the dormant Commerce Clause and are not shielded from the 21st amendment. What Granholm said, consistent, with the historical understanding of the both the dormant Commerce Clause and State's powers, was that laws that make distinctions between in-state and out-of-state products, in other words in-state and out-of-state alcohol are not shielded by the 21st Amendment. In other words, i f you have a law that says that California wine cannot be shipped to consumers within your state, but that Wisconsin wine can be- that's a problem because both the history and the jurisprudence never  countenanced discrimination between products from one state and products from another. But the history and the jurisprudence from the Supreme Court had always envisioned it states would have complete control over the distribution system within the states borders and necessarily would have the power to make distinctions between in-state and out-of-state business. So, the petitioners position in this case is wholly consistent with both Grandholm and Grandholm's recognition that a three-tier system requiring presence within the state is unquestionably legitimate.

Rosen: [00:00:12] Michael, your thoughts on John's claim that Granholm and other cases give the State broad authority over distribution. And then if you can put on the table in this round the Privileges or Immunities Clause on the Institute for Justice website, you have a wonderful explainer, and you argue that laws that discriminate against newly arrived residents of any state have a tainted history, going back to the infamous Black Codes passed by Southern States after the Civil War, you and I, J,  have long argued that the Privileges or Immunities Clause guarantees the right to travel freely between the states for purposes of earning a living or engaging in the ordinary occupation of life. And you say that's the right that Doug and Mary seek to exercise with their move to Tennessee. I have my scan of the transcript of the argument suggested that the words Privileges or Immunities didn't come up in the oral argument. Why was that? Were you disappointed? And why do you think that this law violates the Privileges or immunities clause here?

Bindas: [00:01:07] Well, we'll start with the the points that John was making with regard to the dormant Commerce Clause. Number one, he did try to disassociate the states' position, I'm using states plural. There were a number of states who filed supported briefs on the side of the petitioners in this case. He's trying to disassociate their position with economic protectionism, saying that they're not trying to justify this durational residency requirement on the grounds of economic protectionism, yet during the argument the attorney representing the Wine and Spirit Retailers Association as well as the solicitor general of Illinois, who is has an amicus on the same side, said unequivocally that economic protectionism is perfectly permissible and does not violate the dormant Commerce Clause when it comes to alcohol regulation, that the 21st amendment essentially removed or immunized any alcohol related law from constitutional review under the Commerce Clause, even if it was motivated solely by economic protectionism, which prompted Justice Kagan during the argument to say then “Isn't the sky the limit? Why stop at two or ten years? Can't you know the sky's the limit at that point?” And they unabashedly repeated that economic protectionism is not grounds for invalidating a law when it comes to alcohol regulation. I don't think the court countenance that extreme position. Moreover, with respect to physical presence, you know John makes the point that physical presence is almost inherently required. For example, when it comes to a wholesaler or a brick and mortar shop in a state,well Total Wine and Doug and Mary Ketchum are operating brick-and-mortar shops that are physically present in the state of Tennessee. That is not the issue here. They are both operating brick-and-mortar shops with physical presence in the state of Tennessee. The question is can the state prohibit the ownership of that physical shop based on where someone lives, or in the Ketchum case, where they used to live. And again, we don't think that the Court is going to hold that the State may do so and that's where we get to the Privileges or Immunities Clause, as what we've offered up as an alternative grounds on which the Court can affirm the Judgment of the Sixth Circuit in validating the durational residency requirements. The Privileges or Immunities Clause was enacted as part of the 14th Amendment and it was designed in large part to ensure that Southern states could not pass laws like the Black Codes, what are commonly now referred to as the Black Codes, laws that in the wake of the abolition of slavery the Southern states use to erect barriers to the ability of the freedmen as well as their Northern supporters to move to and around the South in pursuit of a living. There are a number of types of statutes that were very common in the Southern States before ratification of the Fourteenth Amendment that were designed precisely to impede the mobility of the freedmen and ensure that they would be quote “kept in their place”, both literally and figuratively figuratively. The idea was you now had a free and mobile black labor force in the United States. The former southern plantation owner saw that as a threat an economic threat to them and so they convinced their buddies in the State Legislatures in the South to pass these types of laws that would restrict the mobility of the freedmen and prevent them from earning an honest living on equal terms with other residents of the South and the history is replete with examples of these types of laws and the debates over the Fourteenth Amendment as well as some of the Congressional statutes that preceded it, made clear that one of the overriding purposes of the Privileges or Immunities Clause was to ensure that Southern States could no longer do this. And so we have argued that the Privileges or Immunities Clause protects the right of folks like Doug and Mary to move about the nation freely and that they have a right as citizens of this nation to move to any state and to earn an honest living in that state regardless of their state of origin. And most recently, in 1999 the US Supreme Court ruled in a case called Saenz vs. Roe that a one-year durational residency requirement for for full welfare benefits in California was unconstitutional because it violated the Privileges or Immunities Clause. And as the Court made clear in that case, it has always been common ground that the Clause protects the right of the newly-arrived citizen in a state to be treated on equal terms with other residents of that state and we've argued that if the Clause protects the right to be treated equally in connection with welfare benefits, then surely it protects the right to be treated equally in connection with the ability to earn an honest living now. As you know, Jeff, that the Clause did not come up during the argument. We're not surprised by that. Number one, one of the champions of the Clause is Justice Thomas and Justice Thomas is, as your listeners probably know, not the most active questioner on the bench. And so to the extent that there is interest on this issue, I think you know it would certainly be of interest to him and as is usually the case in oral arguments, he did not ask any questions regarding this or any other issue in the case. Nevertheless, we know that he's interested in it. He has long sought to reinvigorate the Clause as the primary bulwark for the economic liberty and freedom of America. And we're hopeful that that he, and possibly some of the other justices, will take this as an occasion to expand on the history of the Privileges or Immunities Clause and its purpose in preventing these types of barriers that impede the ability of American citizens to migrate to a new state and earn an honest living when they arrive there. So, you know, we'll have to wait and see whether there's discussion of it in any of the opinions from the justices, but in any event, it is an alternative ground on which the court can and should uphold or affirm the judgment of the Sixth Circuit in validating the residency requirements.

Rosen: [00:02:31] John, what would be the consequences of striking down Tennessee's residency requirement under the Privileges or Immunities Clause or under the dormant Commerce Clause? You vividly talked about the desire to become the Walmart of liquor. Justice Gorsuch, in the oral argument, of course, as you know, said “Isn't the next business model to try to operate as the Amazon of liquor?” Do you believe that invalidation of this requirement, especially under the Privileges or Immunities Clause as a kind of economic  protectionism, would strike down much of the regulatory apparatus of liquor in the United States and allow for Amazon's or Walmarts of liquor to flourish?

Neiman: [00:00:12] Total Wines lawyer certainly offered the Justices no course of action that would have struck down the Tennessee durational residency requirement and not open the doors to striking down all sorts of other State laws that the Court has said are unquestionably legitimate, including requirements that a store be physically present within a state. Now, I think it's important to separate out the Privileges or Immunities issue from the dormant Commerce Clause issue in the case. I'm always hesitant to make predictions with any degree of confidence about what the Court is going to do, but I feel 100 percent confident that the majority of the Court will not rely on the Privileges or Immunities Clause in this case. It's a fascinating clause. I admire the work that the Institute for Justice, Michael's shop, has done in sort of teasing out the implications of the Privileges or Immunities Clause, which has been long buried in constitutional jurisprudence. I admire the work they've done in teasing them out. I should say with respect to other areas of the law, not necessarily alcohol regulation, a procedural problem in this case is that the implications were not teased out in this litigation until far too late a stage in the case. So the Privileges or Immunities Clause was not only not discussed by the lower courts, it was not raised by the parties below and it seems inconceivable to me that the Court will breathe life into the privileges and immunities clause at this stage of the case without any lower courts having done any briefing. At ward discussion of the issue and in fact, if you look at the petitioners briefs in this case, they largely just ignored the Privileges or Immunities question altogether, so we don't have a lot of briefing or argument on the issue. All that said, while again, I admire a lot of the work that the Institute for Justice has done in exploring the contours of the Privileges or Immunities Clause, the claim in this case strikes me as an especially weak claim. Let's be clear about what Tennessee told the Ketchum's that they could and could not do. On the one hand, Utah told the Ketchum's is that they could not open up a store selling hard liquor. But that in Utah, that is a Government monopoly, and the Ketchum's had no ability to sell hard liquor in that state likewise. Tennessee did not tell the Ketchum's, “If you move to Tennessee, the economic doors of the state will be closed to you.” They didn't even say you can't open up a beer shop. You can't open up a wine shop. They didn't even say you can't open up a bar. The only kind of business that Tennessee informed the Ketchum's that they would not be able to do or at least the Tennessee statutes, I suppose, told the Ketchum's they would not be able to engage in, was a store that sold hard liquor. That was the one area of the law in which Tennessee statutes had carried over the project of 1933 in terms of being very careful about granting licenses granting relatively few licenses and making sure that the people who possess the licenses, or the companies that possess the licenses, have been in the state long enough to understand the norms that govern in the state and have been in the state long enough to give Tennessee the ability to assess their ability to sell hard liquor in a consistent way with  the manner in which Tennessee has approached the issue. So, whereas in a case like Saenz v. Roe, California's durational residency requirement regarding welfare benefits made it practically impossible for someone who is dependent on welfare benefits to move to California. Tennessee's law, creating a very narrow durational residency requirement with respect to a very narrow sliver of the alcohol industry, did not create any sort of barrier in preventing anyone from moving to the state and making a living in some way. It seems unlikely to me that, even if this issue eventually gets raised in a procedurally appropriate way, that it will stand as a barrier to durational residency requirements, like the one that Tennessee is defending here. And with respect to the dormant Commerce Clause, seems to me, I can understand why some of the parties in the case attempted to inject the Privileges or immunities clause issue into the case because the dormant Commerce Clause argument simply was inconsistent with everything the Court has said about the unquestioned legitimacy of physical presence. In the past, if the respondents were able  to offer a persuasive argument to the Court that the dormant Commerce Clause could forbid durational residency requirements without forbidding physical presence requirements, they would have done so, but to this day we've seen nothing in the briefs or nothing at the oral argument, in which the respondents to the case of explained how durational residency requirements can be unconstitutional under the dormant Commerce Clause because they discriminate. Yet, physical presence requirements are not unconstitutional because even though they discriminate as well.

Rosen: [00:00:31] Michael, what's your response to why you believe that physical presence requirements might be constitutional but not durational requirements? And then handicapping this case is unusually hard we know from Granholm that Justice Scalia and Justice Thomas were on opposite sides. So, it's an unusually non-ideological case, but if the Court were to strike down the requirements, who do you think would be in the majority on what grounds?

Bindas: [00:01:01] Well, with respect to physical presence versus durational residency requirement, you know, obviously the physical presence issue is not involved in this case. It's well beyond a physical presence. But you know I can imagine reasons why a State might be able to credibly claim that physical presence for certain aspects of alcohol distribution is necessary. Now recall that the test for whether or not a law violates the dormant Commerce Clause is whether the State has a legitimate local interest that could not be served through a reasonable non-discriminatory mechanism. You know, perhaps the State would have a sufficiently convincing argument, for example, that a physical warehouse is needed for wholesalers so that the State can inspect the product, tax the product, etc. And that it could justify that and  argue that you know absent having that physical presence, we couldn't adequately achieve those things that we need to achieve, but that is a much different thing than what we have going on here, which is where the State is again. We're talking about brick and mortar retail shops. Total Wine and the Ketchum's are operating brick-and-mortar shops with physical presence, but the State is attempting to regulate it based on where people have lived in the past. That is a much different thing and I don't think the state has any justification, much less a sufficiently important one, for requiring two or ten years presence in the state in order to operate a shop. I just see the physical presence scenario as something wholly different and as for a line-up with the with the Court, I'm not about to try to predict where this is going to go. You know Granholm ,as you mentioned Jeff, was ideologically an interesting lineup, perhaps strange bedfellows on either side of that of that case, which as you noted, was a 5-4 decision. You know, I personally don't think this will be a close case in the sense of a 5-4 type decision. I think our side will prevail and I think it'll be a much bigger margin and at the end of the day the fact that there was an unusual ideological line up in Granholm, and I anticipate we may see that here as well, it shouldn't be surprising because whether or not a State can discriminate against newly arrived residents, based on the fact that they move there from some other state, should not be an ideologically liberal or conservative issue. I think all Justices recognized that that type of discrimination against newly arrived residents or out-of-staters, for that matter, is obnoxious, too. The Commerce Clause to the Privileges or Immunities clause and I think a majority of the court is going to say that the twenty-first amendment can't the can's save a violation of either of those clauses.

Rosen: [00:00:58] John, your thoughts on what the line-up might be and use it to educate our listeners about the different methodological approaches of the justices. What might an originalist hold? How about someone who cares about history and precedent, or the courts legitimacy given all those considerations? How do you think the court might rule?

Neiman: [00:01:19] I think Michael and I agree wholeheartedly that we're very uncomfortable making predictions about line-ups. So I think I'm going to dodge the question respectfully in the same way that he did. I will make some predictions about what factors might motivate the Justices to decide the case in particular ways, I think the first really important factor here is the one I adverted to in at the beginning of this podcast regarding history. At some point in the respondent's argument, Justice Breyer who generally doesn't focus all that much on history, took us for a ride in that constitutional DeLorean talking about the history of these particular kinds of requirements and also the history associated with State regulation of alcohol. I think it's very difficult for the respondents in this case, and then for any justice who would be sympathetic to their side, to reconcile the position that these sorts of durational residency requirements violate the dormant Commerce Clause with the history that unfolded around not only the ratification of 21st amendment in 1933, but the steps that States took in the immediate wake of ratification to effectuate the goals of temperance that everybody wanted to achieve. States in 1933 thought that durational residency requirements were something the twenty-first Amendment authorized them to do. Then it seems implausible that whatever what I should say, that's a very compelling reason to think that in fact the 21st amendment did authorize the states to do so, especially since those kinds of requirements have gone on question now for decades. The other issue I think that seems to be driving and number of the Justices towards the end of respondent's arguments, and I'm thinking about Justice Gorsuch, Justice Kavanaugh, Justice Kagan, was this question of how the respondents could possibly reconcile the principle they wanted the Court to adopt with the Courts clear statements that in-state presence requirements are permissible and unquestioningly legitimate under the 21st amendment. I think it's very telling that when asked to distinguish physical presence requirements from durational residency requirements, Michael during this podcast did not say “Well, physical presence requirements are shielded from dormant Commerce Clause under the 21st amendment.” His suggestion was “perhaps the dormant Commerce Clause inquiry would come out differently for physical presence requirements.” That is not what the Court has said either in Granholm or in the cases before it. In those cases, the Court has said that those requirements are unquestionably legitimate. In other words, there really doesn't need to be a dormant Commerce Clause inquiry into whether there is a less restrictive means of effectuating the state's goals. A temperance physical presence requirements are unquestionably legitimate because they're authorized by the twenty-first Amendment to this day. Total Wine and the other respondents have not offered a principle under which the twenty-first Amendment would Shield physical presence requirements as it does and somehow not shield durational residency requirements from the same sort of dormant Commerce Clause inquiry. So I think the Justices were focused both on the history and also the need to reconcile the Court's repeated statements about the unquestioned legitimacy of the three-tier system, and physical presence requirements will lean heavily in favor of reversing the Sixth Circuit, telling the Sixth Circuit that the broad anti-discrimination principle that it adopted in this case does not accurately reflect either Granholm or the 24th and First Amendment jurisprudence generally and require the Sixth Circuit to reconsider in light of the more narrow scope of the Granholm holding, focus solely on discrimination against out-of-state products rather than out-of-state entities.

Rosen: [00:02:07] Many thanks for that. Well, it is time for closing arguments in this excellent discussion. This is the time in just a few sentences to make your case and try to persuade our listeners of your constitutional argument. So, Michael, the first closing argument is to you. Why do you believe that the Tennessee residency requirement violates the Constitution and why should the Court strike it down?

Bindas: [00:02:32] Simply put, because Americans have a right as citizens of this nation to move to any state and to earn an honest living in it, regardless of their state of origin. No State can punish a citizen for having moved. No  State can discriminate against its own residents simply because they moved from some other state, like the Ketchum's did. The Privileges or Immunities clause, as well as the Commerce Clause, prohibits that kind of discrimination and the 21st Amendment is not a blank check for the states to engage in that kind of discriminatory legislation.

Rosen: [00:00:15] Thank you so much for that and, John, last word to you. Why do you believe the Tennessee residency requirement does not violate the Constitution and why should the court uphold it?

Neiman: [00:00:24] I said at the outset that it's a little difficult from our vantage point here in 2019 to truly understand the crisis that the country faced in 1919 and again in 1933 when the people of the country took the unusual step of enacting two Constitutional Amendments. Dealing with a specific commodity, this being alcohol, I largely agree with almost everything michael says about the ability of citizens to earn an honest living and for the importance of States following a non-discrimination principle, but what the lesson of 1919 and 1933 was that alcohol was a unique product, unlike any other product. It wasn't to be treated like men. It wasn't to be treated like books. It required drastic solutions that involved States, having as the Court has said over and over again, virtually complete control over the distribution systems within their borders. That means that in this very limited industry with respect to this very limited commodity, States have a certain leeway to ensure that the public health dangers that are posed by alcohol do not present themselves, to ensure that the crisis of 1919 and the crisis of 1933 does not arise again and to ensure that this product, which can pose dangers if not regulated carefully, would be controlled and that the goals of temperance of 1933 would be fulfilled. So, in this very narrow area of the economy, in this very narrow sector, the state's decision to impose a reasonable durational residency requirement before allowing people to engage in this very limited activity is justified and constitutional.

Rosen: [00:00:05] Thank you so much Michael Bendas and John Neiman for opening the spigot of reason on the 21st amendment, the dormant Commerce Clause, and the Privileges or Immunities Clause. This has been an effervescent conversation about the intersection of those three amendments and you've given our listeners much to learn more about. Michael, thank you so much for joining.

Bindas: [00:00:29] Thank you for having us.

Neiman: [00:00:31] Thank you.

Rosen: [00:00:32] Today's show was engineered by Kevin Kilburn and produced by Jackie McDermott. Research was provided by Lana Ulrich and Jackie McDermott. Dear We the People listeners, for homework this week, here's a wonderful read and it's Daniel Okrent's “Last call: The Rise and Fall of Prohibition.” It was such a fascinating story about how the 18th Amendment, which had such intense national support in 1919, was re-pealed by the 21st Amendment, which had equally intense National support by 1933 and okrent tells the story in a great narrative that I know you'll enjoy. If you feel moved to learn more, please rate, review and subscribe to We the People on Apple podcast and recommend the show to friends or colleagues or write to me to tell me what you think of it and how we can improve. Your emails are greatly appreciated and thanks so much to those of you who writing over the past couple weeks and remember always when you waken, when you sleep, the National Constitution Center is a private nonprofit. We receive little government support and we rely on the passion, engagement, reasoned wonkery and love of lifelong learning of all of you who are listening to this podcast and educating yourself about the Constitution. So to allow us to continue to do our work, join as a member and the way to do that is to visit Constitutioncenter.org/donate to learn more. On behalf of the National Constitution Center, I'm Jeffrey Rosen.

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