WASHINGTON – Maryland officials will be watching the Supreme Court closely Tuesday when it hears a Michigan case, which Maryland hopes will affirm the broad authority of states to regulate liquor sales within their borders.
A decision in Michigan’s favor could help Maryland beat back a legal challenge by TFWS Inc., a liquor wholesaler that has challenged the state’s right to set prices for liquor.
The case before the court, consolidated with two similar cases, pits small out-of-state wineries against the state of Michigan in a dispute over whether or not they may ship their products directly to consumers in the state.
The high court is being asked to decide whether Michigan is completely free to regulate alcohol sales under the 21st Amendment, which repealed Prohibition and allows states to regulate alcohol, or whether the restriction on direct shipment of out-of-state wine to consumers conflicts with the Constitution’s commerce clause. That clause gives Congress the authority to regulate interstate commerce.
In Maryland, shipping alcohol directly to anyone, whether from in-state or out-of-state, is a felony. The state, which has filed a friend of the court brief in the Michigan case, is primarily interested in the court’s opinion over the scope of a state’s authority to regulate liquor sales.
“The court is being asked to endorse a state’s rights under the 21st Amendment, a right that would help us in our other litigation,” said Gerald Langbaum, counsel to the Maryland comptroller.
The comptroller’s office requires that wholesalers provide a price list to the state every month. Once the list is provided, the prices are “locked-in” for the following month. The state also prohibits volume discounts on liquor.
TFWS Inc. sued the state in 1999, alleging that state laws that control the pricing of liquor in Maryland violate federal anti-trust law by restricting competition.
The case has been tied up in the courts since, having completed its second trip to the 4th U.S. Circuit Court of Appeals in May, when a three-judge panel vacated a decision in the state’s favor and sent it back to U.S. District Court in Maryland for reconsideration.
Attorneys for the state argued that the 21st Amendment lets Maryland tightly regulate alcohol in order to promote temperance, but the appeals court ruled that “the retailer’s interest under the Commerce Clause trumped our right,” Langbaum said.
“If the court were to endorse Michigan’s view that its rights under the 21st Amendment were superior to the rights granted under the commerce clause, we could get some language that’s helpful to us,” Langbaum said.
But attorneys for TFWS are not convinced that a victory for Michigan would mean a slam-dunk for Maryland.
“I would be surprised if the Supreme Court would say one part of the Constitution trumps another part,” said William Murphy, an attorney representing TFWS. “Courts don’t usually talk that way. They interpret the way that different parts of the Constitution interact.”
The Supreme Court will give “guidance” on how lower courts should interpret the scope of the 21st Amendment, Murphy said.
“That guidance may give greater weight to the commerce clause or greater weight to the 21st amendment,” he said. “It really depends on the analysis the Supreme Court adopts.”
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