Judge upholds Indiana laws restricting wine deliveries

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Indiana laws restricting the delivery of wine to consumers have been upheld by a federal judge who rejected constitutional challenges from an out-of-state retailer, in contrast to another recent ruling in a case challenging state alcohol licensing laws.

Indiana Southern District Court Chief Judge Tanya Walton Pratt granted summary judgment to the state in a March 30 opinion in Chicago Wine Company, et al. v. Eric Holcomb, et al., 1:19-cv-02785.

Chicago Wine Company, its owners and three Indiana residents sued the state, alleging three statutes were unconstitutional. Those included:

  • Indiana Code § 7.1-3-21-3, which requires an applicant to have been an Indiana resident for at least five years to receive an alcoholic beverage retailer’s permit or dealer’s permit.
  • C. 7.1-5-11-1.5(a), which prohibits the delivery of wine to anyone in Indiana other than a wholesaler.
  • C. 7.1-3-15-3(d), which requires wine dealers to deliver wine themselves rather than using a common carrier.

The residency requirement of I.C. 7.1-3-21-3 was previously enjoined in Indiana Fine Wine & Spirits v. Cook, 459 F. Supp. 3d 1157 (S.D. Ind. 2020), and Pratt likewise declared it violative of the Commerce Clause in the Chicago Wine case.

But applying the U.S. Supreme Court’s decision in Tennessee Wine & Spirits Retailers Association v. Thomas, 139 S. Ct. 2449 (2019), the chief judge upheld the two other challenged statutes dealing with wine delivery.

Specifically, Tennessee Wine asked “whether the challenged requirement can be justified as a public health or safety measure or on some other legitimate nonprotectionist ground.” The state presented a nonprotectionist grounds for both I.C. 7.1-5-11-1.5(a) and 7.1-3-15-3(d), Pratt ruled.

I.C. 7.1-3-15-3(d) was previously challenged and upheld in Lebamoff Enters v. Snow, 757 F. Supp. 2d811 (S.D. Ind. 2010). There, the Southern District determined the statute was not facially discriminatory and, under Pike v. Bruce Church, Inc., 397 US 137 (1970), “reached the conclusion that the statute serves legitimate local interests, and any burden on commerce was not clearly excessive in relation to the local interests.”

Pratt reached the same conclusion in her March 30 opinion, finding the statute was not facially discriminatory because it “treats in-state and out-of-state wine retailers identically: their ‘delivery may only be performed by the permit holder or an employee who holds an employee permit.’”

Further, “The State Defendants have presented evidence in the form of a sworn declaration from Brian Stewart, an Indiana State Excise Police sergeant … which supports the argument that the statute helps advance the State’s interests in keeping alcohol out of the hands of minors, controlling the quantity of alcohol in the State to curtail public health concerns, and protecting against unsafe or counterfeit products,” Pratt wrote, granting summary judgment to the state and intervenor Wine & Spirits Distributors of Indiana. “These public health and safety benefits justify Indiana Code § 7.1-3-15-3(d) on ‘nonprotectionist grounds’.”

Pratt upheld I.C. 7.1-5-11-1.5(a) on similar grounds, again finding that the statute was not facially discriminatory. This statute also was previously litigated and upheld in Bridenbaugh v. Freeman-Wilson, 227 F.3d 848 (7th Cir. 2000).

“For the reasons discussed in the section above concerning Section 7.1-3-15-3(d), the Court concludes that Section 7.1-5-11-1.5(a) is valid under the Twenty-first Amendment and is not violative of the Commerce Clause. The State Defendants’ argument is well-taken and supported by evidence and case law that Section 7.1-5-11-1.5(a) advances legitimate local interests by controlling the quantity of alcohol in the State to curtail public health concerns, protecting against unsafe or counterfeit products, and keeping alcohol out of the hands of minors,” the chief judge concluded.

The court did not address the plaintiffs’ claim under the Privileges and Immunities Clause, which remains pending for trial, Pratt wrote.

Pratt’s ruling came just days before Southern District Senior Judge Sarah Evans Barker blocked I.C. 7.1-3-21-5.4(a) and 7.1-3-21-6(a)(10)(B)(i). Those statutes imposed a residency requirement to obtain an alcoholic beverage retailer’s permit, or annual gross food sales of more than $100,000 for out-of-state entrepreneurs.

As in Indiana Fine Wine & Spirits, Barker found the challenged statutes violated the dormant Commerce Clause.

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