Tennessee Wine And Spirits Retailers Association v. Thomas

139 S.Ct. 2449 (2019)

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Nature of the Case

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Facts

Tennessee, (P), requires alcoholic beverages distributed in the State to pass through a specified three-tiered system. P issues different types of licenses to producers, wholesalers, and retailers of alcoholic beverages. Producers may sell only to licensed wholesalers; wholesalers may sell only to licensed retailers or other wholesalers; and only licensed retailers may sell to consumers. P also has durational-residency requirements for all persons and companies wishing to operate “retail package stores” that sell alcoholic beverages for off-premises consumption. An individual must demonstrate that he or she has “been a bona fide resident” of P for the previous two years. To renew such a license-which P requires after only one year of operation-an individual must show continuous residency in P for a period of 10 consecutive years. A corporation cannot get a retail license unless all of its officers, directors, and owners of capital stock satisfy the durational-residency requirements applicable to individuals. No corporation whose stock is publicly traded may operate a liquor store in P. In 2016, Tennessee Fine Wines and Spirits, LLC dba Total Wine Spirits Beer & More (Total Wine) and Affluere Investments, Inc. dba Kimbrough Fine Wine & Spirits (Affluere) applied for licenses to own and operate liquor stores in Tennessee. Neither Total Wine nor Affluere satisfied the durational-residency requirements. Total Wine was formed as a Tennessee limited liability company but is owned by residents of Maryland and Affluere was owned and controlled by two individuals who, by the time their application was considered, had only recently moved to P. P recommended approval of the applications, but Tennessee Wine and Spirits Retailers Association threatened to sue if it granted them. P filed a declaratory judgment action in state court to settle the question of the residency requirements’ constitutionality. The court concluded that the requirements are unconstitutional. P declined to appeal, and Total Wine and Affluere were issued licenses. The Association appealed and a divided panel affirmed. All three judges held that P's residency requirements facially discriminate against out-of-state economic interests and that the 10-year residency requirement for license renewals nor the 100-percent-resident shareholder requirement is constitutional under the Twenty-first Amendment and dormant Commerce Clause precedents. The majority struck down a 2-year residency requirement for individuals, reasoning that they facially discriminate against interstate commerce and that the interests they are claimed to further can be adequately served through reasonable, nondiscriminatory alternatives. The dissent disagreed, reading §2 of the Twenty-first Amendment to grant States “‘virtually’ limitless” authority to regulate the in-state distribution of alcohol, the only exception being for laws that “serve no purpose besides ‘economic protectionism.’” The Supreme Court granted certiorari.