Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-08-15738/USCOURTS-ca9-08-15738-0/pdf.json

Nature of Suit Code: 950
Nature of Suit: Contitutionality of State Statutes
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BLACK STAR FARMS LLC; JOHN 

NORTON; GARY FRISCH; MICHELLE

FRISCH; DAVID MONHEIT; MELISSA

MONHEIT,

Plaintiffs-Appellants,

No. 08-15738

v.

D.C. No.

JERRY OLIVER, in his official  2:05-CV-02620-

capacity as Director of the State of MHM

Arizona Department of Liquor

License and Control, OPINION

Defendant-Appellee,

ALLIANCE BEVERAGE DISTRIBUTING

COMPANY LLC,

Defendant-Intervenor-Appellee. 

Appeal from the United States District Court

for the District of Arizona

Mary H. Murguia, District Judge, Presiding

Argued and Submitted

September 15, 2009—San Francisco, California

Filed April 13, 2010

Before: Stephen S. Trott and Carlos T. Bea, Circuit Judges,

and Suzanne B. Conlon,* District Judge.

Opinion by Judge Trott

*The Honorable Suzanne B. Conlon, United States District Judge for

the Northern District of Illinois, sitting by designation. 

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COUNSEL

James A. Tanford, Indiana University School of Law, Bloomington, Indiana, for the plaintiffs-appellants.

Kathleen P. Sweeney, Assistant Attorney General, Phoenix,

Arizona, for the defendant-appellee.

Deborah A. Skakel, Dickstein Shapiro LLP, New York, New

York, for the intervenor-defendant-appellee.

Kevin E. O’Malley, Gallagher & Kennedy, P.A., Phoenix,

Arizona, for the defendant-intervenor-appellee.

OPINION

TROTT, Circuit Judge:

This case involves a Michigan winery’s claim that certain

provisions of Arizona’s statutory scheme regulating the direct

shipment of wine from wineries — whether located in-state or

out-of-state — to Arizona consumers violate the dormant

Commerce Clause. The Plaintiffs-Appellants (collectively

“Black Star Farms”) claim that those provisions, in practical

effect, unlawfully discriminate against out-of-state wineries.

Arizona generally requires all alcoholic beverages sold to

consumers in the state to pass through a three-tier distribution

system comprised of producers, wholesalers, and retailers.

However, Arizona has carved out two exceptions to its system

that allow wineries under specified circumstances to bypass

the three-tier distribution system. First, all wineries that pro5510 BLACK STAR FARMS v. OLIVER

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duce less than 20,000 gallons of wine per year — whether

located in-state or out-of-state — are allowed to ship an

unlimited amount of wine directly to consumers, regardless of

how the order is placed, and to sell directly to retailers. Second, all wineries — whether located in-state or out-of-state —

are allowed to ship two cases of wine per year directly to consumers who purchase wine while they are physically present

at the winery. Relying on Granholm v. Heald, 544 U.S. 460

(2005), which held that States may mandate a three-tier distribution scheme regulating the sale of wine so long as the

scheme does not unlawfully discriminate against out-of-state

wineries, Black Star Farms contends that these challenged

exceptions to the three-tier system violate the dormant Commerce Clause.

We conclude that Arizona’s statutory exceptions to its

three-tier distribution system, which treat similarly situated

in-state and out-of-state wineries the same and impose no new

impermissible burdens on out-of-state wineries, do not have

the practical effect of “favor[ing] in-state economic interests

over out-of-state interests.” Id. at 487. Therefore, we affirm

the district court’s order granting summary judgment in favor

of the State.

I

BACKGROUND

Arizona regulates the sale of alcoholic beverages through

a three-tier distribution system comprised of suppliers (e.g.,

wineries, distilleries, and breweries), wholesalers, and retailers. See Ariz. Rev. Stat. §§ 4-243.01, 4-244(6)-(7). Generally,

suppliers may sell and deliver only to wholesalers, wholesalers may sell and deliver only to retailers, and retailers may

sell and deliver only to consumers. Id. For the purposes of this

case, there are two key exceptions to this three-tier distribution system:

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1. The “small winery” exception,

1

 which allows any

winery, wherever located but which produces no more than

20,000 gallons of wine per year, to ship an unlimited amount

of its wines directly to consumers, regardless of how the consumer places his purchase order, and to sell directly to retailers. Ariz. Rev. Stat. § 4-205.04(C)(7), (9).2

2. The “in person” exception, which allows any winery,

wherever located, to ship up to two cases of its wines per year

directly to a consumer, but only if the consumer is physically

present at the winery when he buys the wine. Ariz. Rev. Stat.

§ 4-203.04(J).3

Either or both exceptions are available on equal terms to

wineries located in Arizona and to wineries located elsewhere.

The Arizona legislature created these exceptions in direct

response to Granholm, which held that the Commerce Clause

prohibits States from discriminating against interstate commerce when they regulate the transportation and importation

of alcohol pursuant to the Twenty-First Amendment. See S.B.

1276, 47th Leg., 2d Reg. Sess. (Ariz. 2006). Senate Bill

1276’s statement of purpose was as follows:

1The district court referred to the small winery exception as a “gallonage cap exception.” Black Star Farms, LLC v. Oliver, 544 F. Supp. 2d

913, 917 (D. Ariz. 2008). 

2We use the term “small winery” to refer to wineries that produce no

more than 20,000 gallons of wine per year. We use the term “large winery” to refer to wineries that produce more than 20,000 gallons of wine

per year. 

3Black Star Farms contends that the in-person exception is not available

to wineries that produce more than 40,000 gallons of wine per year. It is

misinformed. The statute is clear: “Notwithstanding any other law, a person may ship wine as long as the following apply . . . .” Ariz. Rev. Stat.

§ 4-203.04(J) (emphasis added). None of the requirements in section 4-

203.04(J) set a 40,000 gallon limit. Id.

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The purpose of this act is to conform Arizona laws

regarding the intrastate and interstate sales and deliveries of wine to the provisions of Public Law 107-

273, div. C, Title I, section 11022 and to conform to

the requirements of the decision of the United States

Supreme Court in Granholm v. Heald, 544 U.S. 460,

125 S. Ct. 1885 (2005) by adopting nondiscriminatory laws governing the sale and delivery of wine

produced by small wineries. This act is intended to

provide for a separate method of regulating only the

sale and delivery of wine produced by small wineries. Other than the specific exceptions established

by existing law and this act for domestic farm wineries, it is the intent of this act to retain the current

three-tier method of regulating the sale and delivery

of spirituous liquor and the current revenue collection and enforcement law.

Before passage of Senate Bill 1276, the small winery

exception was not available to wineries unless 75% of their

wine was produced from grapes grown in Arizona. Id. Further, the small winery exception was not available to wineries

producing more than 75,000 gallons of wine per year. Id. Senate Bill 1276 removed the in-state production requirement and

reduced the cap applicable to the small winery exception to

20,000 gallons. Id. At that time, only one Arizona winery —

Kokopelli Winery — produced more than 20,000 gallons of

wine per year.

In 2007, there were more than 4,700 wineries in the United

States. In 2004, wineries producing more than 25,000 gallons

of wine per year accounted for about 98% of total wine production in the United States. However, more than 70% of all

wineries produced less than 25,000 gallons per year.

Black Star Farms, a Michigan winery, produced approximately 35,000 gallons of wine in 2006. Thus, the small winery exception was not available to Black Star Farms.

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Nevertheless, the in-person exception did allow Black Star

Farms to ship up to two cases per year to a consumer who

purchased the wine while he was physically present at the

winery in Michigan. Plaintiffs-Appellants John Norton, David

and Melissa Monheit, and Gary and Michelle Frisch

(“consumer plaintiffs”) are Arizona residents and wine drinkers who desire to, and are prohibited from, ordering wine

from Black Star Farms and other out-of-state wineries over

the telephone and internet for delivery in Arizona. They can

drink Black Star Farms wines delivered to them in Arizona

only if they travel to Michigan and buy the wine at the winery. Black Star Farms does not sell to Arizona wholesalers —

its production is too low for wholesalers to carry the brand.

Nor can Black Star Farms ship directly to Arizona retailers.

The consumer plaintiffs contend “[i]t is economically and

practically impossible for [them] to undertake the time and

expense to visit wineries located far from Arizona, including

those in Michigan, Napa, and Oregon, in order to purchase

wine in person and have it shipped home.” 

Black Star Farms filed an action under 42 U.S.C. § 1983 on

the ground that the small winery and in-person exceptions to

the three-tier distribution system violate the dormant Commerce Clause because, in practical effect, the two exceptions

to the three-tier system discriminate against out-of-state wineries. Black Star Farms sought a declaratory judgment that the

statutory provisions were unconstitutional and sought to

enjoin enforcement of those provisions.

The district court denied Black Star Farms’s motion for

summary judgment and granted Defendants’ cross-motions

for summary judgment, concluding that Black Star Farms

failed to carry its burden of showing that the challenged statutory scheme discriminates against out-of-state wineries in

practical effect. Black Star Farms, LLC, 544 F. Supp. 2d at

928-29. The district court first noted that Arizona’s statutory

scheme was “facially neutral and evenhanded.” Id. at 920.

The district court held that Black Star Farms failed to prove

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that the small winery exception had the effect of discriminating against interstate commerce because (1) there was no evidence the exception allowed in-state wineries to gain market

share at the expense of out-of-state wineries, and (2) more

than half of all United States wineries can take advantage of

the exception. Id. at 928. The district court also held that

Black Star Farms failed to prove that the in-person exception

had the effect of discriminating against interstate commerce

because (1) there was no evidence the exception allowed instate wineries to gain market share at the expense of out-ofstate wineries, and (2) Arizona was not required to compensate out-of-state wineries for benefits that accrued to in-state

wineries based on their geographical proximity to Arizona

consumers. Id. at 925.

Black Star Farms appeals the district court’s order denying

its motion for summary judgment and granting cross-motions

for summary judgment filed by Defendant Jerry Oliver,

Director of the State of Arizona Department of Liquor

Licenses and Control, and Intervenor-Defendant Alliance

Beverage Distributing Company. We affirm the district court.

On this record, the small winery and in-person exceptions do

not discriminate against interstate commerce and, thus, strict

scrutiny does not apply. Because Black Star Farms concedes

its claims depend on the application of strict scrutiny, its

claims must fail.

II

STANDARD OF REVIEW

We review de novo a district court’s grant of summary

judgment and its resolution of federal constitutional issues.

S.D. Myers, Inc. v. City & County of San Francisco, 253 F.3d

461, 466 (9th Cir. 2001). “We will affirm if the district court

applied the correct substantive law and the evidence reveals

no genuine issue of material fact when viewed in the light

most favorable to the party opposing summary judgment.” Id.

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III

THE COMMERCE CLAUSE

[1] The Commerce Clause says: “The Congress shall have

Power . . . [t]o regulate Commerce . . . among the several

States.” U.S. Const. Art. I, § 8, cl. 3. The Supreme Court has

interpreted the Commerce Clause “to have a ‘negative’ aspect

that denies the States the power unjustifiably to discriminate

against or burden the interstate flow of articles of commerce.”

Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality, 511 U.S. 93,

98 (1994). Courts have sometimes referred to this doctrine as

the “dormant Commerce Clause.” United Haulers Ass’n v.

Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330,

338 (2007).

[2] Two levels of scrutiny exist for analyzing state statutes

challenged under the dormant Commerce Clause. Maine v.

Taylor, 477 U.S. 131, 138 (1986). The higher level of scrutiny

applies to a state statute that “discriminate[s] against interstate

commerce ‘either on its face or in practical effect.’ ” Id.

(quoting Hughes v. Oklahoma, 441 U.S. 322, 336 (1979)). For

the purposes of the dormant Commerce Clause, “ ‘discrimination’ simply means differential treatment of in-state and outof-state economic interests that benefits the former and burdens the latter.” Or. Waste, 511 U.S. at 99 (emphasis added).

Of course, the “differential treatment” must be as between

persons or entities who are similarly situated. See Gen.

Motors Corp. v. Tracy, 519 U.S. 278, 298-99 (1997); Nat’l

Ass’n of Optometrists & Opticians LensCrafters, Inc. v.

Brown, 567 F.3d 521, 525, 527 (9th Cir. 2009). A court must

analyze such a statute under the “strictest scrutiny.” Hughes,

441 U.S. at 337. That is, such a statute is unconstitutional

unless it “ ‘serves a legitimate local purpose,’ and . . . this

purpose could not be served as well by available nondiscriminatory means.” Taylor, 477 U.S. at 138 (quoting Hughes, 441

U.S. at 336). The party challenging the statute bears the burden of showing discrimination. Hughes, 441 U.S. at 336. In

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this case, we agree with the district court that Black Star

Farms has not successfully met this burden.

IV

DISCUSSION

A.

Background

[3] In the district court, Black Star Farms conceded that the

statutory scheme at issue is not discriminatory on its face. It

also accused Arizona’s scheme of being the product of obvious “economic protectionism,” but it did not pursue this allegation other than as an atmospheric circumstance. Indeed, in

its reply brief to us, Black Star Farms says that this “issue is

not important,” conceding (1) “that the evidence of [legislative] protectionist intent is largely circumstantial,” and (2)

that it “do[es] not have a smoking gun” on which to rely.

Accordingly, it declares that “it does not matter if the legislature had protectionist intent, because a finding that state legislation constitutes economic protectionism may be made on the

basis of either discriminatory purpose or discriminatory effect.”

4

Reply Brief at 24 (quotation and citation omitted). Thus, it

relies here, as it did in the district court, on its argument “that

the in-person and gallonage cap exceptions are discriminatory

in effect.” Black Star Farms, LLC, 544 F. Supp. 2d at 918.

Moreover, in its brief to us, it “agree[s] . . . that the Arizona

laws at issue would pass constitutional muster under the minimal scrutiny test of Pike v. Bruce Church, Inc., 397 U.S. 137,

142 (1970)” (a state law that applies evenhandedly to in-state

and out-of-state entities is subject to less searching scrutiny).

Therefore, Black Star Farms’s appeal asks us effectively to

4

In any event, the “evidence” of a legislative economic protectionist

purpose advanced by Black Star Farms is insufficient to survive summary

judgment were this an active issue. 

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decide one question, and one question only.5

 That question is

whether Arizona’s statutory scheme for regulating the shipment of wine to consumers has the practical effect of “favor-

[ing] in-state economic interests over out-of-state interests.”

Granholm, 544 U.S. at 487. 

This question presents itself to us in the context of a motion

for summary judgment, which Black Star Farms failed to survive. Accordingly, the question we must examine and answer

de novo is whether the record adduced by Black Star Farms

was sufficient to support a verdict in its favor to the effect that

this facially neutral and even-handed scheme does have such

a prohibited discriminatory effect. We conclude that the

record would not support such a verdict, as we shall explain.

B.

Analysis

[4] The summary judgment record, as described by Judge

Murguia, is devoid of any substantial evidence of an actual

adverse effect created by this scheme — including its exceptions — which we repeat is facially neutral. We agree with

her assessment:

Plaintiffs proffer no evidence to suggest that such a

limited [direct shipment] exception, applicable to

both in-state and out-of-state wineries, erects a barrier to Arizona’s wine market that in effect creates a

burden that alters the proportional share of the wine

market in favor of in-state wineries, such that out-ofstate wineries are unable to effectively compete in

the Arizona market.

5As noted in Part V of this opinion, Black Star Farms attempts on

appeal to raise a new issue, but we decline to address it. 

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Black Star Farms, LLC, 544 F. Supp. 2d at 925.

Further, there is no indication whatsoever that the inperson exception has any effect on the flow of interstate commerce; no indication that the exception

creates a system under which local goods constitute

a larger share, and goods with an out-of-state source

constitute a smaller share, of the total sales in the

market.

Id.

Plaintiffs have not established that Arizona’s inperson and [small winery] exceptions to the State’s

three-tiered distribution system somehow alter the

proportional share of the State’s wine market in

favor of in-state wineries.

Id. at 927. 

[5] Judge Murguia’s conclusion was that Black Star

Farms’s burden was to offer “substantial evidence of an actual

discriminatory effect,” but that “such evidence is absent

here.” Id. at 928. We agree.

C.

The “Small Winery” Exception

The district court observed with respect to the small winery

exception that the number of out-of-state wineries that can

take advantage of it “dwarf[s] the number of in-state wineries” that can do so. Id. at 926. Moreover, the district court

noted that “almost twice as many out-of-state wineries than

in-state wineries have already obtained” the necessary

licenses. Id.

[6] Surely, as recognized by the district court, there are

facially neutral schemes of this sort which in practice do have

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the effect of deleteriously intruding upon Interstate Commerce, but here, Black Star Farms has not presented us with

such a factual scenario or case. See, e.g., Hunt v. Wash. State

Apple Adver. Comm’n, 432 U.S. 333, 352-53 (1977). In

essence, Black Star Farms asks us without substantial evidentiary support to speculate and to infer that this scheme necessarily has the effect it fears. This leap of faith we will not

take. Courts examining a “practical effect” challenge must be

reluctant to invalidate a state statutory scheme regulating

alcoholic beverages simply because it might turn out down the

road to be at odds with our constitutional prohibition against

state laws that discriminate against Interstate Commerce. The

proof of the pudding here must be in the eating, not in the picture on the box as seen through the partial eyes of the

beholder — which is especially true in a case where neither

facial economic discrimination nor improper purpose is an

issue.

As brought to our attention in their helpful amicus brief by

the Wine and Spirits Wholesalers of America, Inc., the American Beverage Licensees, and the Sazerac Company, three of

our sister circuits agree with this approach to a case asserting

a discriminatory effect claim. See, e.g., Cherry Hill Vineyard,

LLC v. Baldacci, 505 F.3d 28, 36 (1st Cir. 2007) (plaintiff

claiming discriminatory effect must submit “probative evidence of adverse impact” and where a statutory provision “is

evenhanded on its face and wholesome in its purpose,” a

“substantial” evidentiary showing is required to prove discriminatory effect); National Paint & Coatings Ass’n v. City

of Chicago, 45 F.3d 1124, 1132 (7th Cir. 1995) (discriminatory effect was not established where “plaintiffs did not offer

any evidence”); Eastern Ky. Res. v. Fiscal Court of Magoffin

County, 127 F.3d 532, 544 (6th Cir. 1997) (“[U]nless there is

evidence that a state law treats in-state economic interests differently than out-of-state economic interests, that law is valid

. . . .”).

[7] In other words, prove it, or lose it. When challenged in

its briefs to do so, Black Star Farms’s answer in its reply brief

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effectively is, we don’t have to, it should be obvious. Based

upon precedent and logic, we disagree. As the First Circuit

aptly observed in Baldacci, “[c]onjecture . . . cannot take the

place of proof.” 505 F.3d at 39.

The First Circuit decided Family Winemakers of California

v. Jenkins, 592 F.3d 1 (1st Cir. 2010), after this case was submitted for decision. In that case, which is manifestly distinguishable from this case (and which cited Baldacci with

approval), the First Circuit struck down a Massachusetts statute establishing differential methods by which wineries distribute wine in that State. That statute differentiated between

“small” wineries producing 30,000 gallons or less of grape

wine a year, on one hand, and “large” wineries producing

more than 30,000 gallons of such wine, on the other. The fatal

problem identified by the First Circuit was that small wineries

could sell their wines in Massachusetts in three ways: “by

shipping directly to consumers, through wholesaler distribution, and through retail distribution.” Id. at 4. All Massachusetts wineries were “small” and could use all of these

methods. By contrast, “large” wineries, all of which were

located in other states, were required to “choose between relying upon wholesalers to distribute their wines [in Massachusetts] or applying for a ‘large winery shipping license’ to sell

directly to Massachusetts consumers. They cannot, by law,

use both methods to sell their wines in Massachusetts, and

they cannot sell wines directly to retailers under either

option.” Id.

The relevant issue in that case was whether the Massachusetts law was “discriminatory in effect.” Id. at 10. The court

held that it was because the evidence offered demonstrated

that the law conferred “a clear competitive advantage to

‘small’ wineries, which includes all Massachusetts’s wineries,

and creates a comparative disadvantage for ‘large’ wineries,

none of which are in Massachusetts.” Id. at 11 (citing Baldacci, 505 F.3d at 36-37). Thus, the evidence adduced by

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chusetts’s law was “ ‘to cause local goods to constitute a

larger share, and goods with an out-of-state source to constitute a smaller share, of the total sales in the market.’ ” Id. at

10 (quoting Exxon Corp. v. Governor of Maryland, 437 U.S.

117, 126 n.16 (1978)).

[8] The short answer to Family Winemakers is twofold.

First, the Arizona statute does not force “large” winemakers

into a restrictive method of distribution in comparison with

“small” winemakers. The restrictive method of distribution —

the three-tier distribution system — already existed. The Arizona statute freed all small wineries, whether located in-state

or out-of-state, from that restrictive method of distribution.

Second, the plaintiffs in that case, unlike the plaintiffs here,

had evidence to prove their contentions. We reiterate Judge

Murguia’s correct analysis: 

Arizona’s gallonage cap exception does not restrict

the flow of interstate commerce in favor of in-state

wineries and in effect opens up the State’s wine market to allow more out-of-state wineries than in-state

wineries to take advantage of Arizona’s gallonage

cap exception and directly ship to Arizona consumers.

Plaintiffs must offer substantial evidence of an

actual discriminatory effect in order to take advantage of heightened scrutiny and shift the burden of

proof to the State; but such evidence is absent here.

Plaintiffs have offered no indication that Arizona’s

in-person and [small winery] exceptions create a

market under which local goods constitute a larger

share, and goods with an out-of-state source constitute a smaller share, of the total sales in the market.

The mere fact that more out-of-state wineries than

in-state wineries are required to adhere to Arizona’s

three-tiered distribution system is not by itself sufficient to establish that Arizona’s statutory scheme is

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patently discriminatory in effect against interstate

commerce. That fact at best supports the contention

that Arizona’s statutory scheme places an incidental

burden on interstate commerce. If the Court were to

find otherwise, then no distinction would exist

between statutes that are patently discriminatory in

effect and those that are subject to the incidental burden test under the Pike analysis. This Court is not

inclined to abolish that distinction.

Black Star Farms, LLC, 544 F. Supp. 2d at 928.

Granholm, Black Star Farms’s primary case authority, does

not support its arguments. In Granholm, “[o]ut-of-state wineries [in Michigan], whether licensed or not, face[d] a complete ban on direct shipment.” 544 U.S. at 473-74. Such is not

the case here. As for New York, in-state licensed producers

could ship directly from their wineries to their customers, but

out-of-state wineries were required to “open a branch office

and warehouse in New York.” Id. at 474. The Court opined

that “New York’s in-state presence requirement runs contrary

to our admonition that States cannot require an out-of-state

firm ‘to become a resident in order to compete on equal

terms.’ ” Id. at 475 (quoting Halliburton Oil Well Cementing

Co. v. Reily, 373 U.S. 64, 72 (1963)). Arizona’s laws do not

approach this level of discriminatory effect. The district court

was correct in its observation that in Granholm, “the exceptions in effect allowed only in-state wineries, to the exclusion

of all out-of-state wineries, to bypass the states’ three-tiered

distribution system and ship directly to consumers.” Black

Star Farms, LLC, 544 F. Supp. 2d at 920.

Finally, we agree with Judge Murguia that “[n]othing in

Granholm suggests that the Supreme Court was concerned

about equalizing the inherent marketing advantage that

accrues to in-state wineries because of their close proximity

to a state’s consumers.” Id. at 925.

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D.

The “In-Person” Exception

[9] Again, for dormant Commerce Clause purposes, “ ‘discrimination’ simply means differential treatment of in-state

and out-of-state economic interests that benefits the former

and burdens the latter.” Or. Waste, 511 U.S. at 99 (emphasis

added). As the Supreme Court explained in Granholm, “[i]f

a State chooses to allow direct shipment of wine, it must do

so on evenhanded terms.” 544 U.S. at 493. Black Star Farms

seems to suggest that Granholm presents States with only two

choices in regulating the direct shipment of wine from wineries to consumers: (1) prohibit all direct shipment of wine,

or (2) allow all wineries to ship directly to consumers without

any restrictions that might incidentally burden out-of-state

wineries, such as an in-person purchase requirement. We disagree. Instead, we read Granholm to permit States to limit

direct shipment from wineries so long as the limitations treat

in-state and out-of-state wineries in the same manner, see id.

at 474, and do not impose new burdens on out-of-state wineries, see Hunt, 432 U.S. at 351.

[10] Arizona’s in-person purchase requirement does not

discriminate against out-of-state wineries. The requirement

treats in-state and out-of-state wineries the same — there is no

“differential treatment.” See Or. Waste, 511 U.S. at 99. The

direct shipment of wine under a direct shipment license —

whether by an in-state or out-of-state winery — is subject to

the in-person purchase requirement, regardless of the state in

which the winery is found, including Arizona. Ariz. Rev. Stat.

§ 4-203.04(J). This requirement does not impose any new

burden on out-of-state wineries. See Granholm, 544 U.S. at

474 (explaining that the New York statute imposed a new burden on out-of-state wineries by requiring them to open a new

location in New York); Hunt, 432 U.S. at 351 (explaining that

the North Carolina statute imposed a new burden on out-ofstate apple growers by requiring them to remove state quality

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labels from apples shipped to North Carolina). As the First

Circuit explained, “[a]n effect is not discriminatory, in violation of the dormant commerce clause, if it results from natural

conditions.” Baldacci, 505 F.3d at 38 n.7.6 We agree. In addition, Black Star Farms adduced no evidence that the in-person

exception causes wine produced by Arizona wineries to constitute a larger share of the total sales in the market. “[T]he

mere fact that a statutory regime has a discriminatory

potential is not enough to trigger strict scrutiny under the dormant commerce clause.” Id. at 37. A de minimis benefit to instate wineries is also insufficient to trigger strict scrutiny. See

id. at 38-39; Brown & Williamson Tobacco Corp. v. Pataki,

320 F.3d 200, 216 (2d Cir. 2003); see also Baude v. Heath,

538 F.3d 608, 612 (7th Cir. 2008), cert. denied, 129 S. Ct.

2382 (2009) (upholding an Indiana statute that required consumers who wanted to receive direct shipments of wine from

a winery — whether located in state or out of state — to visit

the winery and supply proof of age). We must affirm the district court’s order granting summary judgment to the defendants. But see Cherry Hill Vineyards, LLC v. Lilly, 553 F.3d

423, 432-33 (6th Cir. 2008) (holding that Kentucky’s inperson purchase requirement for direct shipment of wine discriminated against interstate commerce because the plaintiffs

presented evidence that the requirement favored in-state wineries and burdened out-of-state wineries).

[11] Accordingly, the district court’s award of summary

judgment in favor of Arizona’s director of its Department of

Liquor Licensing and Control shall stand.

6

In Baldacci, the plaintiffs challenged a Maine statute that permitted

wineries that produced no more than 50,000 gallons of wine per year to

sell directly to consumers who were physically present at the winery. 505

F.3d at 31. Unlike Arizona’s in-person exception, the Maine statute did

not permit wineries to ship the wine to the consumer; the consumer was

required to transport the wine himself. Id. The First Circuit held that the

plaintiffs failed to carry their burden of showing that the requirement was

discriminatory in effect. Id. at 35. This holding supports our conclusion

that in-person purchase requirements do not discriminate against out-ofstate wineries. 

BLACK STAR FARMS v. OLIVER 5525

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V

NEW ARGUMENT RAISED ON APPEAL

Black Star Farms attempts to raise a new argument on

appeal. Black Star Farms contends the Arizona statutes are

unconstitutional because they directly regulate interstate commerce. See NCAA v. Miller, 10 F.3d 633, 638-39 (9th Cir.

1993) (holding unconstitutional a Nevada statute that had the

effect of directly regulating interstate commerce). Because

Black Star Farms did not raise this issue before the district

court, we decline to address it here. See AlohaCare v. Hawaii

Dep’t of Human Servs., 572 F.3d 740, 744 (9th Cir. 2009).

VI

CONCLUSION

We affirm the district court’s order denying Black Star

Farms’s motion for summary judgment and granting Arizona’s cross-motions for summary judgment.

AFFIRMED.

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