1

07- 4781- cv B u y R ite , I n c . v . B o yle 1 U N IT E D S T A T E S C O U R T O F A P P E A LS 2 3 F OR THE S EC OND C IR C U IT 4 5 6 7 August Term, 2008 8 9 (Argued: J anuar

y 20, 2009 Dec ided: J uly 1, 2009) 10 11 Docke t No. 07-4781-c v 12 13 14 A RN O LD ’ S W I NES , I NC ., D / B /A / K

AHN ’ S F I NE W I N ES & S P I R I TS , B UY R I TE , I NC ., D O I N G BU SI N ESS 15 A S C R OW N L I Q U O RS , J OS HUA T. B LOCK , S HAR ON S I L BE R , 16 17 Plain tif fs- Ap pe lla nts , 18 19 –v.– 20 21 D A N I EL B. B O Y LE , C HAI RMAN OF THE N EW Y O RK S TA TE L I Q U O R A UT HO R I TY , I N HI S OF F I C I AL 22 C AP AC I TY , L AWRENC E J. G ED DA , C OM MI S S I ONER OF THE D I V I SI O N O F A LC O H O LI C B EV ER AGE 23 C ONTR OL , I N HI S O F F I C I AL C AP AC I TY , N EW Y O RK S TA TE L I Q U O R A UT HO R I TY , 24 25 Defendants-A ppellees , 26 27 E BER B RO T H ER S W I NE & L I Q U O R C O RP ., C H A RM ER I NDU S TRI ES , I

NC ., METR OP OL I TAN P AC K AGE 28 S TO RE A S S OCI AT ES , I NC ., 29 30 Interve nor-Defe ndants-Appellee s . 31 32 33 34 35 Be fore : 36 W AL KE R , C A LA BR ESI , and W ES L EY , Circuit Judges

. 37 38 Appea l from an or der of the United States District Court for the Southern District of Ne w 39 Yo rk

(H olw e ll, J.), e nte re d o n O c tob e r 1 , 2 00 7, g ra nti ngde fe nd ants ’ m oti on s to dis mis s2 1 Appellants’ r equest for a dec laratory

judgme nt invalidating se ctions 100(1), 102(1) (a) , and 2 10 2( 1) (b ) o f N e w Y or k’ s A lc oh oli c B e ve ra g e Contr ol L aw a s v iol ativ e of the Comme rc e Cla

us e 3 of the United States Constitution, Article I , Section 8, Clause 3. 4 5 A F F I RMED . 6 7 8 9 10 P ET ER E. S EI DMAN , MilbergL L P, New Yor k, NY, (Sanf

ord P. Dumain, Milberg 11 L L P, New Yor k, NY, James A. Tanfor d, Indiana Univ. School of L aw, 12 Blooming ton, I N, and Rober

t D. Epstein, Epstein Cohen Donahoe & 13 Mendes, Indianapolis, I N, of counsel), for

Plain tif fs- Ap pe lla nts

. 14 15 R I C HAR D P. D EA R I NG , Assistant Sol icitor Gene ral (B arba ra D . Under

wood, 16 Solicitor Genera l, and Michae l S. Belohlave k, Senior Counsel, Division of 17 Appea ls & Opinions, of counsel), for Andre w M. Cuomo, Attorney 18 Gene ral of the State of Ne w York, N ew Yor k, NY, for

De fe nd an ts19 Appellee s . 20 21 J OHN F. O’M A RA , D avis on & O’ Ma ra , P. C., El mir a , N Y ( Ha

rr is B e a c h PL L C, 22 Pitt sford, NY , of counsel), for In te rv e no r-

De fe nd an t- Ap pe lle e Eb e r B ro s. 23 W ine&Liq uo r Co rp . 24 25 H OW AR D G RA FF , Dickstein Shapiro L L P, New Yor k, NY, for

In te rv e no r26 Defendant- AppelleeCharmer Industries, Inc. 27 28 A L AN J. G ARDNER , Ver ini & Ga rdner , New Y ork, NY, for In te rv e no r-

De fe nd an t29 AppelleeMetropolitan PackageStore Association, Inc. 30 31 S AR AH L. O L S ON , Wil dman, Har rold, Allen & Dix on, L L P, Chi cag o, I L(Richar d 32 Har rison, Westerman B all Edere r Miller & Sharfstein, L L P, Mineola, NY, 33 of counsel), for Arthur J. DeCelle, Executive Vice President and Ge nera l 34 Counsel of the B eer Institut e, Washing ton, D.C., for Amicus Curiae The 35 Be e r I ns titute

. 36 37 ANTHONY S. K OGUT , Wil lingham & Coté, P.C., East L ansing , MI , for Amicus 38 Curiae The American Be verageLicensee s Association

. 39 40 C A RT ER G. P HI L L I PS , Sidley Austin L L P, W ashing ton, D.C. (J acque line G. 41 Cooper, Sidley Austin, L L P, W ashing ton D.C., Craig Wolf, J oanne Moa k, 42 and Ka rin Moore, Wine & Spirits W holesaler s of Amer ica, Inc.,3 1 Washington, D.C., of counsel), for Am ic i Cu ria e W

ine&Sp iri ts 2 W holesalers of America, I

nc., National Beer W

holesalers Association, and 3 Sazerac Company

. 4 5 6 7 W ES L EY , Circuit Judge : 8 This case asks us to char t a cour se betwe en two constitutional provisions that delineate 9 the boundar ies of a state’s powe r to regulate commer ce, one an express g rant, the othe r an 10 implied lim itation. Section 2 of the Twenty -first Amendme nt provides: “The transportation or 11 imp or

tatio n into a

ny State , T e rr ito ry , o r p os se ssi on of the Un ite d St ate s f

or de liv e ry or us e 12 the re in o f i nto xicatin gliq uo rs , in vio latio n o f t

he la ws the re of

, is he re by

pr oh ibi te d. ” U. S. Co ns t. 13 ame nd . X XI , § 2. Th e Comme rc e Cla us e re se rv e s f

or Con g re ss t

he po we r “ [t]o r e g ulate 14 Commerce . . . a

mong the sever al States,” thus implicitly limit ing the states’ powe r to do so. 15 U.S. Const. art. 1, § 8, cl. 3. Here , we must deter mine whether

New Y ork’s a lcohol regulatory 16 reg ime is properly within the scope of se ction 2 of the Twe nty -first Amendme nt, such that it does 17 no t r

un a fo ul o f t he do rm ant C omm e rc e Cla us e . We c on c lud e that th e c ha lle ng e d r e g ime is 18 pe rm iss ibl e un de r t he Tw e nty -f

ir st A me ndme nt i ns of

ar a s it re qu ir e s th at a ll l iqu or

so ld w ith in 19 the State of

Ne w Y or k p a ss t hr ou g h N e w Y or

k’ s thre e -t ie r r e g ulator

y sy ste m. 20 21 BACK GR OUND 22 Appellant Ar nold’s Wines, I nc., doingbusiness as Kahn’ s Fine Wines & Spirits, a wine 23 re ta ile r o pe ratin gtw o s tor e s in the Ind iana

po lis , Ind iana

are a , w ou ld l ike to s e ll i ts p ro du c ts 24 direc tly

to New Yor

k consumers. A

ppellants J oshua T. B lock and Shar on Silber, New Y ork4 1 residents, would like to be a ble to buy and re ceive wine dire ctly from out-of- state re tailers. 2 Appellants thus broug ht this action in the United States District Court for the Southern District of 3 New Y ork ag ainst the NewYork State L iquor Authority and individual officia ls of the New York 4 State L iquor Authority , pursuant to 42 U.S.C. § 1983, seekinga dec laratory judgme nt finding 5 sections 100(1), 102( 1)(a ), and 102( 1)(b) of Ne w York’ s Alcoholic B ever ag e Control L aw 6 (“A BC L aw” ) unconstitutional to the ext ent that they prohibit out-of-state w ine re tailers fr om 7 selling a

nd deliveringwine dire ctly to New Yor

k consumers. Tw o licensed N ew Yor k 8 wholesale rs and a

n association of lice nsed Ne w York r etailer s were g rante d leave to appea r as 9 int e rv e no r- de fe nd ants

. 10 The district cour t (Holwell, J.), in a well-re asoned de cision, g rante d defe ndants’ motion 11 to dismi ss, holding that the c halleng ed sec tions are a n integ ral pa

rt of the thre e-tier

alcohol 12 re g ulator

y sy ste m c on sis te nt w iththe a uth or ity g ra nte d to Ne w Y or

k b y the Tw e nty -f

ir st 13 Amendment. Ar

no ld’ s W ine s, In c . v . B oy le , 515 F. Supp. 2d 401, 413-14 (S.D.N.Y . 2007). 14 Ap pe lla

nts tim e ly fi le d th is a

pp e a l. 15 A. New Y ork’s Re gulatory Schem e 16 Sections 100(1), 102(1) (a) , and 102(1) (b) of New Y ork’s AB C L aw r equire that all liquor 17 so ld, de liv e re d, sh ipp e d, or tr ans po rt e d to a

Ne w Y or k c on sume r f

ir st p a ss t hr ou g h a n e nti ty 18 lic e ns e d b y

the State of

Ne w Y or k. Se c tio n 1 00 (1 ) s tate s, “ No pe rs on sh a ll m anu fa c tur e fo r s a le 19 or sell at wholesa le or re tail any alcoholic be vera g e within the state without obtaining the 20 appropr iate license there for r equire d by this chapter.” N.Y. Alco. B ev. Cont. L aw § 100( 1)Wit h the exception of winer ies, see id. §§ 79 -c , 7 9- d, a ll m anu fa c tur e rs ’ p ro du c ts mus t 1 pass throug h the three -tier sy stem. Manufa cture rs oper atingwithin the State of NewYork a re re qu i re d t o o b t ai na l i ce n s e gr an t edb y th e s t at e, as we l l as d i s tri b u t e t h ei r p ro d u ct s th ro u gh licensed wholesaler s and re tailers. See id. §§ 100(1), 100( 2). Manufa cture rs oper atingoutside of the state, a

nd there fore not licensed by the state, similarly

must ship t heir produc ts to a licensed in-state wholesa ler or r etailer for r esale to New Yor

k consumers. See id. §§ 100(2), 102( 1). 5 1 (M c Ki nn e y

20 00 & Sup p. 20 06 ). Th e oth e r t wo pr ov isi on s ma

ke it i lle g a l to sh ip a lc oh oli c 1 2 bever ag es to an unlice nsed entity within the state (i.e., a

consumer)

. Id. § 102(1)( a)- (b). 3 These pr ovisions are pa rt of the thre e-tier

licensingstructure for the sa le and distribution 4 of a lc oh oli c be ve ra g e s e sta

bli sh e d in Ne w Y or k s ho rt ly a ft e r t he pa ssa g e of

the Tw e nty -f

ir st 5 Amendment. The main purpose of the three -tier sy stem was to pre clude the e x istence of a “tied” 6 sy ste m be tw e e n p ro du c e rs and re ta ile rs , a

sy ste m g e ne ra lly

be lie ve d to e na

ble or g anize d c ri me to 7 dominate the industry . The thre e tiers a re: (1) the produc er, ( 2) the distributor or whole saler, a nd 8 ( 3 ) th e r e t a i l e r . U n d e r th i s s ys t e m , th e p r o d

u c e r s e l l s t o a l i c e n s e d i n - s t at e w h o l e s a l e r , w h o p ays 9 excise tax es and de livers the alc ohol to a licensed in-state re tailer. The reta iler, in turn, sells the 10 alcohol to consumer s, collectingsales taxes where applicable . In New Y ork, only in-state and 11 out-of-state winerie s may by pass the thre e-tier

sy stem to ship directly

to consumers. Id. §§ 79-c, 12 79 -d . A ll o the r o ut- of -s tate pr od

uc e rs and se lle rs mus t sh ip t o s tate -l ic e ns e d who le sa le rs wi thi n 13 the three -tier sy stem. Id. § 1 02 (1 )( a )- (b ); see also Arnold’s W ines , 515 F. Supp. 2d at 403-04. 14 This licensing scheme allows the state to over see the financ ial relationships among 15 manufa cture rs, wholesa lers, and r etailer s, seeN.Y. Alco. B ev. Cont. L aw §§ 101, 105( 16)-( 17), 16 106(13)- (14), a s well as the wa y s these entities price g oods and make sales, see id. §§ 101-aa , 17 101-b(2) -(3) . The State L iquor Authority may inspect any

premises whe re a lcoholic beve rag es6 1 are manufa cture d, stored, or sold, as w ell as the books and r ecor ds kept on such pre mises. Id. §§ 2 18(4), 103( 7), 104(10) , 105(15), 106( 12). Ne w York a sserts that the thre e-tier regulatory

sy stem 3 a llo ws the state to c oll e c t taxes m or e e ff ic ie ntl y and pr e ve nt t he sa le of a lc oh ol t o mi no rs . 4 Relevant in this particular case , New Y ork-lice nsed re tailers, the f inal tier in the state’ s 5 thr e e -t ie r s y ste m, m ay ob ta in o ff

-p re mis e s li c e ns e s p e rm itt ingthe m to de liv e r a lc oh ol d ir e c tly to 6 consumers’ homes “in vehic les owned a nd operated by

such license e[s] , or hired a nd operated by 7 such license e[s] from a tr uckingor transpor

tation company

reg istered with the liquor a uthority .” 8 Id. § 105(9). Ne w York r etail off- premises lice nsees must comply with a set of hig hly

detailed 9 re g ulatio ns g ov e rn ingthe loc atio n, phy sic a l c ha ra c te ri sti c s, and

op e ra tin gho ur s o f t

he ir 10 premises, a s well as their f inancial r elationships with producer s and wholesa lers, and the manner 11 in which they

keep books a

nd rec ords for a ll their transac tions. Id. § 1 05 (1 )- (2 3) . O ut- of -s tate 12 re ta ile rs wi tho ut a n in -s tate op e ratio n c ann ot o bta in a Ne w Y or k r e ta il o ff

-p re mis e s li c e ns e . It is 13 this dist inction–that New Yor k-license d reta ilers, but not out-of-state r etailer s, may deliver liquor 14 direc tly

to New Yor

k residents–that Appe llants challeng e in this case. 15 16 DI SCU SSIO N 17 Appellants ar g ue that Ne w York’ s ban on direc t sales to consumers by out-of-state liquor 18 reta ilers discriminates a g ainst interstate c ommerce and thus violates the Commerce Clause. The 1 9 C o m m er ce C l au s e p ro v i d es th atC o n gre s s h as th e p o we r t o “r egu l at e C o m m er ce wi thfo re i gn 2 0 N at i o n s , an d

am o n gth e s e v e r a l S t at e s , an d w i thth e In d i anT r i b e s . ” U

. S

. C o n s t

. art

. I § 8 , c l

. 3

. It 21 is w e ll e sta

bli sh e d th at th e a ff

ir mativ e imp lie s th e ne g ativ e , a nd that th e Comme rc e Cla

us e7 1 establishes a “ dormant” c onstraint on the power of the states to e nact leg islation that int erf ere s 2 with or burdens inter state commer ce. See, e .g. , Dennis v. H iggins , 498 U.S. 439, 447 (1991). 3 Thus , s tate s ma

y no t pa ss l aws that di sc ri min ate a g a ins t out- of -s tate e c on omi c int e re sts un le ss 4 tho se laws “ a dv anc e [] a le g iti mate loc a l pu rp os e that c ann ot b e a de qu ate ly se rv e d b y

re a so na ble 5 nondiscriminatory alternatives.” New Energy Co. of Ind. v. Limbach , 486 U.S. 269, 278 (1988). 6 Howeve r, the Supreme Court has made c lear that the Twe nty -first Amendme nt alters 7 do rm ant C omm e rc e Cla us e ana ly sis of

state laws g ov e rn ingthe imp or tatio n o f a lc oh oli c 8 bever ag es. E.g. , Gran ho lm v . H e ald, 544 U.S. 460, 488-89 (2005). Ratifie d in 1933, the 9 Twenty -first Amendme nt repe aled the E ighte enth Amendment a nd ended Prohibition. Section 2 10 of the Ame ndment provides: “The transportation or importation into any State, Terr itory , or 11 possession of the United States for delivery or use ther ein of intox icatingliquors, in violation of 12 the laws ther eof, is her eby prohibited.” The purpose of section 2 wa s to protect ce rtain cor e 13 interests of the states in “promotingtempera nce, e nsuringorder ly

marke t conditions, and raising 14 reve nue” thr oug h regulation of the produc tion and distribution of alcoholic beve rag es. Nor th 15 Dakota v. U

nited States , 495 U.S. 423, 432 (1990) (plura lity opinion). 16 The Twe nty -first Amendme nt is thus i n tension with the Commerce Clause , as sec tion 2 17 “g rants the States virtually complete c ontrol over whe ther to per mit im portation or sale of liquor 18 and how to structur e the liquor distribution sy stem.” Gran ho lm , 5 4 4 U. S

. at4 8 8 (qu o t i n g Cal

. 19 Retail Liquor Dealers Ass’n v. Midc al Aluminum, Inc. , 445 U.S. 97, 110 (1980)) ( internal 20 quotation marks omitted). But state power s under the T wenty -first Amendme nt are not without 21 limit ation; the Amendment does not immuniz e all re g ulation of alcoholic be vera g es fr om8 1 Commerce Clause scrutiny

. Id . St ate po lic ie s a re on ly “ pr ote c te d und e r t

he Tw e nty -f

ir st 2 Amendment whe n they treat liquor produced out of state the same as its domestic equivalent.” 3 Id. at 489. 4 Most rece ntly , in Gran ho lm v . H e ald, the Supreme Court a ddresse d the difficulties 5 inhere nt in the intersection of the se two constitutional provisions. Analy zing the Wilson Act and 6 the Webb-Ke ny on Act–two pre -Prohibition st atutes that influenc ed the dr aftingof sec tion 2 of 7 the Twe nty -first Amendme nt–the Court concluded that section 2’s purpose was to re turn to the 8 states only

the Commerce Clause immunity provided by

those two Acts. Id. at 483. The 9 Twenty -first Amendme nt was intended “ to allow States to maintain an eff ective a nd uniform 10 sy stem for c ontrolling liquor by regulating its transpor

tation, importation, and use. The 11 Am e ndme nt d id n ot g ive State s th e a uth or ity to p a ss n onun if

or m la ws in o rd e r t o d isc ri min ate 12 ag ainst out-of-state g oods.” Id. at 484-85. 13 The Gran ho lm Court set forth the test for deter mining the c onstitut ionality of state liquor 14 regulations. I f the state me asure discriminates in favor of in-state pr oducer s or produc ts, the 15 regulatory

reg ime is not automatically saved by the Twe nty -first Amendme nt simpl y by virtue of 16 the spec ial nature of the produc t regulated. See id. at 484-87. Rather , if the cour t finds the law 17 discriminatory , it will onl y be upheld if it re asonably advanc es leg itimate state interests “that 18 cannot be adequa tely serve d by

rea sonable nondiscr iminatory alternatives.” Id. at 489 (quoting 19 Limbach , 486 U.S. at 278) (inter nal quotation marks omitted). 20 Applying this fr amewor k, the Granholm Court struck down laws in Ne w York a nd 21 Mic hig an th at c re ate d e xce pti on s to the state s’ thr e e -t ie r d ist ri butio n s y ste ms, a llo wi ngin- state9 1 wi ne ri e s to by

pa ss t he thr e e tie rs and

sh ip d ir e c tly

to c on sume rs , whil e pr e ve nti ngout- of -s tate 2 winerie s from doingso. Id. at4 6 6

. T h e C o urtfo un d th atth e “ d i ff

er en t i al tre at m en tre qu i r[ i n g] 3 all out-of-state wine, but not all in-state wine, to pa ss throug h an in-state wholesaler and re tailer 4 befor e re achingconsumers” impermissibly discriminated ag ainst interstate c ommerce . Id. at 5 47 3- 74 ; see also id. at 467. Thus, the Court found that the N ew Yor k and Michig an laws w ere 6 not immuni zed by the Twe nty -first Amendme nt. 7 Ha

vin gc on c lud e d th at th e c ha lle ng e d la ws we re no t a

uth or ize d b y

the Tw e nty -f

ir st 8 Amendment, the Gran ho lm Court ne xt und e rt oo k th e sta

nd ard do rm ant C omm e rc e Cla

us e 9 analy sis, determining whether the discriminatory

statutes serve d a leg itimate local purpose that 10 could not be ac complished throug h nondiscriminatory means. See id. at 489. The Court noted 11 that th e re we re a

numbe r o f n on dis c ri min ator y pr a c tic e s b y

wh ic h th e state s c ou ld a c hie ve the ir 12 stated g oals of fa cilitating tax collection and pr eventingminors from consumingalcohol. See id. 13 at 489-93. Ac cording ly , it struck down the Ne w York a nd Michig an laws a s violative of the 14 Commerce Clause

. Id. at 493. 15 In r e a c hin gits c on c lus ion , th e Cou rt re pe ate dly

e mph a size d th at th e thr e e -t ie r s y ste ms i n 16 place in both states did not themselves violate the Constitut ion. Specifica lly , the Court stated 17 that it

is “ un qu e sti on a

bly le g iti mate ” fo r a

state to b ar t

he imp or tatio n o f a lc oh oli c be ve ra g e s if it 18 bans the sale and consumption of alc ohol altoge ther, or to “ funnel sale s throug h the three -tier 19 sy stem.” Id. at 489. Gran ho lm i s b es ts ee nas an at t em p tt o h arm o n i z e p ri o r C o urth o l d i n gs 20 re g ard ingthe po we r o f t he state s to re g ulate a lc oh ol w ith in t he ir bo rd e rs –a

po we r s pe c if

ic a lly 21 g rante d to the states by the Twe nty -first Amendme nt–with the broad policy conce rns of the10 1 Commerce Clause

. See, e .g. , Nor th Da k ota , 4 95 U. S. at 43 2; Cap ita l Cit ie s Ca ble , I nc . v . Cr isp , 2 46 7 U .S. 69 1, 71 2- 13 (1 98 4) ; Midcal , 445 U.S. at 110. Granholm va lid ate s e ve nh and e d s tate 3 po lic ie s r e g ulatin gthe imp or tatio n a nd dis tr ibutio n o f a lc oh oli c be ve ra g e s und e r t he Tw e nty -f

ir st 4 Am e ndme nt. I t is on ly wh e re state s c re ate dis c ri min ator y e xce pti on s to the thr e e -t ie r s y ste m, 5 allowingin-state, but not out-of-state , liquor to by pass the thre e re g ulatory

tiers, that their law s 6 are subject to invalidation based on the Commerc e Clause. Gran ho lm , 544 U.S. at 489; se e als o 7 Brooks v. Vassar , 462 F.3d 341, 351- 53 (4th Cir. 2006). 8 A. Application of the Gr anh olm Analysis to New Y ork’s ABC Law 9 Ap pe lla

nts c ha lle ng e pr ov isi on s th at make no dis tin c tio n b e tw e e n li qu or pr od uc e d in 10 New Y ork and liquor pr oduced out of the state: both may

be shipped dire ctly

to New Yor

k 11 consumers by

licensed in-state re tailers. Se e Gran ho lm 54 4 U .S. at 48 7; He aly v . B e e r I ns t. , 491 12 U. S. 3 24 , 3 35 -3 7 ( 19 89 ); Brown -F or ma n D ist ille rs C

or p. v . N. Y . S tate Liq uo r A uth ., 47 6 U .S. 13 573, 582-83 (1986) ; Bacc hus Imports, Ltd. v. Dias , 4 68 U. S. 2 63 , 2 76 (1 98 4) . App e lla nts se e k to 14 mimic the conce rns addr essed in Gran ho lm by c on te nd ingthat th e Ne w Y or k la w i s inva lid 15 beca

use it g rants in-state r etailer s benef its not afforde d to out-of-state r etailer s. This argument 16 comes up short unde r Granholm for se vera l rea sons. 17 First, bec ause in-state re tailers make up the third tier in New York’s thre e-tier

regulatory 18 sy stem, Appellants’ c halleng e to the AB C L aw’ s provisions requiringall wholesale rs and 19 reta ilers be pr esent in and lice nsed by the state, N.Y . Alco. B ev. Cont. L aw § 100( 1), is a fr ontal 20 attack on the constitutionalit y of three -tier sy stem itself. Howeve r, the Gran ho lm Court 21 specific ally

acknow ledg ed the vital role of the thre e-tier sy stem in the exercise of states’ sec tionThe Granholm dissenters spec ifically endorse d the constitutionality of the thre e-tier 2 sy stem as well. Id. at 495 (Stevens, J., diss enting ) (“ Can it be doubted that a State mig ht establish a state monopoly of the manuf

actur e and sa le of be er, a

nd either pr ohibit all competing importations, or discourag e importation by laying a heavy impost, or channelize desire d i mp o rt at i o n s b y

co n fi n i n g th em t o a s i n gl e c o n s i gn ee ? ” ( qu o t i n g Sta teBd . o f E qu ali za tio n o f Ca l. v. Y oung’s Mk

t. Co. , 2 99 U. S. 5 9, 62 -6 3 ( 19 36 )) ; id. at 517 (Thomas, J., dissenting) (a ffirming the exist ence of the “ widespre ad, unquestioned a cce ptance of the thre e-tier sy stem of liquor regulation”). 11 1 2 power s. The Court re aff irmed that the thre e-tier

sy stem is an “unquestionably leg itimate” 2 exercise of

the states’ pow ers unde r the Twe nty -first Amendme nt to regulate the importation and 3 use of a lcohol. Gran ho lm , 5 44 U. S. at 48 8- 89

. Ap pe lla nts ’ a rgume nt i s th e re fo re dir e c tly 2 4 fore closed by

the Gran ho lm Court ’s e xpre ss a ff ir matio n o f t

he le g a lity

of the thr e e -t ie r s y ste m. 5 Appellants re ply that the languag e in Granholm e nd or sin gthe thr e e -t ie r s y ste m is me re ly 6 dicta. In Gran ho lm , the states explicitly argued that the c halleng ed re g ulations were essential 7 elements of the three -tier sy stem. They attempted to justify

their re g ulations by

citing pr ior 8 Sup re me Court

c a se s th at a c kn ow le dg e d th e thr e e -t ie r s y ste m a s a le g iti mate e xer c ise of

state 9 power

under the Twenty -first Amendme nt. I n rea chingits holdi ng , the Granholm Court noted 10 that the cha lleng ed re g ulations were discriminatory exceptions to, rather tha

n integ ral pa

rts of, 11 the under lying thr ee- tier sy stems. See id. Ha d th e thr e e -t ie r s y ste m it se lf be e n uns us ta ina

ble 12 under the Twenty -first Amendme nt, the Granholm Court wo uld have ha d n o n e e d to dis tin g uis h 13 it f

ro m th e imp e rm iss ibl e re g ula tio ns at is su e . A s Judg e Ho lw e ll s tate d in his op ini on

be low , “ if 14 dicta this be, it is of the most persuasive kind.” Arnold’s W ines , 515 F. Supp. 2d at 412. 15 Second, Ne w York’ s ABC L aw tre ats in-state a nd out-of-state liquor evenha ndedly under 16 the state’s thre e-tier sy stem, and thus complies with Gran ho lm ’s nondiscrimination principle.12 1 Se e Gran ho lm , 5 44 U. S. at 48 9. Ne w Y or k r e qu ir e s th at a ll l iqu or

–whe the r o ri g inatin gin s tate 2 or out of state–pa ss throug h the three -tier sy stem. N.Y. Alco. B ev. Cont. L aw §§ 102 et seq. 3 Al co h o l s o l d

b y i n -s t at e r et ai l er s d i re ct l y

t o co n s u m er s i nNe w Y o rkh as al re ad y p as s edth ro u gh 4 the first two tiers–produc er a nd wholesale r–and be en taxed and re gulated ac cording ly . Requiring 5 out- of

-s tate liq uo r t o p a ss t

hr ou g h a lic e ns e d in -s ta

te wh ole sa le r a

nd re ta ile r a dd s n o c os t to 6 deliveringthe liquor to the consumer not equally

applied to in-state liquor. Rather , the New 7 Yo rk

re g ulator y sc he me mand ate s th at bo th i n- state and out- of -s tate liq uo r p a ss t hr ou g h th e same 8 three -tier sy stem befor e ultimate deliver y to the consumer. 9 This is in st ark c ontrast to the cha lleng ed re g ulations in Gran ho lm . The Ne w York a nd 10 Michig an laws struc k down by the Court in Granholm c re ate d s pe c if ic e xce pti on s to the state s’ 11 three -tier sy stems favoringin-state produc ers. 544 U.S. at 474. This wa s exactly the ty pe of 12 economic pr otectionist policy the Commerce Clause soug ht to forestall, and where the Gran ho lm 13 Court drew the line. See id. at 489. Whil e the Tw enty -first Amendme nt gr ants the states broa d 14 power s to regulate the tra nsportation, sale, a

nd use of a lcohol within their border s, it sim ply does 15 not immuni ze attempts to discriminate in favor of local produc ts and produce rs. Id. ; se e als o 16 Bacc hus , 4 68 U. S. at 27 6. Th e c ha lle ng e d r e g ulatio ns he re are e ve nh and e d a nd pe rm iss ibl y 17 aimed at “ combat[ing] the perc eived e vils of an unre stricted tra ffic in liquor,” rathe r than 18 acc omplishi ng“mer e ec onomic protec tionism .” Bacc hus , 468 U.S. at 276. Thus, New Y ork’s 19 alcohol re g ulatory scheme proper ly

falls within the state’s powe rs grante d by section 2 of the 20 Twenty -first Amendme nt. 21 Be cause New Y ork’s thre e-tier sy stem treats in-state and out-of- state liquor the same , andAp p el l an t s ’ c o m p l ai n t s o f d i s cr i m i n at i o nh av e s o m ew h ato f ah o l l o w r i n g. Al th o u gh 3 they asser t a willingne ss to comply with New Yor

k’s re g ulatory

scheme if allowed to de liver liquor directly

to New Yor

k consumers, this would be virtua lly impossibl e without either a n absurd ope rational re sult, or a dismantling of N ew Yor k’s entire three -tier sc heme. F or example, we re the y to c omp ly

wi th t he e xistin gsy ste m, I

nd iana -b a se d A rn old

Wine s w ou ld b e re qu ir e d to purcha se its liquor inventory from Ne w York wholesaler s, only to ship the wine bac k acr oss the country to New Yor

k consumers. See N. Y. Al c o. B e v. Cont. L . § 10 2( 3- b) . E ve n if Ap pe lla nts wer e willing to live with this rather absurd a rra ng ement, it would violate Indiana law s requiring licensed liquor r etailer s to purchase inventory from license d Indiana whole salers. See Ind. Code §§ 7. 1- 3- 14 -4 , 7 .1 -3 -1 5- 3( a ). B ut e ve n if Ap pe lla nts su c c e e d in

the ir c ha lle ng e to t

he in- state reta iler re quirements of N ew Yor k, under e x isting Ne w York L aw, Ar nold’s Wines would not qu a lif y fo r a re ta il l ic e ns e be c a

us e mul ti- sto re op e ra

tio ns are no t e lig ibl e fo r r e ta il l ic e ns e s in New Y ork. See N.Y. Alco. B ev. Cont. L . §§ 63(5), 79( 2). Of c ourse, the multi-store ope rations re str ic tio n is wr itt e n in

the c on te xt of

in- state re ta ile rs . U lti mate ly , b e c a us e it i s d e mon str a

bly impossibl e for

out-of-state reta ilers like Arnold Wines to comply with New Yor

k’s exist ing three -tier sc heme, grantingthem the re lief they seek w ould require us to invalidate NewYork’s three -tier sy stem. 13 1 does not discriminate a g ainst out-of-state products or pr oducer s, we ne ed not ana ly ze the 2 regulation further

under Commerc e Clause pr inciples. Sections 100(1), 102( 1)(a ), and 102( 1)(b) 3 of Ne w York’ s ABC L aw a re a n integ ral pa

rt of Ne w York’ s three- tier sy stem. Be cause New 3 4 York’s la

ws eve nhandedly

regulate the importation and distribution of liquor within the state, we 5 hold that they

do not run afoul of

the Commerce Clause. 6 7 CO NC LU SION 8 Sections 100(1), 102(1) (a) , and 102(1) (b) of New Y ork’s Alc oholic Be vera g e Control 9 L aw, ins tit

uti nga thr e e -t ie r s y ste m f

or the re g ula

tio n o f a lc oh oli c be ve ra g e s, do no t di sc ri min ate 10 ag ainst out-of-state produce rs in violation of the Commerce Clause of the United States 11 Con sti tut ion , A rt ic le I , Se c tio n 8 , Cl a us e 3, and

are thu s a

va lid e xer c ise of

the state ’s ri g hts 12 under the Twenty -first Amendme nt. For the fore g oing r easons, the district c ourt’s orde r of14 1 O c t o b e r

1 , 2 0 0 7 g r an t i n gd e f

e n d an t s ’ m o t i o n s t o d i s m i s s i s h e r e b y A F F I RMED .15 1 CAL AB RESI , Circuit Judge , co n cu rr i n g: 2 Ijoin fully in J udg e Wesley ’s opinion. Iwrite sepa rate ly to emphasize the unusual nature 3 of judicial interpr etation of the Tw enty -F irst Amendment, a c onstitut ional provision that, over 4 seventy -five year s, has bee n define d and re define d to acc ommodate cha ng ing soc ial needs a

nd 5 norms. There is good e vidence that when the T wenty -F irst Amendment was f irst adopted, 6 section two of that a mendment was intende d to give states nea r-total contr ol over a lcohol 7 re g ulatio n. Th at c omp le te c on tr ol w a s a sta rk e xce pti on

to t he oth e rw ise lim ite d s c op e of state 8 commerc e re g ulation. I n the ensuingdeca des howe ver, a s attitudes toward a lcohol have c hang ed 9 and its commerc e has be come more nationalized, the Supreme Court has incr easing ly rea d the 10 Tw e nty -F ir st A me ndme nt m or e na rr ow ly , a nd e xclu de d f

ro m it s p ro te c tio n a

ny numbe r o f s tate 1 1 re gu l at o ry

s ch em es th at , t o b e s ure , d i s cr i m i n at edaga i n s t i n t er s t at e c o m m er ce . T h i s “up d at i n g” 12 of

the Tw e nty -F ir st A me ndme nt r a ise s im po rt ant t he or e tic a l qu e sti on s a

bo ut t he ro le of c ourt s in 13 interpre ting c onstitut ional provisions that may well have become anac hronistic. But a part fr om 14 the se “ le g a l pr oc e ss” iss ue s, the jur isp ru de nc e that th e Sup re me Court ha s c re ate d thro ug h th is 15 up datin gpr e se nts oth e r p ro ble ms. Re g re tta bly , it of te n le ave s lo we r c ourt s at a los s in se e kin gto 16 figure out what the Twenty -F irst Amendment means a nd what if a

ny g overningprinciples may be 17 derive d from the High Court’s Twenty -F irst Amendment dec isions. 18 1 9 I. 20 A. 21 “The history of state r egulation of alcoholic be vera g es date s from longbefor e adoption of 22 the Eig hteenth Amendme nt.” Craig v. Boren , 429 U.S. 190, 205 (1976). As e arly as the Lic e ns e16 1 Cases , 4 6 U .S. (5 Ho w. ) 5 04 , 5 79 (1 84 7) , th e Sup re me Court “ re c og nize d a

br oa d a uth or ity in 2 state g overnme nts to regulate the tra de of a lcoholic beve rag es within their borde rs fre e fr om 3 implied restrictions under the Commerce Clause .” Cra ig , 429 U.S. at 205. Soon enoug h, 4 howeve r, the Supreme Court started to trim awa y at the edg es of that r egulatory power . Thus, by 5 th e l at e n i n et ee n thce n tury , th e S u p re m e C o urtb ega nt o “u n d er cu tth e t h eo re t i ca l un d er p i n n i n gs 6 of the License Cases .” Id. And, while the Supre me Court continued to per mit st ates to ban 7 alcohol altog ether , se e Gran ho lm v . H e ald, 5 44 U. S. 4 60 , 4 76 (2 00 5) ; Mugler v. Kansas , 123 8 U.S. 623 (1887), the Court, in a se ries of c ases dur ing the 1880s, struck down on dorma nt 9 Commerce Clause g rounds state law s banningor burde ning the sale of importe d liquor. See 10 Gram ho lm , 5 44 U. S. at 47 6- 77 (c oll e c tin gc a se s) ; see also, e.g. , Le isy v . H ar din , 135 U.S. 100 11 (1 89 0) ; Bowman v. Chicago &Nw. Ry. Co. , 125 U.S. 465 (1888). 12 In 1890, Congr ess tried to re solve the doctrina l “bind” the Court had c reated: states 13 “ c ou ld b an th e pr od uc tio n o f d ome sti c liq

uo r . . . but th e se laws we re ine ff e c tiv e be c a

us e 14 out-of-state liquor was immune from a ny state re g ulation as long as it remaine d in its original 15 packa g e.” Gran ho lm , 544 U.S. at 478. At the same time, the le g islators tried to addre ss schemes 16 of state pr otectionism. They did this by

passingthe Wils on Act, which stated that “All . . . 17 int oxic atin gliq

uo rs or liq uid s tr ans po rt e d into a

ny State or Te rr ito ry . . . s ha ll u

po n a rr iva l in 18 such State or Te rritory be subjec t to the operation and eff ect of the laws of suc h State or Ter ritory 1 9 en ac t edi nth e e x er ci s e o f i t s p o l i ce p o we rs , t o th e s am e e x t en tan d i nth e s am e m an n er

as th o u gh 20 su c h li qu ids or

liq uo rs ha d b e e n p ro du c e d in su c h St ate or

Te rr ito ry . . . . ” 27 U. S.C. § 1 21 . T his 21 act—a s descr ibed re cently in Gran ho lm —a llo we d s tate s “ to r e g ulate imp or te d li qu or on the same 22 terms as domestic liquor” but “did not allow States to discriminate ag ainst out-of-state liquor.”17 1 Gran ho lm , 544 U.S. at 478. 2 The Wilson Act posed many interpre tive challeng es for the cour ts. The text of the 3 statute—rea d literally —seeme d to permit obvious end-runs a round its anti-protec tionistaims. 4 Th e Sup re me Court , h ow e ve r, re a dil y interpre ted the ac t in light of that purpose . Thus, in Sc ott 5 v . D on ald, 1 65 U. S. 5 8 ( 18 97 ), the Court str uc k d own, a s a

vio latio n o f t

he Wils on

Ac t, a South 6 Caro lin a

liq uo r r e g ulator

y sc he me that r e qu ir e d a ll l iqu or sa le s to be c ha

nn e le d thro ug h a

state 7 liq uo r c omm iss ion e r. Th e South C aro lin a Ac t in str uc te d th e c omm iss ion e r t o “ purc ha se his 8 supplies from the bre wer s and distillers in this State when their product re ache s the standar d 9 require d by

this Act: Provided, Such supplies can be pur chase d as che aply from such br ewe rs and 10 distil lers in this St ate a s elsewhe re.” 1895 S.C. Acts 732. And South C arolina la w limited the 11 State’s markup on loc ally produce d wines to a 10-pe rce nt profit but imposed no such cap in the 12 c a se of

imp or te d w ine s. 16 5 U .S. at 93 . T he re su lt o f a ll this wa s inva lid dis c ri min atio n a g a ins t 13 out-of-state liquor. 14 The Court explained that the Wilson Act was “not intended to c onfer upon any State the 15 po we r t o d isc ri min ate inj ur iou sly a g a ins t th e pr od

uc ts o f o the r S tate s in

a rt ic le s w ho se 16 manu fa c tur e and

us e are no t f

or bid de n, and

wh ic h a re , th e re fo re , th e su

bje c ts o f l e g iti mate 17 commerc e.” Id. at 100. The Court fur ther he ld that the Wil son Act mandated “e quality or 18 un if

or mity of tr e atme nt u

nd e r s tate laws ,” and

did no t a llo w So uth

Caro lin a to p ro vid e “ an unju st 19 pref

ere nce” to its products “as ag ainst simil ar pr oducts of the other States.” Id. at 101. 20 In the late ninete enth ce ntury , states also attempted to re g ulate liquor by banningits direct 21 shipment, for per sonal use, fr om out-of-state sour ces to c itiz ens within the state. B ut the 22 Supreme Court soon interpre ted the Wilson Act as prohibiting such state laws. See Vancev.18 1 W .A. Vanderc ook Co. , 1 70 U. S. 4 38 (1 89 8) ; Rh od es v . I owa , 170 U.S. 412 (1898). In 1913, 2 Congr ess re sponded by passingthe Webb-Ke ny on Act which pr ohibits “[ t] he shipment or 3 transportation . . . of any . . . intox icatingliquor of any kind from one State, Te rritory , or District 4 . . . into any

other State, Te rritory , or District . . . [for the purpose of being ] receive d, possessed, 5 sold, or in any

manner used . . . in violation of any law of suc h State, Terr itory , or District.” 37 6 Stat. 699, 699-700 (codifie d at 27 U.S.C. § 122). I t is not precisely clea r what kind of regulation 7 the Webb-Ke ny on Act mea nt to allow. But, as it was inter prete d—much later

—in Gran ho lm , the 8 Webb-Kenyon Act “f orb[ade] ‘shipment or transportation’ only wher e it runs af

oul of the State’s 9 g ener ally

applicable laws g overningrec eipt, possession, sale, or use .” Gran ho lm , 544 U.S. at 10 482 (interna l quotation marks omitted). The re sult was that states could prohibit direc t 11 “shipments of alc ohol to consumers for persona l use, provided that the States tre ated in-state and 12 out-of-state liquor on the same ter ms.” Id. at 481. 13 B. 14 In 1919, the Eig hteenth Amendme nt was ratified and prohibition beg an. In 1933, 15 ho we ve r, pr oh ibi tio n w a s r e pe a le d b y the pa ssa g e of

the Tw e nty -F ir st A me ndme nt. Whil e 16 section one of

the Twe nty -F irst Amendment mere ly repe aled pr ohibition, s ection two did more. 17 Th at se c tio n s tate d th at “ [t]he tr ans po rt atio n o r i mpo rt atio n into a ny State

. . . f

or de liv e ry or us e 18 the re in o f i nto xicatin gliq uo rs , in vio latio n o f t

he la ws the re of

, is he re by

pr oh ibi te d. ” U. S. Co ns t. 19 Amend. XXI

§ 2. 20 Th e langua g e of se c tio n tw o is rathe r o pa qu e . In it s te rm s, it d oe s n ot a uth or ize any

state 21 re g ulatio n b ut r athe r j us t f or bid s p e op le fr om t

ra ns po rt inga lc oh ol i nto a

state in w ay s th at vi olateAs L arr y Tribe onc e quipped, “ there are two way s, and two wa y s only , in which an 1 ordinary private c itiz en, ac ting unde r her own steam a

nd under c olor of no law, c an violate the United States Constit ution. One is to enslave somebody . . . . The other

is to bring a

bottle of beer , wine, or bour

bon into a State in violation of its beverag e contr ol laws.” L awr ence H. Tribe, How To Violat e the Constitution W ithout Really Trying , 12 Const. C ommentary 217, 220 (1995).

I t is noteworthy , howeve r, that the text of section two “c losely follows the 2 Web b- Ke nyon

and Wils on Ac ts, ” a sim ila ri ty that th e Sup re me Court

ha s, in m or e re c e nt t ime s, he ld “ e xpre ss[e d] th e fr ame rs ’ c le ar i nte nti on of c on sti tut ion a lizin gthe Comme rc e Cla us e framework e stablished under those statutes.” Cra ig , 4 29 U. S. at 20 5- 06 ; ac c or d G ra nh olm , 544 U.S. at 485.

19 1 that state’s law s. Courts, neverthe less, have c onsistently (and unde rstandably

) re ad the se ction 1 2 to authorize broad state regulation. 3 Th e re is e vid e nc e that th e int e nt o f s e c tio n tw o w a s to g ive c omp le te re g ulator y a uth or ity 4 to the states over

alcohol. Duringthe congressional de bate a bout section two, for e x ample, one 2 5 senator stated that the “pur pose of se ction 2 is to restore to the States by constitutional 6 amendment a

bsolute control in eff

ect ove r interstate commerc e af fec ting intoxi catingliquors 7 which ente r the c onfines of the States.” 76 Cong . Rec. 4143 (1933) (statement of Senator 8 B la ine ). An d Just ic e B la c k, wh o whil e a Se nator pa rt ic ipate d in

the pa ssa g e of

the Tw e nty -F ir st 9 Am e ndme nt i n th e Se nate , c le arl y be lie ve d th at se c tio n tw o w a s inte nd e d to re tur n “ ‘a bs olute 10 control’ of

liquor traff

ic to the States, fre e of a ll restrictions which the Commerc e Clause mig ht 11 befor e that time have imposed.” Hostetter v. I dlewild Bon Voyage Liquor Corp. , 377 U.S. 324, 12 338 (1964) ( Bla ck, J., di ssenting) 13 Not surprising ly , there fore , the Supreme Court “ made c lear in the ear ly

y ear s following 14 a do pti on

of the Tw e nty -f

ir st A me ndme nt t

hat by vir tue of its pr ov isi on s a

State is t ota lly 15 unconfine d by

traditional Commerce Clause limitations when it re stricts the importation of20 1 intox icants destined f or use, distribution, or consumption within it s border s.” Hostetter , 377 2 U. S. at 33 0; ac c or d Craig , 429 U.S. at 206. And, in this period, the Court upheld nea r-total 3 c on tr ol o ve r d ome sti c a lc oh ol c omm e rc e by state s, e ve n to the po int

of op e nin gthe do or

to 4 “liquor-r elated political tra de wa rs amongthe states.” L awr ence H. Tribe, A merica n 5 Con sti tut ion a l L a

w § 6- 27 , at 11 68 (3 d e d. 20 00 ); see, e .g. , Indianapolis Brewing Co. v. Li quor 6 Control Comm’n , 305 U.S. 391 (1939) (upholdingMichig an’s pr ohibition of in-state beer deale rs 7 se lli ngbe e r m a de in I nd iana ); Mahoney

v. Jose ph Triner Corp. , 3 04 U. S. 4 01 (1 93 8) ; Sta te 8 Board v. Y

oung’s Marke t Co. , 299 U.S. 59, 64 (1936). Just ice B rande is, for example, observe d 9 in Y

oung’s Marke t

that “to construe the [Twenty -F irst] Amendment as sa ying, in e ffe ct: The 10 State may

prohibit the importation of intox icatingliquors provided it prohibits the manufac ture 11 and sale within its border s; but if it permits s uch manuf actur e and sa le, it must l et imported 12 liquors compete with the domestic on e qual terms . . . . would involve not a c onstruction of the 13 Amendment, but a r ewr iting of it.” Id. at 62. 14 C. 15 To the extent that the Supreme Court’s ea rly interpre tation was cor

rec t, however , 16 “re writing ” is exactly what happe ned. In 1964, in Hostetter v. I dlewild Bon Voyage Liquor 17 Corp. , 377 U.S. 324 (1964), the Supre me Court held that a state cannot r egulate passa g e of liquor 18 throug h that state whe n the point of final deliver y was a duty -fr ee c oncession within the state, for 19 example, delivery on board a

n airplane regulated by

the customs service . The Court interpr eted 20 section two not as “r epea l[ ing] the Commerce Clause wher ever regulation of intox icatingliquors 21 is conce rned,” an interpr etation that the Court ca lled an “a bsurd simplification,” but rathe r stated 22 that eac h of the two provisions “must be c onsidered in the lig ht of the other, a nd in the context ofThe Court desc ribed the “ obscurity of the leg islative history

of sec tion two,” and 3 dismiss ed Just ice B rande is’s opinion in Y ou ng ’s Ma rk

e t as “br oad languag e.” Id. at 274.

21 1 the issues and intere sts at stake in any concr ete c ase.” Id. at 331-32 (inter nal quotation marks 2 omitted). Relying he avily on leg islative history

(and pe rhaps his own knowle dg e of what he ha d 3 intended), Justi ce B lack strong ly disag ree d. See id. at 338 (B lack, J., diss enting ). And, in 1976, 4 in a

c a se no ta ble fo r i ts e qu a l pr ote c tio n h old ing , th e Sup re me Court re a ff ir me d th e po int

ma de in 5 Hostetter

. See Cra ig , 429 U.S. at 206 (re asoningthat section two “c reated an e x ception to the 6 normal oper ation of the Commerc e Clause” but “does not pro tanto r epea l the Commerce 7 Clause”)

. 8 In a ser ies of ca ses in the 1980s, the Court applied this principle see mingly to narrow 9 further

the power s confe rre d upon states by the Twe nty -F irst Amendment. Fir st, in Bacc hus 10 Imports, Ltd. v. Dias , 468 U.S. 263 (1984), the Court struck down a Ha waii tax ex emption that 11 fa

vo re d c e rt a in l oc a lly -p ro du c e d a lc oh ol a nd that w a s, by

the state ’s own a dmi ssi on , inte nd e d to 12 be prote ctionist. The Court rea soned that protec tionism was not “the centr al purpose” of sec tion 13 two and that “[s]t ate law s that constitute mere e conomic prote ctionism are . . . not entitled to the 14 same de fe re nc e a s la ws e na c te d to c omb at th e pe rc e ive d e vil s o f a n unr e str ic te d tr a ff

ic in 15 liquor.” Id. at 276. J ustice Stevens vig orously objected, a

nd descr ibed an inquiry

into the 3 16 purpose of

a liquor law a s “a totally novel appr oach to the T wenty -F irst Amendment.” Id. at 287 17 (Stevens, J. di ssenting)

. 18 Next, in Brown-Forman Distillers Cor p. v. N.Y . State Liquor Auth. , 476 U.S. 573 (1986), 19 and He aly

v . B e e r I ns t. , 491 U.S. 324 (1989), the Court struck down on dormant commer ce 20 g rounds two state law s that require d liquor produce rs to aff irm that they

wer e not cha

rg ing a ny22 1 highe r p ri c e s in

tho se state s th an in

oth e r s tate s. Th e Court

re a so ne d th at th e Tw e nty -F ir st 2 Amendment does not pe rmit states to regulate sale s in other states. 476 U.S. at 585. 3 4 D

. 5 The Supreme Court’s most rece nt foray into the question of the applica bility of the 6 Twenty -F irst Amendment to the dormant Commerc e Clause c ame in Granholm v. He ald, 544 7 U.S. 460 (2005). In light of the rathe r extensive defe renc e to state re g ulation of alcohol, ther e 8 develope d, even in r ece nt times, complex state statutes that made it difficult to purchase alcohol 9 fr om o ut o f s tate . T he se statut e s g ave ri se to t he c on sti tut ion a l qu e sti on of wh e the r s tate s c ou ld 10 se t up re g ulator

y re g ime s w he re the “ ob

je c t and e ff e c t” wa s “ to a llo w i n- state wi ne ri e s to se ll 11 wine dire ctly

to consumers in that State but to prohibit out-of-state wine ries fr om doing so, or, at 12 the least, to make direc t sales imprac tical from a n economic sta

ndpoint.” Gran ho lm , 544 U.S. at 13 466. 14 At issue in Gran ho lm wer e portions of Ne w York’ s and Michig an’s a lcoholic re g ulatory 15 laws . T he Court

de sc ri be d th e se re g ime s a s c re atin ga thr e e -t ie r s y ste m th at “ is, in b ro a d te rm s 16 and with re finements to be discusse d, mandated . . . only for sa les from out-of

-state wine ries.” 17 544 U.S. at 467. Under Michig an’s then- exis ting r eg ime, out-of-state wine produc ers we re 18 require d to “distribute their wine through wholesale rs” whe rea s in-state produc ers c ould obtain a 19 license to sell dire ctly to consumers. Id. at 468-69. Unde r Ne w York’ s reg ime at the time, 20 wi ne ri e s c ou ld s hip to c on sume rs in N e w Y or k o nly if the y c ou ld e sta

bli sha phy sic a l pr e se nc e in 21 New Y ork and/or pr imarily used g rape s g rown in Ne w York. Id. at 470. 22 After

observing(without expl ainingthe sig nificanc e of the fac t) that states had f ormed23 1 rec iproca l trade a g ree ments for dire ct shipping, a s part of “ an ong oing, low- level tra de wa r,” id. 2 at 473, the Court found that Michig an’s r eg ime expressly preve nted direc t sales from out-of

3 state winer ies to consumers a nd that New Y ork’s re g ime cre ated a sometimes prohibitive burden 4 on out-of-state winerie s that wished to sell directly to consumers. (T his burden included a 5 phy sical pre sence require ment, something a bout which dormant Commerc e Clause c ases ha d 6 long e x presse d suspicion, id. at 473-76). 7 In deter

mining whe ther the Tw enty -F irst Amendment protec ted the Michig an and N ew 8 Yo rk

re g ulator y sc he me s, the Court

ana ly zed the Wils on

and Web b- Ke nyon

Ac ts, wh ic h it 9 asser

ted the Twe nty -F irst Amendment had “ constitutionaliz [ed] .” Id. at4 8 4 (qu o t i n g Cra ig , 429 10 U. S. at 20 5- 06 ). Th e Court c on c lud e d th at “ [t]he a im o f t he Tw e nty -f

ir st A me ndme nt w a s to 11 a llo w St ate s to ma int a in a n e ff e c tiv e and

un if or m sy ste m f

or c on tr oll ingliq

uo r b y re g ulatin gits 12 tr ans po rt atio n, imp or tatio n, and

us e ,” but th at “ [t]he Am e ndme nt d id n ot g ive State s th e a uth or ity 13 to pass nonuniform laws in orde r to discriminate a g ainst out-of-state g oods, a privileg e they had 14 not enjoy ed at a

ny ear lier time.” Id. at 48 4- 85 . T he Court c ite d s e ve ra l r e lativ e ly

re c e nt c a se s, 1 5 i n cl u d i n g He aly , Brown-Forman , and Ba c c hu s I mp or ts , a s st and ingfo r t

he pr op os iti on

that “ state 16 regulation of alcohol is limited by the nondiscrimination principle of the Commerce Clause ,” 544 17 U.S. at 487. 18 Intere stingly , howeve r, the Court also wr ote that its holding would not “c all into question 19 the c on sti tut ion a lity of the thr e e -t ie r s y ste m” ins of ar a s “ ‘[t ]he Tw e nty -f

ir st A me ndme nt gra

nts 20 the States virtually complete c ontrol over whe ther to per mit im portation or sale of liquor and 21 how to structure the liquor distribution sy stem.’” Id. at4 8 8 (qu o t i n g Calif ornia Retail Li quor 22 Dealers Ass’n v . Midcal Aluminum, Inc

. , 445 U.S. 97, 110 (1980)). And the Court stated, cle ar24 1 as day , that “the thre e-tier sy stem itself is ‘unquestionably leg itimate.’” Id. (qu o t i n g Nor th 2 Dakota v. U

nited States , 495 U.S. 423, 432 (1990)). Indeed, the Court cited J ustice Scalia’ s 3 concur

renc e in the judg ment in Nor th D ak ota and, in an e x planatory pare nthetical, quoted Justi ce 4 Scalia’s state ment that “‘The Twenty -first Amendme nt . . . empower s North Dakota to require 5 that all liquor sold for use in the State be purcha sed fr om a license d in-state wholesa ler.’” 6 Gran ho lm , 5 4 4 U. S at4 8 9 (qu o t i n g Nor th D ak ota , 4 97 U. S. at 44 7 ( Sc a lia , J., c on c ur ri ngin 7 judgme nt)). The Court, however , conclude d this affirmation of the three -tier sy stem by stating 8 that “[s] tate policies a re pr otected unde r the Twe nty -first Amendme nt when they treat liquor 9 pr od

uc e d o ut o f s tate the same a s it s d ome sti c e qu iva le nt” but th at “ [t]he ins tant c a se s, in 10 contra st, involve straig htforwa rd attempts to discriminate in favor of loca l produce rs.” Id. 11 1 2 II. 13 14 The e volving inter pretation of the Twenty -F irst Amendment ra ises important questions 15 about the role of cour ts. I t is possi ble that the Twe nty -F irst Amendment was or igina lly intended 16 and under stood to have the c omplex shape that it has assumed in the past fe w dec ades. B ut, as 17 many

distinguished justices have contende d—initially in opinions for the Court and more 18 rec ently

in dissent—it s eems more likely that the Twe nty -F irst Amendment, when e nacte d, 19 meant to ca

rve out fr om dormant Commerce Clause scrutiny the ar ea of

alcohol re g ulation. 20 Ne ve rt

he le ss, it a

pp e ars that th e Sup re me Court ha s in c re a sin g ly

“ up date d” the Tw e nty -F ir st 21 Am e ndme nt, and it i s th is j ud ic ia l pr oc e ss t hat I wi sh , b ri e fl y , to a dd

re ss. 22 A.F o r e s p e c ia ll y

inte r e s ti n gd is c u s s io n s o f c r im in a li zati o no f

v ic e , s e e Wi ll ia

m J. St un tz , 4 The Pathological Politi cs of Criminal L aw , 100 Mich. L . Rev. 505, 572-76 (2001) ; and Will iam J . Stuntz , Race

, Class, and Drugs , 98 Colum. L . Rev. 1795 (1998). 25 1 When the Twenty -F irst Amendment was f irst adopted and c ourts interpre ted sec tion two 2 to a

uth or ize vir

tua lly lim itl e ss s tate re g ulatio n, the Un ite d St ate s w a s a dif fe re nt p la c e tha

n it is 3 today . L aws fr equently reg ulated “mor als,” a

nd alcohol wa s often viewe d as immoral. And eve n 4 setting “ morals” a side, the pre vailing vie w of a lcohol was that it was a unique produc t that posed 5 unusual dang ers, both dire ctly as an intoxi cant, a

nd indirectly , as a stre am of c ommerce that 6 g ener ated c orruption and c rime. I t was there fore left to individual states to decide, in lig ht of 4 7 their own loca l values, nee ds, and experienc es, how to conte nd with that product. 8 J ustice Jackson descr ibed this understandingwhen he wrote in 1941 that “ [t ]he people of 9 the United States knewthat liquor is a lawlessness unto itself.” Duck worth v. Arkansas , 3 14 U. S. 10 390, 398 (1941) ( J ackson, J., concurr ing in r esult). J ackson r easone d that those who cr eate d the 11 Tw e nty -F ir st A me ndme nt 12 deter

mined that [alcohol] should be g overne d by a spec ific and pa

rticular 13 constitutional provision. They did not leave it to the cour ts to devise specia l 14 distortions of the ge nera l rules as to interstate commerc e to cur b liquor’s 15 ‘t e nd e nc y to g e t out of

le g a l bo un ds .’ I t w a s th e ir un satis fa c tor

y e xpe ri e nc e wi th 16 that method that resulted in g iving liquor a n exclusive place in c onstitut ional law 17 as a c ommodity whose tra

nsportation is gove rned by a spec ial constitutional 18 provision. 19 20 Id. at 398-99. Put differe ntly , even those who might think that ce rtain kinds of liquor re g ulation 21 pose no bene fit to temperanc e or public sa fety still wanted a

broad, ove rinclusive author ization 22 for state regulation, so as to preve nt courts or Cong ress fr om chipping a way at the states’ power 23 to regulate. 24 In th e e ns uin gde c a de s h ow e ve r, atti tud e s to wa rd s a lc oh ol h ave c ha

ng e d, and itsThere are still some local g overnme nts that do ban alcohol e ntirely

. 5 26 1 c omm e rc e ha s b e c ome mor e natio na lize d. As Justi c e Ste ve ns ob se rv e d in his Granholm dis se nt, 2 “[t] oday

many Americ ans, par

ticularly those members of

the young er g ener ations who make 3 policy

decisions, re g ard a lcohol as an or dinary article of commer ce, subje ct to substantially the 4 same mar

ket and leg al controls as othe r consumer products.” Gr

an ho lm , 544 U.S. at 494 5 (Stevens, J. di ssenting) . But, “ [t ]hat was definitely not the view of the g ener ations that made 6 policy

in 1919 when the Eig hteenth Amendme nt was ratified or in 1933 when it wa s repe aled by 7 the Twe nty -first Amendme nt.” Id. 8 Nowada

y s, alcohol is not prohibited by any state, and the be er industry is one that runs 5 9 the me pa

rk s r athe r t

ha n o rg anize d c ri me de ns . It is no t surp ri sin g , th e re fo re , th at w he n c ourt s in 10 the ‘60s, ‘70s, ‘ 80s, and today consider the notion of a Twe nty -F irst Amendment that authorizes 11 any state re g ulation, even r egulation that would otherwise c lear ly violate the dorma

nt Comm erc e 12 Clause, they

find it hard to fathom such a constitutional rule. B ut, as J ustice Stevens said, 13 qu oti ngJusti c e Mars ha ll, “ [t]he Con sti tut ion do e s n ot p ro hib it l e g isl atur e s f ro m e na c tin gstu

pid 14 laws.” N.Y

. State Bd. of Elec. v . Lopez-Torres , 1 2 8 S

. C t

. 7 9 1 , 8 0 1 ( 2 0 0 8 ) ( S t e v e n s , J. 15 concur

ring ). 16 17 B. 18 Th is p ro ble m of ho w c ourt s sh ou ld d e a l w ithse e min g ly ana c hr on ist ic le g a l pr ov isi on s is 19 one with which judg es and sc holars have long strug g led. I t may appea r to a judg e that a le g al 20 provision is “born in another ag e,” Quill v. Vacc o , 80 F.3d 716, 732 ( 2d Cir. 1996) (Calabr esi, J ., 2 1 c o n c ur

r i n gi nth e r e s u l t ) , b u tw h ati s h e o r s h e t o d o ?Whe the r, wh e n, and a s to wh at pr ov isi on s su c h u pd atin gsh ou ld b e c arr ie d o ut b y c ourt s 6 as ag ainst leg islatures is, of cour se, anothe r question. 27 1 In the context of anac hronistic statutes , scholars a nd judge s have ma de var ied sug g estions 2 about what to do. The y have c onsidered a

ny number of a

pproac hes includingdrac onian 3 adher ence—perha ps even ove r-a dhere nce—to a statute’s orig inal meaning ; bold rewritingand 4 updating ; common-law e volution; us e of inter pretive tools that re flec t curre nt politi cal 5 pref

ere nces; a nd sendingparticula

rly dubious statutes back to leg islatures for a “se cond look.” 6 See, e .g. , Guido Calabre si, A Common L aw f or the Ag e of Statutes 16-26, 31- 43, 163-66 (1982)

. 7 Interpre ting the Constit ution , w ithre sp e c t to out- of -d ate c on sti tut ion a l pr ov isi on s, 8 pr e se nts a

mor e c omp le x set

of c ha lle ng e s. B e c a

us e the U. S. Co ns tit

uti on is s o d if fi c ult to 9 ame nd , a

pr ov isi on

that ha s b e c ome ana c hr on ist ic is e ve n le ss likely to be re paire d by

the 10 political branc hes than is an out-of -date statute. But while c ourts may , perha ps, be viewe d as 11 eng ag ing in a

dialog ue with the political bra nches when “updating” anac hronistic statutes 12 throug h “interpr etation,” suc h a dialogue is far more diff

icult and dang erous in the c ontext of 13 c on sti tut ion a l la

w. F or a c ourt c ann ot e a sil y

a ssume that th e po lit ic a l br anc he s w ill be a ble 14 corr ect e ven egreg ious constituti onal interpre tative er rors. 15 Som e c on sti tut ion a l pr ov isi on s w e re wr itt e n to e vo lve ov e r t ime . T he Ei g hth 16 Amendment’s pr ohibition on cruel and unusual punishment would mea n littl e if c ourts wer e 17 e xpe c te d s imp ly

to c omb thr ou g h h ist or

y bo ok s a nd de te rm ine wh at, i n th e late e ig hte e nth 18 centur

y , the fra mers thoug ht was “c ruel.” The F ourth Amendment’s pr ohibition on 19 “unre asonable ” sea rche s simil arly

permits evolution and pre vents that constitutional provision 20 from bec oming tethe red to a nother time. Conversely , some provisions were not written to be

6SeeL ewis B . Namier , Conflicts: S tudies in Contemporary History 69-70 (1942) (“When 7 discoursingor writingabout history , [people] i mag ine it in terms of their own e x perie nce, a nd wh e n tr yingto g a ug e the futur e the y

c ite su pp os e d a na log ie s f ro m th e pa st: til l, b y

do ub le pr oc e ss of re petition, they

imag ine the past a

nd reme mber the f

uture.” ). Alexander B ickel has quote d Namier ’s discussion of history with approva l in an analy sis of judicial lawmaking

. See Al e xan de r M . B ic ke l, T he Sup re me Court and the I de a of Pr og re ss 1 3 ( 19 70 ); se e als o Br ett G. Scharf fs, Law a s Craft , 54 Vand. L . Rev. 2245, 2314-15 (2001) (asse rting that Ihave taken a 28 1 up date d. Th e Pr e sid e nt o f t he Un ite d St ate s mu st b e at le a st 3 5 ye ars old . T hat numbe r i s n ot t o 2 be “inf

lation adjusted.” See Steven G. Calabr esi, Too Y oung for the No. 1 Job? , Ch i. T ri b. , July 3 22, 2008, at C13. 4 But what are courts to do when a constitutional provision neither clea rly invites nor 5 clea

rly prohibits updating? Some have a rgued that cour

ts should int erpr et them in a common law 6 fashion. See, e .g. , David A. Strauss, Common Law Constitut ional Interpretation , 6 3 U

. C h i

. L. 7 Rev. 877, 893 (1996). Others ha ve asse rted that c ourts should respond, in some sense, to the 8 popular will. See, e .g., L arr y D. Kra mer, The SupremeCourt, 2000 T erm—Foreword: W

e the 9 Cou rt , 115 Har

v. L . Rev. 4 (2001); Rober t Post& Re va Sieg el, Popular Consti tutionalism, 10 Departme ntalism, and Judicial Supremacy , 92 Cal. L . Rev. 1027 (2004). And some contend that 11 courts should adhe re, a s best they can, to a n orig inal understanding(whatever that may be) of the 12 provision in question. See, e .g. , Antonin Scalia, Or igi na lis m: TheLesse r E v il , 57 U. Cin. L . Rev. 13 849 (1989). 14 To be sure , the Constitut ion as a whole does and must evolve. Mor eover , as the Court 15 may

have done in its recent r eading s of the Twe nty -F irst Amendment, history can be made into a 16 too l f

or br ing ingthe Cha

rt e r i nto lin e wi th c ur

re nt n e e ds . B ut j ud g e s a

re no t hi sto ri ans wi th 17 fa

nc y ro be s and

lif e te nure . A nd

his tor ic a l r e int e rp re tatio n a lw ay s p os e s th e ri sk that c ourt s w ill 18 too rea dily

“imag ine the past [to] reme mber the f uture.” 7simil ar position when tea chinga common-la w cour se). Distinguished jurists have , on occa sion, been e ven more skeptical of c ourt uses of 8 history . Ionce sug g ested to Jus tice F elix Fr ankfur ter that the c lause in the Constituti on requiring that the President be “ a natur al born Citiz en . . . of the United States” mea nt only that if a pe rson was born out of

wedlock ( i.e. “naturally

born”) that person ha d to be a Citiz en at birth to be elig ible to be President. I did this j okingly , knowingthat Fr ankfur ter, like me, ha d been bor n abroa d. Iadded, e ven more fanc ifully , that the clause was likely there to exclude from the Presidency

the much admire d, but also fea red, A lexander Hamilton, who was said to be of “illeg itimate” birth. The sc holar-justice immediately answe red, “

I’ ll buy that,” and the n a dd e d— no t in je st, Ibe lie ve —“ and

any wa y it’ s a s g oo d a s mo st o f what g oe s f or his tor y on thi s Court!” 29 1 More f

undamentally , and re g ardle ss of whethe r history is the chosen tool, any

sort of 8 2 up datin gc an b e da ng e ro us . It ma

y pe rm it c ourt s, e sp e c ia lly we ll- me anin gon e s, to s ub sti tut e 3 the ir

own n oti on s o f m od e rn

ne e ds fo r t

ho se of the ma jor ity . M or e ov e r, wh e n a re re a din gre su lts 4 in t

he e re c tio n o f a

c on sti tut ion a l ba

rr ie r, it m ay

re mov e se ri ou s is su e s f

ro m th e de moc ra

tic 5 proce ss and from leg islative deliberation. Cf. J . Har vie Wilki nson I I I , Of Guns, Abortions, and 6 the Unrave ling Rule of Law , 95 Va. L . Rev. 253 (2009); Richar d A. Posner, In De fense of 7 Looseness: The Suprem e Court and Gun Control , New Re public, Aug . 27, 2008, at 32. 8 Ad dit ion a lly , th is s or t of up datin gpr e se nts ano the r p ro ble m, a nd on e that is e sp e c ia lly 9 appar ent in the context of the Twenty -F irst Amendment: I t can lea ve state le g islatures and lowe r 10 fe de ra l c ourt s w ithno fi rm un de rs tand ingof

wh at th e law a c tua lly

is. Whe n o ne c le ar r

ule 11 simply

repla ces a

previous rule , the law is ea sy enoug h to understand. B ut when the High Court 12 c arv e s o ut o ne e xce pti on a ft e r a no the r, it b e c ome s d if

fi c ult to k no w h owany

ind ivi du a l c a se 13 should come out. Fr om the vantag e point of a c ourt of appe als, the law f reque ntly is fix ed; and 14 then we r eadily

follow the Supreme Court. B ut in this are a, abse nt a per fec tly analog ous case , 15 we a

re a ll too frequently

left to try to gue ss at the cur

rently applicable rule fr om the Court’s30 1 evolvingjurisprudenc e, a jur isprudence that seems more focuse d on updatingconstitutional 2 meaningthan with principled judg ments. To the student and tea cher of the law , it appear s clea r 3 that th e me anin gof the Tw e nty -F ir st A me ndme nt i s c ha ng ing . B ut i t is dif

fi c ult to k no w j us t 4 how much the Supre me Court wants that ame ndment to evolve. 5 Th is l e ave s lo we r c ourt s in a dif fi c ult sit uatio n; w e str ive to i nte rp re t w hat th e law “ is” 6 while knowingwell that there is no “is” but only a dire ction. In such circ umstances, the be st that 7 we c an do is to look to the bulk of case s decide d by the Supreme Court a

nd rea d with special c are 8 its latest decision—at the moment, Gran ho lm . For , while the g ener al direc tion of Supreme Court 9 jurisprudenc e has be en towar d prohibiting a ny discriminatory

state re g ulation, it is not for our 10 c ourt

to s ay ho w f ar o r h owfa st w e sh ou ld m ov e a lon gthat ve c tor . A s a re su lt, we mus t lo ok

to 11 the run of Supre me Court case s that have pe rmitted broad state regulation, and then conside r the 12 exis ting e x ceptions, par ticularly those both descr ibed and limited in the rec ent controlling 13 Granholm case , and, on that basis, dec ide. 14 When we do that, we can only come out one w ay . To be sure , the ca se bef ore us c ould be 15 viewed a s merely a small step beyond Gran ho lm . B ut, in f a c t, f or the re a so ns a

bly g ive n in 16 J udg e Wesley ’s opinion, to strike down the state lawunder r eview w ould, at the same time, 17 re qu ir e us to i g no re too muc h o f t he ba c kg ro un d ju

ri sp ru de nc e and

to e xten d th e tr e nd

we ll 18 beyond Gran ho lm while ig noringsome of its most specific languag e. 19 An

e xten sio n o f t

his so rt is n ot f or us to m ake . A lth ou g h o ne might w e ll a rgue that so me 2 0 o f t h e d ee p er

u p d at i n g n o t i o n s un d er l yi n g Granholm su g g e st tha t th e Sup re me Court

wi ll 21 ultimately

g o further

than it there did, we cannot de cide the c ase be fore us on the basis of such 22 pr og no sti c atio ns . I f t he Sup re me Court

wi sh e s f ur the r t o me ld t

he Tw e nty -F ir st A me ndme nt i nto31 1 the br oa d c on sti tut ion a l la nd sc a pe , s o b e it. B ut u

nle ss a nd un til it d oe s, Judg e Wes le y ’s ana ly sis 2 seems to me to be e x actly rig ht, and I

g ladly join his opi nion.