Order Michigan Supreme Court 

Lansing, Michigan 

November 29, 2006 Clifford W. Taylor,

 Chief Justice 

126121 Michael F. Cavanagh 

Elizabeth A. Weaver 

Marilyn Kelly 

NATIONAL WINE & SPIRITS, INC., Maura D. Corrigan 

NWS MICHIGAN, INC., and Robert P. Young, Jr. 

Stephen J. Markman, NATIONAL WINE & SPIRITS, L.L.C., Justices Plaintiffs-Appellants, 

v SC: 126121 

 COA: 243524 

Ingham CC: 02-000013-CZ

STATE OF MICHIGAN, 

Defendant-Appellee,

and 

MICHIGAN BEER & WINE 

WHOLESALERS ASSOCIATION, 

Intervening Defendant-Appellee. 

_________________________________________/ 

On order of the Court, leave to appeal having been granted and the case having 

been briefed and argued by counsel, the order of January 20, 2006 which granted leave to 

appeal is VACATED and leave to appeal is DENIED because we are no longer 

persuaded the questions presented should be reviewed by this Court. 

CAVANAGH, J., dissents and states as follows: 

I respectfully disagree with the majority’s determination that leave to appeal was 

improvidently granted in this case. The issues are jurisprudentially significant and farreaching. I further note that this Court heard oral argument on the application and then 

chose to issue an order granting leave to appeal and requiring full briefing and oral 

argument. After considering arguments on the issues twice, I believe that this Court 

should issue an opinion on the merits of the issues presented. 

KELLY, J., joins the statement of CAVANAGH, J. 

WEAVER, J., dissents and states as follows: 
 

 

 

 

 

2 

I dissent from the majority’s decision that leave to appeal was improvidently 

granted. I would remand this case to the Court of Appeals for reconsideration in light of 

Granholm v Heald, 544 US 460 (2005). 

The statute at issue, MCL 436.1205(3),1

 while perhaps not unconstitutional on its 

face, as applied, forever prohibits an out-of-state business from operating as both an 

authorized distribution agent of spirits and as a distributor of wine. Michigan distributors 

of wine in operation before September 24, 1996, on the other hand, were permitted to 

also become authorized distribution agents of spirits (ADAs). As a result, § 205(3) 

precludes out-of-state distributors from achieving the benefits of a combined cost 

2

economy.

In addition, § 205(3) prohibits any distributors established after September 24, 

1996, from selling or distributing a brand of wine in an area where an established 

distributor has already been assigned or authorized to sell that particular brand of wine.3 

1

 Section 205(3), in pertinent part, is set forth below: 

After September 24, 1996, an authorized distribution agent or an 

applicant to become an authorized distribution agent who directly or 

indirectly becomes licensed subsequently as a wholesaler shall not be 

appointed to sell a brand of wine in a county or part of a county for which a 

wholesaler has been appointed to sell that brand under an agreement 

required by this act. A wholesaler who directly or indirectly becomes an 

authorized distribution agent shall not sell or be appointed to sell a brand of 

wine to a retailer in a county or part of a county for which another 

wholesaler has been appointed to sell that brand under an agreement 

required by this act, unless that wholesaler was appointed to sell and was 

actively selling that brand to retailers in that county or part of that county 

prior to September 24, 1996, or unless the sale and appointment is the result 

of an acquisition, purchase, or merger with the existing wholesaler who was 

selling that brand to a retailer in that county or part of that county prior to 

September 24, 1996. 

2

 For example, when a Michigan distributor operating as both an ADA of spirits 

and as a wine distributor delivers spirits and wine to retailers on the same truck, it can 

lower its delivery costs. However, under § 205(3), out-of-state distributors cannot 

conserve costs by loading wine and spirits on the same truck. 

3 Before September 24, 1996, Michigan wine distributors were not prohibited from 

“dualing,” a concept whereby a wine distributor could compete with other distributors in 

a particular area and sell the same competing brands of wine. After September 24, 1996, 

only those wine distributors established in Michigan before that date could continue 

“dualing.” 
 

 

 

 

 

3 

Thus, those Michigan distributors established before 1996 enjoy the competitive 

advantage of being able to sell certain brands exclusively, and to also act as authorized 

distribution agents of both spirits and wine. 

It is undisputed that before September 24, 1996, only Michigan businesses were 

licensed as wine wholesalers in the State of Michigan. Consequently, when § 205(3) was 

enacted, only existing Michigan wine distributors retained the benefit of distributing all 

the wine brands they sold as before September 24, 1996. Conversely, no out-of-state 

wine distributor could achieve the same benefit, nor could any out-of-state distributor 

ever enjoy the cost savings of becoming a distributor of both wine and spirits. 

The United States Supreme Court’s decision in Granholm had not been released at 

the time the Court of Appeals decided this case. Had the Court of Appeals had the 

benefit of the United States Supreme Court’s ruling in Granholm, it may very well have 

concluded that the burden on interstate commerce imposed by § 205(3) outweighs the 

state’s objective in preserving the existing three-tier alcohol distribution system.4

 As the 

United States Supreme Court noted in Granholm, protectionist state legislation that 

4

 The traditional Commerce Clause test was discussed by the United States 

Supreme Court in Brown-Forman Distillers Corp v New York State Liquor Auth, 476 US 

573, 578-579 (1986): 

This Court has adopted what amounts to a two-tiered approach to 

analyzing state economic regulation under the Commerce Clause. When a 

state statute directly regulates or discriminates against interstate commerce, 

or when its effect is to favor in-state economic interests over out-of-state 

interests, we have generally struck down the statute without further inquiry. 

See, e. g., Philadelphia v. New Jersey, 437 U.S. 617, 98 S. Ct. 2531, 57 L. 

Ed. 2d 475 (1978); Shafer v. Farmers Grain Co., 268 U.S. 189, 45 S. Ct. 

481, 69 L.Ed. 909 (1925); Edgar v. MITE Corp., 457 U.S. 624, 640-643, 

102 S. Ct. 2629, 73 L. Ed. 2d 269 (1982) (plurality opinion). When, 

however, a statute has only indirect effects on interstate commerce and 

regulates evenhandedly, we have examined whether the State's interest is 

legitimate and whether the burden on interstate commerce clearly exceeds 

the local benefits. Pike v. Bruce Church, Inc., 397 U.S 137, 142, 90 S. Ct. 

844, 25 L. Ed. 2d 174 (1970). We have also recognized that there is no 

clear line separating the category of state regulation that is virtually per se 

invalid under the Commerce Clause, and the category subject to the Pike v. 

Bruce Church balancing approach. In either situation the critical 

consideration is the overall effect of the statute on both local and interstate 

activity. See Raymond Motor Transportation, Inc. v. Rice, 434 U.S. 429, 

440-441, 98 S. Ct. 787, 54 L. Ed. 2d 664 (1978). 
 _________________________________________ 

 

 

4 

provides a competitive advantage to intrastate commerce is subject to attack under the 

Commerce Clause: 

Time and again this Court has held that, in all but the narrowest 

circumstances, state laws violate the Commerce Clause if they mandate 

“differential treatment of in-state and out-of-state economic interests that 

benefits the former and burdens the latter.” Oregon Waste Systems, Inc. v. 

Department of Environmental Quality of Ore., 511 U.S. 93, 99, 114 S. Ct. 

1345, 128 L. Ed. 2d 13 (1994). See also New Energy Co. of Ind. v. 

Limbach, 486 U.S. 269, 274, 108 S. Ct. 1803, 100 L. Ed. 2d 302 (1988). 

This rule is essential to the foundations of the Union. The mere fact of 

nonresidence should not foreclose a producer in one State from access to 

markets in other States. H. P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 

525, 539, 69 S. Ct. 657, 93 L. Ed. 865 (1949). States may not enact laws 

that burden out-of-state producers or shippers simply to give a competitive 

advantage to in-state businesses. This mandate “reflect[s] a central concern 

of the Framers that was an immediate reason for calling the Constitutional 

Convention: the conviction that in order to succeed, the new Union would 

have to avoid the tendencies toward economic Balkanization that had 

plagued relations among the Colonies and later among the States under the 

Articles of Confederation.” Hughes v. Oklahoma, 441 U.S. 322, 325-326, 

99 S. Ct. 1727, 60 L. Ed. 2d 250 (1979). [Granholm at 472.] 

Given the constitutional implications posed by the application of § 205(3), and 

given the United States Supreme Court’s mandate against differential treatment of out-ofstate economic interests, a remand to the Court of Appeals for reconsideration in light of 

Granholm would be the most judicious resolution of this case. 

s1121 

I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the 

foregoing is a true and complete copy of the order entered at the direction of the Court. 

November 29, 2006 

Clerk