Opinion ID: 202974
Heading Depth: 2
Heading Rank: 2

Heading: The Rejoinder.

Text: Although vigorously asserted by able counsel, this argument lacks force. When all is said and done, the plaintiffs have not satisfied their initial burden of showing that Maine's statutory scheme is discriminatory in effect. Without such evidence, we must defer to the state legislature, which has `virtually complete control' over the importation and sale of liquor and the structure of the liquor distribution system. North Dakota, 495 U.S. at 431, 110 S.Ct. 1986 (quoting Cal. Retail Liquor Dealers Ass'n v. Midcal Alum., Inc., 445 U.S. 97, 110, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980)). To be sure, the plaintiffs cite a plethora of cases in endeavoring to demonstrate that the expense added by the restriction on direct shipment offends the dormant commerce clause. But these decisions are not capable of carrying the weight that the plaintiffs load upon them. The plaintiffs' most loudly bruited authority is Granholm, in which the Supreme Court invalidated Michigan and New York restrictions on the direct shipping of alcohol by out-of-state wineries. Despite some superficial similarities, the fit between Granholm and this case is not exact and, thus, the decision is of limited utility here. [5] The novel aspect of Granholm was the Court's holding that the Twenty-First Amendment  a constitutional provision dealing with the regulatory power of the several states in regard to the manufacture, distribution, and sale of alcoholic beverages  cannot salvage explicitly discriminatory regimes even though the regulated product is an alcoholic beverage. See Granholm, 544 U.S. at 493, 125 S.Ct. 1885. The Twenty-First Amendment is only peripherally involved in this case, and does not require discussion. On the issue before us, Granholm does not dictate the result. That opinion provides less than complete guidance, and virtually no new elaboration, with respect to what does  or does not  constitute discrimination against interstate commerce. Both the Michigan and New York schemes invalidated in Granholm discriminated against out-of-state purveyors  and did so in ways that long have been understood to be unconstitutional. See id. at 467, 125 S.Ct. 1885 (terming the discrimination explicit); see also id. at 472-76, 125 S.Ct. 1885. The Michigan scheme was discriminatory on its face  it allowed in-state producers to ship wines directly to Michigan consumers while banning out-of-state producers from doing so. See id. at 473-74, 125 S.Ct. 1885. Thus, the finding of unconstitutionality does not assist the present plaintiffs. The New York scheme was closer, but still different; it allowed wineries to direct-ship only if they first established a physical presence in New York. See id. at 474, 125 S.Ct. 1885. The scheme was found to allow in-state wineries to sell wine directly to consumers in that State but to prohibit out-of-state wineries from doing so, or, at the least, to make direct sales impractical from an economic standpoint. Id. at 466, 125 S.Ct. 1885. The plaintiffs insist that the Maine scheme operates much the same as the New York scheme because, in practical effect, it gives in-state producers preferential access to consumers. While one district court, drawing heavily on Granholm, has found discriminatory a requirement that direct wine sales be made face to face, see Cherry Hill Vineyard, LLC v. Hudgins, 488 F.Supp.2d 601, 618-19 (W.D.Ky.2006), other courts disagree, see, e.g., Baude v. Heath, Civ. No. 05-0735 [2007 WL 2479587, at  n. 25] (S.D.Ind. Aug. 29, 2007); Jelovsek v. Bresden, 482 F.Supp.2d 1013, 1020-21 (E.D.Tenn.2007); Hurley v. Minner, Civ. No. 05-826, 2006 WL 2789164, at  (D.Del. Sept. 26, 2006). We concur with the latter courts. The plaintiffs in this case overlook a key distinction between the New York and Maine statutes. New York created an additional barrier to the entry of out-of-state wineries into the direct-shipping market  a barrier that Maine has not erected. To elaborate, New York created a direct-shipping market for wine; it allowed direct shipping on particular conditions, and those conditions were rigged to favor in-state wineries (which, unlike out-of-state wineries, would not have to set up separate sales outlets within New York's boundaries). See Granholm, 544 U.S. at 474, 125 S.Ct. 1885. Maine flatly outlaws any and all direct shipping of wine. Consequently, there is no direct-shipping market; neither in-state nor out-of-state wineries may direct-ship. Hence, while well-established legal rules demanded the invalidation of both the Michigan and New York schemes, see, e.g., Or. Waste Sys., 511 U.S. at 99-100, 114 S.Ct. 1345, those rules do not demand any such ukase here. By the same token, most of the other cases chronicled by the plaintiffs involve statutes that  unlike the Maine regime at issue here  explicitly discriminate against out-of-state goods or products. See, e.g., id. at 99, 114 S.Ct. 1345; Chem. Waste Mgmt., Inc. v. Hunt, 504 U.S. 334, 342, 112 S.Ct. 2009, 119 L.Ed.2d 121 (1992); City of Philadelphia v. New Jersey, 437 U.S. 617, 627, 98 S.Ct. 2531, 57 L.Ed.2d 475 (1978). These cases are distinguishable because Maine's statutory scheme vis-à-vis farm wineries does not explicitly discriminate against interstate commerce. Farm winery licenses are available on equal terms to in-state and out-of-state vineyards alike, and Maine's ban on the direct shipping of wine applies evenhandedly across the board. We are, then, on terra incognita. In the absence of any explicit (i.e., facial) discrimination, the plaintiffs must persuade us that Maine's evenhanded requirement that all wine purchases be made face to face camouflages some more sinister reality: that its practical effect is invidiously discriminatory. This is a burden that litigants in analogous cases ordinarily have failed to carry. See, e.g., Brown & Williamson Tobacco Corp. v. Pataki, 320 F.3d 200, 212-14 (2d Cir.2003) (upholding, as against a dormant commerce clause challenge, state law requiring that all tobacco sales be conducted in face-to-face transactions). The Supreme Court has not directly spoken to the question of what showing is required to prove discriminatory effect where, as here, a statute is evenhanded on its face and wholesome in its purpose. In our view, that showing must be substantial  and an examination of the evidence in the record satisfies us that the plaintiffs have not pushed past this plateau. We explain briefly. We previously have held that a plaintiff bringing a dormant commerce clause challenge based exclusively on the allegedly discriminatory effect of a statutory scheme is required to submit some probative evidence of adverse impact. See Alliance of Auto. Mfrs., 430 F.3d at 41 (upholding summary judgment when plaintiff offered only prognostications woven from the gossamer strands of speculation and surmise, unaccompanied by any significantly probative evidence of a discriminatory effect on commerce); accord R & M Oil & Supply, Inc. v. Saunders, 307 F.3d 731, 735 (8th Cir.2002) (holding that plaintiff had failed to provide sufficient evidence to prove discriminatory effect); E. Ky. Res. v. Fiscal Ct. of Magoffin County, 127 F.3d 532, 544 (6th Cir.1997) (finding no discriminatory effect when plaintiffs failed to present evidence showing how out-of-state entities, as compared to in-state entities, were burdened). Sweeping aside rhetorical flourishes, the plaintiffs have proffered no evidence that permitting farm wineries to sell only face to face, either on premises or at approved in-state locations, discriminates against interstate commerce. There is no evidence that Maine law acts to protect Maine vineyards or that Maine consumers substitute wines purchased directly from Maine vineyards for wines that they otherwise would have purchased from out-of-state producers. There is not even evidence that any wines at all are purchased by consumers directly from Maine vineyards. And, finally, nothing contained in the stipulated record suggests that the locus option somehow alters the competitive balance between in-state and out-of-state firms. Cf. Hunt, 432 U.S. at 351, 97 S.Ct. 2434 (holding that statutory scheme designed to eliminate out-of-state companies' competitive advantage in marketing created an unconstitutionally discriminatory effect). The substitution scenario is further weakened by the fact that the plaintiffs have adduced no evidence that would in any way undermine the plausible impression that Maine consumers (like imbibers everywhere) view trips to a winery as a distinct experience incommensurate with  and, therefore, unlikely to be replaced by  a trip to either a mailbox or a retail liquor store. See Jelovsek, 482 F.Supp.2d at 1021 (observing that it seems the market for on-site wine purchases, requiring the effort (or pleasure) of a trip to the winery, is different in kind and reach from the convenience-oriented market that would be created and facilitated by a law allowing direct-shipping). [6] Nor have they offered evidence to impeach the suggestion, made in one of the cases on which they rely, that bottles of wine are unique and, thus, unlikely to be perceived by consumers as interchangeable. See Hudgins, 488 F.Supp.2d at 617; see also Gen. Motors Corp. v. Tracy, 519 U.S. 278, 299, 117 S.Ct. 811, 136 L.Ed.2d 761 (1997) (observing that difference[s] in products may mean that the different entities serve different markets, and would continue to do so even if the supposedly discriminatory burden were removed). The plaintiffs' principal effort to fill this void involves a report prepared by the Federal Trade Commission (FTC). Drawing on this report, they argue that the ban on direct shipping raises the cost of out-of-state wines and prices some wines out of the Maine market altogether. FTC, Possible Anticompetitive Barriers to E-Commerce: Wine (July 2003) [FTC Report], available at http://www.ftc.gov/os/2003/07/ winereport2.pdf (last visited Sept. 20, 2007). But nothing in the FTC Report establishes that the farm winery exception disproportionately burdens interstate commerce. The plaintiffs also repeatedly cite Associated Indus. of Mo. v. Lohman, 511 U.S. 641, 114 S.Ct. 1815, 128 L.Ed.2d 639 (1994), for the proposition that discrimination should be measured in dollars and cents, such as in lost sales. See id. at 654, 114 S.Ct. 1815. Even if that is so, however, the plaintiffs have not shown a single penny of losses attributable to the allegedly discriminatory farm winery exception. They invite us to infer the existence of such losses but prudence requires that we decline that invitation. In our judgment, the mere fact that a statutory regime has a discriminatory potential is not enough to trigger strict scrutiny under the dormant commerce clause. See id. (noting that the Justices have never deemed a hypothetical possibility of favoritism to constitute discrimination that transgresses constitutional commands). There must be substantial evidence of an actual discriminatory effect, and such evidence is utterly absent here. [7] Given Maine's large land mass and the concentration of its population in the southern end of the state, see Grant's Dairy  Me., LLC v. Comm'r of Me. Dep't of Agric., Food & Rural Res., 232 F.3d 8, 21 (1st Cir.2000), it cannot plausibly be said that the farm winery exception redounds to the exclusive benefit of Maine vineyards. Rather, whatever minimal benefits might be inferred from the structure of the scheme itself seem largely to be dispersed on the basis of geography. In short, there is simply no evidence that out-of-state wineries suffer any disproportionate loss of business on account of Maine's direct-shipping ban. The plaintiffs have made no showing that any discrimination vis-à-vis access to the Maine market actually results from the farm winery exception itself. While the FTC Report and the plaintiffs' other evidentiary proffers suggest that a direct-shipping ban harms out-of-state producers, the plaintiffs acknowledge that the constricted availability of wine is due in large part to the three-tier system itself. Appellants' Br. at 10. Because the three-tiered system has not been challenged here, this acknowledgment undercuts any inference that the allegedly discriminatory farm winery exception is responsible for the perceived harm. [8] The plaintiffs' response to this lack of evidence is an assertion that even if the impact is small because direct sales do not constitute a significant market and . . . in-state wineries do not do much walk-in business, the regime is nonetheless unconstitutional because the dormant commerce clause contains no de minimis exception. Appellants' Reply Br. at 8. But the case upon which they rely for this proposition, Camps Newfound/Owatonna v. Town of Harrison, 520 U.S. 564, 117 S.Ct. 1590, 137 L.Ed.2d 852 (1997), concerned a statute that was discriminatory on its face. See id. at 581, 117 S.Ct. 1590. It strikes us as implausible that the same de minimis standard would apply when evaluating whether a facially neutral statute has a discriminatory effect on interstate commerce. See Brown & Williamson Tobacco, 320 F.3d at 216 (finding a de minimis advantage to in-state [companies] . . . insufficient to establish a discriminatory effect); cf. New Energy, 486 U.S. at 276, 108 S.Ct. 1803 (commenting that  where discrimination is patent . . . neither a widespread advantage to in-state interests nor a widespread disadvantage to out-of-state competitors need be shown) (emphasis supplied). The de minimis standard, when used in cases involving facially discriminatory laws, speaks to the degree of discrimination. It cannot sensibly be used to answer the different question of whether discriminatory effect exists. In other words, it is only once the fact of discrimination has been proved that the de minimis standard comes into play. It follows that the plaintiffs cannot succeed in this case merely by invoking the de minimis standard and ignoring their burden to proffer substantial evidence of discrimination. This result appeals to common sense. Were we to require no showing beyond the de minimis level, no distinction would exist between the discriminatory effect test and the incidental burden test employed by the Supreme Court in Pike, 397 U.S. at 142, 90 S.Ct. 844. While the Court has 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, Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986), it has nonetheless continued to maintain that distinction. We do not propose to abolish it today. In a last-ditch effort to put the genie back in the bottle, the plaintiffs essay a naked appeal to the logic of the argument that some discriminatory effects must result from a regime that allows consumers to go to in-state wineries and buy as much wine as they want but precludes them from ordering wine directly from out-of-state wineries. Conjecture, however, cannot take the place of proof. [9]