Opinion ID: 843269
Heading Depth: 1
Heading Rank: 4

Heading: 436.1205(3) is Subject to Strict Scrutiny

Text: The Commerce Clause problem with MCL 436.1205(3) is not straightforward. To appreciate the magnitude of the constitutional issue, it is necessary to understand the law's effects. MCL 436.1205(3) creates two categories of ADAs: (1) ADAs that were wholesaling wine before September 24, 1996 (the favored class) and (2) ADAs that were not (the disfavored class). The two classes are treated differently but, within each class, every ADA is treated the same. At first blush, treating ADAs differently depending on whether they were in the wholesaling business on a certain date would seem not to create a Commerce Clause issue. It is only when one considers that solely Michigan companies were able to wholesale wine before September 24, 1996, [10] that the constitutional problem comes into focus. Because only Michigan companies could sell wine wholesale in Michigan before September 24, 1996, the favored class contains only Michigan companies. The members of this class are given a distinct advantage over all other ADAs. The reason is that only they can act as wine wholesalers and distributors in areas where a preexisting wholesale agreement exists. [11] By giving a class of Michigan companies this advantage, the law creates a system where out-of-state ADAs can never compete on the same terms as the favored class of Michigan ADAs. When a state statute discriminates against interstate commerce by favoring in-state economic interests over out-of-state interests, it is subject to strict scrutiny. Brown-Forman Distillers Corp., 476 U.S. at 578, 106 S.Ct. 2080. Because this law favors in-state entities over out-of-state entities, it can survive only if it can withstand strict scrutiny. [12] To survive strict scrutiny, the state must demonstrate that the law in question actually furthers the purported legitimate state interest, and no less discriminatory means exist to accomplish this interest. New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 278, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988). Intervening defendant Michigan Beer & Wine Wholesalers Association claims that the purpose of this statute is to protect existing wine wholesalers from ADAs that might desire to become wine wholesalers. It argues that this protection is needed because, without it, ADA wholesalers would have a built-in advantage over non-ADA wholesalers and could gobble up the market. Assuming this is a legitimate purpose, there is a less discriminatory way to accomplish it. The Legislature could ban all ADAs, not just those that began wholesaling after September 24, 1996, from wholesaling brands of wine in areas where there is a preexisting wholesale agreement covering them. [13] Because this law is not narrowly tailored to achieve the government's interest, it is invalid and must be struck down. [14]