Court Opinion

ID: 9429714
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:27:43.229395+00
Date Added: 2024-06-11T17:19:12.216046
License: Public Domain

*278Justice Stevens,
with whom Justice Rehnquist and Justice O’Connor join, dissenting.
Four wholesalers of alcoholic beverages filed separate complaints challenging the constitutionality of the Hawaii liquor tax because pursuant to an exception, since expired, the tax was not imposed on okolehao or pineapple wine in certain tax years.1 Although only one of them actually sells okolehao and pineapple wine,2 apparently all four of them are entitled to engage in the wholesale sale of these beverages as well as the various other alcoholic beverages that they do sell. The tax which they challenge is an excise tax amounting to 20 percent of the wholesale price; presumably the economic burden of the tax is passed on to the wholesalers’ customers.
Today the Court holds that these wholesalers are “entitled to litigate whether the discriminatory tax has had an adverse competitive impact on their business.” Ante, at 267. I am skeptical about the ability of the wholesalers to prove that the exemption for okolehao and pineapple wine has harmed their businesses at all, partly because their customers have reimbursed them for the excise tax and partly because they are free to take advantage of the benefit of the exemption by selling the exempted products themselves. Even if some minimal harm can be proved, I am even more skeptical about the possibility that it will result in the multimillion-dollar refund that the wholesalers are claiming. My skepticism *279concerning the economics of the wholesalers’ position is not, however, the basis for my dissent. I would affirm the judgment of the Supreme Court of Hawaii because the wholesalers’ Commerce Clause claim is squarely foreclosed by the Twenty-first Amendment to the United States Constitution.3
J — I
At the outset, it is of critical importance to a proper understanding of the significance of the Twenty-first Amendment in this litigation to note the issues this case does not raise. First, there is no claim that the Hawaii tax is inconsistent with any exercise of the power that Art. I, § 8, cl. 3, of the Constitution confers upon the Congress “To regulate Commerce among . . . the several States.” The extent to which the Twenty-first Amendment may or may not have placed limits on the ability of Congress to regulate commerce in alcoholic beverages is simply not at issue in this case. Hence, there is no issue concerning the continuing applicability of previously enacted federal statutes affecting the liquor industry.4 For purposes of analysis, we may assume, arguendo, that the Twenty-first Amendment left the power of Congress entirely unimpaired.5
*280Moreover, there is no claim that the Hawaii tax has impaired interstate commerce that merely passes through the State,6 or that is destined to terminate at a federal enclave within the State.7 Nor is there a claim of a due process violation,8 nor a claim of discrimination among persons, as opposed to goods,9 nor a claim of an effect on liquor prices outside the State.10
The tax is applied to the sale of liquor in the local market that presumably will be consumed in Hawaii. It thus falls squarely within the protection given to Hawaii by the second section of the Twenty-first Amendment, which expressly mentions “delivery or use therein.”11
II
Prior to the adoption of constitutional Amendments concerning intoxicating liquors, there was a long history of special state and federal legislation respecting intoxicating liquors and resulting litigation challenging that legislation *281under the Commerce Clause.12 The Commerce Clause effectively prevented States from unilaterally banning the local sale of intoxicating liquors from out of state, Leisy v. Hardin, 135 U. S. 100 (1890), but Congress, acting pursuant to its plenary power under the Commerce Clause, essentially conferred that authority on them, and this Court upheld that exercise of congressional power. Clark Distilling Co. v. Western Maryland R. Co., 242 U. S. 311 (1917). The Eighteenth Amendment, ratified in 1919, prohibited the manufacture, sale, and transportation of intoxicating liquors for beverage purposes, and expressly conferred concurrent power to enforce the prohibition on Congress and the several States.13 Section 1 of the Twenty-first Amendment, ratified in 1933, repealed the Eighteenth Amendment. However, the constitutional authority of the States to regulate commerce in intoxicating liquors did not revert to its status prior to the adoption of these constitutional Amendments; §2 of the Twenty-first Amendment expressly provides:
“The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”
This Court immediately recognized that this broad constitutional language confers power upon the States to regulate commerce in intoxicating liquors unconfined by ordinary limitations imposed on state regulation of interstate goods by the Commerce Clause and other constitutional provisions, Ziffrin, Inc. v. Reeves, 308 U. S. 132 (1939); Finch & Co. v. *282McKittrick, 305 U. S. 395 (1939); Indianapolis Brewing Co. v. Liquor Control Comm’n, 305 U. S. 391 (1939); Mahoney v. Joseph Triner Corp., 304 U. S. 401 (1938); State Board of Equalization v. Young’s Market Co., 299 U. S. 59 (1936), and we have consistently reaffirmed that understanding of the Amendment, repeatedly acknowledging the broad nature of state authority to regulate commerce in intoxicating liquors, see, e. g., Capital Cities Cable, Inc. v. Crisp, 467 U. S. 691, 712 (1984); Craig v. Boren, 429 U. S. 190, 206-207 (1976); Heublein, Inc. v. South Carolina Tax Comm’n, 409 U. S. 275, 283-284 (1972); California v. LaRue, 409 U. S. 109, 114-115 (1972); Seagram & Sons v. Hostetter, 384 U. S. 35, 42 (1966); Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U. S. 324, 330 (1964); Nippert v. Richmond, 327 U. S. 416, 425 (1946); United States v. Frankfort Distilleries, Inc., 324 U. S. 293, 299 (1945).
Ill
Today the Court, in essence, holds that the Hawaii tax is unconstitutional because it places a burden on intoxicating liquors that have been imported into Hawaii for use therein that is not imposed on liquors that are produced locally. As I read the text of the Amendment, it expressly authorizes this sort of burden. Moreover, as I read Justice Brandeis’ opinion for the Court in the seminal case of State Board of Equalization v. Young’s Market Co., supra, the Court has squarely so decided.
In Young’s Market, the Court upheld a California statute that imposed a license fee on the privilege of importing beer to any place in California. After noting that the statute would have been obviously unconstitutional prior to the Twenty-first Amendment, the Court explained that the Amendment enables a State to establish a local monopoly and to prevent or discourage competition from imported liquors. Because the Court’s reasoning clearly covers this case, it merits quotation at some length:
“The Amendment which 'prohibited’ the ‘transportation or importation’ of intoxicating liquors into any state *283‘in violation of the laws thereof,’ abrogated the right to import free, so far as concerns intoxicating liquors. The words used are apt to confer upon the State the power to forbid all importations which do not comply with the conditions which it prescribes. The plaintiffs ask us to limit this broad command. They request us to construe the Amendment as saying, in effect: The State may prohibit the importation of intoxicating liquors provided it prohibits the manufacture and sale within its borders; but if it permits such manufacture and sale, it must let imported liquors compete with the domestic on equal terms. To say that, would involve not a construction of the Amendment, but a rewriting of it.
“The plaintiffs argue that, despite the Amendment, a State may not regulate importations except for the purpose of protecting the public health, safety or morals; and that the importer’s license fee was not imposed to that end. Surely the State may adopt a lesser degree of regulation than total prohibition. Can it be doubted that a State might establish a state monopoly of the manufacture and sale of beer, and either prohibit all competing importations, or discourage importation by laying a heavy impost, or channelize desired importations by confining them to a single consignee? Compare Slaughter-House Cases, 16 Wall. 36; Vance v. W. A. Vandercook Co. (No. 1), 170 U. S. 438, 447. There is no basis for holding that it may prohibit, or so limit, importation only if it establishes monopoly of the liquor trade. It might permit the manufacture and sale of beer, while prohibiting hard liquors absolutely. If it may permit the domestic manufacture of beer and exclude all made without the State, may it not, instead of absolute exclusion, subject the foreign article to a heavy importation fee?” 299 U. S., at 62-63.
Today the Court implies that Justice Brandéis’ reasoning in the Young’s Market case has been qualified by our more recent decision in Hostetter v. Idlewild Bon Voyage Liquor *284Corp., supra. However, in the passage quoted by the Court, ante, at 275, Justice Stewart merely rejected the broad proposition that the Twenty-first Amendment had entirely divested Congress of all regulatory power over interstate or foreign commerce in intoxicating liquors. As I have already noted, this case involves no question concerning the power of Congress, see supra, at 279, and n. 4, and Justice Brandeis of course in no way implied that Congress had been totally divested of authority to regulate commerce in intoxicating liquors — a proposition which Justice Stewart characterized as “patently bizarre.” 377 U. S., at 332.
Moreover, the actual decision in Hostetter was predicated squarely on the principle reflected in the Court’s earlier decision in Collins v. Yosemite Park & Curry Co., 304 U. S. 518 (1938). Referring to Collins, the Court explained:
“There it was held that the Twenty-first Amendment did not give California power to prevent the shipment into and through her territory of liquor destined for distribution and consumption in a national park. The Court said that this traffic did not involve ‘transportation into California “for delivery or use therein” ’ within the meaning of the Amendment. ‘The delivery and use is in the Park, and under a distinct sovereignty.’ Id., at 538. This ruling was later characterized by the Court as holding ‘that shipment through a state is not transportation or importation into the state within the meaning of the Amendment.’ Carter v. Virginia, 321 U. S. 131, 137.” Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U. S., at 332.14
*285On the same day that it decided Hostetter, the Court also held that a Kentucky tax violated the Export-Import Clause of the Constitution. Department of Revenue v. James B. Beam Distilling Co., 377 U. S. 341 (1964). The holding of that case is not relevant to the Commerce Clause issue decided today, but the final paragraph of the Court’s opinion in the James B. Beam Distilling Co. case surely confirms my understanding that the Court did not then think that it was repudiating the central rationale of Justice Brandéis’ opinion in Young’s Market. It wrote:
“We have no doubt that under the Twenty-first Amendment Kentucky could not only regulate, but could completely prohibit the importation of some intoxicants, or of all intoxicants, destined for distribution, use, or consumption within its borders. There can surely be no doubt, either, of Kentucky’s plenary power to regulate and control, by taxation or otherwise, the distribution, use, or consumption of intoxicants within her territory after they have been imported. All we decide today is that, because of the explicit and precise words of the Export-Import Clause of the Constitution, Kentucky may not lay this impost on these imports from abroad.” 377 U. S., at 346.
Indeed, only 11 days ago, we stated that a direct regulation on “the sale or use of liquor” within a State’s borders is the “core § 2 power” conferred upon a State, Capital Cities Cable, Inc. v. Crisp, 467 U. S., at 713, observing:
“‘This Court’s decisions . . . have confirmed that the Amendment primarily created an exception to the normal operation of the Commerce Clause.’ [Section] 2 reserves *286to the States power to impose' burdens on interstate commerce in intoxicating liquor that, absent the Amendment, would clearly be invalid under the Commerce Clause.” Id., at 712 (citation omitted).
As a matter of pure constitutional power, Hawaii may surely prohibit the importation of all intoxicating liquors. It seems clear to me that it may do so without prohibiting the local sale of liquors that are produced within the State. In other words, even though it seems unlikely that the okolehao lobby could persuade it to do so, the Hawaii Legislature surely has the power to create a local monopoly by prohibiting the sale of any other alcoholic beverage. If the State has the constitutional power to create a total local monopoly— thereby imposing the most severe form of discrimination'on competing products originating elsewhere — I believe it may also engage in a less extreme form of discrimination that merely provides a special benefit, perhaps in the form of a subsidy or a tax exemption, for locally produced alcoholic beverages.
The Court’s contrary conclusion is based on the “obscurity of the legislative history” of § 2. Ante, at 274. What the Court ignores is that it was argued in Young’s Market that a “limitation of the broad language” of § 2 was “sanctioned by its history,” but the Court, observing that the language of the Amendment was “clear,” determined that it was unnecessary to consider the history, 299 U. S., at 63-64 — the history which the Court today considers unclear. But now, according to the Court, the force of the Twenty-first Amendment contention in this case is diminished because the “central purpose of the provision was not to empower States to favor local liquor industries by erecting barriers to competition.” Ante, at 276. It follows, according to the Court, that “state laws that constitute mere economic protectionism are not entitled to the same deference as laws enacted to combat the perceived evils of an unrestricted traffic in liquor.” Ibid. This is a totally novel approach to *287the Twenty-first Amendment.15 The question is not one of “deference,” nor one of “central purposes”;16 the question is whether the provision in this case is an exercise of a power expressly conferred upon the States by the Constitution. It plainly is.
Accordingly, I respectfully dissent.

 Two of the wholesalers Bacchus Imports, Ltd., and Eagle Distributors, Inc., are appellants in this Court; the other two, Paradise Beverages, Inc., and Foremost-McKesson, Inc., are nominally appellees under our Rules, see ante, at 266, n. 2, but have filed briefs supporting reversal. All four were parties to the case in the Hawaiian Supreme Court.

 As the Supreme Court of Hawaii noted:
“Paradise acknowledges it is a ‘beneficiary’ of the exemptions from taxation provided by HRS §244.4 for okolehao and fruit wine produced in Hawaii. It nevertheless maintains the statute is unconstitutional probably because the volume of sales of the exempted products is relatively insubstantial.” In re Bacchus Imports, Ltd., 65 Haw. 566, 570, n. 9, 656 P. 2d 724, 727, n. 9 (1982).

 As the Court recognizes, the issue whether the Twenty-first Amendment insulates the exemption from invalidation under the Commerce Clause is properly before us, even though it was not argued below. I should add that the wholesalers’ specific Equal Protection Clause claim is plainly foreclosed under the Twenty-first Amendment as well, see, e. g., Mahoney v. Joseph Triner Corp., 304 U. S. 401 (1938), and their Import-Export Clause claim is wholly lacking in merit, see, e. g., Department of Revenue v. James B. Beam Distilling Co., 377 U. S. 341 (1964).

 See generally Capital Cities Cable, Inc. v. Crisp, 467 U. S. 691 (1984); California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U. S. 97 (1980); see also Heublein, Inc. v. South Carolina Tax Comm’n, 409 U. S. 275, 282, n. 9 (1972).

 The Commerce Clause operates both as a grant of power to the Congress and a limitation on the power of the States concerning interstate commerce. Congress’ power under the Clause, however, is broader than the limitation inherently imposed on the States, and hence we have always *280recognized that some state regulation of interstate commerce is permissible which would be impermissible if Congress acted. Cooley v. Board of Wardens, 12 How. 299 (1852). Given the dual character of the Clause, it is not at all incongruous to assume that the power delegated to Congress by the Commerce Clause is unimpaired while holding the inherent limitation imposed by the Commerce Clause on the States is removed with respect to intoxicating liquors by the Twenty-first Amendment.

 See generally Department of Revenue v. James B. Beam Distilling Co., supra; Carter v. Virginia, 321 U. S. 131 (1944).

 See generally United States v. Mississippi Tax Comm’n, 412 U. S. 363 (1973); Collins v. Yosemite Park & Curry Co., 304 U. S. 518 (1938).

 See generally Wisconsin v. Constantineau, 400 U. S. 433 (1971).

 See generally Craig v. Boren, 429 U. S. 190 (1976).

See generally Seagram & Sons v. Hostetter, 384 U. S. 35 (1966); compare United States Brewers Assn., Inc. v. Rodriquez, 465 U. S. 1093 (1984) (summarily dismissing appeal from 100 N. M. 216, 668 P. 2d 1093 (1983)), with Healy v. United States Brewers Assn., Inc., 464 U. S. 909 (1983) (summarily aff’g 692 F. 2d 275 (CA2 1982)).

 See infra, at 281.

 See, e. g., United States v. Hill, 248 U. S. 420 (1919); Clark Distilling Co. v. Western Maryland R. Co., 242 U. S. 311 (1917); In re Rahrer, 140 U. S. 545 (1891); Leisy v. Hardin, 135 U. S. 100 (1890); Bowman v. Chicago & Northwestern R. Co., 125 U. S. 465 (1888); Walling v. Michigan, 116 U. S. 446 (1886); License Cases, 5 How. 504 (1847), overruled, Leisy v. Hardin, supra.

 See generally The National Prohibition Cases, 253 U. S. 350 (1920). *285case does not involve ‘measures aimed at preventing unlawful diversion or use of alcoholic beverages within New York.’ 212 F. Supp., at 386. Rather, the State has sought totally to prevent transactions carried on under the aegis of a law passed by Congress in the exercise of its explicit power under the Constitution to regulate commerce with foreign nations. This New York cannot constitutionally do.” 377 U. S., at 333-334.

 The Court added:
“A like accommodation of the Twenty-first Amendment with the Commerce Clause leads to a like conclusion in the present case. Here, ultimate delivery and use is not in New York, but in a foreign country. The State has not sought to regulate or control the passage of intoxicants through her territory in the interest of preventing their unlawful diversion into the internal commerce of the State. As the District Court emphasized, this

 It is an approach explicitly rejected in Young’s Market, 299 U. S., at 63 (rejecting argument that the “State may not regulate importations except for the purpose of protecting the public health, safety or morals . . .”), and in subsequent cases as well, see, e. g., Seagram & Sons v. Hostetter, 384 U. S., at 47 (“[Njothing in the Twenty-first Amendment. . . requires that state laws regulating the liquor business be motivated exclusively by a desire to promote temperance”). Because it makes the constitutionality of state legislation depend on a judicial evaluation of the motivation of the legislators, I regard it as an unsound approach to the adjudication of federal constitutional issues. Indeed, it is reminiscent of a long since repudiated era in which this Court struck down assertions of Congress’ power to regulate commerce on the ground that the objective of Congress was not to regulate commerce, but rather to remedy some local problem. See generally Carter v. Carter Coal Co., 298 U. S. 238 (1936); Schechter Poultry Corp. v. United States, 295 U. S. 495 (1935); Railroad Retirement Board v. Alton R. Co., 295 U. S. 330 (1935). In any event, the Court’s analysis must fall of its own weight, for we do not know what the ultimate result of a regulation such as this may be. The immediate objective may be to encourage the growth of domestic distilleries, but the ultimate result — or indeed, objective — may be entirely to prohibit imported liquors for domestic consumption when the domestic industry has matured.

 I would suggest, however, that if vague balancing of “central purposes” is to govern the ultimate disposition of this litigation, a careful and thorough analysis of the actual economic effect of the tax exemption on the business of the taxpayers should be made before any serious consideration is given to their multimillion-dollar refund claim.