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Tenn. Wine & Spirits Retailers Ass'n v. Thomas - 139 S. Ct. 2449 (2019)

Rule:

Under the Dormant Commerce Clause cases, if a state law discriminates against out-of-state goods or nonresident economic actors, the law can be sustained only on a showing that it is narrowly tailored to advance a legitimate local purpose. 

U.S. Const. amend. 21, § 2, gives the states regulatory authority that they would not otherwise enjoy, but mere speculation or unsupported assertions are insufficient to sustain a law that would otherwise violate the Commerce Clause. Where the predominant effect of a law is protectionism, not the protection of public health or safety, it is not shielded by U.S. Const. amend. 21, § 2. 

Facts:

Tennessee law imposes durational-residency requirements on persons and companies wishing to operate retail liquor stores, requiring applicants for an initial license to have resided in the state for the prior two years; requiring an applicant for renewal of a license to reside in the state for 10 consecutive years; and providing that a corporation cannot obtain a license unless all of its stockholders are residents. Following the state attorney general’s opinion that the residency requirements discriminated against out-of-state economic interests in violation of the Commerce Clause, the Tennessee Alcoholic Beverage Commission (TABC) declined to enforce the requirements. Two businesses that did not meet the residency requirements (both respondents here) applied for licenses to own and operate liquor stores in Tennessee. Tennessee Wine and Spirits Retailers Association (Association) threatened to sue the TABC if it granted the licenses, so the TABC’s executive director (also a respondent) filed a declaratory judgment action in state court to settle the question of the residency requirements’ constitutionality. The case was removed to federal district court, which found the requirements unconstitutional. 

Issue:

Is Tennessee’s 2-year durational-residency requirement for retail liquor store license applicants violative of the Commerce Clause?

Answer:

Yes.

Conclusion:

The United States Supreme Court held that because the predominant effect of the 2-year residency requirement for retail license applicants was simply to protect the Tennessee Wine and Spirits Retailers Association’s members from out-of-state competition and had little relationship to public health and safety, it violated the Commerce Clause. The residency requirement was not shielded by U.S. Const. amend. 21, § 2, because it was not a license to impose all manner of protectionist restrictions on commerce in alcoholic beverages. Lastly, the Association did not show that the 2-year durational-residency requirement for license applicants was valid as it expressly discriminated against nonresidents and poorly served the goal of enabling Tennessee to ensure that only law-abiding and responsible applicants received licenses.

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