Legal Case Summary

We'll hear argument next in case 1896 Tennessee wine and spirits retailers association versus Blair Mr. Doretsky. Mr. Chief Justice and may it please the court. In the wake of the nation's failed experiment with prohibition, the 21st Amendment restored to the states the powers that they previously had under the Wilson and Web Kenyan acts. In exercising those powers, both before prohibition and then its immediate aftermath, states enacted residency requirements like Tennessee's to regulate the sale of alcohol within their territory. All along the way, this court recognized the state's power to do so as part of their virtually complete control over how to structure the liquor distribution system. Under Grand Home, that unbroken and undisputed history is despositive. Residency requirements like Tennessee's are protected from dormant commerce clause scrutiny because they were authorized by the Wilson and Web Kenyan acts and uniformly considered constitutional at the time of ratification. Respondents offer. They're asked you to clarify for me your position, just as Sutton in his dissent. Basically said, if your legislature came and said we don't want out of state wholesalers, distributors or retailers to be in our chain of distribution because they're going to take business away from our local enterprises. Period. End of story. Are you saying that the state can do that? Are you disagreeing with Justice, with Judge Sutton? Or do you think that there's an economic protectionism protection against what a state can do? So I don't think that there is an economic protectionism exception to the 21st Amendment, but even if there were one as Judge Sutton recognized in applying his test to the two-year residency requirement in the field, who would still prevail? Well, except we have a difficulty there, which is you can't look at just legislation, piecemeal. You have to look at it as a whole. It was written as a whole. It's one paragraph that says two years plus ten. So it's really twelve years because, and he said there's no economic justification for a ten-year residency requirement. So what you have to look at is not whether it's two years, but whether there's any reason for a twelve-year residency requirement. And if she said no to ten, then it's no to twelve. So Justice Sutton, my or that, that gets us into a severability question

. And- But let's go back to my initial question. Yes, it does. And that's a separate question. And you can argue that one back and forth. But my fundamental question is, you believe the 21st Amendment permits states to discriminate against out-of-state interests. Then does that mean Boccus, Grand Hold, all our jurisprudence that has invalidated certain state laws was wrong? Is that-is-are you suggesting we should just disavow all those cases and forget them? No, no, or not. And let me address both by- I know I want to limit it to producers, but that's not the way that Grand Hold talked about them, talked about this issue, but it's sliced and diced as much as you want. But is it your position that the 21st Amendment makes all our other jurisprudence wrong? No, it's not. And let me explain how to harmonize it. Grand Hold, and Grand Hold mandated a historical test. The question and Grand Hold, which online justices agreed upon, was what were the state's pre-prohibition powers? Now, the disagreement in Grand Home was about whether states could discriminate against out-of-state products, pre-prohibition, but the framework was not an economic protectionism framework. It was a historical question. But can I come back to the-what I-where I thought, just as sort of my words started, and ask you just very simply, can I state and act a 10-year residency requirement? And if not, why not? There would not be a dormant commerce clause problem with a 10-year residency requirement. There might be some other constitutional challenge to that, but it would be immune from dormant commerce clause scrutiny, as long as it treated in-state and out-of-state products the same. Okay. Suppose if it was a grandparents requirement. So you can't-you can't get a liquor license in Tennessee unless your grandparents were Tennessee residents. That would not create a dormant commerce clause problem. It would not create a dormant commerce clause problem because the whole point of the 21st Amendment was to constitutionalize the pre-prohibition powers, which included the power to discriminate against out-of-state interest. If you think about the-the three-tier system and the in-state wholesale requirement, for example, that this Court in Grand Home itself said was unquestionably legitimate, that discriminates against that. Okay

. I'll pick up on something else just to say to my or referred to. Suppose you have the State statute that says, for the exclusive purpose of protecting in-state retailers, no, you must be a resident of the state for two years, five years, in order to get a license. Would that be-would that be constitutional? I still don't think there would be a dormant commerce clause problem with that. Now, under Bacchus, if you're looking at the language in Bacchus, Bacchus does talk about economic protectionism, but it does so in the context of a case that was discriminating against out-of-state products. If the rule from Bacchus- Bacchus- Well, it involved wholesalers, but it involved a tax exemption that applied only for in-state products rather than out-of-state products. And that the tax was collected through the wholesalers. Yeah, that's the problem. I don't know why under your theory of the dormant commerce clause, if the State can do what it wants within its borders because it's regulating liquor, I don't know why our cases would be right under your theory that they can't put a different tax on different products. Because under Grand Home and under the history pre-prohibition, states could do virtually what they wanted within their borders, but not everything, and one important carve-out, and this is reflected in the text of the Wilson Act itself, is that they had to treat in-state and out-of-state products the same. The Wilson Act itself says, this is in the blue brief at page 26, it's 27 U.S.C. 121, that states have the power to ban the importation of liquor as long as they treat in violation of laws in the exercise of its police powers within the state, as long as they are treating liquor to the same extent and in the same manner as those such liqueurs had been produced in the state or territory. So the pre-prohibition itself. Then Sifrin was wrong, one of the cases you rely on. Because Sifrin was really the counter-sabapis, wasn't it? And Sifrin basically said, you can discriminate in terms of taxes, basically. But not based on products. And the key point from Bacchus was that it was about discrimination based on products. If the rule that came out of Bacchus were just a straight economic protectionism test, Grand Home would have been a much easier case. Grand Home could have been written by saying, the question is, do the Michigan and New York laws at issue, are they meant to protect in-state producers or not? That wasn't the analysis that Grand Home used. Instead, again, Grand Home set forth this historical test that required the court to look back at the pre-prohibition powers

. And the Wilson and Webb Kenyan acts, first of all, empowered states to regulate interstate shipment of alcohol so long as they treated in-state and out-of-state alcohol the same. And then second, at that time, pre-prohibition states also had the inherent authority to regulate in-state sales. So combined, that meant that states pre-prohibition were free to structure the in-state liquor distribution systems, free from Commerce Clause scrutiny, again, as long as they treated in-state and out-of-state. But it's quite a stomach-close. I mean, if you go back to 1920, maybe they said you only be sold on the basis of race or the basis of gender or some, I mean, it can't be 100 percent whatever they did in 1920. Well, that's right, but that's because the 21st Amendment and the pre-prohibition powers that we're talking about are powers related to overriding the dormant Commerce Clause specifically, not other constitutional provisions like the First Amendment or pre-prohibition. Now, in other words, your position, your view is all the other amendments apply. Okay. The Commerce Clause applies to as long as it wasn't part of the distribution system in the Wilson Act. And that- But if it's part of the distribution of the Wilson Act, then it's free of Commerce Clause, but otherwise it's subject to it, and it's also subject to everything else. Is that basically- I mean, I've got it basically, right? No, I wouldn't quite say we're looking at the distribution system pre-the Wilson Act. But the Wilson and Web Kenyan Act, which were constitutionalized in the 21st Amendment, were all about permitting States to act in ways that did restrain Commerce. But they weren't about permitting States to act in ways that violated the First Amendment or other, you know, individual rights, for example. And so- It's going to be wrong because the law then did provide for racial discrimination. And there's nothing in the provision that limits itself to the Commerce Clause. It just says the transportation or importation into any State, territory, or possession of the United States for delivery or use therein of intoxicating liqueurs in violation of the laws thereof is hereby prohibited. I don't actually see in that any reference to the Commerce Clause or do any other limiting principle yet we have cases that have found limiting principles. Yes, but this Court's case is including the ones that have found limiting principles and grand home itself, all explain that the 21st Amendment has to be understood in light of what it was trying to achieve, which was constitutionalizing these statutes. And these statutes were dealing with Commerce, notwithstanding their broad language, the problem that they were trying to solve and the State powers that they were trying to protect were related to powers because- Let me ask something about that. I do understand that the 21st Amendment was geared towards giving States greater freedom in controlling the distribution and sale of liquor in their jurisdiction. But I'm having a hard time understanding how the residency requirement does when it comes to a person's pre-existing residency

. So, yes, we understand that having someone there who is responsible to the community is necessary. That was inherent in the three-tier system. But why is it inherent in the three-tier system that you have to have someone who's only a local do it? There are many States whose three-tier system doesn't require that. They function fairly well. I don't understand the necessity of that. So, first, I don't think the question is whether it's necessary or not. The point of the 21st Amendment is that courts aren't supposed to impose that kind of scrutiny. States get to decide what distribution system works within their state. There's no one's size fits also. I agree. But there are some parts of the discrimination part of the- of the Commerce Clause that we say still affect this. You're saying they can't use it to violate the First Amendment. We've said you can't use it to discriminate against products, although nothing in here says you can't do that. I'm having a hard time understanding, explaining to me why it's necessary. So, let me make two points. One, just quickly going back to your earlier question about the text of the 21st Amendment. The text does refer to the delivery or use of alcohol. So, that is invoking the sort of Commerce Clause concern that the history confirms. But to get to your other question about the purposes of a Durational Residency requirement, everybody agrees that a residency requirement of some sort is constitutional, notwithstanding that it would otherwise raise Commerce Clause concerns. And the Durational component of a residency requirements serves very much the same interests, for example. Residency requirements are important because they allow states to conduct background checks

. Having somebody be a resident for a longer period of time allows those who decide whether to issue licenses to actually observe the person, and to observe the person's character and give the state a better ability to decide whether to issue a license and to conduct the background checks. Well, not sure why. You're arguing that they serve a public health and safety purpose. But I thought you answered my previous question by saying it doesn't matter if the only purpose of the regulation, and this is spelled out right in the statute itself, is economic protectionism. That does not create a Durational Commerce Clause problem because the 21st Amendment gave the states that authority. So, I think that's right. I think there's no historical pedigree for an economic protectionism sort of exception. If the Court were to engage that in that, it would essentially be a standardless inquiry. Well, I think you're turning, maybe you're turning it around. And maybe my understanding of history is wrong, so you'll correct me. But I thought that the purpose of the 18th Amendment was a determination by those who adopted it and ratified it, that alcohol created a public health and safety problem. And I thought the purpose of the 21st Amendment, and Section 2 of the 21st Amendment, was to say this is a determination, the public health and safety determination, is not going to be made on the national level, it's going to be made by the states. But none of that seems to me that anything to do with economic protectionism. But where am I wrong in that? What is the basis for thinking that the purpose of, or a purpose of Section 2 of the 21st Amendment, was to authorize the states in this one area, dealing with alcohol, to engage in protectionist activities that wouldn't be permitted with respect to any other commodity? I don't think the purpose was specifically to allow protectionist activity, but I do think that the purpose was to shield state laws from scrutiny under the Dormit Commerce Laws. And for sure, one way that states might exercise that authority would be economic protectionism, but there's no historical pedigree for that kind of a carve-out from what is otherwise virtually complete authority for states to legislate in this area, free from Dormit Commerce Laws. If the court, when you say virtually complete authority, and you've said several times the point of the 21st Amendment, the purpose of the 21st Amendment, the problem that I'm having in thinking about this is the text of the 21st Amendment does not support that as I read it. You mentioned delivery or use, but it doesn't just say the states have complete authority over delivery or use. It's talking about the transportation or importation in any state. And why isn't that most naturally read to allow states to remain dry and therefore ban transportation or importation, but not to otherwise impose discriminatory or as Justice Alito says protectionist regulations? Two points in response to that, Justice Kavanaugh. First, the 21st Amendment has to be read against the backdrop of the inherent authority that states already had to regulate the distribution systems within their system. The 21st Amendment didn't need to say that expressly because it was understood at the time

. Second, this Court in Mid-Cal. And this is going to stop you there. I'm sorry. Where do you get that idea that it somehow, the backdrop was to give the States authority to enact protectionists legislation or legislation that discriminated against out of state producers, retailers, wholesalers? So I direct you to Judge Sutton's descent in the Sixth Circuit, which walks through the understanding of state authority. I, I, I, I, I, I, I, I, I don't see that in the Web Kenyan Act. That the things that led up to that were not the act was not as I understood it and enacted to enable states to enshrine protectionist legislation into state law. Those statutes were enacted in order to avoid circumvention of certain inherent state powers by avoiding the product. When they wanted to remain dry states, as I understood it. But when the 21st Amendment was enacted, obviously that was the end of prohibition, but it also restored to the States powers that they previously had to regulate, regulate authority within their borders. I'd also direct the Court to Mid-Cal. This is at 445 U.S. at 1.06, which said that although the 21st Amendment on its face gives the States control over the transportation or importation, such control logically entails considerable regulatory power not strictly limited to importing and transporting alcohol. That too is referring to the courts and to the States' inherent power to regulate the systems within their states. If I may reserve their major my time. Thank you, counsel. General Franklin. Mr. Chief Justice and may it please the Court. This Court has repeatedly stated, most recently, in-grand home itself, that Section 2 of the 21st Amendment gives States virtually complete control over how to structure their domestic liquor distribution systems

. Now, questions have obviously arisen already this morning about whether residency requirements were part of that structure and they were. We know that, for example, from the Vance case in 1898 that the Court's discussion there is very instructed. Vance involved the South Carolina dispensary law, but the Court there said the dispensary law was comparable to a situation in which a State required for a retail license that the retailer be a resident of that State. And the Court treated that situation as so self-evidently valid that it used that as the basis for upholding the South Carolina law by saying any rule that would question that. Mr. Franklin, you are representing quite a number of states, including Tennessee, I guess, maybe. These states have very, very residency requirements and I want to take you back to Justice Salitos' question. Tennessee appears to be on one end of the spectrum. And is there anything in your argument that would give us a way to say, you know, when there is a 12-year residency requirement, when there is a 100 percent shareholder requirement, these have stopped being public health and safety measures. These are clearly protectionists and we should not allow those to occur. Well, I agree with my co-cowse that there wouldn't be a dormant commerce clause claim there because the 21st Amendment, as he stated, was designed to supplant or displace dormant commerce clause analysis. Now, there may come a point where the residency requirement is so extreme or so excessive as to be truly arbitrary, and then it could fail the 14th Amendment's background presumption. Well, it's not arbitrary if you are intending to promote economic protectionism. And as I understand your position, it's that that's part of the State's prerogatives too. And then, you know, the sky is the limit. The more you do, the more protectionist it gets. Well, for example, it's our position, in this case, that the interplay between the initial two-year residency requirement for a license under Tennessee law and the 10-year renewal requirement, it's hard to see a rational basis for that. It seems like a trap for the unwary. That's not a dormant commerce clause problem, but it could be a violation of the background, rationality, minimal rationality requirement of the 14th Amendment. Why is that to pick up on Justice Kagan's question? Economic protectionism is rational. It's in certain circumstances

. It's disputed, but it's rational. And maybe a dormant commerce clause problem. And you're saying, no, it's no dormant commerce clause problem. Then it would seem I'm repeating Justice Kagan now, the sky's the limit. My comment went simply to the interplay between the official requirement and the subsequent requirement. Yeah, but the 12 years, no dormant commerce clause problem, you said, and the rationality argument would be that it's designed to favor in-state retailers. That's rational. Our position would simply be that at some point down the line, there could be a failure of minimal rationality. But that's certainly not the case with respect to the two-year requirement. Which, General, I guess the question is, if you're conceding that much, what's the delta? What's the difference between what the dormant commerce clause would otherwise disallow and what I take it to be your position, the equal protection clause, would permit? If it's irrational, under one, why is it rational under the other? And are we just going to recreate our dormant commerce clause jurisprudence elsewhere? Well, I do think it would be a mistake to recreate the dormant commerce clause elsewhere, presumably. But why isn't that exactly the invitation you're issuing us through this concession? I don't think so. All legislation is subject to the 14th Amendment's background requirement of minimal rationality. We don't think we're close to that here. And the protectionism lens is just the wrong lens through which to look at this issue. So I suppose you, law, any liquor storehouse to use paint made in Tennessee, asphalt made in Tennessee for the barking lawn. Neon, you know, I can go on. I suppose at some point if we're talking about the use of paint, then we're really getting pretty far afield from the state structuring the in-state distribution. And say, there's just as good a reason for saying the out-of-state owner has to be a live here for 12 years as there is to say paint. In fact, a better reason because of Tennessee paint is really good. But the statute here, Your Honor, goes to the question of who can sell to whom and on what terms? That's always been at the heartland of what the 21st Amendment was meant to protect the state's ability to structure the intrastate sale of its products. I guess, Mr

. Franklin, the question that followed from my last is, wouldn't it be a better idea if we said the dormant commerce clause does apply and then let the state come back and say, we can meet that test. We have real health and safety concerns here and our law is well tailored to address those concerns. And so it's not a dormant commerce clause violation. I think that approach, which is essentially judge-sutton's approach, would still embroil the courts in the kind of line drawing that the 21st Amendment was designed to relieve them by creating what this Court has called an exception to the normal operation of the dormant commerce clause. It would be at odds with the broad regulatory discretion that's conferred by the 21st Amendment. But I think it's important to note also that the respondents approach, which is not that approach, right? That their approach says no discrimination of any kind under the 21st Amendment. And that approach really would leave the 21st Amendment with no meaningful role to play in our modern constitutional order. Think about the three-tier system for a moment. This Court described it in Grand Hall not only as unquestionably legitimate, but also as involving sales too and purchases from an in-state wholesaler. Now, that arrangement disadvantages out of state business interests. It wouldn't fly if we were talking about milk or trash, but this Court has treated it as unquestionably legitimate because it's part of the state's choice about how to structure the in-state sale of this particularly dangerous product that has distinctive constitutional treatment under the 21st Amendment. In the end, respondents are asking this Court to treat alcohol like any other article of commerce, but it's not. It was actually a hundred years ago today that the 18th Amendment was finally ratified. And 14 years after that failed experiment, the 21st Amendment restored to the individual states their broad police powers over delivery and sale of this product within their borders, so long as they treated out of state and in-state products, the same. And that proviso comes directly from the Text of the Wilson Act, which was Congress's instruction as to how and to what extent to overturn this Court's original package doctrine case law from the late 19th century. That was the line Congress drew and no further. Grand Home drew the same line. It said, we're not going to import all of the dormant commerce clauses, non-discrimination principles into the 21st Amendment, but we are going to import so much of it as the historical analysis and the Wilson Act required. As Justice Kavanaugh pointed out in an earlier question, the 21st Amendment is about the transportation or importation of alcohol into a state. How do you get from there to a durational residency requirement that is imposed on the owner of a retail outlet in the state? Suppose I am not a resident of Tennessee, and I want a license to operate an entity that will sell only Tennessee whiskey. How would that fall within the terms of the 21st Amendment? Well, if I can quote from Mid-Cal in the way that my colleague was beginning to do, what the Court said there is very instructive

. It said, yes, in terms, the amendment gives states control over transportation and importation. But, of course, such control, I'm quoting still, logically entails considerable regulatory power not strictly limited to importing and transporting alcohol. It's true, in other words, that the 21st Amendment speaks of importation, though it also speaks of delivery and use, but it does so. Speaks of transportation for the purpose of the river you're used. For the purpose of protecting the state's ability to control the terms on which delivery or use will take place within its borders. And that's exactly what's at issue here. The 21st Amendment, in other words, presupposes and safeguards the state's broad control over intrastate distribution and sale. And this Court has said that repeatedly, grand home and and bakus are not to the contrary. What they do is undertake a historical analysis and recognize a proviso to that. But the broad rule still stands, states have virtually complete control over intrastate distribution and sale. Thank you, General Franklin. Mr. Phillips. Thank you, Mr. Chief Justice, and may please the Court. I'd like to start with the history because it seems to me that there's a fundamental difference here, and this Court actually has answered the question of what the history of the Wilson Act and the Web Kenyan Act and the 21st Amendment was designed to get at. And the language of the 21st Amendment speaks directly to exactly what the purpose of this entire exercise was. The problem that the two Federal Statutes were designed to deal with was the fact that states had complete authority to say we're not going to allow any use or sale of alcohol within our states and had absolutely no authority to stop the import from other states of alcohol. And the first instance in the original package doctrine, they could sell it to retailers. And then ultimately, beyond that, they could sell it directly to consumers. And the statutes were passed to stop that specific practice. And then we go to the prohibition, which is somebody already noted, is exactly 100 years ago today. And then we come back and we repeal the prohibition. And the language in the section to tracks very closely the language and the intention. It's not a grant of authority. It's a protection against allowing out-of-state operators to come in and sell directly to liquor under certain circumstances. That was the entire purpose of it. That's what the Court called in Boccus, and that's what the Court held in Grannell. Boccus said it was not the, I'll quote it, doubts about the scope of the Amendment's authorization, section two. Notwithstanding one thing as certain, the central purpose of the provision was not to empower states to favor local liquor industries by erecting barriers to competition. Can't, candidly, I don't know that the Court had to go past Boccus when it decided Grannell, because those statutes were clearly just as economically protectionist as this one is. But the principle from Boccus is, if a statute has no purpose, and this statute has no purpose, except to be protectionist of the local industries, it's unconstitutional. Is that your standard because you seem to slide back and forth a little bit between standards and your brief, or I thought that you did maybe? If a State can come forward with any purpose other than protectionism, the State wins? No. No. It's when the State doesn't come forward with anything except protectionism, the State loses. But to those the State comes forward and says, we like this because it's protectionist, we were trying to do some protectionist things, and we also coincidentally, we found a way that our protectionist interests matched up completely with our health and safety interests. What happens then? Then you're in Grannell, and that's what, Grannell, I think, could have concluded anyway that the statutes involved there were really just economic protectionism and not gone beyond it, but it did go beyond that. And what it said is, if, in fact, the State is engaged in discrimination under the, under normal Commerce Claw as standards, it's presumptively unconstitutional and the State must come forward and justify the discrimination on the basis of non-discriminatory, less restrictive means of achieving the same objective. And under that standard, and that's, I'm perfectly comfortable with the standard, because there's no doubt that what we're talking about here is ranked discrimination on a basis of the- The, the, the, the, the, the, the, the, the, the, the, the, the, it also says in Grannell Home that the 21st Amendment grants the State's virtually complete control as to how to structure the liquor distribution system. We have previously recognized that the three-tier structure is unquestionably legitimate. And then we go back into the history, and it's just history, but it is history. And, and we discovered that the States, the vast majority, always have had rules like the Tennessee Rule, and today 34 States, apparently, according to my, our count, have rules just like this, except maybe not the same number of years

. And then we go to the prohibition, which is somebody already noted, is exactly 100 years ago today. And then we come back and we repeal the prohibition. And the language in the section to tracks very closely the language and the intention. It's not a grant of authority. It's a protection against allowing out-of-state operators to come in and sell directly to liquor under certain circumstances. That was the entire purpose of it. That's what the Court called in Boccus, and that's what the Court held in Grannell. Boccus said it was not the, I'll quote it, doubts about the scope of the Amendment's authorization, section two. Notwithstanding one thing as certain, the central purpose of the provision was not to empower states to favor local liquor industries by erecting barriers to competition. Can't, candidly, I don't know that the Court had to go past Boccus when it decided Grannell, because those statutes were clearly just as economically protectionist as this one is. But the principle from Boccus is, if a statute has no purpose, and this statute has no purpose, except to be protectionist of the local industries, it's unconstitutional. Is that your standard because you seem to slide back and forth a little bit between standards and your brief, or I thought that you did maybe? If a State can come forward with any purpose other than protectionism, the State wins? No. No. It's when the State doesn't come forward with anything except protectionism, the State loses. But to those the State comes forward and says, we like this because it's protectionist, we were trying to do some protectionist things, and we also coincidentally, we found a way that our protectionist interests matched up completely with our health and safety interests. What happens then? Then you're in Grannell, and that's what, Grannell, I think, could have concluded anyway that the statutes involved there were really just economic protectionism and not gone beyond it, but it did go beyond that. And what it said is, if, in fact, the State is engaged in discrimination under the, under normal Commerce Claw as standards, it's presumptively unconstitutional and the State must come forward and justify the discrimination on the basis of non-discriminatory, less restrictive means of achieving the same objective. And under that standard, and that's, I'm perfectly comfortable with the standard, because there's no doubt that what we're talking about here is ranked discrimination on a basis of the- The, the, the, the, the, the, the, the, the, the, the, the, the, it also says in Grannell Home that the 21st Amendment grants the State's virtually complete control as to how to structure the liquor distribution system. We have previously recognized that the three-tier structure is unquestionably legitimate. And then we go back into the history, and it's just history, but it is history. And, and we discovered that the States, the vast majority, always have had rules like the Tennessee Rule, and today 34 States, apparently, according to my, our count, have rules just like this, except maybe not the same number of years. And so, so this amendment was enacted against a history. This Court has several times say we honor that history, and the history favors the other side. So, so what do we do about that? Well, I don't think the history does favor the other side. First of all, I, pretty clear to me that there's nowhere near 34 States that have durational residency requirements. Well, that may be, but they say you have to be a resident in some form or other, but there are a lot. And my, and my client is here, as I, as we say in our brief, to be, and actually both of our clients are here to say, we, we are not challenging the three-tier system. All we are seeking is the opportunity to compete into this market. See, I, the problem I have is it seems I don't think that you would challenge the State, the State's residency requirement moving forward, meaning that almost all of the States require their full sailors, distributors, and retailers to be resident in the state. Or present. Some say present, some say resident. But pretty much, you're not challenging that. I do not challenge that. What's wrong? So, now the challenge seems to me why is a pre-registration or pre-vicensing residency requirement of the normal length, one or two years, because I think even the dissent below thought the 14 was two, the 12 was too long, all right? But let's concentrate on the two. Let's do the severability your adversary wants. Why is that two years not reasonable? Okay. Given the history of what other States have done, et cetera, et cetera. Okay, so the core principle that's embedded in here, right, is that there's a non-discrimination principle. And so adopting a durational residency requirement is by definition discriminating against out of state interest. And unless you're going to limit it just to producers, which is an irrational limitation, this, of course, never adopted with respect to any Commerce Clause analysis, we are being discriminated against. And therefore, it's the States burden to come forward and to justify that discrimination. There is no rational basis for the two-year ban that they put in place here

. And so, so this amendment was enacted against a history. This Court has several times say we honor that history, and the history favors the other side. So, so what do we do about that? Well, I don't think the history does favor the other side. First of all, I, pretty clear to me that there's nowhere near 34 States that have durational residency requirements. Well, that may be, but they say you have to be a resident in some form or other, but there are a lot. And my, and my client is here, as I, as we say in our brief, to be, and actually both of our clients are here to say, we, we are not challenging the three-tier system. All we are seeking is the opportunity to compete into this market. See, I, the problem I have is it seems I don't think that you would challenge the State, the State's residency requirement moving forward, meaning that almost all of the States require their full sailors, distributors, and retailers to be resident in the state. Or present. Some say present, some say resident. But pretty much, you're not challenging that. I do not challenge that. What's wrong? So, now the challenge seems to me why is a pre-registration or pre-vicensing residency requirement of the normal length, one or two years, because I think even the dissent below thought the 14 was two, the 12 was too long, all right? But let's concentrate on the two. Let's do the severability your adversary wants. Why is that two years not reasonable? Okay. Given the history of what other States have done, et cetera, et cetera. Okay, so the core principle that's embedded in here, right, is that there's a non-discrimination principle. And so adopting a durational residency requirement is by definition discriminating against out of state interest. And unless you're going to limit it just to producers, which is an irrational limitation, this, of course, never adopted with respect to any Commerce Clause analysis, we are being discriminated against. And therefore, it's the States burden to come forward and to justify that discrimination. There is no rational basis for the two-year ban that they put in place here. The Tennessee Attorney General himself has twice looked at this ban and said it doesn't remotely serve any purpose that's designed under the 21st Amendment, or dealing with alcohol or public safety or public health or anything else. It's only designed to- The legislature gave a reason. And the reason it gave was because this is alcohol, we're protecting the public interest. That's fine. But that doesn't remotely explain the two-year durational residency requirement. That just explains all of the other regulations that were adopted at the same time, including the 12-year residency requirement. So that, it's their burden. And they should come forward not just in making statements to the legislature. They can come into court, and that's what Grant Holman says. Look, you discriminate against out-of-state interests that triggers a burden on the state to justify the limitation, the discrimination that it's imposed. And what does it say? In this case, it said absolutely nothing. It didn't file a single affidavit. It didn't put forward any kind of a witness. It didn't put on any defense whatsoever. And the reason is pretty clear. The sole purpose of this statute was, as my friend here, who represents the Retailers Association, proves beyond any question, what does this design to do is be exclusively protectionist, which is why, in some places, we say that's a basis for the court to reach the decision, because this is exclusively protectionist. But if you don't accept that, our fallback position is, Grant Holman requires them to come forward with more than they have been said. Yes, same question. Yes, of course. But to be able to have what is called the three-seer system is unquestionably legitimate, virtually complete control over how to structure liquor distribution, a liquor distribution system, employs people. And how can you structure, you can, but you could structure a liquor system involving the people who are to work there

. The Tennessee Attorney General himself has twice looked at this ban and said it doesn't remotely serve any purpose that's designed under the 21st Amendment, or dealing with alcohol or public safety or public health or anything else. It's only designed to- The legislature gave a reason. And the reason it gave was because this is alcohol, we're protecting the public interest. That's fine. But that doesn't remotely explain the two-year durational residency requirement. That just explains all of the other regulations that were adopted at the same time, including the 12-year residency requirement. So that, it's their burden. And they should come forward not just in making statements to the legislature. They can come into court, and that's what Grant Holman says. Look, you discriminate against out-of-state interests that triggers a burden on the state to justify the limitation, the discrimination that it's imposed. And what does it say? In this case, it said absolutely nothing. It didn't file a single affidavit. It didn't put forward any kind of a witness. It didn't put on any defense whatsoever. And the reason is pretty clear. The sole purpose of this statute was, as my friend here, who represents the Retailers Association, proves beyond any question, what does this design to do is be exclusively protectionist, which is why, in some places, we say that's a basis for the court to reach the decision, because this is exclusively protectionist. But if you don't accept that, our fallback position is, Grant Holman requires them to come forward with more than they have been said. Yes, same question. Yes, of course. But to be able to have what is called the three-seer system is unquestionably legitimate, virtually complete control over how to structure liquor distribution, a liquor distribution system, employs people. And how can you structure, you can, but you could structure a liquor system involving the people who are to work there. The people who are to work there are an integral part of such a system. Right. And therefore, given the case law and the history and the absence of any discrimination forbidden by others, this has been the law for 100 years. Don't change it. Not all law makes that much sense. And there we are. But this law does make sense, because everything you talk about. I mean, you would want to say their law, you want to say their law does make sense. No, what I'm saying is that if they can apply the other kinds of restrictions equally to both in-state operators and out-of-state operators, we don't have any problem with that. So if your question is to go back to your hypothetical about pink, is if they say, if you're an in-state operator, you have to have green walls and you're out-of-state operator, you have to have green walls. We have no quarrel with that. Our concern is that this is a blatantly discriminatory statute. Well, Mr. Phillips, if we were here on a dormant commerce clause case, it would be easy. But I'm stuck where Justice Breyer is, and I just want to give you another opportunity to discuss the history here. Alcohol has been treated differently than other commodities in our nation's experience for better or worse. And we have the 21st Amendment. We have the Hugh Line decision, for example, in 1972 that required the use of a resident representative to sell alcohol. Yeah. And I didn't see it address that case anywhere in your brief. And I just want to give you one more shot at the history and at dealing with the Wilson Act and Web Act and the sorts of things

. The people who are to work there are an integral part of such a system. Right. And therefore, given the case law and the history and the absence of any discrimination forbidden by others, this has been the law for 100 years. Don't change it. Not all law makes that much sense. And there we are. But this law does make sense, because everything you talk about. I mean, you would want to say their law, you want to say their law does make sense. No, what I'm saying is that if they can apply the other kinds of restrictions equally to both in-state operators and out-of-state operators, we don't have any problem with that. So if your question is to go back to your hypothetical about pink, is if they say, if you're an in-state operator, you have to have green walls and you're out-of-state operator, you have to have green walls. We have no quarrel with that. Our concern is that this is a blatantly discriminatory statute. Well, Mr. Phillips, if we were here on a dormant commerce clause case, it would be easy. But I'm stuck where Justice Breyer is, and I just want to give you another opportunity to discuss the history here. Alcohol has been treated differently than other commodities in our nation's experience for better or worse. And we have the 21st Amendment. We have the Hugh Line decision, for example, in 1972 that required the use of a resident representative to sell alcohol. Yeah. And I didn't see it address that case anywhere in your brief. And I just want to give you one more shot at the history and at dealing with the Wilson Act and Web Act and the sorts of things. Appreciate the opportunity. The case that it seems to me speaks directly to this really as walling versus Michigan. It predates the Wilson Act, it predates Web Kenyan. It specifically says categorically that you cannot, states cannot discriminate against out-of-state sellers by imposing attacks on them. And I guarantee you that under the approach offered by my friends on the other side, they read the 21st Amendment to say, of course, you can impose attacks on them because you're regulating the sale of alcohol, and if you regulate the sale of alcohol on a wholesale or under those circumstances, you can put a billion dollar tax on him as long as it's within the 21st Amendment and that's constitutional. And that predates all of these things and nothing in the Wilson Act, nothing in the Web Kenyan Act and certainly nothing in the second amendment, second to the 21st Amendment, was designed to overrule walling and indeed this court said in Grand Hall, Grand Hall specifically that that case and Scott, and the third case whose name is going to escape me, Ternan, all three survived Section 2 of the 14th Amendment. So while it is true that they can, they have virtual control, virtually control, and they have the ability to control the structure. That's simply a recognition of the three-tiered system and just to go back to the history, what's the purpose of the three-tiered system? It's to avoid the tied sales arrangement that gave rise to the prohibition in the first place. You want to have three distinct levels, you know, the producers, the wholesalers, and the retailers. So the three-tiered system does not necessarily, in your view, entail favoritism of in-state interest. It probably has some advantages, but not in, not, not, what is inherent in the third-nest case. I'm sorry? I'm sorry. The paragraph that Justice Breyer's referred to multiple times also as a quote from a Justice Scalia concurrence, which says that the 21st Amendment empowers a state to require that all liquor be sold by an in-state wholesaler. In other words, that is interpreting the three-tiered system, I think, to entail favoritism of in-state interest. But see, we would regard ourselves as an in-state retailer within the meaning of that. We have satisfied every condition necessary to operate in-state with a presence in-state of a very large facility that can be examined, can be determined to be in compliance, can satisfy every single one of the states. Mr. Phillips, I agree with you on that. I would think that the next case would be much as we've re-examined Quill, for example, and the requirement of physical presence in-state that the next lawsuit would be that, yes, this three-tiered system is, in fact, discriminatory by requiring some sort of physical presence in-state. And under the drawing of the Congress, you have a point. You have a good point

. Appreciate the opportunity. The case that it seems to me speaks directly to this really as walling versus Michigan. It predates the Wilson Act, it predates Web Kenyan. It specifically says categorically that you cannot, states cannot discriminate against out-of-state sellers by imposing attacks on them. And I guarantee you that under the approach offered by my friends on the other side, they read the 21st Amendment to say, of course, you can impose attacks on them because you're regulating the sale of alcohol, and if you regulate the sale of alcohol on a wholesale or under those circumstances, you can put a billion dollar tax on him as long as it's within the 21st Amendment and that's constitutional. And that predates all of these things and nothing in the Wilson Act, nothing in the Web Kenyan Act and certainly nothing in the second amendment, second to the 21st Amendment, was designed to overrule walling and indeed this court said in Grand Hall, Grand Hall specifically that that case and Scott, and the third case whose name is going to escape me, Ternan, all three survived Section 2 of the 14th Amendment. So while it is true that they can, they have virtual control, virtually control, and they have the ability to control the structure. That's simply a recognition of the three-tiered system and just to go back to the history, what's the purpose of the three-tiered system? It's to avoid the tied sales arrangement that gave rise to the prohibition in the first place. You want to have three distinct levels, you know, the producers, the wholesalers, and the retailers. So the three-tiered system does not necessarily, in your view, entail favoritism of in-state interest. It probably has some advantages, but not in, not, not, what is inherent in the third-nest case. I'm sorry? I'm sorry. The paragraph that Justice Breyer's referred to multiple times also as a quote from a Justice Scalia concurrence, which says that the 21st Amendment empowers a state to require that all liquor be sold by an in-state wholesaler. In other words, that is interpreting the three-tiered system, I think, to entail favoritism of in-state interest. But see, we would regard ourselves as an in-state retailer within the meaning of that. We have satisfied every condition necessary to operate in-state with a presence in-state of a very large facility that can be examined, can be determined to be in compliance, can satisfy every single one of the states. Mr. Phillips, I agree with you on that. I would think that the next case would be much as we've re-examined Quill, for example, and the requirement of physical presence in-state that the next lawsuit would be that, yes, this three-tiered system is, in fact, discriminatory by requiring some sort of physical presence in-state. And under the drawing of the Congress, you have a point. You have a good point. So why isn't this just the camel's nose under the tent? Well, if only because under these circumstances is the camel, at least, or I guess I have the nose of the camel, that's not what I'm looking at. I think you may be, yes. I am not. It is fundamentally at odds with my client's business model to be looking to undo the three-tiered system. This is a business model just to try and operate as the Amazon of liquor. No, Amazon wants to operate as the Amazon of liquor, I said ever may at some point. No, my client operates on a more brick and mortar business model that says we're perfectly comfortable operating within the sphere of regulation that the State imposes on every in-state operator. And all we are seeking to have is not to be discriminated against. It's not rational to me. I appreciate that. I look at it. The Web Kenyan Act, 1913, and it says you can't send liquor into a state if it's going to be possessed or sold in any manner, used in violation of any law of the state. Now, any, well, maybe we could work without, but we know at the time that these states did all, or 30, or 20, or 50, have laws that said when you, in fact, structure your distribution system in our state, you have to have local residents. That's one of our employee requirements. So, when they passed Web Kenyan, did they mean all of them except that one? And there could have been a lot that were, in fact, violation of dormant commerce clause. That's where I get all the arguments, but I'm worried about that history. Well, Justice Breyer, you know, I don't know how you can just limit it to that history, though. My guess is if you go back to the point in time of Web Kenyan, Court didn't have in mind every state law that happened to be involved with the state law. No, but there were a lot that said you have to be a resident. But there were probably a lot, as you said earlier, that also probably discriminated on the basis of race, discriminated on the basis of the other amendments every state. They took care of that

. So why isn't this just the camel's nose under the tent? Well, if only because under these circumstances is the camel, at least, or I guess I have the nose of the camel, that's not what I'm looking at. I think you may be, yes. I am not. It is fundamentally at odds with my client's business model to be looking to undo the three-tiered system. This is a business model just to try and operate as the Amazon of liquor. No, Amazon wants to operate as the Amazon of liquor, I said ever may at some point. No, my client operates on a more brick and mortar business model that says we're perfectly comfortable operating within the sphere of regulation that the State imposes on every in-state operator. And all we are seeking to have is not to be discriminated against. It's not rational to me. I appreciate that. I look at it. The Web Kenyan Act, 1913, and it says you can't send liquor into a state if it's going to be possessed or sold in any manner, used in violation of any law of the state. Now, any, well, maybe we could work without, but we know at the time that these states did all, or 30, or 20, or 50, have laws that said when you, in fact, structure your distribution system in our state, you have to have local residents. That's one of our employee requirements. So, when they passed Web Kenyan, did they mean all of them except that one? And there could have been a lot that were, in fact, violation of dormant commerce clause. That's where I get all the arguments, but I'm worried about that history. Well, Justice Breyer, you know, I don't know how you can just limit it to that history, though. My guess is if you go back to the point in time of Web Kenyan, Court didn't have in mind every state law that happened to be involved with the state law. No, but there were a lot that said you have to be a resident. But there were probably a lot, as you said earlier, that also probably discriminated on the basis of race, discriminated on the basis of the other amendments every state. They took care of that. They all, the race, the women, and all these different things. They said, no, no. Of course, they trump. The reason why they trump it, though, why should this read under the laws of the state, so broadly as to mean any law, they have to be valid laws. And so you just go back, it just brings you back to the same fundamental question, Justice Breyer, is it permissible for the state to discriminate with a durational residency requirement, not just a presence, but with a durational requirement? But to go back to Justice Gorsuch's question, I mean, I'm trying to figure out what kind of opinion we could write, Mr. Phillips, that says you win, but then when the next case comes along, and the next case is somebody that says, we don't like this brick-and-mortar stuff, we don't want to have any physical presence at all, and the state is preventing that, and in doing so, the state is discriminating against out of state companies. And you said that that's not valid, so we're entitled to do what we want to do, too. I think there are two ways you can go about this. The first one would be, I mean, you can write an opinion that just says, back us again. This is, this is really protectionist and ought to be declared unconstitutional, leave for another day the rest of those kinds of issues. The second one is, if you want to take up the question and say, you know, why is brick-and-mortar more important? Well, brick-and-mortar is fully consistent with the three-tier system, and we'll leave for another day whether the three-tier system, if it in fact operates. Well, we'll leave them a lot of things for another day, but they all seem to be demanded by the principles that you're asking us to adopt. Well, I don't think so. All I'm asking, the principles I'm asking you adopt is to not discriminate against us under these circumstances where we are clearly, exactly, identically situated and where the state's interests in protecting against alcohol can be fully protected. And leave it for another day if there are other rules that are challenged to see what those rules are. I guess what I'm asking. How they operate and what's the state's justification? Because the hypothetical I was attempting to pose is a hypothetical where the state is acting in a discriminatory manner. And I guess what I'm asking you for is why would some kinds of discrimination be permissible and other kinds of discrimination not be permissible? Because under certain circumstances there may not be any less discriminatory way of achieving the state's objective. Well, but, I'm not sure that. And Brownham says that. Are you incorporating the dormant commerce clause jurisprudence completely? Well, it's a little tricky because Brownham's a little unclear to me on that, because the, I mean, the normal commerce clause says if you discriminate, it's almost per se unconstitutional

. They all, the race, the women, and all these different things. They said, no, no. Of course, they trump. The reason why they trump it, though, why should this read under the laws of the state, so broadly as to mean any law, they have to be valid laws. And so you just go back, it just brings you back to the same fundamental question, Justice Breyer, is it permissible for the state to discriminate with a durational residency requirement, not just a presence, but with a durational requirement? But to go back to Justice Gorsuch's question, I mean, I'm trying to figure out what kind of opinion we could write, Mr. Phillips, that says you win, but then when the next case comes along, and the next case is somebody that says, we don't like this brick-and-mortar stuff, we don't want to have any physical presence at all, and the state is preventing that, and in doing so, the state is discriminating against out of state companies. And you said that that's not valid, so we're entitled to do what we want to do, too. I think there are two ways you can go about this. The first one would be, I mean, you can write an opinion that just says, back us again. This is, this is really protectionist and ought to be declared unconstitutional, leave for another day the rest of those kinds of issues. The second one is, if you want to take up the question and say, you know, why is brick-and-mortar more important? Well, brick-and-mortar is fully consistent with the three-tier system, and we'll leave for another day whether the three-tier system, if it in fact operates. Well, we'll leave them a lot of things for another day, but they all seem to be demanded by the principles that you're asking us to adopt. Well, I don't think so. All I'm asking, the principles I'm asking you adopt is to not discriminate against us under these circumstances where we are clearly, exactly, identically situated and where the state's interests in protecting against alcohol can be fully protected. And leave it for another day if there are other rules that are challenged to see what those rules are. I guess what I'm asking. How they operate and what's the state's justification? Because the hypothetical I was attempting to pose is a hypothetical where the state is acting in a discriminatory manner. And I guess what I'm asking you for is why would some kinds of discrimination be permissible and other kinds of discrimination not be permissible? Because under certain circumstances there may not be any less discriminatory way of achieving the state's objective. Well, but, I'm not sure that. And Brownham says that. Are you incorporating the dormant commerce clause jurisprudence completely? Well, it's a little tricky because Brownham's a little unclear to me on that, because the, I mean, the normal commerce clause says if you discriminate, it's almost per se unconstitutional. Brownham didn't seem to go that far and just talked about narrow tail layering and non-discriminatory means of achieving its objective. And can imagine in a clause case it would make a difference. This is not a clause case. I'm sorry. Isn't that exactly where you want us to go? Not today, of course. Well, maybe tomorrow or next year. And all of a sudden I'm standing here and we'll see you again. And, and, and surely, you know, the state can achieve all the regulatory interests it wants to achieve through dealing with virtual sellers from out of state, just as easily as it can with the physical presence sellers in state. I mean, surely that's tomorrow's argument. Perhaps, but at least this state will have the opportunity to milk just like books. But just, of course, if somebody is going to, at that point, presumably the state will say this is why we can't regulate effectively. This is why we won't have the orderly market. This is why we need this restriction. But what Tennessee has never done here is ever tried to explain why a durational residency requirement of 10, 12, and why you need all stockholders to be in that town, all the directors, etc. That's the issue before this court. That seems to me so clearly beyond what the 21st Amendment was designed to achieve that the court simply should declare it unconstitutional. If there are no further questions or honors. Thank you, Council. On two minutes, Mr. Durewski. Thank you, Mr

. Brownham didn't seem to go that far and just talked about narrow tail layering and non-discriminatory means of achieving its objective. And can imagine in a clause case it would make a difference. This is not a clause case. I'm sorry. Isn't that exactly where you want us to go? Not today, of course. Well, maybe tomorrow or next year. And all of a sudden I'm standing here and we'll see you again. And, and, and surely, you know, the state can achieve all the regulatory interests it wants to achieve through dealing with virtual sellers from out of state, just as easily as it can with the physical presence sellers in state. I mean, surely that's tomorrow's argument. Perhaps, but at least this state will have the opportunity to milk just like books. But just, of course, if somebody is going to, at that point, presumably the state will say this is why we can't regulate effectively. This is why we won't have the orderly market. This is why we need this restriction. But what Tennessee has never done here is ever tried to explain why a durational residency requirement of 10, 12, and why you need all stockholders to be in that town, all the directors, etc. That's the issue before this court. That seems to me so clearly beyond what the 21st Amendment was designed to achieve that the court simply should declare it unconstitutional. If there are no further questions or honors. Thank you, Council. On two minutes, Mr. Durewski. Thank you, Mr. Chief Justice. Respondents offer no administrative rule that would support even the basic presence requirement that this court recognized in Grand Home was unquestionably legitimate. And no account of the history. First, respondents concede a residency requirement. A durational residency requirement follows from that. First, because states get to define what residency is. And second, because the same interests that serve a presence requirement also serve a durational durational residency requirement. Duration facilitates background checks. It facilitates investigation and enforcement of the law because somebody who's been there for a while is more likely to have substantial assets that can be enforced, that can be seized, and is less likely to flee at the first sign of trouble. Once you concede that residency requirements are okay, courts shouldn't be second-guessing the extent to which those very same interests are served by durational residency requirements. The whole point of the 21st Amendment was to take that out of the hands of courts. With respect to the history, Mr. Phillips referred to walling and to Scott. Both of those were cases like Grand Home and Bacchus that involve taxing out of state products, more heavily than in state products. That is the exception that Grand Home recognized to the state's virtually complete authority. But when we're talking about purely in state regulation, like a durational-reresidency requirement for a liquor license, that is what the 21st Amendment is concerned with. There's no economic protectionism test that is either consistent with the history or is admissible. If the court were to go down that road, there would be challenges to dozens of state laws. And how do we draw a line about whether 30 days is protectionist, a year is protectionist, two years is protectionist. At that point, the inquiry just becomes the same as any other dormant commerce clause challenge. And the one thing we know from the 21st Amendment is that alcohol was to be treated differently for dormant commerce clause purposes

. Respondent's rule allowed no room for that. Lastly, even if there were an economic protectionism test for the reasons given by Judge Sutton in his dissent below, and for the reasons I said earlier, Tennessee's law satisfies the necessary level of scrutiny, which is not a searching sort of strict scrutiny, but just is there a plausible reason for the law that makes it survive? Thank you, counsel. Case is submitted