Among the Themes:
- States may not discriminate against newcomers.
- The U.S. Constitution has many provisions designed to prevent anticompetitive efforts like Tennessee’s.
- Bottleneckers—like the Retailers Association—are self-serving institutions that use the government’s power to keep their prices high, thereby hurting consumers and would-be entrepreneurs alike.
Arlington, Va.—On Wednesday, January 16, 2019, the U.S. Supreme Court will hear Tennessee Wine and Spirits Retailers Association v. Blair, a case that will decide whether states may use their power on behalf of a private cartel to discriminate against newcomers and prevent those who are new to a state from earning an honest living. The case centers on Doug and Mary Ketchum, who moved from Utah to Tennessee so they could own and operate a mom-and-pop liquor store there. Doing so would enable them to meet their two main goals: earning a living and doing so in a way that gives them the flexible schedule they need to take care of their severely disabled daughter, Stacie.
According to Tennessee’s law, to qualify for a retail liquor license, one must be a resident of Tennessee for at least two years; and to renew the license, applicants are required to have 10 years of in-state residency. The law blatantly discriminates in favor of in-state residents and against newcomers who move to Tennessee. This is such a clear and egregious violation of the Ketchums’ constitutional rights that even the Tennessee Attorney General said the laws were unconstitutional. Twice. And two federal courts—a trial court and a court of appeals—agreed.
“All our clients want is to earn an honest living and to have the same right as any other resident of Tennessee to do so,” said Michael Bindas, a senior attorney with the Institute for Justice, which is representing the Ketchums. “As we explained in our respondent’s brief, a state may not discriminate against someone because they come from another state; once an American gains residency in any state, he or she may exercise all of the rights of any other resident of that state; the state cannot arbitrarily restrict those rights merely to protect in-state special interests, yet that is exactly what the Tennessee Wine and Spirits Retailers Association is demanding.”
In addition to the Institute for Justice’s brief filed on behalf of the Ketchums, whose two-person company, Affluere Investments, Inc., is a party in this case, a number of amicus (or “friend of the court”) briefs have also been filed by leading legal minds across the nation and across various disciplines. These include:
- A group of distinguished law professors, among them Richard Epstein (New York University School of Law), Jim Ely (Vanderbilt University Law School) and Chris Green (University of Mississippi School of Law), who filed an amicus brief discussing the original public meaning of the Privileges or Immunities Clause. According to the brief, the Clause is fatal to Tennessee’s protectionist laws because it prohibits states from restricting constitutional rights of Americans based on duration of state residency. The brief is an extraordinary feat of historical research. It effectively marshals evidence to show that when the Privileges or Immunities Clause was enacted, there was a widespread understanding that it prohibited states from encroaching on any fundamental right of citizenship, including “the basic rights of mobility and free labor that the Reconstruction generation fought so nobly to secure.”
- A group of highly acclaimed law and economics scholars, including Todd Zywicki (Scalia Law School at George Mason University) and Jerry Ellig (Mercatus Center), who filed an amicus brief explaining that Tennessee’s law is a protectionist measure that is a natural product of lobbying by special interests within a state. The problem with such a measure, these experts explain, is that it restricts competition in the state, with the ultimate harm falling on consumers, who end up paying higher prices.
- Pacific Legal Foundation, a public interest law firm, filed an amicus brief that provides the Court with a holistic overview of every constitutional provision designed to ensure that states do not discriminate in favor of their own in-state residents and economic interests. These include the Commerce Clause, the Privileges and Immunities Clause of Article IV, and the Privileges or Immunities Clause of the Fourteenth Amendment.
- The National Association of Wine Retailers—whose brief was penned by Paul Clement, one of this country’s leading S. Supreme Court advocates—also filed an amicus brief. It discusses the purpose and history of the Commerce Clause and how limiting the Clause’s protections to producers and not retailers, as the Association urges, would flip the Commerce Clause on its head.
- And, finally, the Cato Institute filed its own amicus brief discussing how the power provided to the states by the Twenty-first Amendment is not unlimited and can run afoul of other Constitutional provisions, such as the Commerce Clause, which prohibits discrimination against out-of-state economic interests.
To underscore the self-serving nature of the Tennessee Wine and Spirits Retailers Association’s efforts, the Tennessee Attorney General’s office is not litigating this case. Instead, the Retailers Association has hired its own private counsel who will argue the case before the U.S. Supreme Court.
“The Tennessee Wine and Spirits Retailers Association is doing what all such bottleneckers do: It is trying to use government power to create an artificial bottleneck that protects its members from competition, so they can rake in monopoly profits and not have to work as hard to compete,” said Institute for Justice Attorney Anya Bidwell. “But that is not what government power is supposed to be used for. The power of government should be used to protect the rights of the Ketchums, not to further the economic interests of private parties.”
IJ President Scott Bullock concluded, “A state’s ability to regulate alcohol sales under the Twenty-first Amendment is not unlimited; a state cannot, for example, discriminate against newly arrived residents and out-of-staters who want to lawfully sell alcohol in a state merely to protect in-state interests.”