US retailer Total Wine is taking its lawsuit to overthrow one state's minimum pricing laws to the highest court in the country. Its chances for success, despite setbacks in two lower courts, may be better than ever after this summer's Supreme Court decision in another liquor law case in Tennessee. If the court takes the case, there is a decent chase they will strike down minimum pricing – which makes it illegal to discount alcohol – which exists in Connecticut, Michigan, and several other states.
Total Wine, with 205 stores in 24 states, had sued Connecticut three years ago over state law that requires alcohol wholesalers to post their prices in advance so that competing wholesalers can match them. The law also says wholesalers must hold those prices for a month and may not offer volume discounts to retailers.
In addition, state law, as part of the US’ ubiquitous three-tier system, requires every beer, wine, and spirit to be sold to retailers by a wholesaler. Retailers can't bypass the pricing law by buying directly from the producer.
That combination, says Total's lawsuit, "mimics the results of an illegal price-fixing conspiracy while enabling the cartel’s participants to avoid any explicit ‘agreement.’” It says the law violates federal anti-trust laws.
Two lower courts disagreed, saying the Connecticut law fit within the state's role as protector of the public health, safety, and welfare of its residents. As such, said the several rulings, federal law didn't apply.
The appeal
So why has Total appealed to the Supreme Court? A Total spokesman did not respond to an email for comment, but one attorney who deals with liquor law says the Tennessee decision, though not necessarily related, may have opened the door. In it, the Supreme Court ruled 7-2 that Tennessee's residency requirement for a retail liquor license was unconstitutional. In that case, Total had sued the state after being turned down for a store license because its owners weren't state residents.
Tucker Herndon, an attorney in Nashville, Tennessee, who is the office managing partner of Burr & Forman LLP, says the key to the Supreme's Court decision in the Tennessee case was that the residency requirement didn’t promote the public health, safety, and welfare. All it did, said the ruling, was shield local retailers from competition from national and regional chains. And Justice Samuel Alito, writing for the majority, made a special point of the public health litmus test.
As such, says Herndon, "there could be a trickledown effect from Alito's opinion. What does the Connecticut pricing law have to do with protecting the public health, safety, and welfare? Or does it just protect the wholesalers' monopoly? If the latter is the case, then Total might win its case."
An appeal to the Supreme Court does not mean it will hear the case, and that decision probably won't be made until some time next year.
