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A federal appeals court revived a challenge to an Illinois liquor law, but forewarned the plaintiffs their case may not be easy.
In LeBamoff Enterprises v. Rauner, the U.S. Seventh Circuit Court of Appeals reversed a trial court that had dismissed the plaintiffs' case with prejudice. The appeals court said the trial judge acted too quickly, noting there are material issues about the reasons for the state statute.
The 21st Amendment permits states to regulate liquor sales, the appeals panel said, but they cannot engage in "unlawful economic protectionism."
Under Illinois law, out-of-state retailers are restricted in marketing and shipping liquor in the state. LeBamoff Enterprises, which operates a wine store in Fort Wayne, Indiana, claimed the law violated the Commerce Clause and the Privileges and Immunities Clause of the U.S. Constitution.
Illinois argued that the 21st Amendment gave states the right to regulate liquor sales. The state law protects residents and "the economy of this State," the law says.
"The first reason touches the core of the Twenty-first Amendment, while the second smacks of protectionism," the Seventh Circuit said.
The appellate judges said the district court erred by not inquiring further. The trial judge must sort out the reason the Illinois law treats out-of-state retailers differently.
Meanwhile, a similar issue came up recently from the Sixth Circuit. In Tennessee Wine & Spirits Retailers Association v. Blair, the question is whether the 21st Amendment empowers states to give liquor licenses only to entities that have been there for a specific number of years.
The U.S. Supreme Court will hear arguments in that case in January. The Seventh Circuit said Tennessee Wine may make the plaintiffs' case more difficult in LaBamoff.
"But the question in that case differs from the one now before us, and these differences often matter to the analysis," the Seventh Circuit said. "Our cases involved the ability of companies to ship alcoholic beverages to consumers in Illinois; it does not directly address licensure for retail or wholesale establishments."