The opinion of the court was delivered by: Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Plaintiffs have filed a lawsuit challenging the Illinois Liquor Control Commission's ("Commission" or "ILCC") construction of the Illinois Liquor Control Act of 1934 ("Act") on several federal constitutional grounds. The lawsuit was spurred by Plaintiffs' contention that the Commission's action unlawfully blocked a "significant and important business transaction" -- namely, the acquisition by Anheuser Busch, Inc. (an out-of-state brewer of beer) of City Beverages (an in-state distributor of beer).
Currently before the Court is Plaintiffs' motion for partial summary judgment , seeking a declaration that the Commission's construction of the Act violates the Commerce Clause. The Court granted Plaintiffs' request for expedited briefing on that claim (a request that the State Defendants, represented by the Illinois Attorney General, did not oppose) and heard oral argument on June 16, 2010. The Court also has granted the motions of several interested parties to participate as amici curiae: the Wine and Spirits Distributors Association ("WSDI"), the Association of Beer Distributors of Illinois ("ABDI"), and the Illinois Craft Brewers Guild, Ltd. ("Guild").*fn1
Having carefully considered the arguments of the parties and amici, both orally and in writing, the Court grants Plaintiffs' motion for partial summary judgment  on the Commerce Clause claim. In regard to the remedy that follows from the Court's Commerce Clause ruling, the parties and amici agree that the Court, in the exercise of its discretion, must choose one of two alternatives: either "extension" or "nullification" of the unconstitutional in-state benefit. In the particular circumstances of this case, the Court concludes that "nullification" -- that is, withdrawing self-distribution privileges from in-state brewers rather than extending those privileges to out-of-state brewers -- does the "minimum damage" to the legislative and regulatory scheme under the Illinois Liquor Control Act, and thus is the appropriate remedy. Finally, because the Court's choice of remedy rests on judgments as to the intent of the Illinois General Assembly and implicates matters of public policy as to which the General Assembly is the ultimate arbiter, the Court temporarily stays enforcement of its ruling to provide the General Assembly an opportunity to act definitively on this matter if it chooses to do so.
A. The Liquor Control Act
Like many states, Illinois regulates the production, importation, distribution, and sale of alcoholic beverages through a three-tier licensing system. The function performed at each of the tiers (i.e., production, distribution/wholesale,*fn2 and retail) requires separate licensing and compliance with regulations specific to that tier. Pursuant to the Liquor Control Act, to distribute beer in Illinois, it is necessary to hold a Distributor's License, and to import beer from out-of-state for distribution in Illinois, it is necessary to hold an Importing Distributor's License. In-state beer producers may hold a Brewer's License, which entitles them to hold Distributor's and Importing Distributor's Licenses. See235 ILCS 5/5-1(a) ("A Brewer may make sales and deliveries of beer * * * to retailers provided the brewer obtains an importing distributor's license or distributor's license in accordance with the provisions of this Act."). According to the Commission, an out-of-state beer producer is ineligible to hold Distributor's and Importing Distributor's Licenses. However, out-of-state producers are not precluded from selling their product within the State. Indeed, in 2008, Plaintiff Anheuser-Busch, Inc. distributed more than 38 million gallons of beer within Illinois through various distributors. But, according to the Commission, an out-of-state producer must go through an in-state distributor. In other words, in-state brewers are permitted to perform the distribution function in Illinois, while out-of-state brewers are precluded from doing the same. Taking this one step further, on account of its non-resident status, an out-of-state brewer may not possess an ownership interest in a licensed Illinois distributor.
Prior to 1982, the Illinois Attorney General had opined that all brewers could self-distribute under theLiquor Control Act. In 1982, the General Assembly amended the statute to provide that out-of-state brewers must hold Non-Resident Dealer Licenses.*fn3 Because the Act did not specifically authorize non-resident dealers to distribute, the Commission has interpreted the Act to prohibit non-resident dealers from holding a Distributor's or Importing Distributor's License.*fn4
Plaintiff Anheuser-Busch, Inc. ("AB Inc.") is a wholly owned subsidiary of Anheuser-Busch Companies, Inc. AB Inc. does not brew or produce beer within Illinois and has not done so at any time relevant to this matter. At all times relevant to this matter, AB Inc. has exported beer produced elsewhere in the United States into Illinois for distribution within the state.
Each year during the period from 1982 through 2005, the Illinois Liquor Control Commission*fn5 issued to AB Inc., in its own name, one or more Illinois Distributor's and Importing Distributor's Licenses. During much of the period from 1982 through 2005, one or more affiliates of AB Inc. also held one or more Distributor's and Importing Distributor's Licenses. From 2005 through the present, AB Inc. affiliate Wholesaler Equity Development Corporation ("WEDCO") has maintained an ownership interest in an entity that held one or more Distributor's and Importing Distributor's Licenses. Plaintiff WEDCO is a wholly-owned subsidiary of Anheuser-Busch Companies, Inc. From the formation of Plaintiff City Beverage -- Illinois LLC in 2005 through the present, WEDCO has maintained a thirty percent ownership interest in City Beverage. Plaintiffs SD of Illinois, Inc. ("SDI") and Double Eagle Distributing Company ("Double Eagle") (SDI and Double Eagle are referred to collectively as the "Soave Entities") each have owned a thirty-five percent interest in City Beverage. City Beverage is the parent company of City Bloomington, City Chicago, and City Markham. City Bloomington, City Chicago, and City Markham have held from 2005 through the present both Illinois Distributor's and Importing Distributor's Licenses in various names.
In December 2009, WEDCO reached an agreement with the Soave Entities to purchase the Soave Entities' combined seventy percent interest in CITY Beverage. The transaction was scheduled to close on February 12, 2010. On January 6, 2010, AB Inc. and WEDCO notified the Commission that WEDCO planned to purchase a distributor in Illinois. From January 6 through January 17, the Commission requested information from Plaintiffs regarding the ownership of WEDCO. On January 27, 2010, AB Inc. and WEDCO notified the Commission that WEDCO (a wholly owned subsidiary of AB Inc.) planned to acquire the additional seventy percent interest in CITY Beverage.
The parties prepared to close on the transaction on February 12. On February 11, 2010, Ivan Fernandez, legal counsel for the Commission, e-mailed to Nancy Kamp of AB Inc. a letter from Defendant Haymaker stating that it would be unlawful for WEDCO to complete the acquisition of City Beverage. After receipt of Defendant Haymaker's letter, AB Inc. and WEDCO postponed the purchase of City Beverage that otherwise appeared poised to close on February 12, because Mr. Haymaker's letter stated that it would violate Illinois law to do so. To date, the parties have not completed the transaction.
On March 2, 2010, the Commission held a "Special Session" on the question of whether an Illinois non-resident dealer may hold an Illinois Distributor License. On March 10, 2010, the Commission issued a ruling in which it stated that the Illinois Liquor Control Act "prohibits an Illinois-licensed Non-Resident Dealer from possessing an ownership interest in a licensed Illinois distributor." In support of its decision, the Commission explained that the three-tier system promotes temperance by protecting against "vertical monopolies and economies of scale that would lead to the introduction of cheap alcohol liquor into the marketplace." In support of its ruling, the Commission also cited the State's interest in tax collection, an orderly market, and public safety. The ruling permitted WEDCO to retain its current minority interest in CITY Beverage due to the "history and facts surrounding this case." The declaratory ruling added that the Commission would "renew said CITY Beverage distributors licenses upon their expiration and as currently owned absent any other license disqualifying factors. This factual determination is limited solely to the history and facts surrounding this case and will have no bearing on future legal declarations or rulings from the [Commission]." On April 1, 2010, the Commission issued its annual renewal of CITY Bloomington's Distributor's and Importing Distributor's Licenses.
Currently, only two in-state brewers -- Argus and Big Muddy -- hold distribution rights, and they are limited to distributing their own products.*fn6 Neither has held its distributors' license for long; Big Muddy was licensed in June 2009, while Argus obtained its license in February 2010. A third in-state brewer, Goose Island Beer Co., holds a distributor's license but currently does not self distribute. AB Inc. has an ownership interest in Goose Island.
II. Legal Standard on Summary Judgment
Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In determining whether there is a genuine issue of fact, the Court "must construe the facts and draw all reasonable inferences in the light most favorable to the nonmoving party." Foley v. City of Lafayette, 359 F.3d 925, 928 (7th Cir. 2004).
To avoid summary judgment, the opposing party must go beyond the pleadings and "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A genuine issue of material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. The party seeking summary judgment has the burden of establishing the lack of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Summary judgment is proper against "a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322. The non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In other words, the "mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]." Anderson, 477 U.S. at 252.
AB Inc. currently holds a Non-Resident Dealer's License and proposes to become a distributor by acquiring a 100% ownership interest in Illinois distributor City Beverage. But the Act's definition of "distributor" specifically excludes non-resident dealers: "Distributor means any person, other than a manufacturer or non-resident dealer licensed under this Act, who is engaged in this State in purchasing, storing, possessing, or warehousing any alcoholic liquors for resale or reselling at wholesale, whether within or without this State." 235 ILCS 5/1-3.15. Common ownership or affiliation between out-of-state brewers and entities that hold distribution licenses also is illegal according to Defendants, and thus Defendants have stated that WEDCO's acquisition of CITY Beverage would be unlawful under the Commission's interpretation of the Act. However, the Commission interprets the Act to permit in-state brewers to act as distributors: "[A] brewer may make sales and deliveries of beer * * * to retailers provided that the brewer obtains an importing distributor's license or distributor's license in accordance with the provisions of this Act." 235 ILCS 5/5-1(a). Plaintiffs seek a declaratory judgment invalidating the prohibition against out-of-state brewers holding the licenses necessary to distribute beer in Illinois on the ground that the prohibition discriminates in favor of in-state (and against out-of-state) entities in violation of the Commerce Clause.
Before turning to the merits of Plaintiffs' constitutional claim, the Court first must address a few threshold issues that have been raised primarily by the amici.
Amicus WSDI contends that this Court lacks subject matter jurisdiction over Plaintiffs' Commerce Clause claim, which WSDI insists does not belong in federal court at this time "under the rubric of either standing or ripeness." WSDI Br. at 9. WSDI's jurisdictional argument rests on constructions of (i) the Illinois Liquor Control Act and (ii) the Commission's authority that are not shared by the Commission itself. WSDI argues that, properly understood, the Act does not discriminate between in-state and out-of-state economic interests, and thus Plaintiffs have not suffered any injury that is traceable to a Commerce Clause violation. See WSDI Br. at 5 ("WSDI's construction of the Act is proper in light of the Act's plain language and removes any claim that the Act is unconstitutional on its face"); id. (urging this Court to adopt WSDI's "plain language" construction to avoid reaching the constitutional question asserted by Plaintiffs). WSDI also submits that the Commission ...