United States District Court, N.D. Illinois, Eastern Division
DER-YEGHIAYAN, District Judge.
matter is before the court on Defendants' motion to
dismiss. For the reasons stated below, the motion is granted.
Lebamoff Enterprises, Inc. (Lebamoff) allegedly operates wine
retail stores in Indiana. Plaintiffs contend that Lebamoff,
one of the Plaintiffs, has received requests from customers
who moved to Illinois to sell and ship wine to Illinois.
Plaintiffs also claim that Lebamoff has received requests
from customers to send gifts of wine to Illinois residents.
Lebamoff allegedly declined such offers due to the Illinois
Liquor Control Act of 1934 (ILCA), 235 ILCS 5/1-1 et
seq., which Plaintiffs contend prevents Lebamoff from
shipping wine directly to Illinois consumers. Plaintiffs
argue that 235 ILCS 5/5-1(d) and 236 ILCS 5/6-29.1(b) of ILCA
are unconstitutional. Plaintiffs include in their complaint
claims asserting violations of the Commerce Clause (Count I),
and claims asserting violations of the Privileges and
Immunities Clause (Count II). Wine and Spirits Distributors
of Illinois have intervened in this matter as a Defendant.
Defendants now move to dismiss all claims.
ruling on a motion to dismiss brought pursuant Federal Rule
of Civil Procedure 12(b)(6) (Rule 12(b)(6)), the court must
draw all reasonable inferences that favor the plaintiff,
construe the allegations of the complaint in the light most
favorable to the plaintiff, and accept as true all
well-pleaded facts and allegations in the complaint.
Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d
609, 622 (7th Cir. 2012); Thompson v. Ill.
Dep't of Prof I Regulation, 300 F.3d 750, 753
(7th Cir. 2002). A plaintiff is required to include
allegations in the complaint that "plausibly suggest
that the plaintiff has a right to relief, raising that
possibility above a 'speculative level'" and
"if they do not, the plaintiff pleads itself out of
court." E.E.O.C. v. Concentra Health Services,
Inc., 496 F.3d 773, 776 (7th Cir. 2007)(quoting in
part Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955,
1965 (2007)); see also Morgan Stanley Dean Witter,
Inc., 673 F.3d at 622 (stating that "[t]o survive a
motion to dismiss, the complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief
that is plausible on its face, " and that "[a]
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged")(quoting Iqbal v. Iqbal, 556
U.S. 662 (2009))(internal quotations omitted).
Commerce Clause Claims (Count I)
argue that Plaintiffs have not alleged facts that would
indicate that ILCA violates the Commerce Clause. A state law
may violate the Commerce Clause if it "mandate[s]
'differential treatment of in-state and out-of-state
economic interests that benefits the former and burdens the
latter.'" Granholm v. Heald, 544 U.S. 460,
472 (2005)(quoting Oregon Waste Systems, Inc. v.
Department of Environmental Quality of Ore., 511 U.S.
93, 99 (l994))(explaining that "[t]he mere fact of
nonresidence should not foreclose a producer in one State
from access to markets in other States" and that
"States may not enact laws that burden out-of-state
producers or shippers simply to give a competitive advantage
to in-state businesses"). However, the Twenty-first
Amendment granted to the "States virtually complete
control over whether to permit importation or sale of liquor
and how to structure the liquor distribution system."
Id. at 488-89 (explaining that "[a] State which
chooses to ban the sale and consumption of alcohol altogether
could bar its importation"). The Twenty-first Amendment
was intended to provide States with authority to
"maintain an effective and uniform system for
controlling liquor by regulating its transportation,
importation, and use." Id. at 484.
argue that the challenged sections of ILCA are
unconstitutional to the extent that they are applied to
out-of-state alcohol retailers. While Plaintiffs address
arguments in their brief, such as whether the Twenty-first
Amendment overrides other portions of the Constitution, such
arguments are mere red herrings. Plaintiffs' Commerce
Clause claims as alleged in the complaint fail at the most
basic starting point. Plaintiffs cannot show that ILCA
provides for differential treatment of in-state and
out-of-state economic interests. Under Illinois law, the
sales of alcoholic liquors is funneled through a three-tier
system. 235 ILCS 5/5-1. The Illinois Liquor Commission
(Commission) is authorized to license: (1) manufacturers and
primary U.S. importers, (2) distributors and importing
distributors, and (3) retailers. 235 ILCS 5/5-1. In order the
facilitate the controlled importation of alcohol into the
state, ILCA authorizes the Commission to issue non-resident
dealer licenses for out-of-state manufacturers and primary
U.S. importers to import alcohol into the State for sale and
delivery to Illinois licensed importing distributors. 235
ILCS 5/1-3.29. ILCA also allows in-state retailers to sell
and ship alcohol by common earners and parcel delivery
services to Illinois consumers. 235 ILCS 5/5-1(d).
Out-of-state retailers that operate outside the three-tier
system are prohibited from selling and delivering alcohol to
Illinois consumers through various direct means. 235 ILCS
Granholm, the Supreme Court made clear that States
can "assume direct control of liquor distribution
through state-run outlets or funnel sales through the
three-tier system." Granholm, 544 U.S. at 489
(stating that the Court had "previously recognized that
the three-tier system itself is 'unquestionably
legitimate"')(quoting North Dakota v.
United States, 495 U.S. 423, 432 (1990)). While the
Court in Granholm ultimately found the three-tier
systems in question to be unconstitutional, the reason for
such a finding was based on the preferential treatment
accorded to in-state producers, which allowed them to
circumvent the systems. Id. at 474-76.
Illinois statutory scheme does not provide such exceptions
for in-state retailers or differentiate between such
retailers and out-of-state retailers. Under the statutory
scheme in Illinois, all alcohol sold in Illinois by retailers
directly to Illinois consumers must pass through the
three-tier system. In Illinois, ILCA is in place to control
the use of alcohol by regulating its transportation,
importation, and sales. Unlike in-state-retailers who have
obtained alcohol under the three-tier regulation system,
certain out-of-state retailers such as Plaintiffs have not
proceeded through the regulatory system in place to protect
the Illinois public from harm. Plaintiffs' constitutional
claims relating to unfair treatment is an attempt to
circumvent the Illinois statutory scheme designed to protect
the Illinois public. The Commission has made findings as to
the purpose of Section 6-29.1 of ILCA, stating that the
section is necessary to help to limit problems such as
automobile accidents, domestic violence, alcohol abuse, and
underage drinking, and to collect revenue to address such
social problems. 235 ILCS 5/6-29.1(a). The Illinois
Legislature properly passed ILCA to protect the public,
stating for example, that ILCA is to "be liberally
construed, to the end that the health, safety, and welfare of
the People of the State of Illinois shall be protected and
temperance in the consumption of alcoholic liquors shall be
fostered and promoted by sound and careful control and
regulation of the manufacture, sale, and distribution of
alcoholic liquors." 235 ILCS 5/1-2. Out-of-State
Plaintiffs' constitutional interests in conducting
commerce within Illinois does not provide them with
unfettered access to Illinois markets to prey on Illinois
consumers and reap profits without regard to the health and
welfare of the Illinois public without complying with
Illinois' regulations and laws that are applicable to
allow Out-of-State Plaintiffs to operate outside the
three-tier system in Illinois, while in-state-retailers
diligently operate within the regulatory system and help to
limit the potential social problems connected with improper
use of alcohol, would actually provide Out-of-State
Plaintiffs with an unfair advantage over the instate
retailers rather than remove any self-perceived disadvantage
to Plaintiffs. Plaintiffs' Commerce Clause claims in this
action thus seek to foster unfair advantages in commerce,
which is ironically contrary to the Commerce Clause. Other
Circuits have upheld the constitutionality of three-tier
systems such as Illinois' system, and Plaintiffs have not
pointed to any controlling precedent on point that would
support their position or to any Circuit law which has ruled
in the manner that they advocate. See, e.g., Arnold's
Wines, Inc. v. Boyle, 571 F.3d 185, 191 (2d Cir.
2009)(finding that "New York's three-tier system
treats in-state and out-of-state liquor the same, and does
not discriminate against out-of-state products or
producers"); Wine Country Gift Baskets.com
v. Steen, 612 F.3d 809, 818-20 (5th Cir.
2010)(finding Texas three-tier system constitutional). ILCA
is in place to protect the Illinois public and Plaintiffs
have not shown that in-state entities and out-of-state
entities are treated unequally. For the protection of the
Illinois public, all alcohol sold directly to Illinois
consumers must first pass through the three-tier regulatory
system. The system ensures proper control and regulation of
alcohol, and ensures the proper collection of revenues, which
promotes the welfare of the Illinois public. Plaintiffs'
complaint on its face fails to suggest any burden on
interstate commerce or violation of the Commerce Clause.
Defendants have shown that the challenged sections of ILCA
are rationally related to a legitimate state interest.
Therefore, Defendants' motion to dismiss the Commerce
Clause claims is granted.
Privileges and Immunities ...