Cherry Hill Vineyard, LLC v. Baldacci

United States Court of Appeals
For the First Circuit

No. 07-1513

CHERRY HILL VINEYARD, LLC AND PHILIP BROOKS,

Plaintiffs, Appellants,

v.

JOHN E. BALDACCI, IN HIS OFFICIAL CAPACITY
AS GOVERNOR OF MAINE, ET AL.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Gene Carter, Senior U.S. District Judge]

[Hon. Margaret Kravchuk, U.S. Magistrate Judge]

Before

Boudin, Chief Judge,
Selya, Senior Circuit Judge,
and Schwarzer,** Senior District Judge.

James A. Tanford, with whom Robert D. Epstein, Epstein Cohen
Donahoe & Mendes, Richard J. Silver, and Russell Silver &
Silverstein were on brief, for appellants.
Christopher C. Taub, Assistant Attorney General, with whom G.

*
Of the Northern District of California, sitting by
designation.
Steven Rowe, Attorney General, Paul Stern, Deputy Attorney General,
and Michelle Robert, Assistant Attorney General, were on brief, for
appellees.
Lisa Hibner Tavani, Deputy Attorney General, State of New
Jersey, with whom Anne Milgram, Attorney General of New Jersey,
Lorinda Lasus, Deputy Attorney General, State of New Jersey, Troy
King, Attorney General of Alabama, Dustin McDaniel, Attorney
General of Arkansas, Joseph R. Biden III, Attorney General of
Delaware, Thurbert E. Baker, Attorney General of Georgia, Lawrence
Wasden, Attorney General of Idaho, Steve Carter, Attorney General
of Indiana, Martha Coakley, Attorney General of Massachusetts, Mike
Cox, Attorney General of Michigan, Jim Hood, Attorney General of
Mississippi, Kelly A. Ayotte, Attorney General of New Hampshire,
Gary K. King, Attorney General of New Mexico, Marc Dann, Attorney
General of Ohio, Hardy Myers, Attorney General of Oregon, Greg
Abbott, Attorney General of Texas, Mark Shurtleff, Attorney General
of Utah, Darrell V. McGraw, Jr., Attorney General of West Virginia,
and Roberto J. Sánchez-Ramos, Secretary of Justice, Commonwealth of
Puerto Rico, on brief for States of New Jersey, Alabama, Arkansas,
Delaware, Georgia, Idaho, Indiana, Massachusetts, Michigan,
Mississippi, New Hampshire, New Mexico, Ohio, Oregon, Texas, Utah,
and West Virginia, and the Commonwealth of Puerto Rico, amici
curiae.
Carter G. Phillips, Jacqueline G. Cooper, Sidley Austin LLP,
Craig Wolf, Joanne Moak, and Kent G. Huntington on brief for Wine
and Spirits Wholesalers of America, Inc., American Beverage
Licensees, The Presidents Forum of the Beverage Alcohol Industry,
and National Beer Wholesalers Association, amici curiae.
Jerrol A. Crouter, Jonathan M. Goodman, and Drummond Woodsum
& MacMahon on brief for Maine Chiefs of Police Association, amicus
curiae.
Sarah L. Olson, Anne G. Kimball, Wildman, Harrold, Allen &
Dixon LLP, Todd S. Holbrook, Peter J. Rubin, Bernstein, Shur,
Sawyer & Nelson, and Arthur J. DeCelle, General Counsel, on brief
for The Beer Institute, amicus curiae.
George T. Dilworth and McCloskey, Mina, Cunniff & Dilworth,
LLC on brief for Maine Beer and Wine Wholesalers Association,
amicus curiae.

October 11, 2007
 SELYA, Senior Circuit Judge. This appeal calls upon us

to assess Maine's decision to allow small wineries to operate

partially outside the usual strictures of the State's alcohol

control laws. The plaintiffs challenge this decision on the ground

that it constitutes impermissible favoritism in violation of the

dormant commerce clause. The district court found the challenge

wanting.

While the central principles on which the dormant

commerce clause operates are well-developed, gray areas exist

around the edges. We believe that Maine's exception for small

wineries falls within one of these gray areas — and in those

precincts, courts must proceed case by case. Here, after careful

perscrutation of Maine's statutory scheme and its constitutional

implications, we find no substantial evidence that the exception

for small wineries actually discriminates against interstate

commerce. Consequently, we affirm the judgment of the district

court.

I. BACKGROUND

This case has been submitted on a stipulated record.

Those stipulations limn the statutory scheme by means of which

Maine regulates the sale of wine. To any extent that the statutes

themselves are ambiguous, we assume that they operate and are

enforced in the manner agreed upon by the parties.

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 A. The Statutory Scheme.

As a general matter Maine, like many states, has chosen

to regulate the distribution of alcoholic beverages by requiring

that producers sell exclusively to licensed wholesalers who, in

turn, may sell only to licensed retailers. Consumers may purchase

alcoholic beverages for off-premises consumption only from licensed

retailers and may do so only in face-to-face transactions. This

three-tiered system has been justified on multiple grounds: as an

efficient means of controlling the distribution of alcoholic

beverages, as an effective means of promoting temperance, and as a

facilitating means of collecting excise taxes. See, e.g., North

Dakota v. United States, 495 U.S. 423, 432 (1990) (recognizing

these as legitimate grounds); Wine & Spirits Retailers, Inc. v.

Rhode Island, 481 F.3d 1, 13 (1st Cir. 2007) (recognizing promotion

of temperance and control of alcohol distribution as legitimate

legislative purposes). Its legitimacy has been vouchsafed by no

less an authority than the Supreme Court. See Granholm v. Heald,

544 U.S. 460, 466 (2005); North Dakota, 495 U.S. at 432.

Consistent with this three-tiered system, Maine wineries

may, for the most part, sell their wares in-state only to

wholesalers. See Me. Rev. Stat. tit. 28-A, § 1361. But this edict

admits of an exception for small vintners that obtain special "farm

winery" licenses. See id. § 1355(3). To qualify for a farm winery

license, a vineyard must produce no more than 50,000 gallons of

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wine annually, see id. § 1355(3)(A), and must pay a modest license

fee ($50 per year), see id. § 1551(3)(F). There are no geographic

restrictions applicable to farm wineries, and licenses are

available on the same terms to wineries located throughout the

United States. Despite this equal footing, no winery outside of

Maine has yet applied for a farm winery license.

Farm wineries enjoy a number of special prerogatives.

For one thing, they may bypass wholesalers and sell directly to

retailers and restaurants. Id. § 1355(3)(D). For another thing,

they may sell directly to consumers; provided, however, that the

transactions take place on the winery's premises or at one of up to

two off-site locations established by the winery. Id. §

1355(3)(B)-(C). Out-of-state wineries may establish off-site sales

outlets on the same basis as in-state wineries.

Sales made by farm wineries directly to consumers,

wherever consummated, must be face to face. Id. This means, of

course, that wine cannot be direct-shipped from a winery to a

consumer. Indeed, Maine law expressly forbids the furnishing of

alcoholic beverages via mail order services, see id. § 2077-B, and

farm wineries are not exempt from that prohibition. Were a non-

Maine winery to obtain a farm winery license, it too would be

subject to this prohibition and could sell its products to Maine

consumers only on the winery's premises or at a designated off-site

location.

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 An additional provision of the statutory regime impinges

indirectly upon the ability of out-of-state wineries to sell

directly to Maine consumers. See id. § 2077. That provision

prohibits a Maine resident from bringing more than four quarts of

wine (typically five bottles) into the state. Id. Individuals may

obtain relief from this import limitation only by special request.

Id. § 2073(3)(A). Such requests are evaluated on a case-by-case

basis by a state agency. Id. The parties have stipulated that,

when requested, such permission is "generally granted." In the

absence of such a dispensation, a Maine resident visiting an out-

of-state winery and purchasing wine in person would be statutorily

forbidden from bringing more than four quarts home with her, and

the winery would be statutorily forbidden from shipping purchased

wine to consumers in Maine.

B. Travel of the Case.

We turn now from the statutory scheme to the particulars

of this case. On September 27, 2005, two plaintiffs — Dr. Philip

Brooks, a Maine resident and oenophile, and Cherry Hill Vineyard,

LLC, an Oregon winery that produces fewer than 50,000 gallons of

wine a year — filed a civil action in Maine's federal district

court against a number of state hierarchs.1 In their complaint,

1
The defendants, all of whom are sued in their official
capacities, are the governor, the attorney general, and the two
ranking officers of Maine's Bureau of Liquor Enforcement. We
sometimes refer to the defendants, collectively, as "Maine" or "the
State."

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they alleged that Maine's farm winery program, in conjunction with

the prohibition on direct shipping, has the effect of

discriminating against interstate commerce in violation of the

dormant commerce clause.2 They prayed for a declaration that the

statutory scheme is unconstitutional insofar as it prevents out-of-

state wineries from selling their merchandise directly to Maine

consumers. Relatedly, they sought injunctive relief barring

enforcement of sections 1361(4), 2077, and 2077-B against wineries

that choose to sell or ship their wares directly to Maine

consumers.

The State defended the face-to-face transactional

requirement and the related restriction on direct shipping as

necessary to prevent underage persons from gaining access to

alcoholic beverages. Wholesalers and retailers have a vested

interest in the three-tiered system and, by leave of court, a trade

group — the Maine Beer and Wine Wholesalers Association — appeared

as an amicus curiae in support of the statutory scheme.

The parties compiled a stipulated record and cross-moved

for summary judgment. The district court referred the motions to

a magistrate judge, who concluded that the face-to-face

2
We think it noteworthy that the plaintiffs have not
challenged the importation limit, see Appellants' Br. at 15 n.18,
but, rather, treat it as aggravating the unconstitutional
discrimination of which they complain. Because the plaintiffs have
chosen to focus their challenge on the farm winery exception and
the face-to-face sales requirement, we eschew any particularized
analysis of the constitutionality of the importation limit.

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transactional requirement and the related ban on direct shipping,

as memorialized in Maine's statutory scheme, did not discriminate

against interstate commerce but, instead, comprised a reasonable

exercise in regulation designed to forestall the sale of alcoholic

beverages to minors. Cherry Hill Vineyard, LLC v. Baldacci, Civ.

No. 05-153, 2006 WL 2121192, at *8-9 (D. Me. July 27, 2006). The

district court summarily adopted the magistrate judge's recommended

decision and granted summary judgment for the defendants. Cherry

Hill Vineyard, LLC v. Baldacci, Civ. No. 05-153 (D. Me. Mar. 5,

2007) (unpublished). This timely appeal followed.

We note, with appreciation, that five separate sets of

amici have filed helpful briefs (all of them urging affirmance of

the judgment below). There is an interesting wrinkle concerning

the arguments advanced by the amici. The plaintiffs, citing our

decisions in United States v. Sturm, Ruger & Co., 84 F.3d 1, 6 (1st

Cir. 1996), and Rhode Island v. Narragansett Indian Tribe, 19 F.3d

685, 705 n.22 (1st Cir. 1994), argue that amici cannot raise new

arguments. In both of the cited cases, however, amici wished to

advance novel arguments on behalf of appellants. Here, the amici

have appeared in support of the appellees. Given our settled rule

that an appellate court may affirm the entry of summary judgment on

any ground made manifest by the record, see, e.g., Iverson v. City

of Boston, 452 F.3d 94, 98 (1st Cir. 2006), this is quite probably

a material difference. In any event, the point is of mainly

-8-
academic interest, as we affirm on the basis of a line of argument

consistently propounded by the State.

II. ANALYSIS

Because the district court acted under the aegis of

Federal Rule of Civil Procedure 56, our review is de novo. See

Auburn Police Union v. Carpenter, 8 F.3d 886, 892 (1st Cir. 1993).

Here, our de novo review begins with first principles. The

Constitution grants Congress the power to "regulate Commerce . . .

among the several States." U.S. Const. art. I, § 8, cl. 3. This

affirmative grant of power to the federal sovereign has long been

understood, by necessary implication, to strip state governments of

any authority to impede the flow of goods between states. See

Alliance of Auto. Mfrs. v. Gwadosky, 430 F.3d 30, 35 (1st Cir.

2005).

The doctrine that surrounds this principle, sometimes

referred to as the dormant commerce clause, holds that a state

regulation that discriminates against interstate commerce on its

face, in purpose, or in effect is highly suspect and will be

sustained only when it promotes a legitimate state interest that

cannot be achieved through any reasonable nondiscriminatory

alternative. Id. Laws that regulate evenhandedly and only

incidentally burden commerce are subjected to less searching

scrutiny under a balancing test, which operates to validate a

challenged regulation unless it burdens commerce in a way that is

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"clearly excessive in relation to the putative local benefits" to

be derived therefrom. Wine & Spirits Retailers, 481 F.3d at 11

(citing Pike v. Bruce Church, 397 U.S. 137, 142 (1970)).

A. The Plaintiffs' Argument.

This is a rifle-shot appeal. The plaintiffs do not

advance any argument under the Pike balancing test. They must,

therefore, avail themselves of the strict scrutiny reserved for

statutes that frankly discriminate against interstate commerce.

Even within that taxonomy, the plaintiffs' objection is narrow;

they forgo any argument that the challenged portions of Maine's

statutory scheme are discriminatory either on their face or in

their conceived purpose.

Winnowing out these possibilities, the plaintiffs pin

their hopes on the isthmian claim that the challenged portions of

the Maine regime are discriminatory in effect, that is, that by

allowing direct sales to consumers only in face-to-face

transactions, the statutory scheme has the practical effect of

benefitting Maine wineries at the expense of their out-of-state

competitors. In advancing this argument, the plaintiffs remind us

that, for this purpose, discrimination has been broadly defined as

"differential treatment of in-state and out-of-state economic

interests that benefits the former and burdens the latter." Or.

Waste Sys. v. Dep't of Envtl. Quality, 511 U.S. 93, 99 (1994).

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 Challenges of this type have a theoretical basis in the

case law. Even facially neutral laws enacted without

discriminatory motive and in furtherance of legitimate local

objectives may be discriminatory in effect (and, thus, engender

strict scrutiny under the jurisprudence of the dormant commerce

clause). See, e.g., Hunt v. Wash. State Apple Adver. Comm'n, 432

U.S. 333, 352-53 (1977); Trailer Marine Transp. Corp. v. Rivera

Vazquez, 977 F.2d 1, 10 (1st Cir. 1992).

When such a challenge is mounted, the initial burden of

establishing discrimination rests with the challenger. See Hughes

v. Oklahoma, 441 U.S. 322, 336 (1979). Once discrimination is

established, however, the devoir of persuasion shifts and the

affected state must demonstrate that no reasonable

nondiscriminatory regulation could achieve its objectives. See New

Energy Co. v. Limbach, 486 U.S. 269, 278 (1988).

With this background in place, we frame the issue. The

plaintiffs argue that the requirement that direct sales take place

on winery premises effectively prevents out-of-state wineries, many

of which are geographically distant, from enjoying any real

opportunity of selling directly to consumers. In-state wineries,

the plaintiffs say, are not similarly disadvantaged because

consumers can much more readily travel to their premises. So, the

plaintiffs' thesis runs, the regime's effect is to raise the cost

of, say, west coast wines as compared to Maine wines since the

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former will, as a practical matter, be available to consumers only

after the addition of hefty "middleman" mark-ups.3 See generally

Granholm, 544 U.S. at 474 (calling the retailer and wholesaler "two

extra layers of overhead" that "increase . . . cost"). Moreover,

wines produced by small out-of-state wineries that are unable to

attract the attention of a retailer or wholesaler may be

unavailable in Maine altogether. Indeed, the plaintiffs argue, in

order to reach Maine consumers for face-to-face transactions, out-

of-state wineries would necessarily be burdened with opening off-

site locations within the Maine market. Establishing that kind of

presence would further escalate costs.4

The plaintiffs conclude by asserting that the

discriminatory burden imposed by the face-to-face sales requirement

and the related ban on direct shipping cannot be justified as

necessary to any legitimate governmental interest. They insist

that the State can fulfill its goal of restricting access to

alcoholic beverages on the part of underage youths by, say,

3
In mounting this argument, the plaintiffs attempt to
distinguish between the cost attributable to the statutory
requirements and any added expense that is attributable to
geographic reality (for example, the fact that Oregon wine must be
shipped cross-country in order to reach Maine consumers will
inevitably add to its cost).
4
Although the plaintiffs do not challenge Maine's four-quart
importation limit, see supra note 2, they complain that their
disadvantage is compounded by that limit. In practice, the
importation limit prevents even committed wine collectors who are
willing to travel from bringing home enough wine to justify the
journey.

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mandating that carriers delivering wine to direct purchasers

confirm that recipients are at least twenty-one years of age. See,

e.g., Mich. Comp. Laws § 436.1203 (taking this approach). On this

basis, the plaintiffs asseverate that the face-to-face requirement

and the related ban on direct shipping cannot withstand strict

scrutiny.

B. The Rejoinder.

Although vigorously asserted by able counsel, this

argument lacks force. When all is said and done, the plaintiffs

have not satisfied their initial burden of showing that Maine's

statutory scheme is discriminatory in effect. Without such

evidence, we must defer to the state legislature, which "has

'virtually complete control' over the importation and sale of

liquor and the structure of the liquor distribution system." North

Dakota, 495 U.S. at 431 (quoting Cal. Retail Liquor Dealers Ass'n

v. Midcal Alum., Inc., 445 U.S. 97, 110 (1980)).

To be sure, the plaintiffs cite a plethora of cases in

endeavoring to demonstrate that the expense added by the

restriction on direct shipment offends the dormant commerce clause.

But these decisions are not capable of carrying the weight that the

plaintiffs load upon them.

The plaintiffs' most loudly bruited authority is Granholm,

in which the Supreme Court invalidated Michigan and New York

restrictions on the direct shipping of alcohol by out-of-state

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wineries. Despite some superficial similarities, the fit between

Granholm and this case is not exact and, thus, the decision is of

limited utility here.5 The novel aspect of Granholm was the Court's

holding that the Twenty-First Amendment — a constitutional provision

dealing with the regulatory power of the several states in regard

to the manufacture, distribution, and sale of alcoholic beverages

— cannot salvage explicitly discriminatory regimes even though the

regulated product is an alcoholic beverage. See Granholm, 544 U.S.

at 493. The Twenty-First Amendment is only peripherally involved

in this case, and does not require discussion. On the issue before

us, Granholm does not dictate the result. That opinion provides

less than complete guidance, and virtually no new elaboration, with

respect to what does — or does not — constitute discrimination

against interstate commerce.

Both the Michigan and New York schemes invalidated in

Granholm discriminated against out-of-state purveyors — and did so

in ways that long have been understood to be unconstitutional. See

id. at 467 (terming the discrimination "explicit"); see also id. at

472-76. The Michigan scheme was discriminatory on its face — it

allowed in-state producers to ship wines directly to Michigan

5
The Granholm Court did express skepticism as to whether a ban
on direct shipping furthers the goal of limiting the access of
underage youths to alcohol. See 544 U.S. at 490. Thus, were the
plaintiffs able to carry their initial burden of putting forth
substantial evidence showing an impermissibly discriminatory
effect, Granholm might have more impact on other elements within
the decisional calculus.

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consumers while banning out-of-state producers from doing so. See

id. at 473-74. Thus, the finding of unconstitutionality does not

assist the present plaintiffs.

The New York scheme was closer, but still different; it

allowed wineries to direct-ship only if they first established a

physical presence in New York. See id. at 474. The scheme was

found to "allow in-state wineries to sell wine directly to consumers

in that State but to prohibit out-of-state wineries from doing so,

or, at the least, to make direct sales impractical from an economic

standpoint." Id. at 466. The plaintiffs insist that the Maine

scheme operates much the same as the New York scheme because, in

practical effect, it gives in-state producers preferential access

to consumers. While one district court, drawing heavily on

Granholm, has found discriminatory a requirement that direct wine

sales be made face to face, see Cherry Hill Vineyard, LLC v.

Hudgins, 488 F. Supp. 2d 601, 618-19 (W.D. Ky. 2006), other courts

disagree, see, e.g., Baude v. Heath, Civ. No. 05-0735, ___ F. Supp.

2d ___, ___ n.25 (S.D. Ind. Aug. 29, 2007) [2007 WL 2479587, at *16

n.25]; Jelovsek v. Bresden, 482 F. Supp. 2d 1013, 1020-21 (E.D.

Tenn. 2007); Hurley v. Minner, Civ. No. 05-826, 2006 WL 2789164, at

*6 (D. Del. Sept. 26, 2006).

We concur with the latter courts. The plaintiffs in this

case overlook a key distinction between the New York and Maine

statutes. New York created an additional barrier to the entry of

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out-of-state wineries into the direct-shipping market — a barrier

that Maine has not erected. To elaborate, New York created a

direct-shipping market for wine; it allowed direct shipping on

particular conditions, and those conditions were rigged to favor in-

state wineries (which, unlike out-of-state wineries, would not have

to set up separate sales outlets within New York's boundaries). See

Granholm, 544 U.S. at 474. Maine flatly outlaws any and all direct

shipping of wine. Consequently, there is no direct-shipping market;

neither in-state nor out-of-state wineries may direct-ship. Hence,

while well-established legal rules demanded the invalidation of both

the Michigan and New York schemes, see, e.g., Or. Waste Sys., 511

U.S. at 99-100, those rules do not demand any such ukase here.

By the same token, most of the other cases chronicled by

the plaintiffs involve statutes that — unlike the Maine regime at

issue here — explicitly discriminate against out-of-state goods or

products. See, e.g., id. at 99; Chem. Waste Mgmt., Inc. v. Hunt,

504 U.S. 334, 342 (1992); City of Philadelphia v. New Jersey, 437

U.S. 617, 627 (1978). These cases are distinguishable because

Maine's statutory scheme vis-à-vis farm wineries does not explicitly

discriminate against interstate commerce. Farm winery licenses are

available on equal terms to in-state and out-of-state vineyards

alike, and Maine's ban on the direct shipping of wine applies

evenhandedly across the board.

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 We are, then, on terra incognita. In the absence of any

explicit (i.e., facial) discrimination, the plaintiffs must persuade

us that Maine's evenhanded requirement that all wine purchases be

made face to face camouflages some more sinister reality: that its

practical effect is invidiously discriminatory. This is a burden

that litigants in analogous cases ordinarily have failed to carry.

See, e.g., Brown & Williamson Tobacco Corp. v. Pataki, 320 F.3d 200,

212-14 (2d Cir. 2003) (upholding, as against a dormant commerce

clause challenge, state law requiring that all tobacco sales be

conducted in face-to-face transactions).

The Supreme Court has not directly spoken to the question

of what showing is required to prove discriminatory effect where,

as here, a statute is evenhanded on its face and wholesome in its

purpose. In our view, that showing must be substantial — and an

examination of the evidence in the record satisfies us that the

plaintiffs have not pushed past this plateau. We explain briefly.

We previously have held that a plaintiff bringing a

dormant commerce clause challenge based exclusively on the allegedly

discriminatory effect of a statutory scheme is required to submit

some probative evidence of adverse impact. See Alliance of Auto.

Mfrs., 430 F.3d at 41 (upholding summary judgment when plaintiff

"offered only prognostications woven from the gossamer strands of

speculation and surmise, unaccompanied by any significantly

probative evidence" of a discriminatory effect on commerce); accord

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R & M Oil & Supply, Inc. v. Saunders, 307 F.3d 731, 735 (8th Cir.

2002) (holding that plaintiff had failed to provide sufficient

evidence to prove discriminatory effect); E. Ky. Res. v. Fiscal Ct.

of Magoffin County, 127 F.3d 532, 544 (6th Cir. 1997) (finding no

discriminatory effect when plaintiffs failed to present evidence

showing how out-of-state entities, as compared to in-state entities,

were burdened).

Sweeping aside rhetorical flourishes, the plaintiffs have

proffered no evidence that permitting farm wineries to sell only

face to face, either on premises or at approved in-state locations,

discriminates against interstate commerce. There is no evidence

that Maine law acts to protect Maine vineyards or that Maine

consumers substitute wines purchased directly from Maine vineyards

for wines that they otherwise would have purchased from out-of-state

producers. There is not even evidence that any wines at all are

purchased by consumers directly from Maine vineyards. And, finally,

nothing contained in the stipulated record suggests that the locus

option somehow alters the competitive balance between in-state and

out-of-state firms. Cf. Hunt, 432 U.S. at 351 (holding that

statutory scheme designed to eliminate out-of-state companies'

competitive advantage in marketing created an unconstitutionally

discriminatory effect).

The substitution scenario is further weakened by the fact

that the plaintiffs have adduced no evidence that would in any way

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undermine the plausible impression that Maine consumers (like

imbibers everywhere) view trips to a winery as a distinct experience

incommensurate with — and, therefore, unlikely to be replaced by —

a trip to either a mailbox or a retail liquor store. See Jelovsek,

482 F. Supp. 2d at 1021 (observing that "it seems the market for on-

site wine purchases, requiring the effort (or pleasure) of a trip

to the winery, is different in kind and reach from the convenience-

oriented market that would be created and facilitated by a law

allowing direct-shipping").6 Nor have they offered evidence to

impeach the suggestion, made in one of the cases on which they rely,

that bottles of wine are unique and, thus, unlikely to be perceived

by consumers as interchangeable. See Hudgins, 488 F. Supp. 2d at

617; see also Gen. Motors Corp. v. Tracy, 519 U.S. 278, 299 (1997)

(observing that "difference[s] in products may mean that the

different entities serve different markets, and would continue to

do so even if the supposedly discriminatory burden were removed").

The plaintiffs' principal effort to fill this void

involves a report prepared by the Federal Trade Commission (FTC).

Drawing on this report, they argue that the ban on direct shipping

raises the cost of out-of-state wines and prices some wines out of

6
The plaintiffs question the discussion in Jelovsek, presently
pending on appeal before the Sixth Circuit, on the ground that the
case was decided on the pleadings. Whatever the situation in
Jelovsek, the plaintiffs here had ample opportunity to flesh out
the record, yet they still have not been able to furnish probative
evidence of discriminatory effect.

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the Maine market altogether. FTC, Possible Anticompetitive Barriers

to E-Commerce: Wine (July 2003) [FTC Report], available at

http://www.ftc.gov/os/2003/07/winereport2.pdf (last visited Sept.

20, 2007). But nothing in the FTC Report establishes that the farm

winery exception disproportionately burdens interstate commerce.

The plaintiffs also repeatedly cite Associated Indus. of

Mo. v. Lohman, 511 U.S. 641 (1994), for the proposition that

discrimination should be measured in dollars and cents, such as in

lost sales. See id. at 654. Even if that is so, however, the

plaintiffs have not shown a single penny of losses attributable to

the allegedly discriminatory farm winery exception. They invite us

to infer the existence of such losses but prudence requires that we

decline that invitation. In our judgment, the mere fact that a

statutory regime has a discriminatory potential is not enough to

trigger strict scrutiny under the dormant commerce clause. See id.

(noting that the Justices "have never deemed a hypothetical

possibility of favoritism to constitute discrimination that

transgresses constitutional commands"). There must be substantial

evidence of an actual discriminatory effect, and such evidence is

utterly absent here.7 Given Maine's large land mass and the

7
Cherry Hill's complaint that it will be forced to establish
off-site locations geographically closer to Maine consumers in
order to attract Maine business appears in some sense to be a
complaint about the effects of geography. Distance is not
congruent with state lines, and the effects of geography alone do
not constitute impermissible discrimination. An effect is not
discriminatory, in violation of the dormant commerce clause, if it

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concentration of its population in the southern end of the state,

see Grant's Dairy — Me., LLC v. Comm'r of Me. Dep't of Agric., Food

& Rural Res., 232 F.3d 8, 21 (1st Cir. 2000), it cannot plausibly

be said that the farm winery exception redounds to the exclusive

benefit of Maine vineyards. Rather, whatever minimal benefits might

be inferred from the structure of the scheme itself seem largely to

be dispersed on the basis of geography.

In short, there is simply no evidence that out-of-state

wineries suffer any disproportionate loss of business on account of

Maine's direct-shipping ban. The plaintiffs have made no showing

that any discrimination vis-à-vis access to the Maine market

actually results from the farm winery exception itself. While the

FTC Report and the plaintiffs' other evidentiary proffers suggest

that a direct-shipping ban harms out-of-state producers, the

plaintiffs acknowledge that the "constricted availability of wine

is due in large part to the three-tier system itself." Appellants'

Br. at 10. Because the three-tiered system has not been challenged

here, this acknowledgment undercuts any inference that the allegedly

results from natural conditions. See Doran v. Mass. Turnpike
Auth., 348 F.3d 315, 319 (1st Cir. 2003); Grant's Dairy — Me., LLC
v. Comm'r of Me. Dep't of Agric., Food & Rural Res., 232 F.3d 8, 21
(1st Cir. 2000); see also Baude, Civ. No. 05-0735, at *27-28.

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discriminatory farm winery exception is responsible for the

perceived harm.8

The plaintiffs' response to this lack of evidence is an

assertion that even if "the impact is small because direct sales do

not constitute a significant market and . . . in-state wineries do

not do much walk-in business," the regime is nonetheless

unconstitutional because the dormant commerce clause contains no de

minimis exception. Appellants' Reply Br. at 8. But the case upon

which they rely for this proposition, Camps Newfound/Owatonna v.

Town of Harrison, 520 U.S. 564 (1967), concerned a statute that was

discriminatory on its face. See id. at 581. It strikes us as

implausible that the same de minimis standard would apply when

evaluating whether a facially neutral statute has a discriminatory

effect on interstate commerce. See Brown & Williamson Tobacco, 320

F.3d at 216 (finding a "de minimis advantage to in-state [companies]

. . . insufficient to establish a discriminatory effect"); cf. New

Energy, 486 U.S. at 276 (commenting that "where discrimination is

patent . . . neither a widespread advantage to in-state interests

8
To be sure, Granholm may reflect a retrenchment of the broad
state power over the distribution and sale of alcoholic beverages
that characterized earlier Supreme Court jurisprudence. But it
does not appear, on the basis of Granholm alone, that a challenge
can successfully be mounted to the three-tiered system. See
Granholm, 544 U.S. at 466 (reaffirming that "States can mandate a
three-tier distribution scheme in the exercise of their authority
under the Twenty-first Amendment"); id. at 493 ("If a State chooses
to allow direct shipment of wine, it must do so on evenhanded
terms."); see also U.S. Const. amend. XXI. Any further step away
from such a scheme is for the Supreme Court to take.

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nor a widespread disadvantage to out-of-state competitors need be

shown") (emphasis supplied).

The de minimis standard, when used in cases involving

facially discriminatory laws, speaks to the degree of

discrimination. It cannot sensibly be used to answer the different

question of whether discriminatory effect exists. In other words,

it is only once the fact of discrimination has been proved that the

de minimis standard comes into play. It follows that the plaintiffs

cannot succeed in this case merely by invoking the de minimis

standard and ignoring their burden to proffer substantial evidence

of discrimination.

This result appeals to common sense. Were we to require

no showing beyond the de minimis level, no distinction would exist

between the discriminatory effect test and the incidental burden

test employed by the Supreme Court in Pike, 397 U.S. at 142. While

the Court has recognized that "there is no clear line separating the

category of state regulation that is virtually per se invalid under

the Commerce Clause, and the category subject to the Pike v. Bruce

Church balancing approach," Brown-Forman Distillers Corp. v. N.Y.

State Liquor Auth., 476 U.S. 573, 579 (1986), it has nonetheless

continued to maintain that distinction. We do not propose to

abolish it today.

In a last-ditch effort to put the genie back in the

bottle, the plaintiffs essay a naked appeal to the logic of the

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argument that some discriminatory effects must result from a regime

that allows consumers to go to in-state wineries and buy as much

wine as they want but precludes them from ordering wine directly

from out-of-state wineries. Conjecture, however, cannot take the

place of proof.9

III. CONCLUSION

We need go no further. The short of the matter is that

the plaintiffs have not carried their burden of showing that the

challenged regulation is discriminatory in effect. In the absence

of such a showing, the plaintiffs' constitutional challenge fails.

Affirmed.

9
In any event, this sortie smacks of an attack on the import
limitation — and the plaintiffs have foresworn any direct attack on
that limitation. See supra note 2. They cannot have their cake
and eat it too.

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