9th Circuit Affirms Dismissal of Out of State Importer Challenge to California Law

Well, that was quick. Two weeks after oral argument, the Ninth Circuit has affirmed the trial court and upheld the motion to dismiss filed by California in the dormant Commerce Clause challenge by a Florida importer to California’s law requiring retailers to source their alcohol from in state wholesalers.  The opinion can be found here.

The court examined the decision of the trial court and noted it was without error.  The court noted, “As the district court correctly found, the fatal flaw for Plaintiffs’ challenge under both requirements is that other independent provisions of the ABC Act, which Plaintiffs do not challenge, would still prohibit Plaintiffs’ proposed transaction with The Pour House even if Section 23661 were invalidated.” 

Moreover, the court dismissed attempts by the plaintiff to bring additional challenges to other parts of the California ABC act noting that these issues were not raised below.  Discussion of the dormant Commerce Clause was not a part of this court’s opinion as they concentrated on the standing problems of the case.

(previous post) Oral Arguments Held by 9th Circuit on Orion Imports’ DCC Challenge to California Law

The Ninth Circuit held oral argument on Orion Imports’ appeal of the district court’s dismissal of the case for lack of standing.  A link to the audio can be found here.   A link to the video feed found here.

The appeal was heard by Ninth Circuit Judges Kim McLane Wardlaw and Carlos Bea as well as Western District of Louisiana Judge James Cain sitting by designation.   The appeal is focused on whether plaintiffs have properly pled standing and most of the oral arguments addressed this issue.  As such a more focused discussion on the dormant Commerce Clause issues would be reserved for another date or lawsuit.

(previous post) Oral Argument Set by 9th Circuit in February 2021 for Orion Imports’ Appeal on Standing

The 9th Circuit has scheduled oral arguments for the review of the Orion Imports challenge to California licensing laws.  The appeal will be held in San Francisco on February 11, 2021.  

The district court had dismissed Orion’s complaint on standing grounds and the 9th Circuit schedule describes the case this way:  “An appeal from the dismissal, on standing grounds, of an action alleging that two provisions in the California Alcoholic Beverage Control Act violate the Commerce Clause by prohibiting out-of-state wine distributors from delivering wine directly to retailers. “

(previous post) Briefing in Challenge to CA Licensing Requirements Due to 9th Circuit by September 18, 2020

The State of California now has until September 18, 2020, to file its response to the Appellant’s brief.   Appellant would have 21 days to file a reply to this brief.  The order can be found here.

(Previous Post) Appellate Brief Filed in 9th Circuit for Out of State Importer Challenge to California Presence Law

Plaintiff Orion Imports, LLC and Peter Creighton have filed their brief and supporting record as they seek to overturn the dismissal of their Third Amended Complaint at the district court level.  The district court had previously dismissed a previous complaint.

Although the underlying complaint is a dormant Commerce Clause challenge to California law, the appellants must first overcome the more mundane issue of standing as their complaint was tossed on that ground.  As such, appellants note “standing is the only issue in this appeal.”

No supporting briefs were filed in support of the plaintiffs and the state of California will file their responsive briefings later this summer.   

(earlier post) Out of State Importer Seeks Appeal to 9th Circuit in Challenge to California Three Tier Law

Despite losing on several motions to dismiss at the district court, Orion Imports will appeal to the 9th Circuit its loss on its dormant Commerce Clause challenge to California’s three tier law.

Recent filings by the Plaintiff indicate that its briefing is due at the end of the June and there will be filings on both sides over the course of the summer.  

This website will update this post when they are filed.

(earlier post)  Court Dismisses Out of State Importer Challenge to California’s Three Tier Requirements

Chief Judge Mueller of the Eastern District of California dismissed the third amended complaint filed by a Florida wine importer against California.  The plaintiffs contended that out-of-state businesses, such as Orion Wine Imports, should be permitted to bypass California’s preferred method of regulating alcoholic beverages and sell directly to California retailers.  The plaintiffs said that the system improperly burdens out of state businesses and favors in state businesses.

The Court examined these claims and pointed out the failure of the argument.  The Court noted that plaintiffs, even with their multiple amended complaints, failed to establish standing to sue the state under Article III of the U.S. Constitution. They could not show that they had suffered an “injury in fact” that was “fairly traceable to the challenged conduct” and that would “likely be redressed by a favorable judicial decision.”   The court noted: “Here, the statute plaintiffs challenge, [B & P Code] section 23661, has not caused, either actually or proximately, their alleged injury. Nor would invalidating the statute redress plaintiffs’ injury.”

The California Beer and Beverage Distributors and the Wine and Spirits Wholesalers of California filed amicus briefs in support of the state’s position.

The Court granted the motion to dismiss without leave to amend and noted: “At hearing, plaintiffs clarified they did not intend to seek further amendment of their complaint if the court dismissed it, as it now has.”

(previous post)  California Attorney General Moves Again to Dismiss Orion’s Amended Complaint

The California Attorney General has filed a motion to dismiss the Orion plaintiffs’ third amended complaint.  A link to the motion is here.  The case is noticed for hearing on November 22.

The exasperated state once again moves to dismiss this complaint and notes that the amended complaint still doesn’t state a claim surviving a motion to dismiss.  The state notes, “Plaintiffs’ third amended complaint (“TAC”), like its previous iterations, centers on Orion Wine Imports, LLC’s desire to conduct business within the State of California without complying with the California Alcoholic Beverage Control Act and its incorporated statutes, regulations, and foundational public policies.”  It further elaborates on how this third amended complaint doesn’t address any of the issues previously raised by the district court in its dismissal of the second amended complaint.

(Previous Post)    He’s Back Again. Fourth Time a Charm? Another Amended Complaint Filed in California Out of State Importer Case

Although the district court granted the state’s motion to dismiss,  the plaintiffs in Orion Wine have taken the lifeline to amend their complaint once again in their challenge to California law.   They have reshaped this version as a more frontal assault on the California requirement that alcohol come to rest in California before it goes to retail.

The original complaint in this matter was filed in June of 2018.  The First Amended Complaint was filed in July, 2018.  A 2nd Amended Complaint was filed in October of 2018.  And now, 15 months after they started the lawsuit, the plaintiffs are again amending their complaint against the state.  Presumably the state will once again move to dismiss this lawsuit for failure to state a claim.

(previous post) California District Court Grants State’s Motion to Dismiss Out of State Importer’s Dormant Commerce Clause Challenge

California District Court Judge Kimberly J. Mueller granted the state of California’s Motion to Dismiss a challenge brought by an out of state wine importer under the dormant Commerce Clause.   The court did give the plaintiffs the opportunity to consider if they would like to file to amend their complaint for a third time “if possible subject to Federal Rule of Civil Procedure 11.”  The court’s order can be found here.

This claim involved a Florida importer/wholesaler who claimed a dormant Commerce Clause violation because it claims it cannot sell to California retailers due to various California laws that in-state importers must also follow.

The court noted that the California law is even handed; “Under California Business & Professions Code section 24041, Orion or any other “out-of-state business” may apply for and obtain either or both an importer’s and/or wholesaler’s “license” in California to have alcohol come to rest, be stored, and be shipped from a licensed public warehouse. Therefore, the law, by its terms, applies equally to in-state and out-of-state importers because the statutes at issue require all importers to have a physical premises in California at which to receive delivery of imported alcohol.”

The court saw through the plaintiff’s attack on California system and trained its concern on the theory of the case as presented to her in the second amended complaint; “plaintiffs’ barebones pleading exposes the absence of a full understanding of the regulatory structure and where there is a possibility of obtaining licenses after leasing public warehouse space.”  There was confusion at both pleading and oral argument over what specific parts of the law were problematic allowing the court to dismiss the complaint with leave for the plaintiff’s to attempt to clarify the Complaint a third time. Lastly, the Court concluded that Orion and its owner each lacked legal standing to pursue a claim under the Privileges and Immunities Clause of the U.S. Constitution.

The California Beer and Beverage Distributors and the Wine and Spirits Wholesalers of California jointly filed a friend-of-the-court-brief in support  of California and also appeared and argued at the December hearing in Sacramento.

It is unknown whether there will be an appeal to the 9th Circuit, plaintiffs will refile and amend their complaint, or if they will drop this matter.

(previous post)  Motion to Dismiss Out of State Wholesaler Challenge to California Wholesaler Law Scheduled for December 21, 2018

The Eastern District of California will hear the Motion to Dismiss filed by the state of California on December 21, 2018.   California wholesaler organizations weighed in with an amicus in support of the state and the plaintiff Orion Wine has filed a brief in opposition to the motion to dismiss.

(previous post) Motions to Dismiss Out of State Wholesaler Case in California Filed

The State of California has filed a Motion to Dismiss a Complaint filed by Orion Wine (a Florida company) and a Florida businessman who claim that the three-tier laws of California that require retailers in California to secure their alcohol from California wholesalers is a violation of the dormant Commerce Clause and the Privileges and Immunities Clause.  A hearing is set for this on September 19.  The hearing will actually consider two issues, the state’s Motion to Dismiss an earlier Amended Complaint as well as the Plaintiff’s request to file a second Amended Complaint to further correct errors in it.  A Joint Status Report highlights the issues and expected future briefings, if any, on this case.

The California Beer and Beverage Distributors and California Wine and Spirits Wholesalers have filed a compelling amicus brief at this stage of the filing to argue why this case should be dismissed as the state laws violate neither the dormant Commerce Clause nor the Privileges and Immunities Clause.

(earlier post) New Shipping Lawsuit Filed in California

A new lawsuit was filed in California by the same law firm that has brought pending challenges in Illinois and Michigan.  Their Missouri challenge was dismissed just last week.

The California lawsuit was filed in federal court in the Eastern District of California. The Complaint on behalf of Orion Wine Imports and an owner of the company claims California laws that prohibit out of state importers and wholesalers from serving California retailers while California importers and wholesalers  are permitted violates the Constitution’s dormant Commerce Clause and the Privileges and Immunities Clause.

Similar lawsuits have not been successful to date as the courts have noted that the United States Supreme Court’s 2005  Granholm decision was limited to supplier based discrimination, not disparities in states laws regulating the retailer and wholesaler tiers.