PUBLISHED
`
`UNITED STATES COURT OF APPEALS
`FOR THE FOURTH CIRCUIT
`
`
`No. 21-1906
`
`
`
`
`
`
`B-21 WINES, INC.; JUSTIN HAMMER; BOB KUNKLE; MIKE RASH; LILA
`RASH,
`
`
`Plaintiffs – Appellants,
`
`
`v.
`
`
`HANK BAUER, Chair, North Carolina Alcoholic Beverage Control Commission,
`
`
`Defendant – Appellee,
`
`
`
`and
`
`
`JOSHUA STEIN, Attorney General of North Carolina,
`
`
`Defendant.
`
`
`------------------------------
`
`CENTER FOR ALCOHOL POLICY; NORTH CAROLINA ASSOCIATION OF
`ABC BOARDS; AMERICAN BEVERAGE LICENSEES; NC BEER & WINE
`WHOLESALERS ASSOCIATION; WINE & SPIRITS WHOLESALERS OF
`AMERICA, INCORPORATED,
`
`
`Amici Supporting Appellee.
`
`
`Appeal from the United States District Court for the Western District of North Carolina, at
`Charlotte. Frank D. Whitney, District Judge. (3:20-cv-00099-FDW-DCK)
`
`
`
`
`Argued: March 9, 2022
`
`
`
`
`
`Decided: June 1, 2022
`
`
`

`

`Before WILKINSON, KING, and QUATTLEBAUM, Circuit Judges.
`
`
`Affirmed by published opinion. Judge King wrote the majority opinion, in which Judge
`Quattlebaum joined. Judge Wilkinson wrote a dissenting opinion.
`
`
`
`
`
`
`ARGUED: James A. Tanford, EPSTEIN COHEN SEIF AND PORTER, LLP,
`Bloomington, Indiana, for Appellants.
` Ryan Y. Park, NORTH CAROLINA
`DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for Appellee. ON BRIEF:
`Robert D. Epstein, James E. Porter, EPSTEIN COHEN SEIF AND PORTER, LLP,
`Indianapolis, Indiana; William C. Trosch, CONRAD TROSCH & KEMMY, P.A.,
`Charlotte, North Carolina, for Appellants. Joshua H. Stein, Attorney General, Zachary W.
`Ezor, Solicitor General Fellow, Jeffrey B. Welty, Special Deputy Attorney General,
`NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for
`Appellee. Jon Carr, JORDAN PRICE, Raleigh, North Carolina, for Amicus North Carolina
`Association of ABC Boards. John C. Neiman, Jr., Brandt P. Hill, MAYNARD COOPER
`& GALE P.C., Birmingham, Alabama, for Amici The Center for Alcohol Policy and the
`North Carolina Association of ABC Boards. Jo Moak, Jacob Hegeman, WINE & SPIRITS
`WHOLESALERS OF AMERICA,
`INC., Washington, D.C.; Kris Gardner,
`THARRINGTON SMITH LLP, Raleigh, North Carolina; Frederick R. Yarger, Teresa G.
`Akkara, WHEELER TRIGG O’DONNELL LLP, Denver, Colorado, for Amici Wine &
`Spirits Wholesalers of America, Inc., American Beverage Licensees, and North Carolina
`Beer & Wine Wholesalers Association.
`
`
`
`
`
`
`
`
`2
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`

`

`KING, Circuit Judge:
`
`Plaintiffs B-21 Wines, Inc., a Florida-based wine retailer, plus its owner and three
`
`North Carolina residents, initiated this 42 U.S.C. § 1983 action in the Western District of
`
`North Carolina, challenging a North Carolina alcoholic beverage control regime as
`
`unconstitutional. More specifically, the Plaintiffs allege that North Carolina’s regime,
`
`which prohibits out-of-state retailers — but not in-state retailers — from shipping wine
`
`directly to consumers in North Carolina (the “Retail Wine Importation Bar”), contravenes
`
`the Constitution’s dormant Commerce Clause. The Plaintiffs sought declaratory and
`
`injunctive relief and named the Chair of the North Carolina Alcoholic Beverage Control
`
`Commission as a defendant, in his official capacity only (hereinafter, the “N.C.
`
`Commission”).1
`
`After entertaining competing cross-motions for summary judgment, the district
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`court awarded summary judgment to the N.C. Commission, ruling that the Twenty-first
`
`Amendment authorizes the Retail Wine Importation Bar. See B-21 Wines, Inc. v. Guy, No.
`
`3:20-cv-00099 (W.D.N.C. July 9, 2021), ECF No. 43 (the “Opinion”).2 The Plaintiffs
`
`challenge that ruling by way of this appeal. As explained herein, we are satisfied that —
`
`
`1 When the Plaintiffs initiated this litigation, A.D. Guy, Jr., was Chair of the N.C.
`Commission and was named as a defendant. During the appeal, Hank Bauer replaced Guy
`as Chair. We have substituted Bauer for Guy, pursuant to Federal Rule of Appellate
`Procedure 43(c)(2). The Plaintiffs also named the Attorney General of North Carolina as
`a defendant, in his official capacity. The Attorney General asserted sovereign immunity
`and was dismissed. That ruling is not challenged.
`
` The Opinion is published in the Federal Supplement and can be found at 548 F.
`Supp. 3d 555 (W.D.N.C. 2021).
`
` 2
`
`
`
`3
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`

`

`even though the Retail Wine Importation Bar discriminates against interstate commerce —
`
`it is authorized by Section 2 of the Twenty-first Amendment. In the circumstances, we
`
`affirm the district court.
`
`
`
`I.
`
`A.
`
`Plaintiff B-21 Wines is a wine retailer from Florida that sells wine by way of online
`
`transactions. B-21 Wines and its Florida resident owner, plaintiff Justin Hammer, seek to
`
`sell and ship wine to North Carolina consumers. Plaintiffs Bob Kunkle, Mike Rash, and
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`Lila Rash are North Carolina residents who desire to purchase wine from out-of-state
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`retailers such as B-21 Wines, and seek to have the wine shipped directly to them. North
`
`Carolina, however, has made it unlawful “for any person who is an out-of-state retail[er]”
`
`to ship any “alcoholic beverage” — a term that includes wine — directly to North Carolina
`
`consumers. See N.C. Gen. Stat. § 18B-102.1(a). Additionally, North Carolina prohibits
`
`its residents from “hav[ing] any alcoholic beverage mailed or shipped to [them] from
`
`outside this State.” Id. § 18B-109(a).
`
`By contrast, North Carolina’s in-state retailers may ship wine directly to consumers
`
`in the State. In that regard, North Carolina generally allows those wine retailers to ship
`
`their product “in closed containers to individual purchasers inside and outside the State.”
`
`See N.C. Gen. Stat. § 18B-1001(4). To ship wine directly to consumers, retailers are
`
`required to obtain permits, id. § 18B-304, and such permits may be issued only to retail
`
`locations owned or managed by a North Carolina resident and having in-state physical
`4
`
`
`
`

`

`premises that are made available for inspection, id. §§ 18B-900(a)(2), -502. Additionally,
`
`qualifying retailers must purchase their wine from an in-state wholesaler. Id. § 18B-
`
`1006(h).
`
`North Carolina thus prohibits out-of-state retailers — by way of the Retail Wine
`
`Importation Bar — from shipping wine directly to the State’s consumers. On the other
`
`hand, North Carolina allows its in-state retailers to do so. The constitutionality of that
`
`statutory distinction is at issue in this appeal.
`
`B.
`
`The differential treatment that North Carolina applies to in-state and out-of-state
`
`retailers with respect to wine shipping is part of the Old North State’s larger regime of
`
`alcoholic beverage control. Like many other states, North Carolina has decided to regulate
`
`alcoholic beverages by routing them through a system of three distinct “tiers.” A typical
`
`“three-tier system” separates the producers, the wholesalers, and the retailers, consistent
`
`with the public interest aim of promoting responsible consumption of alcoholic beverages.
`
`An important feature of a typical three-tier system is “to prohibit a member of one tier from
`
`having a financial interest in a member of a higher or lower tier.” See Sarasota Wine Mkt.,
`
`LLC v. Schmitt, 987 F.3d 1171, 1176 (8th Cir. 2021), cert. denied, 142 S. Ct. 335 (2021).
`
`In North Carolina, the first tier of the three-tier system relates to the alcoholic beverage
`
`producers — such as wineries, breweries, and distilleries. See N.C. Gen. Stat. §§ 18B-
`
`1101, -1104, -1105. The system’s second tier relates to the alcoholic beverage wholesalers,
`
`who purchase such beverages from producers and sell them to retailers. Id. §§ 18B-1107,
`
`
`
`5
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`

`

`-1109. And the third tier is for the alcoholic beverage retailers — such as bars, restaurants,
`
`and other businesses, which sell such beverages directly to consumers. Id. § 18B-1001.
`
`Most alcoholic beverages in North Carolina pass through each of the three tiers
`
`before they reach consumers. North Carolina, however, has created limited exceptions to
`
`its three-tier system. One such exception applies to a specific class of alcoholic beverage
`
`producers — that is, the wineries. North Carolina authorizes both in-state and out-of-state
`
`wineries to obtain wine-shipper permits and to ship their product directly to consumers,
`
`thus bypassing the wholesaler and retailer tiers. See N.C. Gen. Stat. § 18B-1001.1. But
`
`that exception applies only to the wine producers and does not pertain to the wine retailers.
`
`The wine retailers are treated differently with respect to wine shipping privileges, based on
`
`whether they are in-state or out-of-state retailers. In sum, in North Carolina, the privilege
`
`of direct wine shipping is available to in-state wine producers, out-of-state wine producers,
`
`and in-state wine retailers — but not to out-of-state wine retailers.
`
`The basic framework of the three-tier system has been in place for the better part of
`
`a century. Multiple states have adopted the system, primarily to promote public health and
`
`prevent alcohol abuse problems caused by so-called “tied-house” saloons that existed prior
`
`to Prohibition. Back then, the alcoholic beverage producers paid to establish saloons and,
`
`in exchange, the saloonkeepers agreed to sell only their backers’ alcohol and to meet strict
`
`sales quotas. See Tenn. Wine & Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2463
`
`& n.7 (2019). Because those producers served only as “absentee” owners, they “knew
`
`nothing and cared nothing” about the resulting social ills. See J.A. 281 (citing Raymond
`
`B. Fosdick & Albert L. Scott, Toward Liquor Control 33 (Ctr. for Alcohol Pol’y 2011)
`6
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`

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`(1933)).3 The “tied-houses” thus led to widespread alcohol abuse, which caused “a greater
`
`amount of crime and misery” than “any other source.” See Crowley v. Christensen, 137
`
`U.S. 86, 91 (1890).
`
`In 1908, to address the social problems brought about by the “tied-houses,” North
`
`Carolina prohibited alcoholic beverage sales statewide. This was more than a decade
`
`before the Eighteenth Amendment — ratified in 1919 — imposed Prohibition and banned
`
`nationwide the manufacture, sale, and transportation of alcoholic beverages. And although
`
`Prohibition technically resolved the “tied-house” issue, it led to a myriad of other social
`
`problems. As a result, the Eighteenth Amendment was repealed only 14 years later — in
`
`1933 — by Section 1 of the Twenty-first Amendment. To garner support for the repeal of
`
`Prohibition, the drafters of the Twenty-first Amendment included Section 2 therein, which
`
`affords every state the option of banning alcoholic beverages completely if it chooses to do
`
`so. Section 2 provides, in haec verba, as follows:
`
`The transportation or importation into any State, Territory, or possession of
`the United States for delivery or use therein of intoxicating liquors, in
`violation of the laws thereof, is hereby prohibited.
`
`See U.S. Const. amend. XXI, § 2.
`
`After the Twenty-first Amendment returned the authority to regulate “intoxicating
`
`liquors” to the states, North Carolina appointed a commission in 1935 to study the issues
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`related to alcoholic beverage control. See A Survey of Statutory Changes in North Carolina
`
`
`3 Citations herein to “J.A. ___” refer to the contents of the Joint Appendix filed by
`the parties in this appeal.
`
`
`
`7
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`

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`in 1935, 13 N.C. L. Rev. 355, 388 (1935). The commission’s report of 1937 advised of the
`
`need to address the “well recognized evils of the intemperate use of alcohol as a beverage,”
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`but to avoid “excessive restrictions which, however sincere, would result in defeating the
`
`desired ends.” See J.A. 296. To strike a balance, the commission recommended that North
`
`Carolina take over the distribution and sale of alcoholic beverages. It also recommended
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`that North Carolina adopt a statutory regime of alcoholic beverage control that would
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`“promote temperance” while simultaneously “driving . . . the illicit dealer out of business.”
`
`Id. at 305.
`
`Implementing the commission’s recommendations, the North Carolina General
`
`Assembly created in 1937 an administrative body with general supervisory powers over
`
`commerce involving alcoholic beverages — now known as the North Carolina Alcoholic
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`Beverage Control Commission. For a few years thereafter, all alcoholic beverage sales in
`
`North Carolina were channeled through a network of county boards. In 1939, however,
`
`North Carolina switched from the county board system to a three-tier system of alcoholic
`
`beverage control.
`
`North Carolina has modified and refined its three-tier system over the years,
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`including by allowing wine producers to obtain permits to ship wine directly to consumers.
`
`The State has, however, consistently remained committed to the core of the three-tier
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`system. Indeed, the General Assembly has recently “reaffirm[ed] its support” of the three-
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`tier system. See Act of July 18, 2019, S.L. 2019-18, 2019 N.C. Sess. Laws 163, 163-64.
`
`In 2019, North Carolina amended its alcoholic beverage control statutes, specifying their
`
`purpose as to “limit rather than expand” commerce involving alcohol, and to maintain
`8
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`

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`“strict regulatory control . . . through the three-tier . . . system.” Id. at 165-66 (codified at
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`N.C. Gen. Stat. § 18B-100).
`
`C.
`
`
`
`On February 18, 2020, the Plaintiffs filed their Complaint against the N.C.
`
`Commission in this litigation, alleging, inter alia, that by prohibiting out-of-state retailers
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`from shipping wine directly to North Carolina consumers — while at the same time
`
`permitting in-state retailers to do so — North Carolina violates the dormant Commerce
`
`Clause. The Complaint challenged three provisions of North Carolina’s alcoholic beverage
`
`control regime that relate to the Retail Wine Importation Bar — specifically, sections 18B-
`
`102.1(a), -109(a), and -900(a)(2) of the North Carolina General Statutes.4 After the district
`
`court declined to dismiss the Complaint against the Commission, the parties filed cross-
`
`motions for summary judgment. By their respective summary judgment motions, the
`
`Plaintiffs requested the court to invalidate the challenged statutory provisions, while the
`
`Commission asked the court to uphold them as constitutional under the Twenty-first
`
`Amendment. After conducting oral argument, the court filed its Opinion of July 9, 2021,
`
`resolving the litigation by denying the Plaintiffs’ motion and awarding summary judgment
`
`to the Commission.
`
`
`4 As explained above, section 18B-102.1(a) makes it unlawful “for any person who
`is an out-of-state retail[er]” to ship any “alcoholic beverage” directly to North Carolina
`consumers. Section 18B-109(a) in turn prohibits any North Carolina resident from
`“hav[ing] any alcoholic beverage mailed or shipped to him from outside this State.” And
`section 18B-900(a)(2) provides that qualifying alcohol retail locations must be owned or
`managed by a North Carolina resident.
`
`
`
`9
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`

`

`The Opinion assessed the Retail Wine Importation Bar in light of the interplay
`
`between the dormant Commerce Clause — recognized by the Supreme Court for nearly
`
`200 years as prohibiting discrimination by any of the states against interstate commerce —
`
`and the Twenty-first Amendment, which explicitly grants to the several states the authority
`
`to regulate “intoxicating liquors” within their borders. The Opinion recognized and
`
`explained that, for purposes of a dormant Commerce Clause challenge, state regimes that
`
`regulate alcoholic beverages are analyzed under a two-step framework. See Opinion 6.
`
`First, a court inquires into whether the challenged regime discriminates against interstate
`
`commerce. Id. at 7. If that inquiry is answered in the affirmative, the court then “ask[s]
`
`whether the challenged [regime] can be justified as a public health or safety measure or on
`
`some other legitimate nonprotectionist ground.” Id. (internal quotation marks omitted).
`
`After making the initial inquiry, the district court concluded that North Carolina’s
`
`challenged statutory provisions facially discriminate against out-of-state wine retailers.
`
`See Opinion 9. And in assessing whether the Retail Wine Importation Bar could be
`
`justified as “a public health or safety measure or on some other legitimate nonprotectionist
`
`ground,” the court recognized that North Carolina has an important interest in maintaining
`
`its three-tier system of alcoholic beverage control. Id. at 8-9. That system, the court
`
`explained, is “inherently tied to public health and safety measures the Twenty-first
`
`Amendment was passed to promote.” Id. at 8.
`
`The Opinion also recognized that North Carolina’s prohibition on direct wine
`
`shipping by out-of-state retailers to the State’s consumers is an essential feature of its three-
`
`tier system. See Opinion 9. As the district court explained, an alcoholic beverage control
`10
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`

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`regime that allows out-of-state wine retailers to ship directly to North Carolina consumers
`
`would effectively enable those retailers to bypass the State’s three-tier system. Id. at 11.
`
`The Opinion thus concluded that the Plaintiffs’ challenge to the Retail Wine Importation
`
`Bar presented
`
`a choice between virtually eliminating North Carolina’s three-tier system,
`which the Supreme Court and multiple Courts of Appeals have determined
`is unquestionably legitimate, and maintaining the status quo.
`
`Id. Resolving that choice, the district court rejected the Plaintiffs’ challenge and upheld
`
`the Retail Wine Importation Bar as constitutional. Id. The Plaintiffs have timely appealed
`
`from the court’s judgment, and we possess jurisdiction pursuant to 28 U.S.C. § 1291.
`
`
`
`II.
`
`At the root of the parties’ disagreement lies the question of the proper balance
`
`between, on the one hand, North Carolina’s constitutional power under the Twenty-first
`
`Amendment to regulate alcoholic beverages within its boundaries and, on the other, the
`
`dormant Commerce Clause’s prohibition on discrimination by a state against interstate
`
`commerce. The Plaintiffs’ contention on appeal is that the district court struck an erroneous
`
`balance, affording North Carolina’s regulatory authority too much weight. The N.C.
`
`Commission, for its part, agrees with the district court, maintaining that the differential
`
`treatment of in-state and out-of-state wine retailers at issue in these proceedings is
`
`constitutionally authorized.
`
`We review de novo a district court’s disposition of cross-motions for summary
`
`judgment. See Bostic v. Schaefer, 760 F.3d 352, 370 (4th Cir. 2014). As we have
`
`
`
`11
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`explained, “when cross-motions for summary judgment are before a court, the court
`
`examines each motion separately, employing the familiar standard under Rule 56 of the
`
`Federal Rules of Civil Procedure.” See Desmond v. PNGI Charles Town Gaming, L.L.C.,
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`630 F.3d 351, 354 (4th Cir. 2011). Pursuant to that standard, “[s]ummary judgment is
`
`appropriate ‘if the movant shows that there is no genuine dispute as to any material fact
`
`and the movant is entitled to judgment as a matter of law.’” See Lawson v. Union Cnty.
`
`Clerk of Court, 828 F.3d 239, 247 (4th Cir. 2016) (quoting Fed. R. Civ. P. 56(a)). We also
`
`review de novo a district court’s ruling with respect to the constitutionality of a state statute.
`
`See Miller v. Brown, 503 F.3d 360, 364 (4th Cir. 2007).
`
`
`
`III.
`
`The constitutional provisions at center stage in this appeal are the Commerce Clause
`
`— contained in Article I, Section 8, Clause 3 of the Constitution and ratified late in the
`
`Eighteenth Century — and the Twenty-first Amendment, specifically Section 2 thereof,
`
`which was ratified about 145 years thereafter. The Commerce Clause provides that “[t]he
`
`Congress shall have Power . . . [t]o regulate Commerce with foreign Nations, and among
`
`the several States, and with the Indian Tribes.” See U.S. Const. art. I, § 8, cl. 3. “Although
`
`the Clause is framed as a positive grant of power to Congress,” the Supreme Court has
`
`recognized that the Clause “also prohibits state laws that unduly restrict interstate
`
`commerce.” See Tenn. Wine & Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2459
`
`(2019) (internal quotation marks omitted). Important here, the “negative” or “dormant”
`
`aspect of the Commerce Clause prohibits the several states from “adopting protectionist
`12
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`

`

`measures and thus preserves a national market for goods and services.” Id. (internal
`
`quotation marks omitted). Ordinarily, a state statute that discriminates against interstate
`
`commerce is evaluated under a test that is akin to strict scrutiny review, requiring
`
`invalidation unless the state demonstrates “both that the statute serves a legitimate local
`
`purpose, and that this purpose could not be served as well by available nondiscriminatory
`
`means.” See Colon Health Ctrs. of Am., LLC v. Hazel, 733 F.3d 535, 543 (4th Cir. 2013)
`
`(internal quotation marks omitted). But when a challenged statutory regime regulates
`
`alcoholic beverages — thus implicating the Twenty-first Amendment — the standard of
`
`review is different.
`
`Section 2 of the Twenty-first Amendment explicitly grants to each of the states a
`
`broad power to regulate “intoxicating liquors,” i.e., wine and other alcoholic beverages,
`
`within their respective boundaries. The Supreme Court’s initial assessment of Section 2,
`
`made by Justice Brandeis in 1936, was that its broad language accorded plenary authority
`
`to the several states to regulate alcoholic beverages, including the power to discriminate
`
`against out-of-state alcohol interests. See State Bd. of Equalization v. Young’s Market Co.,
`
`299 U.S. 59, 62 (1936). But more recently, in a somewhat fractured decision in 2005, the
`
`Court resolved that Section 2 “does not abrogate Congress’ Commerce Clause powers with
`
`regard to liquor.” See Granholm v. Heald, 544 U.S. 460, 487 (2005). In fact, the Court
`
`emphasized that “state regulation of alcohol is limited by the nondiscrimination principle
`
`of the Commerce Clause.” Id.
`
`Nevertheless, because of the unique constitutional authority accorded to the states
`
`under Section 2 to regulate alcoholic beverages — the only consumer product actually
`13
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`

`

`mentioned in the Constitution — the Supreme Court confirmed that the Twenty-first
`
`Amendment affords a state “virtually complete control” over the distribution of alcoholic
`
`beverages within its borders. See Granholm, 544 U.S. at 488 (internal quotation marks
`
`omitted). Thus, a dormant Commerce Clause challenge to a state’s alcoholic beverage
`
`control statutes requires that the reviewing court “engage in a different inquiry” than it
`
`would utilize for challenges to state statutes involving other commercial products. See
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`Tenn. Wine, 139 S. Ct. at 2474.
`
`The Supreme Court recently enunciated, in its 2019 Tennessee Wine decision, a two-
`
`step framework for assessing alcoholic beverage control laws that are challenged under the
`
`dormant Commerce Clause. First, a court must ask whether the challenged regime
`
`discriminates against interstate commerce. See Tenn. Wine, 139 S. Ct. at 2474. If the
`
`answer to that inquiry is no, the court’s assessment ends and the challenged regime is
`
`constitutional. On the other hand, if the inquiry is answered in the affirmative, the court
`
`proceeds to the second step and assesses “whether the challenged [regime] can be justified
`
`as a public health or safety measure or on some other legitimate nonprotectionist ground.”
`
`Id. To properly assess and dispose of this appeal, we will — as the district court did —
`
`address those two steps in turn.
`
`A.
`
`In evaluating whether North Carolina’s Retail Wine Importation Bar discriminates
`
`against interstate commerce, the district court concluded that it did not need to “go into an
`
`extensive dormant Commerce Clause analysis” because the challenged statutes are
`
`“discriminatory on their face.” See Opinion 9. On appeal, the Plaintiffs have limited their
`14
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`

`

`challenge to two provisions: sections 18B-102.1(a) and -109(a) of the North Carolina
`
`General Statutes. The first of those provisions — section 18B-102.1(a) — prohibits out-
`
`of-state retailers from shipping wine to consumers in North Carolina. The second provision
`
`— section 18B-109(a) — makes it unlawful for North Carolina consumers to have wine
`
`shipped directly to them from outside the State.
`
`The Supreme Court has defined impermissible discrimination for purposes of the
`
`dormant Commerce Clause as “differential treatment of in-state and out-of-state economic
`
`interests that benefits the former and burdens the latter.” See Granholm, 544 U.S. at 472
`
`(internal quotation marks omitted). We therefore assess whether sections 18B-102.1(a)
`
`and -109(a) — as core provisions of the Retail Wine Importation Bar and part of North
`
`Carolina’s alcoholic beverage control regime — treat in-state and out-of-state wine
`
`retailers differently and in a manner that unconstitutionally benefits the former and burdens
`
`the latter.
`
`When construing a statute, we must start with the text thereof. See Lamie v. U.S.
`
`Tr., 540 U.S. 526, 534 (2004). The language of section 18B-102.1(a) — which makes it
`
`“unlawful for any person who is an out-of-state retail[er] . . . to ship or cause to be shipped
`
`any alcoholic beverage directly to any North Carolina resident” — is readily suspect. That
`
`provision singles out a specific group — out-of-state retailers — and prohibits that group
`
`from shipping alcoholic beverages directly to consumers in North Carolina. When assessed
`
`in conjunction with section 18B-1001(4) — which allows in-state retailers to ship wine “in
`
`closed containers to individual purchasers inside and outside the State” — the
`
`discriminatory nature of section 18B-102.1(a) is obvious. This discrimination against
`15
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`

`

`interstate commerce is emphasized by section 18B-109(a), which, for its part, prohibits any
`
`North Carolina resident from “hav[ing] any alcoholic beverage mailed or shipped to him
`
`from outside this State.”5
`
`On appeal, the N.C. Commission concedes that section 18B-102.1(a) targets out-of-
`
`state retailers for discriminatory treatment. The Commission nevertheless maintains that
`
`section 18B-102.1(a) is not discriminatory “in the relevant sense,” in that “the kind of
`
`discrimination targeted by the dormant Commerce Clause is not present here.” See Br. of
`
`Appellee 42, 45. The Commission thus argues that section 18B-102.1(a) “affords no
`
`tangible benefit to in-state retailers” because section 18B-109(a) generally prohibits North
`
`Carolina consumers from having any alcoholic beverages shipped to them from outside the
`
`State, no matter whether the sender is an out-of-state retailer or an in-state retailer sending
`
`alcohol from an out-of-state warehouse. Id. at 45. That contention by the Commission,
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`however, ignores those North Carolina retailers who ship wine from within the State. Such
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`in-state retailers have the privilege of shipping wine directly to consumers, unlike their out-
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`of-state counterparts shipping from outside the State. And that privilege benefits North
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`Carolina retailers by broadening the manner in which they can do business. Put succinctly,
`
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`5 We recognize that out-of-state wine retailers can obtain a permit to ship their
`product to North Carolina residents, provided, inter alia, that those retailers are managed
`or owned by a North Carolina resident, have in-state premises, and buy their product from
`an in-state wholesaler. But that prospect does not eliminate the statutorily mandated
`differential treatment described above. As the Supreme Court ruled in its Granholm
`decision in 2005, New York discriminated against out-of-state wineries by allowing only
`in-state wineries to ship wine directly to consumers, even though out-of-state wineries
`could also do so if they established a distribution operation in New York. See Granholm,
`544 U.S. at 474-75.
`
`
`
`16
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`

`

`we are satisfied that sections 18B-102.1(a) and -109(a), as core provisions of the Retail
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`Wine Importation Bar and part of North Carolina’s alcoholic beverage control regime,
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`discriminate against interstate commerce by allowing in-state retailers to ship their wine
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`directly to North Carolina consumers, while at the same time prohibiting out-of-state wine
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`retailers from doing the same.
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`B.
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`
`
`Turning to the second and most difficult step of the Tennessee Wine framework —
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`whether the Retail Wine Importation Bar is justified as “a public health or safety measure
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`or on some other legitimate nonprotectionist ground” — the district court concluded that
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`the Bar was so justified. On appeal, the Plaintiffs challenge that ruling, maintaining that
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`the court erred in two principal respects: first, by applying an erroneously lenient standard;
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`and second, in ruling that the Bar was justified.
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`1.
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`We will first evaluate the Plaintiffs’ contention that the district court erred by
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`applying an erroneously lenient standard in assessing whether North Carolina’s Retail
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`Wine Importation Bar was justified. Addressing step two of the Tennessee Wine
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`framework, the Opinion inquired whether the Bar was “justified as a public health or safety
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`measure or on some other legitimate nonprotectionist ground,” drawing that language
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`directly from the Supreme Court’s Tennessee Wine decision. See Opinion 7-8 (internal
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`quotation marks omitted). In Tennessee Wine, the Court upheld a dormant Commerce
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`Clause challenge to Tennessee’s two-year residency requirement for individuals seeking
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`initial retail license. See 139 S. Ct. at 2457. In applying the framework “dictated by
`17
`
`
`
`

`

`[Section 2’s] history and our precedents,” the Court, after concluding at step one of its
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`analysis that the Tennessee statute facially discriminated against interstate commerce,
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`assessed, at step two, whether the statute was “justified as a public health or safety measure
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`or on some other legitimate nonprotectionist ground.” Id. at 2474.
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`The Plaintiffs nevertheless contend on appeal that, instead of asking whether the
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`discriminatory treatment by North Carolina is “justified as a public health or safety measure
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`or on some other legitimate nonprotectionist ground,” the district court should have
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`assessed — and we should now assess — whether such treatment advances “an important
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`regulatory interest that could not be furthered by reasonable nondiscriminatory
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`alternatives.” See Br. of Appellants 17.6 In arguing for a different standard of review that
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`is similar to strict scrutiny, the Plaintiffs rely in part on the Tennessee Wine decision, where
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`the Supreme Court conducted a limited inquiry into the possible existence of
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`nondiscriminatory alternatives. See 139 S. Ct. at 2474. But that inquiry was not central to
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`the Tennessee Wine analysis, which was made pursuant to the two specified steps of the
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`Court’s framework.
`
`
`6 We pause to observe that the Plaintiffs are inconsistent in several respects in how
`they phrase the inquiry they urge us to conduct in this appeal. Instead of “an important
`regulatory interest,” they sometimes suggest that we look for “a core concern of § 2,” “an
`important purpose,” “a legitimate non-protectionist purpose,” or “a legitimate local
`purpose.” See Br. of Appellants 14, 32, 35, 46. Each of those options, however, are similar
`to the “legitimate local purpose” terminology used in the ordinary dormant Commerce
`Clause analysis. See, e.g., Colon Health Ctrs. of Am., LLC v. Hazel, 733 F.3d 535, 543
`(4th Cir. 2013).
`
`
`
`18
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`

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`The Plaintiffs additionally rely on the Granholm decision, which preceded
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`Tennessee Wine by about 14 years, to support their argument for a more lenient standard.
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`In Granholm, the Supreme Court struck down alcoholic beverage control regimes in
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`Michigan and New York that allowed in-state wine producers to bypass three-tier systems
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`and ship wine directly to consumers, but prohibited out-of-state wine producers from doing
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`the same. See Granholm, 544 U.S. at 466. As part of its analysis, the Granholm Court
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`inquired into whether the challenged statutory regimes “advance[d] a legitimate local
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`purpose that [could not] be adequately served by reasonable nondiscriminatory
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`alternatives.” Id. at 489 (internal quotation marks omitted). But the existence of a
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`“legitimate local purpose” and the availability of “nondiscriminatory alternatives” were
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`discussed by the Court o