(CN) - A three-year residency requirement for Missouri wholesale liquor distributors is constitutional, the 8th Circuit affirmed.
To obtain a wholesaler license to sell liquor in Missouri, a corporation must be a "resident corporation," incorporated in Missouri with officers and directors who have been "bona fide residents" of Missouri for at least three years.
In addition, 60 percent of stockholders must satisfy this residency requirement to be licensed under the law. The only exception is for corporations licensed as wholesalers before the law went into effect in 1947.
In 2011, Southern Wine & Spirits of Missouri applied for a wholesaler license, but its application was denied for failing to meet the residency requirement, because it is wholly owned by Southern Wine & Spirits of America, a Florida corporation. Southern Wine distributes wine, spirits, beer, and other beverages in 32 states.
The company and its parent sued the Missouri Division of Alcohol and Tobacco Control, challenging the constitutionality of the residency requirement, and claiming that it discriminates against out-of-state corporations in violation of the Commerce Clause.
In court, the Division admitted that the statute discriminates against interstate commerce, but asserted that the 21st Amendment grants the states the right to control the importation of liquor.
A district court judge ruled against Southern Wine, and the 8th Circuit affirmed the decision Wednesday.
Before the appellate court, Southern Wine claimed the purpose of the residency requirement was to protect the local wholesale liquor business in Missouri, and quoted a 1947 newspaper article purporting to describe statements made by the legislation's sponsors.
But "Southern Wine did not raise this protectionist-intent argument in the district court, [or] enter the newspaper article into the record," leaving the state no chance to present alternative evidence, said U.S. Circuit Judge Steven Colloton, writing for the three-judge panel.
Furthermore, "Newspaper articles are 'rank hearsay,'" Colloton said, quoting precedent. "They thus provide a doubtful basis for an important judgment about the constitutionality of legislation. Although courts have mentioned news reports in the course of discussing legislative purpose, we decline to rest a constitutional determination on a news article that does not even purport to provide direct quotations from the one legislator cited."
And while "it is fair to say that the deputy state supervisor did not mount the most vigorous defense of Missouri's law," the judge did not find the Division's interests undermined by his deposition testimony.
The supervisor testified he did not think that the residency rule "impacts the distribution system," and that he did not think granting a license to Southern Missouri would "do anything."
However, he also said that some wholesalers do get involved in community responsibility actions, and stated that the requirement "may serve" the state's interest to promote responsible drinking, just "not as much as it used to."
Colloton concluded: "The Division has established a sufficient basis for its residency requirement, which is meaningfully tied to the 'aim of the 21st Amendment ... to allow States to maintain an effective and uniform system for controlling liquor by regulating its transportation, importation, and use.'"
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