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Robert Freeman; Judy Freeman v. Jon S. Corzine

December 17, 2010


Appeals from the United States District Court for the District of New Jersey (D.C. No. 03-3140) District Judge: Honorable Katharine S. Hayden

The opinion of the court was delivered by: Pollak, District Judge


(Pursuant to F.R.A.P. 43(c))

Jerry Fischer, Director of the New Jersey Division of Alcoholic Beverage Control, Appellant in 08-3268 Robert Freeman; Judy Freeman; Walter Hansel Winery, Inc. Meyer Freeman; Beverly Freeman, Appellants in 08-3302

Argued February 1, 2010

Before: McKEE and HARDIMAN, Circuit Judges, and POLLAK, District Judge.*fn1


Plaintiffs -- two New Jersey wine enthusiasts, a New Jersey couple who seeks access to more Kosher wines, and a California winery -- have brought suit in the United States District Court for the District of New Jersey against Jerry Fischer, New Jersey's Director of Alcoholic Beverage Control, alleging that several aspects of New Jersey's Alcoholic Beverage Control Law ("ABC Law") infringe on the dormant Commerce Clause in violation of 42 U.S.C. § 1983.


New Jersey law, like the laws of many states, establishes a "three-tier" structure for alcohol distribution and sales. Pursuant to that structure, alcoholic beverages are sold by (1) suppliers and manufacturers to (2) wholesalers, who in turn sell to (3) retailers, who then sell alcohol to consumers.

In Granholm v. Heald, 544 U.S. 460 (2005), the Supreme Court reaffirmed the view expressed by five justices in North Dakota v. United States, 495 U.S. 423 (1990), that such a "three-tier system . . . is 'unquestionably legitimate.'" Granholm, 544 U.S. at 489 (citing North Dakota, 495 U.S. at 432 (plurality op.) & id. at 447 (Scalia, J., concurring in the judgment)). The Granholm Court nevertheless cautioned that "straightforward attempts to discriminate in favor of local producers" of alcoholic beverages by, for instance, "subjecting out-of-state [producers], but not local ones, to the three-tier system," are "contrary to the Commerce Clause and . . . not saved by the [states' authority to regulate alcoholic beverages under] the Twenty-first Amendment." Id. at 474, 489 (internal quotation marks omitted).

Plaintiffs filed this suit in 2003, contending that five aspects of New Jersey's laws regulating wine contravene this nondiscrimination principle in violation of the dormant Commerce Clause. The first two statutory provisions at issue involve privileges relating to the sale of wine to consumers and retailers that are afforded to wineries that obtain New Jersey plenary or farm winery licenses, but not to wineries lacking such licenses. Plenary licenses may be obtained by producers that "grow[] and cultivat[e] grapes . . . on at least three acres on, or adjacent to, the winery premises," but only if the wine "is produced, blended, fortified, or treated by the licensee on its licensed premises situated in the State of New Jersey." N.J. Stat. Ann. § 33:1-10(2a). Farm winery licenses, meanwhile, are available to wineries which produce less than 50,000 gallons of wine per year and which, "for the first five years of the operation of the winery," produce wine that is "from at least 51% grapes or fruit grown in the State" of New Jersey. Id. § 33:1-10(2b). Holders of either type of license ("in-state wineries") may sell their wines "at retail to consumers" at the winery and at "six salesrooms apart from the winery premises." Id. §§ 33:1-10(2a) & (2b).*fn1 In-state wineries are also permitted to sell their wines "to wholesalers and retailers." Id. Wineries that do not hold either a plenary or a farm winery license ("out-of-state wineries"), by contrast, must funnel their wines through the three-tier system by selling to wholesalers.

Plaintiffs also challenge two aspects of New Jersey's rules regarding the personal importation of wine. N.J. Stat. § 33:1-2(a) provides in pertinent part as follows:

Alcoholic beverages intended in good faith solely for personal use may be transported, by the owner thereof, in a vehicle other than that of the holder of a transportation license, from a point outside this State to the extent of . . . one gallon of wine . . . within any consecutive period of 24 hours; provided, however, that except pursuant to and within the terms of a license or permit issued by the director, no person shall transport into this State or receive from without this State into this State, alcoholic beverages where the alcoholic beverages are transported or received from a state which prohibits the transportation into that state of alcoholic beverages purchased or otherwise obtained in the State of New Jersey. If any person or persons desire to transport alcoholic beverages intended only for personal use in quantities in excess of those above-mentioned, an application may be made to the director who may, upon being satisfied of the good faith of the applicant, and upon payment of a fee*fn2 . . . issue a special permit limited by such conditions as the director may impose, authorizing the transportation of alcoholic beverages in quantities in excess of those above-mentioned. Plaintiffs challenge both the one-gallon cap on importation and the reciprocity provision prohibiting importation of wine from states that bar the entry of New Jersey wine.

Finally, plaintiffs seek to invalidate New Jersey's ban on direct shipments of wine from wineries to consumers via common carrier. When plaintiffs filed suit in 2003, the ABC Law allowed in-state, but not out-of-state, wineries to make such shipments. However, in anticipation of Granholm, which invalidated similar provisions of Michigan and New York law, the New Jersey legislature rescinded this privilege, resulting in a ban on all direct shipments of wine from producers to New Jersey residents.

After three New Jersey wholesalers -- Fedway Associates, R&R Marketing, and Allied Beverage Group -- intervened in the District Court on behalf of the defendant, the parties filed cross-motions for summary judgment, contesting (1) plaintiffs' standing to sue, and (2) the validity of the above portions of New Jersey's ABC Law. The District Court held that plaintiffs met the applicable standing requirements, and that the challenged provisions were largely constitutional. Both sides appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291.*fn3


"Standing implicates both constitutional requirements and prudential concerns." Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir. 2009). Constitutional standing, which should be considered "before examining issues of prudential standing," Joint Stock Soc'y v. UDV N. Am., Inc., 266 F.3d 164, 175 (3d Cir. 2001), includes three well-known elements:

"(1) an injury in fact (i.e., a concrete and particularized invasion of a legally protected interest); (2) causation (i.e., a fairly traceable connection between the alleged injury in fact and the alleged conduct of the defendant); and (3) redressability (i.e., it is likely and not merely speculative that the plaintiff's injury will be remedied by the relief plaintiff seeks in bringing suit)."

Common Cause of Pa., 558 F.3d at 258 (quoting Sprint Commc'ns Co. v. APCC Servs., Inc., 128 S. Ct. 2531, 2535 (2008)). "'The party invoking federal jurisdiction bears the burden of establishing these elements,'" and, on summary judgment, "the plaintiff cannot rely on mere allegations 'but must set forth by affidavit or other evidence specific facts'" demonstrating that these requirements have been met. Joint Stock Soc'y, 266 F.3d at 175 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)) (internal quotation marks and citation omitted).

An injury-in-fact must be "a palpable and distinct harm" that, even if "widely shared," "'must affect the plaintiff in a personal and individual way.'" Toll Bros., Inc. v. Twp. of Readington, 555 F.3d 131, 138 (3d Cir. 2009) (quoting Defenders of Wildlife, 555 U.S. at 560 n.1). The causation prong then "focuses on who inflicted [the] harm." Id. at 142. While "[t]he plaintiff must establish that the defendant's challenged actions, not the actions of some third party, caused the plaintiff's injury," "[t]his causal connection need not be as close as the proximate causation needed to succeed on the merits of a tort claim," and "an indirect causal relationship will suffice." Id. Finally, the redressability prong "looks forward" to determine whether "'the injury will be redressed by a favorable decision.'" Id. (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 181 (2000)). "Redressability is not a demand ...

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