Alcohol regulations are not as sacrosanct as they used to be. Shortly after the Twenty-first Amendment was ratified, Supreme Court Justice Louis Brandeis declared, and the rest of America agreed, that state alcohol laws were impervious to legal challenge.
What a difference 80 years can make! As demonstrated by the Costco Wholesale and TFWS cases, federal antitrust laws under certain circumstances may not only be the basis of a legal challenge against state regulatory requirements, but in the right circumstances may trump state alcohol laws.
A bulwark against such challenges historically has been the "state-action defense," i.e., the doctrine of jurisprudence providing that a state agency’s conduct -- when expressly authorized by state lawmakers -- is immune from federal antitrust challenge. However, the U. S. Supreme Court’s decision this year in North Carolina Board of Dental Examiners v. Federal Trade Commission is the latest in a series of recent cases that appear to be restricting the scope and application of the state-action doctrine.
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This article is published in the May 2015 issue of Fintech Focus. For more information, click here.
Author - Richard M Blau, Chair GrayRobinson’s Alcohol Industry Team