For reasons I will never quite understand, breweries are often treated differently than wineries in California’s alcohol statutes and regulations (ok, I do understand, it is the powerful wine lobby).  When I tell friends and colleagues that beer law has lots of constitutional nooks and crannies, I often wonder if they believe me.  Here’s some proof.

Today, the California Craft Brewers Association (the “CCBA”) and several independent breweries sued Governor Newsom and California State Public Health (“CDPH”) Officer Sandra Shewry in federal court (Central District of California # 8:20-cv-02372) for violations of the Equal Protection and Due Process Clauses of the United States Constitution for how breweries have been treated during the pandemic and will be treated when things start clearing up.  The Complaint seeks a declaration that the Governor’s executive orders and CDPH Guidance violates both clauses, for an injunction prohibiting California to require breweries to serve sit-down, dine-in meals in order to serve their beer in their tasting rooms (unlike wine), and for attorneys’ fees.  I think the lawsuit has merit.  Of course, the Complaint recognizes the importance of promoting California citizens’ health and safety, but doing so while favoring one class of alcohol manufacturer (wine) over another (beer) is arbitrary.

In response to the COVID-19 pandemic, Governor Newsom issued a series of orders, including a prohibition on beer manufacturers from operating tasting rooms unless they provide meals with any beer served at the tasting room—even if the tasting room never previously sold meals.  Wine tasting rooms, on the other hand, do not have to serve food with wine at their tasting rooms.  Oddly, the Complaint notes that even wineries that share tasting rooms with breweries can sell and serve wine without food, but the beer manufacturer must still serve food.  The Complaint further points out that the state has provided no scientific evidence or explanation for this differing treatment.  The bottom line is that the CCBA and the brewery plaintiffs allege that winery tasting rooms and brewery tasting rooms are similarly situated, if not identically situated, and therefore there is no basis to treat them so differently.  I agree, especially with many breweries facing closure and an inability to move product at all.  This is a discrimination case.

Here is what seems to be the crux of the problem.  On May 12, 2020, the CDPH issued an order stating, “Brewpubs, breweries, bars, pubs, craft distilleries and wineries should remain closed until those establishments are allowed to resume modified or full operation unless they are offering sit-down, dine-in meals.  Alcohol can only be sold in the same transaction as a meal.”  Ok, so far.  Everyone is being treated equally.

Then, on June 28 and July 1, 2020, the CDHP eliminated the need for wine manufacturers to serve meals with their wine. Specifically, the July 1 closure Guidance ordered “all brewpubs, breweries, bars, and pubs in these counties must close, both indoors and outdoors, unless they are offering sit down, din-in meals….”  What happened to wine tasting rooms?  They got a pass.  The CDPH offered no explanation as to why wineries can sell wine only, but breweries must serve sit-down, dine-in meals to sell a pint.  Later, the CDPH attempted to justify the differing treatment in a letter to the CCBA by alleging, essentially, that brewery tasting rooms are in urban areas and wineries are not and that wineries are generally not social hubs for people to meet.  That’s just not true.

Regarding the Equal Protection Clause, the complaint proceeds as follows:  (1) the Fourteenth Amendment forbids any state to “deny to any person within its jurisdiction equal protection of laws”; (2) beer and wine manufacturers are similarly situated; (3) Governor Newsom and the CDPH have treated beer manufacturers differently than wine manufacturers regarding the sit-down meal requirement; (4) there is no rational basis for the differing treatment; and, therefore, (5) the order and guidance are unconstitutional.  In a nice stroke of the pen, the Complaint alleges that “imposing the sit-down, dine-in meal requirement on beer manufacturers does not keep California citizens who seek an alcoholic beverage at home entirely, it just sends them to the winery instead—which is likely to be very nearby (or even next door) to the beer manufacturer they would have visited.”

The Due Process cause of action proceeds similarly and focuses on breweries’ deprivation of conducting their lawful business and the detrimental impact on their liberty and property interests.  Further, the Complaint alleges the CDPH guidance is arbitrary and invites arbitrary enforcement.  Perhaps most importantly, at least for procedural due process, the Complaint focuses on the fact that the CDPH guidance was implemented without a constitutionally-adequate hearing and provides no meaningful procedure to challenge the restrictions.

Why do I think this has merit?  The Complaint alleges the disparate treatment of similarly situated “persons” and provides extensive allegations about the state’s lack of any evidence, scientific or otherwise, that could rationally justify the orders.  And if the state tries to argue that its Twenty-first Amendment powers give it broad power to regulate alcohol as it sees fit, it should read 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 516 (1996) where the Supreme Court recognized that the Twenty-first Amendment “does not license the States to ignore their obligations under other provisions of the Constitution.”  To be more specific, the Court relied on “our specific holdings that the Twenty-first Amendment does not in any way diminish the force of the Supremacy Clause, the Establishment Clause, or the Equal Protection Clause.”  Id. (citations omitted; emphasis added).  Thus, the Twenty-first Amendment will not save unconstitutional infringement on breweries’ rights.

Good luck to the CCBA and the named independent brewers.  We’re rooting for you.  Did I mention that Governor Newsom is a winery owner?

 

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *