Milton S. Kronheim & Company, Inc. v. District of Columbia

91 F.3d 193, 319 U.S. App. D.C. 389, 1996 U.S. App. LEXIS 20027
CourtCourt of Appeals for the D.C. Circuit
DecidedAugust 9, 1996
Docket95-7053, 95-7168
StatusPublished
Cited by33 cases

This text of 91 F.3d 193 (Milton S. Kronheim & Company, Inc. v. District of Columbia) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Milton S. Kronheim & Company, Inc. v. District of Columbia, 91 F.3d 193, 319 U.S. App. D.C. 389, 1996 U.S. App. LEXIS 20027 (D.C. Cir. 1996).

Opinions

Opinion for the Court filed by Circuit Judge SENTELLE.

Separate concurring opinion filed by Circuit Judge SILBERMAN.

Separate dissenting opinion filed by Circuit Judge HENDERSON.

SENTELLE, Circuit Judge:

The District of Columbia appeals from an order of the United States District Court preliminarily and permanently enjoining it from enforcing the Storage Act, D.C.Code § 25-114(f), which generally forbids alcoholic beverage licensees from storing beverages outside the District. The district court, relying on a prior district court opinion affirmed by this court without published opinion, held the Act to be an unconstitutional violation of the Interstate Commerce Clause. We determine that the District is not collaterally es-topped by the prior opinion from defending the constitutionality of its Act. We therefore reach the merits of the controversy.

The District defends the storage requirement on three grounds. First, that the District of Columbia Alcoholic Beverage Control Act (“ABC Act”), a congressional enactment, authorizes the local warehousing requirement; therefore, the requirement is constitutional as federal statutes are not subject to the restrictions of the Commerce Clause. Second, even if the ABC Act is subject to the restrictions of the Commerce Clause, the local warehousing requirement does not violate the clause. And third, even if the requirement would otherwise violate the Commerce Clause, the Storage Act is constitutional as a valid exercise of the District’s core power under § 2 of the Twenty-first Amendment to the Constitution. We hold that, although the ABC Act authorizes the local warehousing requirement, the Act and any statute enacted pursuant to it are subject to the restrictions of the Commerce Clause; but we also hold [196]*196that the storage requirement, although facially inconsistent with the Commerce Clause, is constitutional as a valid exercise of the District’s core power under the Twenty-first Amendment.

I. Background

In 1934, following the repeal of Prohibition, Congress enacted the ABC Act to regulate the importation and distribution of liquor within the District of Columbia. Act of Jan. 24, 1934, § 2; D.C.Code § 25-102. The Act created a three-tier system of distribution that, among other things, required manufacturers, wholesalers and retailers to obtain licenses before “manufactur[ing] for sale, keeping] for sale, or sell[ing] any alcoholic beverage” within the District of Columbia. ABC Act §§ 9(a), 12; D.C.Code §§ 25-109(a)(1), 113. The Act also established an Alcoholic Beverage Control Board, which was authorized to issue, transfer and revoke any license under the Act. ABC Act §§ 4, 6; D.C.Code §§ 25-104,106.

In addition, the ABC Act authorized the Commissioners (now the Council of the District of Columbia) to adopt rules to “control and regulate the manufacture, sale, keeping for sale, offer for sale, solicitation of orders for sale, importation, exportation, and transportation of alcoholic beverages in the District of Columbia.” ABC Act § 7; D.C.Code § 25-107(a). Acting pursuant to this provision, in 1986 the Council enacted the District of Columbia Wholesale Liquor Industry Storage Act (“the Storage Act”). The Storage Act amended § 13 of the ABC Act by adding a sentence requiring that no alcoholic beverage wholesaler licensed by the District shall “store beverages upon premises outside the District, except that licensed wholesalers permitted by the Board to store beverages outside the District as of January 1, 1986, may continue to do so until July 27, 1988.” D.C.Code § 25-114(f).

Appellee Milton S. Kronheim & Co., Inc. (“Kronheim”), a wholesaler of alcoholic beverages licensed under the ABC Act, distributing liquor, beer and wine to District of Columbia retailers, is authorized to store alcoholic beverages at two locations within the District. A Maryland affiliate of Kronheim, The Kronheim Company, Inc., is a licensed wholesale distributor of alcoholic beverages in Maryland. Kronheim desired to consolidate its warehousing operations in the District and Maryland by leasing a facility in Jessup, Maryland. Toward this end, Kron-heim filed suit in district court on February 2, 1995, seeking to enjoin enforcement of the Storage Act.

In deciding this case, the district court relied upon an earlier district court decision in Quality Brands, Inc. v. Barry, 715 F.Supp. 1138 (D.D.C.1989). In that case, Quality Brands, Inc., a licensed alcoholic beverage wholesaler in the District and a competitor of Kronheim, sought a declaratory judgment that the Storage Act was unconstitutional. The district court held that (1) the local warehousing requirement facially discriminated against interstate commerce in violation of the Commerce Clause, Quality Brands, Inc., 715 F.Supp. at 1139-40; (2) the articulated purposes given for the requirement could not withstand the “strict scrutiny” accorded facially discriminatory legislation, id. at 1140-42; and (3) the Twenty-first Amendment did not shield the District’s discrimination against interstate commerce, id. at 1142-43. Consequently, the Quality Brands court concluded that the local warehousing requirement violated the Commerce Clause and enjoined its enforcement. We affirmed that decision without a published opinion. Quality Brands, Inc. v. Barry, 901 F.2d 1130, 1990 WL 51795 (D.C.Cir.1990) (per curiam).

In this case, the district court granted Kronheim’s motion for a preliminary injunction, finding that Kronheim would suffer irreparable harm if its purchase of the Jessup warehouse did not go forward immediately. Milton S. Kronheim & Co., Inc. v. District of Columbia, 877 F.Supp. 21, 30 (D.D.C.1995). The court held that the district court’s decision in Quality Brands collaterally estopped the District from disputing the constitutionality of the Storage Act. Id. at 26-27. The court also determined against the District an issue left open in Quality Brands: whether Congress in the ABC Act authorized the District to require local warehousing or itself imposed such a requirement. Id. at 27-29.

[197]*197The District filed an interlocutory appeal from this preliminary injunction. On summary judgment, the district court confirmed its findings, issued a declaratory judgment and permanently enjoined enforcement of the District’s local warehousing requirement. The District appealed the final judgment and this court consolidated the two appeals. After the district court granted its preliminary injunction, Kronheim completed the Jessup warehouse transaction and is currently consolidating its inventory in the new warehouse.

II. Analysis

A. Collateral Estoppel

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Bluebook (online)
91 F.3d 193, 319 U.S. App. D.C. 389, 1996 U.S. App. LEXIS 20027, Counsel Stack Legal Research, https://law.counselstack.com/opinion/milton-s-kronheim-company-inc-v-district-of-columbia-cadc-1996.