                             In the

United States Court of Appeals
               For the Seventh Circuit

No. 11-1362

L EBAMOFF E NTERPRISES, INC., et al.,
                                             Plaintiffs-Appellants,
                                 v.

A LEX H USKEY, in his official capacity
as chairman of the INDIANA A LCOHOL AND
T OBACCO C OMMISSION,
                                        Defendant-Appellee.


             Appeal from the United States District Court
     for the Southern District of Indiana, Indianapolis Division.
    No. 1:09-cv-00744-JMS-TAB—Jane E. Magnus-Stinson, Judge.


   A RGUED S EPTEMBER 13, 2011—D ECIDED JANUARY 17, 2012




  Before P OSNER, SYKES, and H AMILTON, Circuit Judges.
  P OSNER, Circuit Judge. A company (trade name Cap N’
Cork) that owns retail liquor stores in the Fort Wayne
area of northern Indiana brought this suit, joined by
two consumers of wine who live in Indianapolis, to
challenge the constitutionality of an Indiana state law
that prevents Cap N’ Cork from shipping wine to its
customers via a motor carrier, such as UPS. Ind. Code.
2                                               No. 11-1362

§ 7.1-3-15-3(d). With an exception, explained below, that
is inapplicable to Cap N’ Cork, the statute forbids de-
liveries other than by the seller of the wine or an employee
of the seller—and Indianapolis is a 130-mile drive from
Fort Wayne, well beyond Cap N’ Cork’s feasible delivery
range.
   The company challenges the state law on two grounds.
The first is that it is inconsistent with, and therefore
preempted by, a federal statute, the Federal Aviation Ad-
ministration Authorization Act of 1994, 108 Stat. 1605-06,
7, enacted in 1994, that provides that a state “may not enact
or enforce a law, regulation, or other provision having
the force and effect of law related to a price, route, or
service of any motor carrier,” 49 U.S.C. § 14501(c)(1), with
the principal exception of laws concerned with safety.
§ 14501(c)(2)(A); City of Columbus v. Ours Garage &
Wrecker Service, Inc., 536 U.S. 424, 441 (2002); VRC LLC
v. City of Dallas, 460 F.3d 607, 612-14 (5th Cir. 2006).
   Since everything in an open economy relates to every-
thing else, the term “related to” cannot be interpreted
literally, especially since the statute had a focused aim—to
prevent states from nullifying the repeal, by the
Motor Carrier Act of 1980, 94 Stat. 793, a statutory compo-
nent of the deregulation movement, of the federal laws that
had made truck transportation a heavily regulated indus-
try, like the railroads and airlines, which were also being
deregulated. Rowe v. New Hampshire Motor Transport
Ass’n, 552 U.S. 364, 368 (2008). Rowe read the 1994 law
to forbid a state to require that a tobacco retailer deliver
a tobacco product to a consumer only by a carrier
that verified that the recipient was of legal age
No. 11-1362                                               3

to consume tobacco; the state was attempting to regulate
a service (delivery of tobacco products) provided by
motor carriers. See also DiFiore v. American Airlines, Inc.,
646 F.3d 81, 86-87 (1st Cir. 2011).
  The state law challenged in the present case does not
regulate motor carriers, but it forbids liquor stores to use
motor carriers to deliver wine (also beer and liquor, Ind.
Code §§ 7.1-3-5-3(d), 7.1-3-10-7(c), products that Cap N’
Cork also sells, but for unexplained reasons the company
doesn’t challenge the beer and liquor provisions), and the
effect is to prohibit motor carriers from offering a service
they’d like to offer. True, one major carrier, at least, is
offering it in Indiana (see UPS, “Shipping Wine,”
www.ups.com/wine (visited Nov. 28, 2011)), but only
to wineries that have verified in person the age of the
Indiana residents to whom they ship.
  In a case challenging another Indiana regulation of
wine, we said that “we know from Rowe . . . that states
cannot [consistently with the 1994 act] require interstate
carriers to verify the recipients’ age.” Baude v. Heath,
538 F.3d 608, 613 (7th Cir. 2008). But the Supreme
Court had had no occasion in Rowe—a case about the
delivery of tobacco products rather than of alcoholic
beverages—to address, and did not address, the possible
bearing on the Motor Carrier Act of section 2 of the
Twen ty-First Am endm ent, which states that
“the transportation or importation into any State . . . for
delivery or use therein of intoxicating liquors, in viola-
tion of the laws thereof, is hereby prohibited.” Like all
other states, Indiana forbids the sale of alcoholic bev-
erages to anyone under the age of 21. The Twenty-First
4                                                 No. 11-1362

Amendment authorizes a state to enforce that prohibi-
tion, but not, the Supreme Court has held, by means
that seriously impair the federal government’s constitu-
tional powers. E.g., Granholm v. Heald, 544 U.S. 460, 486
(2005); 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484,
516 (1996); Capital Cities Cable, Inc. v. Crisp, 467 U.S.
691, 712 (1984). And those powers include the power
to regulate transportation by interstate motor carriers.
  In seeking to resolve the tension between the Twenty-
First Amendment and the Supremacy Clause, which in
the absence of the amendment would invalidate a state
law that conflicted with a federal statute, the Supreme
Court has thought it important that the “core . . . power”
conferred on the states by section 2 of the Twenty-First
Amendment is the power of “regulating the times,
places, and manner under which liquor may be imported
and sold.” Capital Cities Cable, Inc. v. Crisp, supra, 467 U.S.
at 716. Indiana’s prohibition of the delivery of wine by
motor carriers is within that power, because it is an
aspect of “regulating the . . . manner under which [wine]
may be . . . sold.” One might have thought that since
the Twenty-First Amendment postdates the Supremacy
Clause, anything within the core power of the amend-
ment (or within the scope of the amendment, period—
forget cores) must trump an inconsistent federal stat-
ute. But while the Supreme Court will accord “a
strong presumption of validity” to regulations within
the core, “strong” is not “conclusive.” North Dakota v.
United States, 495 U.S. 423, 432 (1990) (plurality opinion);
cf. Capital Cities Cable, Inc. v. Crisp, supra, 467 U.S. at
716. “Even though [the challenged statute] represents
No. 11-1362                                                5

the exercise of a core state power pursuant to the Twenty-
first Amendment, a balancing of state and federal
interests must be conducted.” U.S. Airways, Inc. v.
O’Donnell, 627 F.3d 1318, 1330 (10th Cir. 2010).
   So whereas ordinarily a federal law preempts a con-
flicting state law, if the state law regulates alcoholic
beverages the court must balance the federal and state
interests; for just as the federal interests derive constitu-
tional protection from the supremacy clause, the
state interests derive constitutional protection from the
Twenty-First Amendment, unlike the usual case in
which federal preemption is asserted. And if the state
interests are within the core powers that the Twenty-First
Amendment confers on the states, there is a thumb on the
scale—that is the “strong presumption” of validity.
  We’re about to see the strong presumption carry the
day for the challenged Indiana statute, and that makes
us reluctant to get ahead of the Court and declare the
“presumption against preemption” that the Court has
lately applied in cases, unaffected by the Twenty-First
Amendment, in which Congress has legislated in a
field traditionally occupied by the states, see, e.g., Altria
Group, Inc. v. Good, 555 U.S. 70, 77 (2008), conclusive in
the field of state regulation of alcoholic beverages, on
the ground that the amendment makes it a field of
law emphatically occupied (since 1933) by the states.
  Indiana requires drivers employed by liquor retailers
to be trained in and tested on Indiana’s alcohol laws
and also trained in the recognition of phony IDs. See Ind.
Code §§ 7.1-3-1.5-1, -6, -13, 7.1-3-18-9. It is because the
6                                               No. 11-1362

state doesn’t require similar training of motor carriers’
drivers that those carriers aren’t permitted to deliver
alcoholic beverages to a consumer unless, prior to ship-
ping, the consumer’s age is personally verified by an
employee of the winery from which the consumer is
buying. Ind. Code § 7.1-3-26-9(1)(A); Baude v. Heath, supra,
538 F.3d at 612. Motor carriers are required to obtain
“carriers’ alcoholic permits” in order to be allowed
to transport alcohol on public highways in Indiana, but
their drivers are not required to obtain permits and
there is no training requirement either. See Ind. Code
§§ 7.1-3-18-1 et seq. Allowing motor carriers to deliver
wine could therefore undermine the state’s efforts to
prevent underage drinking, the state having decided
not unreasonably that requiring face-to-face age verifica-
tion by someone who has passed a state-certified
training course should reduce the prevalence of that
drinking.
  The fact that Indiana allows direct deliveries by
carriers to wine consumers, where the seller has
previously verified the consumer’s age in person, but
not other such deliveries, might seem to undermine the
state’s rationale, since there is no training requirement
for employees of wineries. But the statute imposes other
requirements on the wineries designed to assure
accurate age verification, see Ind. Code § 7.1-3-26-9, and
it would hardly be feasible for Indiana (and would
indeed be severely discriminatory) to require that em-
ployees of out-of-state wineries at undergo training in
Indiana before being permitted to ship to an Indiana
consumer.
No. 11-1362                                            7

  We might have a different case if a motor carrier
were asking the state to allow it to opt into the same
training requirement imposed on drivers employed by
retailers of wine. That would both weaken the attempt
to justify the challenged law on the basis of the Twenty-
First Amendment (which so far as relates to this case
merely allows a state to take reasonable measures for
preventing underage drinking), and discriminate with-
out apparent justification against motor carriers. But as
far as appears, no motor carrier has sought such equal
treatment with the retailers or been denied it and sued.
No motor carrier is a party to this case.
  So Cap N’ Cork’s federal-preemption argument fails,
but the company has another string to its bow: it argues
that the Indiana law unduly burdens interstate com-
merce, and so violates the commerce clause of Article I
of the Constitution. Not, however, because Indiana may
be increasing the cost of wine produced elsewhere;
that consequence is inherent in the central power con-
ferred on the states by the Twenty-First Amendment—
the power to limit or even forbid the consumption of wine
within its borders—and overrides the competing
interests held to be latent in the commerce clause
because otherwise the amendment would be a dead
letter. But the amendment does not authorize states to
discriminate in favor of local producers—in an extreme
case, to forbid the sale in the state of wine produced
elsewhere while placing no comparable limits on the
sale of wine by wineries located in the state. As the Su-
preme Court explained in Granholm v. Heald, supra, 544
U.S. at 484-85, “the aim of the Twenty-first Amendment
8                                               No. 11-1362

was to allow States to maintain an effective and
uniform system for controlling liquor by regulating its
transportation, importation, and use. The Amendment
did not give States the authority to pass nonuniform laws
in order to discriminate against out-of-state goods, a
privilege they had not enjoyed at any earlier time.” See
also Healy v. Beer Institute, Inc., 491 U.S. 324 (1989).
  The Indiana law does not discriminate expressly
against out-of-state producers. Both local and out-of-state
wineries can deliver to consumers, and by motor carriers
if they want, provided the consumer’s age has been
verified at the winery in person. And both local and out-of-
state wineries are bound by the rule that delivery of
wine sold by a retailer must be made by the retailer’s
own employees. But does the absence of express dis-
crimination end the constitutional inquiry?
  It is typical in cases in which alcoholic beverage reg-
ulations are challenged under the commerce clause
to evaluate the challenge before asking whether the
Twenty-First Amendment blocks the challenge. For if the
challenge would fail even if there were no such amend-
ment, there is nothing to be gained by trying to deter-
mine whether, if it would succeed under that assump-
tion, in the actual case the amendment would blunt it.
We follow that approach in the balance of this opinion.
  The Supreme Court has said that “ ‘when a state statute
directly regulates or discriminates against interstate
commerce, or when its effect is to favor in-state economic
interests over out-of-state interests, we have generally
struck down the statute without further inquiry.’ ”
No. 11-1362                                               9

Granholm v. Heald, supra, 544 U.S. at 487, quoting Brown-
Forman Distillers Corp. v. New York State Liquor Authority,
476 U.S. 573, 579 (1986). But while “without further in-
quiry” may be fine in a case in which the statute is ex-
pressly discriminatory, it doesn’t follow that if the effect
is implicit, indirect, incidental, or unintended, no
further consideration is necessary, even apart from the
difficulty of distinguishing between explicit and implicit,
direct and indirect.
  In Brown-Forman we read that “when . . . a statute has
only indirect effects on interstate commerce and regulates
evenhandedly, we have examined whether the State’s
interest is legitimate and whether the burden on inter-
state commerce clearly exceeds the local benefits. Pike v.
Bruce Church, Inc., 397 U.S. 137, 142 (1970).” 476 U.S. at
579; see also Wiesmueller v. Kosobucki, 571 F.3d 699, 703
(7th Cir. 2009). And Brown-Forman was a case involving
state regulation of alcoholic beverages, as was Bacchus
Imports, Ltd. v. Dias, 468 U.S. 263, 270 (1984), which holds
that “examination of the State’s purpose in this case is
sufficient to demonstrate the State’s lack of entitlement to
a more flexible approach permitting inquiry into the
balance between local benefits and the burden on inter-
state commerce. See Pike v. Bruce Church, Inc.” Thus, as
in Granholm (which cited Bacchus approvingly), the
Court in Bacchus didn’t balance because it didn’t need to,
but neither did it indicate that it would refuse to do so
if the effect on commerce were indirect. Nor has any
appellate court so held. Our Baude decision analyzed
Indiana’s alcohol laws under Pike’s balancing test, and
invalidated one of them, Baude v. Heath, supra, 538 F.3d
10                                                 No. 11-1362

at 612, and other courts have analyzed similar laws simi-
larly. Of all cases that cite both Pike and Granholm or Pike
and the Twenty-First Amendment, we find none that
rejects that approach. Besides Baude, see Wine & Spirits
Retailers, Inc. v. Rhode Island, 481 F.3d 1, 15 (1st Cir. 2007);
see also Freeman v. Corzine, 629 F.3d 146, 164 (3d Cir.
2010); Black Star Farms LLC v. Oliver, 600 F.3d 1225, 1230-31
(9th Cir. 2010); Cherry Hill Vineyards, LLC v. Lilly, 553
F.3d 423, 432 (6th Cir. 2008).
  The Pike standard is intended for cases in which a
statute “regulates even-handedly . . . and its effects on
interstate commerce are only incidental.” Pike v. Bruce
Church, Inc., supra, 397 U.S. at 142. One might as an orig-
inal matter suppose that the Twenty-First Amendment
insulated merely incidental effects on interstate com-
merce in alcoholic beverages from constitutional chal-
lenges based on the commerce clause. But again we
needn’t get ahead of the Supreme Court in the matter.
So incidental are the effects of interstate commerce in
this case—in fact, so negligible—that even if the Twenty-
First Amendment were inapplicable, Cap N’ Cork would
lose its commerce clause challenge.
  It is true that the farther away from the consumer a
winery is, the harder it is to induce consumers to come
for face-to-face age verification at the winery, and most
U.S. wineries are on the West Coast, more than 2000
miles from Indiana. But we ruled in Baude that this is not
unlawful discrimination, given the state’s interest
(which incidentally would exist even if there were no
Twenty-First Amendment, though it would be more
No. 11-1362                                                11

vulnerable to constitutional challenge) in preventing the
sale of alcoholic beverages to minors. See also Wine
Country Gift Baskets.com v. Steen, 612 F.3d 809, 819-20
(5th Cir. 2010); Black Star Farms LLC v. Oliver, supra,
600 F.3d at 1234-35; Cherry Hill Vineyard, LLC v. Baldacci,
505 F.3d 28, 36-39 (1st Cir. 2007); but cf. Cherry Hill Vine-
yards, LLC v. Lilly, supra, 553 F.3d at 432-33. (We note later
that the Lilly case is distinguishable.)
  This case might seem different because of the position
in which out-of-state wineries are placed that ship only
small quantities of wine into Indiana. The state has de-
creed, as it is authorized to do by the Twenty-First Amend-
ment, see Granholm v. Heald, supra, 544 U.S. at 489; Baude
v. Heath, supra, 538 F.3d at 612; Wine Country Gift
Baskets.com v. Steen, supra, 612 F.3d at 818-19, that any
winery that wants to sell its wine through a retailer
rather than directly to the consumer must sell the wine
to a wholesaler, for resale to the retailer, for resale to
the consumer. Indiana wholesalers won’t buy small
quantities of wine because they can’t obtain enough
revenue from reselling small quantities to cover their
costs. But fulfillment services pool orders for such
wines and consign the ordered wines in bulk to whole-
salers. The wholesalers can’t deliver the wine to con-
sumers, because doing so would circumvent Indiana’s
three-tier distribution system (winery-wholesaler-retailer),
so the retailer with whom the consumer placed the
order picks up the wine at the wholesaler’s warehouse
and delivers it by its own employees to the consumer,
who pays the retailer (or the fulfillment service), who
pays the wholesaler, who pays the winery. The regulatory
12                                              No. 11-1362

scheme is the same for all wineries that sell in or
into Indiana, regardless of where they’re located.
  Apparently Cap N’ Cork is one of only two retail liquor
companies in Indiana (and together the two own only a
few dozen of the state’s thousand or so liquor stores)
that pick up from wholesalers wine provided to the
wholesalers by fulfillment services and deliver the wine
to the retailer’s customers. All of Cap N’ Cork’s 15
stores are in the Fort Wayne area, and all the stores of the
other company, which appears to be Payless Liquors, see
www.payless-liquors.com (visited Nov. 28, 2011), are in
the Indianapolis area. (Given Payless, it’s odd that the
two individual plaintiffs live in Indianapolis, rather than
in a part of Indiana in which there is no wine fulfill-
ment service.) A consumer who lives outside the Fort
Wayne area and has not been age-verified by a winery
and must therefore buy from a retailer cannot buy
through Cap N’ Cork, because it will not deliver to a
consumer outside that area. No consumers who haven’t
been age-verified by wineries are permitted to buy wine
produced by wineries that either do not produce in
Indiana or do not ship into the state quantities large
enough to induce wholesalers to stock their wine, unless
the consumers live in or very near either Fort Wayne or
Indianapolis—the only areas served by fulfillment services.
  Local wineries, being more proximate to Indiana con-
sumers than most out-of-state wineries, have a natural
advantage over the latter by virtue of the face-to-face
identification condition of being allowed to ship directly
to consumers. But that as we said is a lawful advantage.
No. 11-1362                                                 13

And the fulfillment services enable Indiana wholesalers
to stock wine sold by even the smallest wineries. The fact
that retailers in certain parts of the state do not offer
delivery of wine supplied to wholesalers by fulfillment
services suggests a lack of demand, other than in Fort
Wayne or Indianapolis, for such wine, rather than any-
thing to do with the challenged state law.
   The case comes down to a complaint that state law is
preventing Cap N’ Cork from enlarging its sales area
to encompass parts of Indiana remote from Fort Wayne.
If true that is an effect on intrastate commerce, not inter-
state commerce. No effect on interstate commerce has
been shown, in contrast to the factual showing of effect
on interstate commerce that persuaded the Sixth Circuit
in Cherry Hill Vineyards, LLC v. Lilly, supra, 553 F.3d at 432-
33, to invalidate a law similar to the one upheld
in Baude. The absence of even an incidental effect on
interstate commerce excuses us from having to wrestle
with the continued applicability of the Pike standard to
state laws that while they discriminate incidentally
against interstate commerce are at the same time within
the Twenty-First Amendment’s gravitational field.
                                                   A FFIRMED.
14                                              No. 11-1362

   H AMILTON, Circuit Judge, concurring in the judgment.
I agree with my colleagues that the district court’s grant
of summary judgment for the defendant should be af-
firmed, but with respect, I reach that conclusion by a
different route. In rejecting plaintiffs’ preemption and
dormant Commerce Clause theories, my colleagues
apply a quasi-legislative form of interest-balancing. In
my view of the applicable law, the Twenty-first Amend-
ment to the Constitution should foreclose those bal-
ancing tests when the state is exercising its core Twenty-
first Amendment power to regulate the transportation
and importation of alcoholic beverages for consumption
in the state. The challenged state law here, forbidding
some but not all direct deliveries of alcohol by common
carriers to consumers, falls within that core power. The
law should be upheld even if, as I believe, its actual
benefits are minimal and its burdens on federal
interests are significant.
  In recent years, the Supreme Court has held that the
Twenty-first Amendment did not protect many state
alcoholic beverage laws challenged on a host of federal
law grounds. See Arnold’s Wines, Inc. v. Boyle, 571 F.3d 185,
192-201 (2d Cir. 2009) (Calabresi, J., concurring) (re-
viewing Twenty-first Amendment cases and describing
Supreme Court’s recent “vector” toward prohibiting
any state alcoholic beverage laws from discriminating
against interstate commerce); Bridenbaugh v. Freeman-
Wilson, 227 F.3d 848, 851-53 (7th Cir. 2000) (reviewing
constitutional history of alcoholic beverage law). By
applying the balancing tests to this Indiana law, how-
ever, my colleagues go farther than the Supreme Court
No. 11-1362                                             15

has gone. My colleagues in the end also uphold the chal-
lenged law, but I believe the use of these balancing tests
will tend to erode the states’ powers protected by the
Twenty-first Amendment.


I. Preemption and the Twenty-first Amendment
   Turning first to plaintiffs’ preemption argument
under the Federal Aviation Administration Authoriza-
tion Act of 1994, 49 U.S.C. §§ 14501(c)(1), 41713(b)(4)(A),
the Twenty-first Amendment provides the only viable
distinction between this case and the Maine statute
barring direct delivery of tobacco that was struck down
as preempted by the FAAAA in Rowe v. New Hampshire
Motor Transport Ass’n, 552 U.S. 364 (2008). The Twenty-
first Amendment distinction should be decisive.
  When the United States decided to end Prohibition in
1933, it did so through the compromise set forth in the
Twenty-first Amendment. Section 1 repealed the Eigh-
teenth Amendment. Section 2 was the other half of the
compromise, providing unique constitutional protection
for state laws regulating alcoholic beverages: “The trans-
portation or importation into any State, Territory, or
possession of the United States for delivery or use
therein of intoxicating liquors, in violation of the laws
thereof, is hereby prohibited.”
  In our federal system, which is otherwise dominated
by the Supremacy Clause in Article VI of the Constitu-
tion, the language in section 2 of the Twenty-first Amend-
ment has the unique effect of elevating the covered state
16                                                    No. 11-1362

laws and regulations to the status of federal constitu-
tional law. Congress could not, for example, pass a law
requiring states to allow direct delivery of interstate
wine shipments to consumers, even though Congress
would be free to impose such a requirement for virtually
any other article of commerce. See, e.g., Granholm v.
Heald, 544 U.S. 460, 488-89 (2005) (noting that states
may ban import of alcohol altogether, or “funnel sales
through the three-tier system”). Where section 2 applies,
ordinary preemption doctrines under the Supremacy
Clause simply do not apply.1



1
   Nobody suggests that section 2 is truly absolute. One need
only hypothesize a state alcoholic beverage law discriminating
on the basis of race, sex, or religion to recognize that there are
limits. See Craig v. Boren, 429 U.S. 190, 209 (1976) (Equal Protec-
tion Clause of Fourteenth Amendment bars different drinking-
age limits based on sex). Similarly, the Supreme Court has held
that the Twenty-first Amendment does not authorize a state
to disregard the First Amendment, 44 Liquormart, Inc. v. Rhode
Island, 517 U.S. 484, 516 (1996) (striking down a ban on price
advertising for alcoholic beverages), the Due Process Clause,
Wisconsin v. Constantineau, 400 U.S. 433, 436 (1971) (requiring
notice and opportunity to be heard before police publicly
prohibit named individuals from buying alcohol), the Import-
Export Clause, Department of Revenue v. James Beam Co., 377 U.S.
341, 346 (1964) (striking down a tax on liquor imported into
state from foreign country), or federal antitrust laws exer-
cising the full commerce power of the federal government,
California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc.,
445 U.S. 97, 114 (1980) (striking down a resale price maintenance
                                                      (continued...)
No. 11-1362                                                     17

  When federal courts deal with a state law exercising
the state’s core Twenty-first Amendment power over
transportation, importation, and sale of alcoholic bever-
ages, including the terms of delivery, federal law
requires great deference to the state law, even if the state
uses that authority in ways that seem protective or be-
nighted as a matter of sound public policy. See North
Dakota v. United States, 495 U.S. 423, 439-40 (1990) (plurality
opinion) (“But when the Court is asked to set aside a
regulation at the core of the State’s powers under
the Twenty-first Amendment . . . it must proceed with
particular care.”). In North Dakota, the state enacted
labeling and reporting requirements to protect its dis-
tribution system from diversion of imported alcohol
intended for consumption on federal military bases.
The regulations raised costs and even caused several
producers to halt shipments to the military bases rather


1
  (...continued)
program). These cases do not show that the Twenty-first
Amendment can be trumped by just any federal statute. They
show, in essence, that a state cannot stretch its core Twenty-first
Amendment powers over transportation and importation of
alcoholic beverages to nullify federal law’s effects over other
aspects of the alcoholic beverage business. See Capital Cities
Cable, Inc. v. Crisp, 467 U.S. 691, 713 (1984) (“we have held
that when a State has not attempted directly to regulate the
sale or use of liquor within its borders—the core § 2 power—
a conflicting exercise of federal authority may prevail”). These
cases that fence in to some extent the states’ powers under
the Twenty-first Amendment should not be understood as
erasing section 2 of the amendment altogether.
18                                              No. 11-1362

than comply. Id. at 429. Finding the regulations to
be within the state’s core power and directed to the
legitimate interest of preventing diversion for unlawful
use in the state, and absent a clear statement about pre-
emption from Congress, the plurality allowed the in-
cidental burdens on federal interests — with no inquiry
into their precise scope other than a conclusion that there
was no evidence of a substantial burden. Id. at 440, 443-44.
  My colleagues and I agree that the Indiana law prevent-
ing retailers from using common carriers for direct
delivery of wine to consumers is an exercise of the state’s
core Twenty-first Amendment power. We differ in our
attempts to discern from the Supreme Court’s few hints
how this sort of preemption challenge to a state’s exercise
of its core Twenty-first Amendment power should be
handled.
   One hint appears in Capital Cities Cable, Inc. v. Crisp,
467 U.S. 691 (1984), where the Supreme Court held that
a state’s prohibition on national cable television adver-
tisements for alcoholic beverages was preempted by
federal law on telecommunications. In any context not
subject to the Twenty-first Amendment, there would
have been no doubt that the state law was preempted.
Because of the Twenty-first Amendment, however, the
Court proceeded more cautiously. Yet the Court took
pains to explain that the state law in question was not
an exercise of the state’s core Twenty-first Amendment
power: “we have held that when a State has not attempted
directly to regulate the sale or use of liquor within
its borders — the core § 2 power — a conflicting exercise
No. 11-1362                                               19

of federal authority may prevail.” Id. at 713 (emphasis
added). Where the state advertising ban was outside the
core power, the Supreme Court applied a balancing test
comparable to the one my colleagues apply. Id. at 714-
15. In my view, however, Capital Cities Cable does not
offer helpful guidance for dealing with a preemption
challenge to a state law that is an exercise of core Twenty-
first Amendment power.
   More helpful is North Dakota v. United States, discussed
above, which held that a state’s exercise of its core Twenty-
first Amendment power was not preempted by federal
law or intergovernmental immunity. The plurality ex-
plained: “But when the Court is asked to set aside a
regulation at the core of the State’s powers under the
Twenty-first Amendment, as when it is asked to
recognize an implied exemption from state taxation, see
Rockford Life Ins. Co. v. Illinois Dep’t of Revenue, 482 U.S.
182, 191 (1987), it must proceed with particular care.
Capital Cities Cable, 467 U.S. at 714. Congress has not
here spoken with sufficient clarity to pre-empt
North Dakota’s attempt to protect its liquor distribution
system.” 495 U.S. at 439-40. The North Dakota plurality
also wrote: “Given the special protection afforded to
state liquor control policies by the Twenty-first Amend-
ment, they are supported by a strong presumption of
validity and should not be set aside lightly.” Id. at 433,
citing Capital Cities Cable, 467 U.S. at 714. I agree with
my colleagues that a “strong presumption” is not a con-
clusive presumption, but the Supreme Court itself has
never held a state’s exercise of its core Twenty-first
Amendment power to be preempted by federal law, nor
20                                             No. 11-1362

has it ever subjected such a law to the sort of balancing
applied by my colleagues.
  North Dakota did not present the more difficult preemp-
tion questions that might arise, for example, if Congress
acted expressly to preempt state alcoholic beverage
laws for powerful federal reasons, despite the strong
directive of the Twenty-first Amendment elevating
those state laws to the status of federal constitutional
commands. In such cases, the difference between a
strong presumption and a conclusive presumption
might be important. We also do not have such a case
here. The “strong presumption” and “clear statement”
rule from North Dakota are enough to decide this case
without any balancing of interests. The FAAAA did not
provide any clear statement of intent to preempt
alcoholic beverage laws, and the “strong presumption”
should save the Indiana law from preemption without
further inquiry into its effectiveness in preventing under-
age drinking.
  In support of their balancing of interests on the preemp-
tion issue, my colleagues cite U.S. Airways, Inc. v.
O’Donnell, 627 F.3d 1318, 1330 (10th Cir. 2010), in which
the Tenth Circuit ordered a district court to undertake
a balancing of state and federal interests to decide
whether New Mexico could enforce its alcoholic
beverage laws, including training requirements for crew
members, against an airline carrying passengers to
No. 11-1362                                               21

and from the state.2 The Tenth Circuit held first that
federal law occupied the field of aviation safety ex-
clusively and then that policies and practices for
serving alcohol to passengers are part of that field. The
court then turned to the Twenty-first Amendment and
held that the district court needed to balance New
Mexico’s core Twenty-first Amendment powers and the
federal interests underlying the Federal Aviation Act. To
support the application of balancing, the Tenth Circuit
cited Capital Cities Cable, which addressed and supports
balancing only for state alcoholic beverages outside the
state’s core powers. See 627 F.3d at 1329, citing Capital
Cities Cable, 467 U.S. at 712-14. The Tenth Circuit’s opinion
read too much into Capital Cities Cable and did not apply
the “strong presumption” and “clear statement” rule from
North Dakota. U.S. Airways therefore provides a pretty thin
basis for extending “balancing” to override the constitu-
tional protection that the Twenty-first Amendment gave to
a state’s core powers to control transportation and importa-
tion of alcoholic beverages for consumption in the state.
  Section 2 of the amendment does not include a proviso
that it applies only “as long as the state laws are rea-
sonable and do not unduly intrude on substantial
federal interests.” That sort of balancing of benefits and
burdens can be an imposition in and of itself on the
broad regulatory power granted to states within the



2
  The case arose after an over-served airline passenger
killed himself and five other people as he drove home from
the airport.
22                                                  No. 11-1362

relatively narrow core of the Twenty-first Amend-
ment. Indiana’s prohibition on some direct deliveries of
wine — whether it makes good sense or not, whether
it helps prevent underage drinking or not, or whether it
is merely a convenient compromise for a highly reg-
ulated and politicized industry — is not preempted by
the FAAAA because it is an exercise of Indiana’s core
power under the Twenty-first Amendment. I would
affirm the district court’s judgment on that basis, with-
out trying to balance the state’s interests against the
FAAAA’s deregulatory policies for the trucking business.


II. The Dormant Commerce Clause and the Twenty-first
    Amendment
  A. Pike Balancing and the Twenty-first Amendment
   “This case pits the twenty-first amendment, which
appears in the Constitution, against the ‘dormant com-
merce clause,’ which does not.” Bridenbaugh, 227 F.3d at
849. A good starting place on the Commerce Clause
issue is the text of section 2 of the Twenty-first Amend-
ment: “The transportation or importation into any State,
Territory, or possession of the United States for delivery
or use therein of intoxicating liquors, in violation of the
laws thereof, is hereby prohibited.” That language can
be read, and was initially read by the Supreme Court, to
immunize from dormant Commerce Clause challenge
even state alcohol laws that facially discriminated
against interstate commerce. See, e.g., State Bd. of Equaliza-
tion of California v. Young’s Market Co., 299 U.S. 59, 62-63
(1936); accord, Ziffrin, Inc. v. Reeves, 308 U.S. 132, 138 (1939)
No. 11-1362                                                23

(“The Twenty-first Amendment sanctions the right of a
state to legislate concerning intoxicating liquors brought
from without, unfettered by the Commerce Clause.”).
   More recently, however, the Supreme Court has held
that the Twenty-first Amendment does not authorize
express discrimination between intrastate commerce
and interstate commerce. Granholm, 544 U.S. at 485-86
(abrogating Young’s Market and other cases). The
Supreme Court has also held that a state may not use
its Twenty-first Amendment powers to regulate com-
mercial transactions with no direct connection to the
state, such as through so-called “price affirmation” stat-
utes. See, e.g., Healy v. Beer Institute, Inc., 491 U.S. 324
(1989); Brown-Forman Distillers Corp. v. New York State
Liquor Auth., 476 U.S. 573 (1986).
  Discriminatory and extraterritorial laws are familiar
categories under the dormant Commerce Clause, and such
laws rarely survive scrutiny. I agree with my colleagues
that the challenged Indiana law does not fit into either
category. As my colleagues point out, there is also
another body of dormant Commerce Clause law. Under
the shorthand “Pike balancing,” it applies to state laws
that regulate evenhandedly between intrastate and in-
terstate commerce to effectuate legitimate local
interests, but which also impose incidental burdens on
interstate commerce. In such cases, the Supreme Court
has adopted a balancing test. The state law will be
upheld “unless the burden imposed on such [interstate]
commerce is clearly excessive in relation to the putative
local benefits.” Pike v. Bruce Church, Inc., 397 U.S. 137, 142
24                                              No. 11-1362

(1970) (striking down law requiring all cantaloupes in
Arizona to be transported in closed containers, which
would have required business that used California pro-
cessing facility to build new facility in Arizona). The
Supreme Court, however, has not used Pike balancing
to strike down any state alcoholic beverage laws. As
I read the Court’s decisions, it also has not signaled that
the lower courts should apply Pike balancing to
alcoholic beverage laws. We should not extend its use
by applying it here.
  My colleagues point out that the Supreme Court has
mentioned Pike balancing in a couple of alcoholic beverage
cases, but a closer look shows that the Court has not
endorsed Pike balancing for these cases subject to the
Twenty-first Amendment. In Brown-Forman Distillers, the
Court cited Pike in its summary of general Commerce
Clause standards, but it never returned to apply Pike.
476 U.S. at 579. Instead, it struck down the New York
price affirmation statute based on its extraterritorial
effects. Id. at 583-84. And in Bacchus Imports, Ltd. v. Dias,
468 U.S. 263 (1984), the Court cited Pike only in saying
that because the Hawaii statute there discriminated
against interstate commerce, the state was not entitled
to the more flexible approach of Pike balancing. 468 U.S.
at 270. That passing comment does not amount to even
a considered dictum teaching that ordinary Pike
balancing should apply when a state is exercising its
powers under the Twenty-first Amendment.
  Without any Supreme Court use or endorsement of
Pike balancing when the Twenty-first Amendment
applies, my colleagues cite several cases in which we
No. 11-1362                                              25

and other circuits seem to have endorsed Pike balancing
in Commerce Clause challenges to alcohol laws. With
a closer look, however, we find only the most indirect
and meager support, without coming to grips with the
states’ Twenty-first Amendment powers, and without
recognizing how interest-balancing intrudes upon those
powers. What we do not find is a case applying
Pike balancing and holding that a non-discriminatory
state alcohol law flunks.
  In Baude v. Heath, 538 F.3d 608 (7th Cir. 2008), our
court accepted the premises of plaintiffs’ legal argu-
ment and held that they had not come forward with
evidence sufficient to show that the face-to-face require-
ment for direct wine shipments imposed an excessive
burden under Pike. The state itself had urged our court to
apply Pike. The Baude panel was not asked and did not
consider whether Pike balancing was ever appropriate
for alcohol laws in light of the Twenty-First Amend-
ment, which is not mentioned in the opinion.
  The Baude panel also invalidated a separate provision
that forbade direct shipments by wineries that also had
wholesale licenses from other states. Id. at 611-12. The
state had not even defended that wholesaler bar, and it
was supported by only speculation about benefits. The
Baude panel concluded that the wholesaler bar was
facially neutral but discriminatory in effect because
93 percent of the nation’s wine production was from
states that allowed producers to sell directly to retailers:
“The statute is neutral in terms, but in effect it forbids
interstate shipments direct to Indiana’s consumers,
while allowing intrastate shipments.” Id. at 612.
26                                              No. 11-1362

Although that portion of the opinion also cited Pike,
the invalidation of the wholesaler bar is better under-
stood as simply an application of Granholm to a state
statute that had discriminatory effects, not an applica-
tion of Pike to a statute with only incidental burdens on
interstate commerce. Given the way the case was
argued, the Baude panel’s approach is certainly under-
standable, and I believe its results were correct. The
Baude opinion does not, however, provide a persuasive
basis for applying Pike balancing to non-discriminatory
state alcohol laws.
  In Wine & Spirits Retailers, Inc. v. Rhode Island, 481 F.3d
1 (1st Cir. 2007), the First Circuit considered challenges
to a host of state alcohol laws. The court briefly men-
tioned the Twenty-first Amendment, Granholm, Healy,
and Pike when it introduced the Commerce Clause stan-
dards. 481 F.3d at 10-11. The discussion of Pike held
that plaintiffs failed to show excessive burdens without
paying any attention to the Twenty-first Amendment.
Id. at 15. Without some explanation, that silence does not
persuade me that Pike balancing is appropriate when
the amendment applies. If that method of analysis
were applied more broadly to state alcohol laws, there
would be little left of states’ powers under section 2
of the amendment.
  Freeman v. Corzine, 629 F.3d 146, 164 (3d Cir. 2010), dealt
with a number of state alcohol laws. The reference to
Pike was only that plaintiffs had not pursued such a
theory. That is not an endorsement of Pike balancing
when the Twenty-first Amendment applies. And in
Black Star Farms LLC v. Oliver, 600 F.3d 1225, 1231 (9th Cir.
No. 11-1362                                              27

2010), the only reference to Pike balancing was that
the plaintiffs conceded that the challenged laws would
survive the test. That is also not an endorsement of
Pike balancing.
   In Cherry Hill Vineyards, LLC v. Lilly, 553 F.3d 423 (6th
Cir. 2008), the Sixth Circuit struck down an in-person
purchase requirement for wineries shipping directly to
customers. (Unlike the Indiana direct-shipment law we
upheld in Baude, which allows a buyer to make many
purchases after one in-person visit, the Kentucky
law required an in-person visit for each purchase.)
The plaintiffs pursued a theory of discriminatory effect,
and the court agreed. That’s also not Pike balancing,
and the court did not try to reconcile Pike with the Twenty-
first Amendment.
  This track record does not amount to any convincing
consensus that Pike balancing is appropriate when the
Twenty-first Amendment applies to a law. In light of the
extraordinary protection of state alcoholic beverage
laws provided by the Twenty-first Amendment and the
absence of any use of Pike balancing by the Supreme
Court in such cases, we should not subject state de-
fendants to the intrusive and uncertain scrutiny
imposed under the Pike test.


  B. If Pike Balancing Applies
  If a court is going to uphold a challenged law in the
end, as my colleagues do, one might ask why the method-
ology makes a difference. I offer two reasons.
28                                              No. 11-1362

  First, litigating a Pike test is quite intrusive. Even in
the best of circumstances, Pike balancing puts courts
in an uncomfortable and almost legislative role. As
Justice Scalia wrote in his concurring opinion in CTS
Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987), the
Pike “inquiry is ill suited to the judicial function and
should be undertaken rarely if at all.” 481 U.S. at 95. “The
judiciary lacks the time and the knowledge to be able
to strike a fine balance between the burden that a
particular state regulation lays on interstate commerce
and the benefit of that regulation to the state’s legitimate
interests.” Wiesmueller v. Kosobucki, 571 F.3d 699, 704
(7th Cir. 2009). Asking the Pike question — whether a
burden on state commerce is clearly excessive in relation
to local benefits? — can be a lot like asking whether a
blue race-car is clearly faster than it is blue. In extreme
cases, such cross-categorical comparisons can be useful,
but Pike balancing invites a wide-open inquiry into com-
peting policy considerations and debates over the
efficacy of competing solutions to perceived problems.
  The Pike test thus requires a state agency to mobilize
personnel, resources, and evidence to justify its policies,
and often to do so where good evidence may be hard
to come by. Speculation is not enough to show real
benefits to weigh against the burdens on Commerce
Clause plaintiffs. Raymond Motor Transp., Inc. v. Rice, 434
U.S. 429, 447-48 (1978) (finding a dormant Commerce
Clause violation where the state offered only speculation
and “failed to make even a colorable showing that its
regulations contribute to highway safety”); Baude, 538 F.3d
at 612 (Pike balancing requires evidence of both benefits
No. 11-1362                                                29

and burdens). Getting beyond speculation can be a chal-
lenge. It’s one we accept in all other contexts, but section 2
of the Twenty-first Amendment empowers states to act
much more freely regarding alcoholic beverages. We
should not lightly impose on them the burden of
justifying their policies to federal courts.
   Second, and more important, whether Pike balancing
applies here will be decisive in other cases, and I believe
it should actually be decisive in this case. On this point
I respectfully disagree with my colleagues. Absent the
effects of the Twenty-first Amendment, plaintiffs should
have prevailed under Pike. At the very least, given the
lopsided presentation of evidence — a good deal
by plaintiffs and nothing but speculation from the
state — summary judgment for the defense would not
be justified under Pike.
  Plaintiffs submitted affidavits substantiating the
burden imposed on their wine fulfillment business and
on wine consumption by the ban on common carrier
deliveries of wine club shipments. According to its
owners, Cap N’ Cork stands to lose up to $45,000 in
profits each year from its wine-club fulfillment
business, which it apparently operated throughout
Indiana via common carrier in violation of the chal-
lenged law before the state took steps to enforce it. That
profit corresponds to approximately 13,000 cases of
wine worth some $1,500,000 to consumers. Much of
this wine was delivered outside of Fort Wayne and origi-
nated from some of the thousands of wineries that
do not have direct shipment permits or access to a
30                                               No. 11-1362

licensed wholesaler. My colleagues argue that these are
merely effects on plaintiffs’ preferred method of doing
business, not effects on interstate commerce, the latter
being of course the only effects that matter under the
dormant Commerce Clause.
  The same might have been said of the facially-neutral
packaging requirement in Pike itself, and that law
was struck down. Economies of scale are important in
analyzing the burdens of the challenged law. From the
evidence submitted, we can infer that delivery of wine
on a retail scale by common carriers is much more cost-
effective than having a retailer use its own employees
and vehicles to make deliveries. Wine retailers are in
the business of selling wine, after all, not operating a cost-
effective home delivery service. The fact that other
retailers in Indiana are not trying to provide local
delivery for wine-club fulfillment services tends to
confirm the extent of the burden rather than undermine
plaintiffs’ theory. My colleagues’ view also overlooks
the status of Cap N’ Cork as a participant in a stream
of commerce that, but for enforcement of Ind. Code § 7.1-3-
15-3(d), allows many small, out-of-state wineries and
wine clubs to reach wine drinkers like plaintiffs, who
enjoy a much wider variety of wines beyond those
carried by the state’s wholesalers.3



3
  Many of the most celebrated wine-makers in California sell
primarily to restaurants and their private customer lists, do
not operate facilities where in-person age verifications could
occur, and rely exclusively on the fulfillment process to
reach potential customers in Indiana.
No. 11-1362                                              31

  Looking beyond just these plaintiffs, we see that the
wine business in Indiana consists overwhelmingly of out-
of-state wine. Indiana’s wine production is relatively
small, with just over 1.7 million gallons of wine bottled in
2010. See Alcohol and Tobacco Tax and Trade Bureau,
U.S. Dept. of the Treasury, Statistical Report — Wine
(2010), available at http://www.ttb.gov/statistics/2010/
2010wine.pdf (last visited Jan. 9, 2012). Indiana residents
consumed over 9.7 million gallons of wine in 2010. See
Beer Institute, Brewers Almanac 2011, available at
http://www.beerinstitute.org/statistics.asp?bid=200 (last
visited Jan. 9, 2012). Even if Indiana exported no wine
at all, over 80 percent of the wine consumed in
Indiana must come from outside the state. Yet only 86
of the nearly 6000 out-of-state wineries in the United
States have obtained direct shipment permits. See Snow
Interrogs. No. 5. Licensed wholesalers in Indiana carry
products from just several hundred wineries, among
the many thousands available in the wider market.
  Plaintiffs buttress their interstate burden argument
with citations to the FTC Report mentioned so often in
recent wine cases. See Federal Trade Commission, Possible
Anticompetitive Barriers to E-Commerce: Wine (2003) at 5-7,
16-19, 22-26, available at http://www.ftc.gov/os/2003/
07/winereport2.pdf (last visited Jan. 9, 2012). That report
suggests that bans on direct shipment dramatically
reduce consumer choice, in large part because many
wineries have difficulty obtaining distribution through
traditional wholesalers and retailers. See, e.g., id. at 24.
The facially neutral burdens of obtaining retail distribu-
tion in Indiana fall more heavily on wineries from Cali-
32                                             No. 11-1362

fornia, Oregon, and Washington than on wineries
from Indiana. That does not make the Indiana law dis-
criminatory, but it describes the incidental effects on
interstate commerce that invite Pike balancing in other
contexts.
  Plaintiffs again cite the FTC Report, as well as a report
from the National Academies of Science, to suggest
that direct shipment via age-verifying common carriers
adequately inhibits youth access to wine. See id. at 26-27;
Granholm, 544 U.S. at 490 (considering the FTC findings).
There is simply no evidence in the record even sug-
gesting that wine club shipments of high-end wines are
a method used by minors seeking to evade age limits.
  As I see the case, Indiana’s problem here is that it has
chosen to allow some direct deliveries by common carriers
to consumers, but not others. The selective approach
undermines the state’s rationale for the challenged law. If
a consumer has ever visited in person a winery with the
proper direct-shipping license for Indiana, so that the
winery could confirm the consumer is at least 21 years old,
the winery may use a common carrier to make direct
deliveries to that consumer. Ind. Code § 7.1-3-26-9(1)(A).
The state is satisfied with any adult signature upon
delivery; it need not be from the consumer whose age
was verified by the winery. But in many other circum-
stances, such as the wine clubs that plaintiffs seek to
join, common carriers may not be used. Ind. Code § 7.1-3-
15-3(d). As a result of this inconsistency, it is hard to
give much weight to Indiana’s arguments about the
salutary purposes served by the challenged law.
No. 11-1362                                              33

   My colleagues suggest that section 7.1-3-15-3(d) reason-
ably blocks wine club deliveries by common carrier
because of the lack of face-to-face age verification either
by an Indiana retail store employee or in an out-of-state
winery. Indiana requires age-verification training for
employees of Indiana retailers who may sell wine face-to-
face or deliver wine directly to customers. Ind. Code § 7.1-
3-1.5-6. Indiana does not (and could not) require such
training for the out-of-state winery employees, and
does not require it for delivery drivers who are already
involved in direct shipments to customers. See Ind. Code
§§ 7.1-3-26-9, 7.1-3-18-1 et seq. But defendant’s own evi-
dence showed that 35 percent of (trained) Indiana
licensees sold alcohol to underage customers in under-
cover police tests in 2009. Poindexter Aff. ¶ 15. One
might reasonably conclude from that data, and from the
absence of any evidence of underage deliveries through
high-end wine clubs, that the prohibited common
carrier deliveries pose little threat to the state’s
legitimate interests. For permitted direct shipments by
common carrier, the in-person visit to the winery could
have been years ago, adding little or nothing to the state’s
confidence level, and the delivery driver needs only an
adult signature from someone, not necessarily from
the named buyer. If those arrangements are acceptable
to the state, it’s hard to see why wine club deliveries
by common carrier should not be.
  In an attempt to show that the burdens on interstate
commerce do not clearly outweigh the state’s interest in
preventing underage drinking, the state relies on
34                                               No. 11-1362

conclusory affidavits from two of its excise agents
asserting that age verification in face-to-face transactions
is “one effective barrier to youth access” to alcohol. See
Poindexter Aff. ¶ 6. That’s about it for the defense on
the merits.
  Such speculation should not be enough to meet the
state’s burden. Given Indiana’s selective ban on common
carrier deliveries, under genuine Pike balancing, Indiana
should need some evidence supporting the notion that
retailer employees are at least marginally better than
common carrier employees at obtaining genuine adult
signatures. In other words, the state should need some
evidence giving some reason to expect that Cap N’ Cork
employees are better at face-to-face age verification
than UPS drivers. As plaintiffs point out, there is simply
no such evidence in the record. Indiana allows UPS
delivery drivers to deliver wine for holders of direct
shipment permits, and it requires a face-to-face verifica-
tion to be performed by those drivers. See Ind. Code §§ 7.1-
5-10-23, 7.1-3-26-9(2)(B) & (D), and 7.1-3-26-13. Re-
sponding to interrogatories, the state admitted that it
had experienced “no difficulties in regulation” and “no
complaints” regarding common carriers and direct ship-
ment. Snow Interrogs. No. 9. As far as the stated rationale
for the challenged law goes, the law is a solution in
search of a problem.4




4
  With regard to the favored deliveries by retailer employees,
though, the state has had some difficulty with retailers’
“failure to maintain adequate records.” Id. at No. 11.
No. 11-1362                                             35

  When a regulation burdens interstate commerce only
indirectly and incidentally, we do not require states to
legislate in the most efficient possible manner. If we are
applying genuine Pike balancing, though, there must be
at least some sign of incremental benefit from the state
regulation. See Pike, 397 U.S. at 142 (“And the extent of
the burden that will be tolerated will of course depend
on the nature of the local interest involved, and on
whether it could be promoted as well with a lesser
impact on interstate activities.”); see also Raymond
Motor Transp., 434 U.S. at 447-48 (state failed to produce
evidence that the permitted 55-foot truck trailers were
any safer than the prohibited 65-foot trailers). Again,
speculation about benefits is not enough to satisfy Pike.
Id.; Baude, 538 F.3d at 612. Here the state provided
evidence related to the conceded importance of its
interest but has left an evidentiary vacuum with regard
to the efficacy of section 7.1-3-15-3(d) in service of that
interest. In my view, the Twenty-first Amendment is
the only rescue for the challenged law, and that’s why
the district court was correct to enter judgment for
the defendant.
                        *    *   *
  The organization of the alcoholic beverage industry is
a product of a legal structure from the earlier age
that first adopted Prohibition and then repealed it with
the Twenty-first Amendment. What has evolved is a
collection of Balkanized state markets and legal systems
that regulate an industry with enormous influence over
the lawmakers who regulate it. The system can easily
36                                            No. 11-1362

devolve into ossified protection of incumbent businesses,
as with the protection of the three-tier distribution
system — a model that may seem to have less and less
value as the internet and e-commerce flatten the global
marketplace. Yet the extraordinary constitutional status
given to state alcoholic beverage laws in the Twenty-first
Amendment was the compromise that allowed the
repeal of Prohibition. Rather than asking courts to
erode that compromise, those seeking a more progressive
organization of the industry should turn to state-by-
state political action on behalf of consumers who are
hurt by these laws designed primarily to protect incum-
bents in the industry.




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