In the
United States Court of Appeals
For the Seventh Circuit

Nos. 00-1044 & 00-1046

Russell Bridenbaugh, et al.,

Plaintiffs-Appellees,

v.

Karen Freeman-Wilson, Attorney General
of Indiana, et al.,

Defendants-Appellants.



Appeals from the United States District Court
for the Northern District of Indiana, South Bend Division.
No. 3:98cv0464AS--Allen Sharp, Judge.


Argued June 8, 2000--Decided September 13, 2000



  Before Easterbrook and Williams, Circuit Judges.

  Easterbrook, Circuit Judge. This case pits the
twenty-first amendment, which appears in the
Constitution, against the "dormant commerce
clause," which does not. Section 2 of the twenty-
first amendment provides: "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." This
directly authorizes state control over imports,
while the premise of dormant commerce clause
jurisprudence is an inference that the grant of
power to Congress in Art. I sec.8 cl. 3 implies
a limitation on state authority over the same
subject. We must decide how the combination of
express grant and implied withdrawal of state
power applies to I.C. sec.7.1-5-11-1.5(a), which
makes unlawful all direct shipments from out of
state to Indiana consumers by any "person in the
business of selling alcoholic beverages in
another state or country". Several Indiana
enophiles brought suit, arguing that because the
statute restricts only those sellers engaged in
selling "in another state or country", it runs
afoul of the dormant commerce clause. The
district court held sec.7.1-5-11-1.5
unconstitutional, 78 F. Supp. 2d 828 (N.D. Ind.
1999), and the state officials responsible for
enforcing that statute (sued on the theory of Ex
parte Young, 209 U.S. 123 (1908)), joined by
intervening defendant Wine & Spirit Wholesalers
of Indiana, now appeal.

  Before taking up the merits, we must first
decide whether the plaintiffs have standing.
Indiana (as we call the state defendants) points
out that the only law plaintiffs challenge
regulates sellers, not consumers. Section 7.1-5-
11-1.5 provides:

(a) It is unlawful for a person in the business
of selling alcoholic beverages in another state
or country to ship or cause to be shipped an
alcoholic beverage directly to an Indiana
resident who does not hold a valid wholesaler
permit under this title. This includes the
ordering and selling of alcoholic beverages over
a computer network (as defined by IC 35-43-2-3
(a)).

(b) Upon a determination by the commission that
a person has violated subsection (a), a
wholesaler may not accept a shipment of alcoholic
beverages from the person for a period of up to
one (1) year as determined by the commission.

Plaintiffs are not "in the business of selling
alcoholic beverages" and therefore could not
violate sec.7.1-5-11-1.5(a) if they tried.
Indiana contends that the only proper plaintiffs
are out-of-state sellers, none of which has sued.
Consumers might be able to invoke the interests
of third parties if the targets of the statute
would have difficulty vindicating their own
rights, see Craig v. Boren, 429 U.S. 190, 192-94
(1976), but enterprises in the liquor business
could challenge Indiana law without impediment.
Moreover, Indiana observes, other laws do target
the consumer side of transactions with
unauthorized sellers, and plaintiffs have chosen
not to challenge those. See I.C. sec.sec. 7.1-5-
10-5, 7.1-5-10-7. As Indiana sees things,
sec.7.1-5-11-1.5 causes these plaintiffs no
redressable harm, because, even if it is invalid,
other laws that are not subject to any plausible
constitutional challenge still would prevent
plaintiffs from receiving the beverages they
crave from out-of-state sellers.

  Let us start with injury in fact. Before
Indiana enacted sec.7.1-5-11-1.5 many vintners
shipped wine direct to the plaintiffs from
California and other states, and they stopped as
soon as sec.7.1-5-11-1.5 took effect. Some of the
wines plaintiffs want to drink are not carried by
Indiana resellers. That establishes injury in
fact. Anyone who has held a bottle of Grange
Hermitage in one hand and a broken corkscrew in
the other knows this to be a palpable injury.
Moreover, Indiana dealers collect state excise
taxes on wines that pass through their hands,
while the shippers with which plaintiffs used to
deal do not; this difference in price is another
source of injury. Plaintiffs need not be the
immediate target of a statute to challenge it.
See Allen v. Wright, 468 U.S. 737, 758 (1984);
Lujan v. Defenders of Wildlife, 504 U.S. 555, 562
(1992). Plaintiffs’ claim, moreover, is direct
rather than derivative: every interstate sale has
two parties, and entitlement to transact in
alcoholic beverages across state lines is as much
a constitutional right of consumers as it is of
shippers--if it is a constitutional right at all.

  Redressability is trickier. Plaintiffs wish to
purchase wine directly from out-of-state sellers.
These vendors do not have Indiana permits, yet
Indiana makes holding a permit a condition to the
sale of liquor to its residents. I.C. sec.sec.
7.1-3-21-3, 7.1-3-21-5. (It is questionable
whether out-of-state businesses are eligible for
permits, but what matters now is that the sellers
neither hold nor want permits, and plaintiffs
have conceded that they would lack standing to
challenge sec.sec. 7.1-3-21-3 and 7.1-3-21-5.)
Purchasing alcoholic beverages from a vendor that
the consumer knows to be unlicensed by Indiana is
not only a civil infraction, I.C. sec.7.1-5-10-7,
but also a criminal misdemeanor, I.C. sec.sec.
7.1-5-10-5, 7.1-5-1-8. So the purchases these
plaintiffs wish to make are unlawful, under
statutes that they do not challenge. How, then,
could a declaration that sec.7.1-5-11-1.5 is
invalid solve their problem?

  At oral argument, plaintiffs’ counsel insisted
that the unchallenged sections are ambiguous, and
that his clients could continue to order wine
from out-of-state sellers without violating state
law. That is untenable; the statutes we have
cited are plain, and plaintiffs have filed
affidavits demonstrating not only purchases from
unlicensed sellers but also knowledge that the
sellers lack Indiana permits. Their objective in
this suit is to get rid of sec.7.1-5-11-1.5 so
they can get back to violating sec.sec. 7.1-5-10-
5 and 7.1-5-10-7. Laws forbidding purchases from
sellers that lack Indiana permits are devilishly
difficult to enforce, however, for the same
reason states have insuperable problems
collecting their use taxes when people buy from
out-of-state vendors that do not collect sales
taxes. Noncompliance is almost impossible to
detect, and rampant civil disobedience ensures
that a handful of prosecutions would not be
effective. Private gains from violating the laws
vastly exceed the anticipated legal penalties.
Sellers and shippers of alcohol are fewer in
number, facilitating enforcement. What is
puzzling is that Indiana appears unwilling to
enforce its purchaser-side laws even against
consumers who proclaim and revel in their
violations, as our plaintiffs do. When a state
has two statutes, one effective and one
ineffective, the existence of the second cannot
preclude a challenge to the first, for an
injunction against the first would redress the
injury. See Larson v. Valente, 456 U.S. 228, 239-
40 (1982). Imagine that sec.A punished importing
California wine with a $50 fine, while sec.B
punished the same deed with imprisonment.
Potential customers would have standing to
challenge sec.B even though sec.A remained on the
books, because sec.A would have much less effect
on their conduct. This would be clear if the $50
were called a tax; it is equally so if the $50 is
called a fine. Likewise, Indiana’s unwillingness
to enforce laws penalizing consumers who buy from
unlicensed sellers means that plaintiffs have
standing to challenge sec.7.1-5-11-1.5(a),
because it is the latter section alone that
effectively blocks their purchases, which will
resume if sec.7.1-5-11-1.5(a) is held invalid.
Plaintiffs therefore have standing. Whether it
would be sound to issue an injunction designed to
help scofflaws violate state statutes is
doubtful, but the proper use of equitable
discretion is unrelated to the requirements of
Article III. Indiana does not contend that a
judge should deny relief even if sec.7.1-5-11-
1.5(a) is unconstitutional, so we turn to the
merits.

  Title 7.1 of the Indiana Code establishes an
elaborate regulatory regime for the distribution
of alcohol. Like most states, Indiana has chosen
a three-tiered system of alcohol distribution,
with different classes of permits for
manufacturers, distributors, and retailers. This
facilitates what appellants call "orderly market
conditions"--a euphemism for reducing competition
and facilitating tax collection. Direct shipments
from other states undermine both of these
objectives. If the product were cheese rather
than wine, Indiana would not be able either to
close its borders to imports or to insist that
the shippers collect its taxes, despite the
effect on its treasury, e.g., Quill Corp. v.
North Dakota, 504 U.S. 298 (1992), though it
might be able to enforce its preferred system of
distribution in other ways. See, e.g., Exxon
Corp. v. Governor of Maryland, 437 U.S. 117
(1978). For more than a century the Supreme Court
has treated the grant of commerce power to
Congress as a prohibition against border-closing
laws and other efforts by states to discriminate
against interstate commerce. See, e.g., Cooley v.
Board of Port Wardens, 53 U.S. (12 How.) 299, 319
(1851); Welton v. Missouri, 91 U.S. 275, 280
(1875); General Motors Corp. v. Tracy, 519 U.S.
278, 287 (1997). Indiana permits local wineries,
but not wineries "in the business of selling . .
. in another state or country", to ship directly
to Indiana consumers. The district court
concluded that this violates the Constitution.
But sec.2 of the twenty-first amendment empowers
Indiana to control alcohol in ways that it cannot
control cheese. Does sec.2 shield sec.7.1-5-11-
1.5(a) from what would otherwise be its fate
under dormant commerce clause jurisprudence?

  The parties believe that we should address this
question by exploring the "core purposes" of
sec.2. Plaintiffs, fortified chiefly by district
court cases and a student note, Alcohol Direct
Shipment Laws, the Commerce Clause, and the
Twenty-First Amendment, 85 Va. L. Rev. 353
(1999), insist that the "core concern" of the
twenty-first amendment is temperance. After
Prohibition, a state that wanted to remain dry
could use sec.2 to do so. But sec.7.1-5-11-1.5(a)
is hard to justify as a temperance measure--
though tax collection does raise the price and
thus depress the consumption of any product--and
it was on this ground that the district court
held that sec.2 does not authorize Indiana’s law.
Defendants argue that, although temperance is a
"core concern," there are others, including
raising revenue and "ensuring orderly market
conditions." See, e.g., North Dakota v. United
States, 495 U.S. 423, 432 (1990) (plurality
opinion); Joseph E. Seagram & Sons, Inc. v.
Hostetter, 384 U.S. 35, 47-48 (1966), overruled
on other grounds by Healy v. The Beer Institute,
491 U.S. 324, 342-43 (1989). Section 7.1-5-11-
1.5(a) furthers these other objectives, so,
according to defendants, the section is
authorized by the twenty-first amendment. If
"core concerns" spelled the difference, we would
follow the Supreme Court rather than district
courts and student notes. But our guide is the
text and history of the Constitution, not the
"purposes" or "concerns" that may or may not have
animated its drafters. Objective indicators
supply the context for sec.2; suppositions about
mental processes are unilluminating.

  Before the eighteenth amendment and the Volstead
Act banned alcohol nationwide, the temperance
battle was fought state by state. The movement
won victories in many legislatures, and the Court
held that state laws banning the production and
consumption of alcohol were constitutional,
Mugler v. Kansas, 123 U.S. 623 (1887), but to
enforce these laws states had to deal with liquor
arriving from other states and nations--and their
ability to do so was regularly defeated by
decisions invoking the commerce clause. See
generally Owen M. Fiss, Troubled Beginnings of
the Modern State, 1888-1910, VIII Holmes Devise
History of the Supreme Court 266-92 (1993);
Alexander M. Bickel, The Judiciary and
Responsible Government, 1910-21, IX Holmes Devise
History of the Supreme Court 438-46 (1984). For
example, when Iowa attempted to restrict
importation of liquor to persons possessing a
permit, the Court held this law an impermissible
burden on interstate commerce. Bowman v. Chicago
& Northwestern Ry., 125 U.S. 465 (1888). When
Iowa reacted to Bowman by forbidding the sale of
alcohol altogether, no matter its source, it was
frustrated once again. Leisy v. Hardin, 135 U.S.
100 (1890), held that resale is incident to
importation, so that imported liquor remains an
article of interstate commerce--which states
could not regulate--as long as it stays in its
original package. See also Brown v. Maryland, 25
U.S. (12 Wheat) 419, 441-42 (1827). (The
original-package doctrine has been jettisoned,
see Michelin Tire Corp. v. Wages, 423 U.S. 276
(1976), but it remains vital to understanding the
twenty-first amendment.) The combination of Leisy
and Mugler meant that states could forbid
domestic production of alcoholic beverages but
could not stop imports; the Constitution
effectively favored out-of-state sellers.

  Leisy invited Congress to eliminate this
anomaly, see 135 U.S. at 108, and Congress took
up the invitation. The Wilson Act, 26 Stat. 313
(1890), empowered states to regulate imported
liquor "to the same extent and in the same manner
as though such liquids or liquors had been
produced in such State or Territory, and shall
not be exempt therefrom by reason of being
introduced therein in original packages or
otherwise." This Act eliminated the privileged
status of interstate sellers but did not
authorize discrimination against them. See Scott
v. Donald, 165 U.S. 58 (1897). It reversed the
result of Leisy and empowered states to regulate
the sale of all liquor, imported or domestic. But
one problem remained: shipments direct from out-
of-state sellers to consumers. In re Rahrer, 140
U.S. 545 (1891), held that Congress may authorize
state laws regulating liquor imports, but the
Court construed the Wilson Act in light of
dormant-commerce-clause jurisprudence to leave
Bowman untouched, so that although states could
regulate resale of imported liquor in its
original package, states were still powerless
against interstate shipments direct to consumers.
See Rhodes v. Iowa, 170 U.S. 412 (1898); Vance v.
W.A. Vandercook Co., 170 U.S. 438, 452 (1898).

  Could Congress empower states to create non-
uniform rules governing direct shipments, like
the statute challenged in this case? Rhodes and
Vance implied a negative answer--that Congress
could not "delegate" its commerce power to the
states, see Cooley, 53 U.S. at 318--leading the
national government to exercise national power by
piggybacking state prohibitions onto a federal
prohibition: "[T]he shipment or transportation
[into a state] . . . of any . . . liquor . . .
[which] is intended, by any person interested
therein, to be received, possessed, sold, or in
any manner used, either in the original package
or otherwise, in violation of any law of such
State . . . is hereby prohibited." By the time
this law, the Webb-Kenyon Act, 37 Stat. 699
(1913), was held constitutional by Clark
Distilling Co. v. Western Maryland Ry., 242 U.S.
311 (1917), the temperance movement had the upper
hand and the eighteenth amendment was soon
ratified.

  America changed course in 1933 and repealed the
eighteenth amendment by sec.1 of the twenty-
first. But the twenty-first amendment did not
return the Constitution to its pre-1919 form.
Section 2 tracks the Webb-Kenyon Act and
effectively incorporates its approach into the
Constitution. Like the Webb-Kenyon Act, sec.2
incorporates state prohibitions into a federal
rule; like the Webb-Kenyon Act, sec.2 closes the
loophole left by the dormant commerce clause,
abetted by Bowman and Rhodes: direct shipments
from out-of-state sellers to consumers that
bypass state regulatory (and tax) systems. No
longer may the dormant commerce clause be read to
protect interstate shipments of liquor from
regulation; sec.2 speaks directly to these
shipments. Indeed, all "importation" involves
shipments from another state or nation. Every use
of sec.2 could be called "discriminatory" in the
sense that plaintiffs use that term, because
every statute limiting importation leaves
intrastate commerce unaffected. If that were the
sort of discrimination that lies outside state
power, then sec.2 would be a dead letter.

  No decision of the Supreme Court holds or
implies that laws limited to the importation of
liquor are problematic under the dormant commerce
clause. What the Court has held, however, is that
the greater power to forbid imports does not
imply a lesser power to allow imports on
discriminatory terms. See Brown-Forman Distillers
Corp. v. New York State Liquor Authority, 476
U.S. 573, 579 (1986). Immediately after the
amendment’s ratification the Supreme Court
tolerated discriminatory regulation, see
California Board of Equalization v. Young’s
Market Co., 299 U.S. 59 (1936); Indianapolis
Brewing Co. v. Liquor Control Commission, 305
U.S. 391, 394 (1939), but more recently the Court
held a discriminatory tax invalid. See Bacchus
Imports, Ltd. v. Dias, 468 U.S. 263, 267 (1984)
("The central purpose of [sec.2] was not to
empower States to favor local liquor industries
by erecting barriers to competition."). Cases
such as Brown-Forman and Bacchus apply an
unconstitutional-conditions approach to use of
the sec.2 power. They treat sec.2 as eliminating
economic discrimination against in-state commerce
of the sort caused by Leisy, Bowman, and the
original package doctrine, without authorizing
discrimination against out-of-state sellers. Like
the Wilson Act and the Webb-Kenyon Act before
Prohibition, sec.2 enables a state to do to
importation of liquor--including direct
deliveries to consumers in original packages--
what it chooses to do to internal sales of
liquor, but nothing more.

  Indiana Code sec.7.1-5-11-1.5(a), like the
statute in Bowman, regulates importation. And the
shipments it regulates, direct shipments to
consumers, are precisely the sort that prompted
the Webb-Kenyon Act, the forefather of sec.2.
Section 2 thus authorizes I.C. sec.7.1-5-11-
1.5(a) unless the state has used its power to
impose a discriminatory condition on importation,
one that favors Indiana sources of alcoholic
beverages over sources in other states, as Hawaii
did in Bacchus. Plaintiffs contend that sec.7.1-
5-11-1.5(a) discriminates in this fashion, but we
do not see how. Indiana insists that every drop
of liquor pass through its three-tiered system
and be subjected to taxation. Wine originating in
California, France, Australia, or Indiana passes
through the same three tiers and is subjected to
the same taxes. Where’s the functional
discrimination? Plaintiffs observe that holders
of Indiana wine wholesaler or retailer permits
may deliver directly to consumers’ homes. See
sec.sec.7.1-3-13-3(a), 7.1-3-14-4(c). But these
permit holders may deliver California and Indiana
wines alike; firms that do not hold permits may
not deliver wine from either (or any) source; and
even an Indiana citizen that is "in the business
of selling alcoholic beverages in another state
or country" is forbidden by sec.7.1-5-11-1.5(a)
to deliver wine directly from out of state to a
consumer in Indiana, no matter the wine’s source.
(An Indiana citizen holding an Indiana permit may
not, for example, make direct deliveries of
Indiana’s, or any other state’s, wines from a
warehouse in Illinois. The wine must be
reimported through an Indiana wholesaler or
retailer.)

  This regime has its anomalies. An Indiana wine
retailer, holding an appropriate permit, that is
also "in the business of selling alcoholic
beverages" in Illinois, is permitted to ship
directly to Indiana consumers by sec.7.1-3-14-
4(c), and forbidden to do so by sec.7.1-5-11-1.5.
Indiana’s judiciary has yet to consider how, if
at all, these statutes may be reconciled. Nor
need we try to do so. Though this conflict may
bedevil wholesalers and retailers, plaintiffs are
consumers, and the statutory conflict does not
disable any wholesaler from importing liquor to
Indiana and reselling to consumers. Plaintiffs do
not complain about the statute that apparently
limits distribution permits to Indiana’s
citizens. These plaintiffs are concerned only
with direct shipments from out-of-state sellers
who lack and do not want Indiana permits.

  So far as these plaintiffs are concerned, the
main effect of Indiana’s system is to subject
their purchases to taxation, by requiring the
beverages to pass through the hands of permit
holders whose business is closely monitored to
ensure tax collection. Sellers that quit shipping
to plaintiffs after sec.7.1-5-11-1.5 took effect
have admitted in affidavits that they never paid
a dollar of Indiana excise taxes. This situation
resembles that created by Bowman, Leisy, Rhodes,
Vance, and the original package doctrine a
century ago, when states discriminated against
in-state sellers, because they could not
effectively govern direct shipments from
elsewhere. Congress adopted the Webb-Kenyon Act,
and later proposed sec.2 of the twenty-first
amendment, precisely to remedy this reverse
discrimination and make alcohol from every source
equally amenable to state regulation. Section
7.1-5-11-1.5 has one real economic effect on out-
of-state sellers who neither have nor seek
Indiana permits: it channels their sales through
Indiana permit-holders, enabling Indiana to
collect its excise tax equally from in-state and
out-of-state sellers. As the history of the
twenty-first amendment confirms, this is
precisely what sec.2 is for.

  The judgment is reversed, and the case is
remanded with instructions to enter judgment for
defendants.
