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Alexis Bailly Vineyard, Inc. v. Harrington

United States Court of Appeals, Eighth Circuit

July 29, 2019

Alexis Bailly Vineyard, Inc., a Minnesota corporation; The Next Chapter Winery, LLC, a Minnesota limited liability company Plaintiffs - Appellants
v.
John Harrington, in his official capacity as Commissioner of the Minnesota Department of Public Safety Defendant-Appellee Adam Ruhland Amicus on Behalf of Appellant(s)

          Submitted: March 14, 2019

          Appeal from United States District Court for the District of Minnesota - Minneapolis

          Before SHEPHERD, ERICKSON, and KOBES, Circuit Judges.

          KOBES, CIRCUIT JUDGE.

         Alexis Bailly Vineyard, Inc. and The Next Chapter Winery, LLC (collectively, Farm Wineries) appeal from an order granting summary judgment to the Commissioner of the Minnesota Department of Public Safety (Commissioner). The district court held that the Farm Wineries lack standing to challenge a Minnesota statute that requires them to manufacture their wine with a majority of the ingredients grown or produced in Minnesota. On appeal, the Farm Wineries claim that the district court erred by granting summary judgment to the Commissioner and ask us to consider the merits of the dispute. We reverse the district court's order granting summary judgment and remand for further proceedings.

         I.

         Minnesota uses a three-tiered alcohol distribution system that separates the functions of manufacturer, wholesaler, and retailer. Retailers cannot manufacture alcohol and manufacturers cannot sell their product directly to retailers or the general public. See Minn. Stat. §§ 340A.301, 340A.401. Alternatively, Minnesota offers a "farm winery" license that allows manufacturers of wine or cider to sell their products directly to retailers and consumers. Minn. Stat. § 340A.315, subd. 2. The Minnesota Farm Wineries Act is part of an effort by Minnesota to "encourage and support the fledgling farm winery industry . . . [and to] nurture grape growing and winemaking." Research Department, Minn. House of Representatives, Farm Wineries, at 1 (June 2012), https://www.house.leg.state.mn.us/hrd/pubs/farmwine.pdf. To qualify as a farm winery, license holders must pay an annual license fee of $50, produce less than 75, 000 gallons of wine annually, and be located on agricultural land. Minn. Stat. § 340A.315, subds. 1, 2, 9. The Act also mandates that a farm winery produce wine "with a majority of the ingredients grown or produced in Minnesota." Id. § 340A.101, subd. 11.

         Minnesota recognizes that growing grapes in northern climates is difficult and it may not be possible in some years for farm wineries to source more than half of their ingredients from Minnesota suppliers. So, the Act provides for an "affidavit exception" to the in-state requirement. Farm wineries may file an affidavit stating that "Minnesota-produced or -grown grapes, grape juice, other fruit bases or honey is not available in quantities sufficient to constitute a majority of the . . . wine produced by a farm winery." Minn. Stat. § 340A.315, subd. 4. If the Commissioner agrees, "the farm winery may use imported products" for one year, "after which time the farm winery must use the required amount of Minnesota products . . . unless the farm winery [] files a new affidavit." Id.

         The Commissioner has never denied an affidavit request, but he does investigate them and the process is more than a rubber stamp. The Commissioner requires farm wineries to explain why they require an exemption from the in-state requirement and occasionally conducts site visits to ensure compliance. Farm wineries have historically filed affidavit requests when in-state growing conditions made it difficult or impossible for them to purchase enough ingredients from Minnesota growers.

         The Farm Wineries hold farm winery licenses and want to expand their operations. Specifically, the Farm Wineries want to create new varieties, work with higher quality ingredients and more reliable suppliers, and increase the quantity of wine they produce. They argue that the in-state requirement prevents them from doing so.

         In this pre-enforcement action, the Farm Wineries seek a declaration that the Act's in-state requirement violates the dormant Commerce Clause. Following discovery, the parties filed cross-motions for summary judgment. The district court granted the Commissioner's motion, holding that the Farm Wineries did not have standing to challenge the Act. Despite finding that the inability to grow their businesses constituted an injury in fact, the court determined that the Farm Wineries caused their own injuries when they chose to seek a farm winery license instead of a wine manufacturer license. The court therefore held that the Farm Wineries' injuries were not fairly traceable to the statute and that they lacked standing. The Farm Wineries timely appealed.

         II.

         We review the district court's standing analysis de novo. Disability Support All. v. Heartwood Enters., LLC, 885 F.3d 543, 545 (8th Cir. 2018). To establish standing, a plaintiff must show: "(1) a concrete and particularized injury, that (2) is fairly traceable to the challenged conduct, and (3) is likely to be redressed by a favorable decision." Va. House of Delegates v. Bethune Hill, 139 S.Ct. 1945, 1950 (2019). When a plaintiff is the object of government action, "there is ordinarily little question that the action or inaction has caused him injury, and that a judgment preventing or requiring the action will redress it." Lujan v. Defs. of Wildlife, 504 U.S. 555, 561-62 (1992). Because the Farm Wineries are the ...


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