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Appeals Court Backs Retailers In Illinois Shipping Case

November 29, 2018

The ongoing national debate over interstate retailer shipping took another twist yesterday, as a federal appeals court reversed an earlier decision that had allowed Illinois to bar shipments from out-of-state retailers.

The U.S. Court of Appeals for the Seventh Circuit found that the earlier district court decision in favor of Illinois failed to adequately examine the state’s justifications for the law, which was challenged on Commerce Clause grounds by Indiana chain Cap n’ Cork (Lebamoff Enterprises). But while it overturned the ruling, potentially opening the door to shipments into Illinois from out-of-state, the appeals court noted that the looming Tennessee v. Byrd case before the Supreme Court could have significant implications for this and other similar cases looking ahead.

The Illinois case stems from the state’s refusal to allow out-of-state retailers to ship to its residents, while allowing the practice for retailers with a physical presence in the state. While Cap n’ Cork asserts that the law is discriminatory and unconstitutional under the Commerce Clause, Illinois says “its restrictions fall within its reserved powers under the Twenty-first Amendment and in any event are necessary to protect its legitimate interests in the health and wellbeing of Illinois residents,” in the words of the court.

The appeals court decision continued, “The district court accepted Illinois’s reasoning and dismissed the case with prejudice. We conclude that it was too quick to do so in the face of material contested issues about the necessity for and justifications behind the Illinois statute. We therefore reverse, but with the caveat that there are other aspects of the Illinois law—not before us at present—that will be difficult for plaintiffs to surmount if Tennessee Wine does not come out in their favor.”

In addition to the Illinois and Tennessee cases, similar battles are underway elsewhere, with shipping advocates recently winning a decision in their favor in Michigan.Daniel Marsteller

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