Southern Glazer's Wine and Spirits, LLC v. Harrington

                  UNITED STATES DISTRICT COURT                          
                     DISTRICT OF MINNESOTA                              

SOUTHERN GLAZER’S WINE AND SPIRITS,   Civil No. 21-1254 (JRT/ECW)        
LLC, AND SOUTHERN GLAZER’S WINE AND                                      
SPIRITS OF MINNESOTA, LLC,                                               

                       Plaintiffs,                                      

v.                                                                       

JOHN HARRINGTON, in his capacity as                                      
Commissioner of the Minnesota                                            
Department of Public Safety,     MEMORANDUM OPINION AND ORDER            
                                 GRANTING PLAINTIFFS’ MOTION FOR        
                      Defendant,   JUDGMENT ON THE PLEADINGS            

v.                                                                       

JOHNSON BROTHERS LIQUOR COMPANY,                                         
AND BELLBOY CORPORATION,                                                 

             Intervenor Defendants.                                     



   Peter J. Schwingler and William Thomson, STINSON LEONARD STREET LLP, 
   50 South Sixth Street, Suite 2600, Minneapolis, MN 55402, for plaintiffs; 

   Jason  Marisam,  MINNESOTA  ATTORNEY  GENERAL’S  OFFICE,  445        
   Minnesota Street, Suite 1100, St. Paul, MN 55101, for defendant;     

   Forrest Tahdooahnippah, Nicholas J. Bullard, Steven J. Wells, and Vanessa J. 
   Szalapski, DORSEY & WHITNEY LLP, 50 South Sixth Street, Suite 1500,  
   Minneapolis, MN 55402; James T. Smith, HUFFMAN, USEM, CRAWFORD &     
   GREENBERG, PA, 5101 Olson Memorial Hwy., Suite 1000, Golden Valley,  
   MN 55422, for intervenor defendants.                                 

   Daniel N. Rosen, ROSEN LLC, 60 South Sixth Street, Suite 3615, Minneapolis, 
   MN 55402, for amicus curiae Kick’s Liquor Store, Inc., Zipp’s Liquor Store, 
    Inc., John Wolf Enterprises, Inc., JPG Corporation, and Keith and Linda’s 
    Place, Inc.                                                          

    Plaintiffs Southern Glazer’s Wine and Spirits, LLC and Southern Glazer’s Wine and 
Spirits of Minnesota, LLC (together, “Southern”) brought this action against Defendant 
John Harrington in his capacity as Commissioner of the Minnesota Department of Public 
Safety (“the State”) alleging that Minn. Stat. § 340A.307—otherwise known as the 

Coleman  Act—unconstitutionally  violated  the  dormant  Commerce  Clause.    After  a 
thorough review by the Minnesota Attorney General’s Office, the State agreed that the 
Coleman Act was unconstitutional.  Southern and the State filed a Joint Motion for Entry 
of Stipulated Judgment and Permanent Injunction prohibiting the State from enforcing 

the Coleman Act against Southern.  Intervenor Defendants Johnson Brothers Liquor 
Company and Bellboy Corporation (together, “Intervenors”) intervened in this action 
with the intention of defending the Coleman Act’s constitutionality.1     
    The case is before the Court on both Southern’s Motion for Judgment on the 

Pleadings and Southern and the State’s Joint Motion for Entry of Judgment.  Because the 
Coleman Act violates the dormant Commerce Clause, the Court will grant Southern’s 
Motion for Judgment on the Pleadings.  The Court will use its inherent authority to stay 

this Order for 60 days because legislation pending before the Minnesota Legislature may 
moot the current controversy.                                             

    1 Sunny Hill Distributors, Inc. was also an Intervenor Defendant but has since withdrawn 
from this action.  (Order on Stip. Withdrawal, Mar. 24, 2022, Docket No. 164.)  
                           BACKGROUND                                     
I.  THE PARTIES                                                            

     Southern is the nation’s largest liquor wholesaler and entered the Minnesota 
market in 2010.  (Compl. ¶¶ 5–6, May 19, 2021, Docket No. 1.)  Although Southern is not 
directly subjected to any alleged unconstitutional discrimination, Southern has multiple 
contracts with out-of-state producers that are regulated by the Coleman Act.  (Id. ¶ 25.)  

Southern’s contracts with out-of-state producers contain language giving it exclusive 
distribution  rights  in  Minnesota  but,  pursuant  to  the  Coleman  Act’s  allegedly 
discriminatory  language,  Southern  is  unable  to  enforce  these  rights  as  out-of-state 

producers are banned from establishing exclusive distributorships and must offer their 
products equally to all wholesalers.  Minn. Stat. § 340A.307, subd. 1; (Decl. Surelda Heard 
(“Heard Decl.”), Exs. A–D, Oct. 12, 2021, Docket No. 88.).                
     The State agrees with Southern that the Coleman Act is unconstitutional after 

reviewing this Court’s decision in Alexis Bailly Vineyard, Inc. v. Harrington, 

 (D. Minn. 2020).  In Alexis Bailly, portions of Minnesota’s Farm Winery Act were found 
unconstitutional under the dormant Commerce Clause for treating out-of-state products 
differently than their instate counterpart.  482 F.Supp.3d at 828.  Rather than defend 

what it determined was an unconstitutional law, the State sought to resolve Southern’s 
challenge and avoid the inefficient use of resources prolonged litigation would require.  
(Reply Supp. Joint Mot. at 2, Dec. 15, 2021, Docket No. 128.)             
      Intervenors are Minnesota-based wholesalers seeking to defend the Coleman Act 
 against Southern’s constitutional challenge due to the allegedly devastating financial 

 effects their businesses would suffer.  (Decl of David Gewolb2 Supp. Mot. Intervene ¶¶ 
 2, 5, June 4, 2021, Docket No. 22; Decl.of Mark Hubler Supp. Mot. Intervene ¶¶ 7–9, 
 June 4, 2021, Docket No. 24.)                                             

II.  THE COLEMAN ACT                                                        
      Minnesota, like most states, employs a “three-tier system” to regulate alcohol 
 classified  by  the  separation  of  manufacturers,  wholesalers,  and  retailers  through 
 licensing requirements.  (Intervenor Defs.’ Mem. Opp. Mot. J. Pleadings at 4, Nov. 17, 

 2021, Docket No. 113.)  In a three-tier system, a manufacturer cannot sell directly to 
 retailers and instead  sells to  wholesalers  while wholesalers cannot sell directly to 
 consumers and subsequently sell to retailers.  See Tenn. Wine & Spirits Retailers Ass’n v. 
 Thomas, 

 (2019).  The three-tiered system has routinely been 

 upheld and is “unquestionably legitimate.”  Granholm v. Herald, 

 
 (2005).                                                                   
      In its current form, the Coleman Act prohibits exclusive distribution agreements 
 for alcohol produced outside of Minnesota and instead requires that the products be 

 offered on an equal basis to all wholesalers—a practice known as open wholesaling.  


      2 Although it appears that the correct spelling is “Geowolb” based upon the declaration’s 
 signature page, the Court has referenced the declaration as it was titled when filed for clarity of 
 the record.                                                               
Minn. Stat. § 340A.307, subd. 1.  Open wholesaling has not always been a requirement 
in Minnesota as exclusive distributorships were previously permitted.  Fed. Distillers Inc. 

v. State, 

, 152–53 (Minn. 1975).  However, the Minnesota Legislature 
became concerned about exclusive distribution under which a “retailer . . . in order to 
sell a particular brand of liquor, was compelled to deal with a particular wholesaler and 
to  pay  that  wholesaler’s  price”  and  passed  legislation  prohibiting  exclusive 

distributorships in 1969.  

 at 153 n. 10 (quoting 

).  The 1969 
legislative effort initially proved to be ineffective because “distillers and wholesalers 
found it to their advantage to continue the practice of sole distributorships by the 

distillers, declaring that they had no agreement but simply cho[osing] in their discretion 
to limit sales to a wholesaler of demonstrated loyalty, efficiency, and selling ability.”  Id. 
at 152.  Therefore, the Minnesota Legislature attempted to remedy its previous failure 
and passed the Coleman Act in 1973.                                       

    Under the Coleman Act, only out of-state liquor producers must offer their 
products on equal terms to all wholesalers.    Minn. Stat. § 340A.307, subd. 1 (“All 
licensed importers must offer for sale on an equal basis to all licensed wholesalers and 
manufacturers all intoxicating liquor brought into the state of Minnesota.”)  After the 

Minnesota Supreme Court held in Fed. Distillers that the term “licensed importer” 
applied to a company that imported bulk liquor, rectified and bottled it in the state, the 
Minnesota  Legislature amended  the  Coleman  Act  to explicitly exempt products that 
 further are “distilled, refined, rectified, or blended” liquor within the state.  Minn. Stat. 
 § 340A.307, subd. 4.  As it stands, the Coleman Act currently imposes open wholesaling 

 on out-of-state producers and products while exempting Minnesota producers and 
 products and allowing the latter to establish exclusive distributorships. 
III.  PROCEDURAL BACKGROUND                                                 
      On May 19, 2021, Southern filed the Complaint in this case seeking both a 

 declaration that the Coleman Act is unconstitutional and an injunction against future 
 enforcement.  (Compl. ¶¶ 27–36.)  After this Court’s ruling in Alexis Bailly Vineyard, 
 Southern contacted the State and inquired about the Coleman Act’s constitutionality.  

 (Pls.’ Mem. Supp. Mot. J. Pleadings at 3, October 12, 2021, Docket No. 86.)  The State 
 agreed that the Coleman Act violated the dormant Commerce Clause.  (Id.)  Accordingly, 
 Southern  filed  this  Complaint  and  the  parties  filed  a  Joint  Motion  for  Stipulated 
 Judgment, asking the Court to enter the requested declaratory judgment and injunction.  

 (Id. at 3–4; Joint Mot. Stip. J, May 21, 2021, Docket No. 10.)            
      Intervenors moved to intervene as defendants due to their interest in defending 
 the Coleman Act.  (Intervenor Mem. Supp. Mot. Intervene at 3–4, June 4, 2021, Docket 
 No. 20.)  After successfully intervening, Intervenors requested the Court stay the case 

 until the end of the 2022 legislative session to permit the Minnesota Legislature to 
 consider proposed amendments to the Coleman Act.  (Mot. Stay at 1, Aug. 13, 2021, 
Docket No. 45.)  On September 10, the Magistrate Judge denied Intervenors’ Motion.  
(Order Denying Mot. Stay, Sept. 29, 2021, Docket No. 68.)3                

    Intervenors also requested that the Court allow them to amend their pleadings 
to  assert  crossclaims  seeking  declaratory  judgments  that  (1)  the  Coleman  Act  is 
constitutional and (2) can be preserved through severance.  (Mot. Am., Ex. B, Nov. 1, 
2021, Docket No. 102.)  The Magistrate Judge denied Intervenors’ Motion because “the 

Intervenor Defendants all but admit their crossclaims are redundant of the factual and 
legal issues already in the case.”  (Order Denying Mot. Am. at 5, Dec. 7, 2021, Docket 
No. 121.)4                                                                

    While Southern and the State’s Joint Motion was pending, Southern filed a 
Motion for Judgment on the Pleadings and all of the relevant parties agreed to a briefing 
schedule permitting a single hearing on the Joint Motion and Southern’s Motion for 
relief under Rule 12(c).  (Stip. Briefing Schedule, Sept. 29, 2021, Docket No. 66; Pls.’ Mot. 

J. Pleadings, Oct. 12, 2021, Docket No. 84.)                              




    3Intervenors objected to the Magistrate Judge’s Order.  (Intervenor Defs.’ Objs. Order 
Mot. Stay, Oct. 13, 2021, Docket No. 92.)  However, because of this Order, the Intervenors’ 
objections are moot.                                                      
    4Intervenors also objected to the Magistrate Judge’s Order denying their Motion to 
Amend.  (Intervenor Defs.’ Objs. Order Mot. Am., Jan. 03, 2022, Docket No. 132.)  Even if the 
Court were to reach a different conclusion than the Magistrate Judge, this Order moots their 
proposed crossclaims and objections.                                      
                             DISCUSSION                                    
I.  STANDARD OF REVIEW                                                     

      Rule  12(c)  of  the  Federal  Rules  of  Civil  Procedure  provides  that  “[a]fter  the 
 pleadings are closed . . . a party may move for judgment on the pleadings.”  Fed. R. Civ. P. 
 12(c).  The Court analyzes a motion for judgment on the pleadings under the same 
 standard as a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).  See Ashley 

 Count, Ark. v. Pfizer, Inc., 

 (8th Cir. 2009).  The Court “accept[s] as true 
 all facts pleaded by the non-moving party and grant[s] all reasonable inferences from the 
 pleadings in favor of the non-moving party.”  Syverson v. FirePond, Inc., 

, 749 

 (8th Cir. 2004).  “Judgment on the pleadings is appropriate only when there is no dispute 
 as to any material facts and the moving party is entitled to judgment as a matter of law.”  
 Wishnatsky v. Rovner, 

 (8th Cir. 2006).                  
      “When considering a motion for judgment on the pleadings . . . , the court generally 

 must ignore materials outside the pleadings, but it may consider some materials that are 
 part of the public record or do not contradict the complaint, as well as materials that are 
 necessarily embraced by the pleadings.”  Porous Media Corp. v. Pall Corp., 

 (8th Cir. 1999) (cleaned up).                                        

II.  STANDING                                                               
      Intervenors contend that Southern lacks standing to bring this action because its 
 injury is not redressable and the third-party standing doctrine bars Southern’s claims.  The 
Court must therefore first determine whether Southern has standing to request the relief 
it seeks.                                                                 

    A. Redressability                                                    
    Assuming the Coleman Act is found unconstitutional, Intervenors argue that the 
Coleman Act is severable, and the invalid discriminatory provisions would be severed such 
that Southern would still be prohibited from exercising its exclusive distribution rights.  

    Article III of the Constitution limits the jurisdiction of federal courts to deciding 
cases and controversies.  Lujan v. Defs. of Wildlife, 

 (1992).  Standing is 
essential to the case-or-controversy requirement.  

.  To establish standing, a 

plaintiff must show (1) that it suffered a concrete and particularized injury-in-fact that is 
actual or imminent; (2) a causal connection between the injury and the defendant's 
conduct; and (3) that it is likely the plaintiff's injury will be redressed by the remedy.  

 
at 560–61.  “To determine whether an injury is redressable, a court will consider the 

relationship between ‘the judicial relief requested’ and the ‘injury suffered.’”  California 
v. Texas, 

, 2115 (2021) (citation omitted).                
    In the Eighth Circuit, the general rule requires assuming that a plaintiff would be 
successful in their claims.  Graham v. Catamaran Health Sols. LLC, 

, 407–08 

(8th Cir. 2017).  “Therefore, if a claim presents a question of statutory interpretation under 
which one interpretation leads to possible relief and the other does not, standing exists.”  

  However, redressability must be established by more than a “merely speculative” 
showing that the court can grant relief to redress the plaintiff's injury.  Advantage Media 
v. Eden Prairie, 

, 801 (8th Cir. 2006).                       

    As  discussed  infra,  the  Court  finds  that  the  Coleman  Act  is  not  severable.  
Accordingly, Southern’s injury is redressable because a favorable decision finding that the 
Coleman  Act  is  unconstitutional  would  eliminate  the  prohibition  on  exclusive 
distributorships.                                                         

    B.  Third-Party Standing                                             
    Intervenors also contend that Southern lacks standing because it is not directly 
regulated by the Coleman Act and Southern cannot challenge the law by asserting the 

rights of third parties.                                                  
    “[O]nly in exceptional cases may a party have standing to assert the rights of 
another.”  Ben Oehrleins & Sons & Daughter, Inc. v. Hennepin Cty., 

, 1378–
79 (8th Cir. 1997).  Plaintiffs alleging a violation of a constitutional or statutory right must 

show that their interests are arguably within the zone of interests to be protected or 
regulated by the statute or constitutional guarantee in question.  Id.  “In Commerce 
Clause jurisprudence, cognizable injury is not restricted to those members of the affected 
class against whom states or their political subdivisions ultimately discriminate.”  S.D. 

Farm Bureau, Inc. v. Hazeltine, 

, 591–92 (8th Cir. 2003).     
    Though Intervenors are correct that the Coleman Act regulates out-of-state liquor 
producers and that Southern is not directly regulated, the Court finds that Southern has 
 standing because its interest in exercising its exclusive distribution contracts with out-of-
 state producers is firmly within the zone of interests under the dormant Commerce 

 Clause.  Hazeltine, 

 (finding that loss of business as a result of a challenged 
 statute satisfied the injury-in-fact requirement); Ben Oehrleins, 115 F.3d at 1379 (finding 
 sufficient injury-in-fact where county ordinance prohibited plaintiffs from gaining access 
 to a market).                                                             

III.  DOCUMENTS OUTSIDE THE PLEADINGS                                       
      Intervenors argue next that Southern’s request for Rule 12(c) relief should be 
 converted to a motion for summary judgement because Southern relies on documents 

 outside  of  the  pleading.    Specifically,  Intervenors  contend  that  the  four  contracts 
 Southern attached to a declaration supporting its Motion for Judgment on the Pleadings 
 are not embraced by its Complaint and are inappropriate for this Court to rely on without 
 converting the motion to one for summary judgment.  (Heard Decl., Exs. A–D (“Southern 

 contracts”).)                                                             
       “In general, materials embraced by the complaint include ‘documents whose 
 contents are alleged in a complaint and whose authenticity no party questions, but which 
 are not physically attached to the pleadings.’”  Zean v. Fairview Health Servs., 

 (8th Cir. 2017) (citation omitted).                              
      Although Southern attached examples of it contracts to a declaration and not to 
 its Complaint, the Southern contracts were sufficiently alleged in and embraced by the 
 Complaint.  (Compl. ¶ 25.)  Additionally, Intervenors have not argued that the Southern 
 contracts are fake or otherwise unreliable.  The Court finds that the Southern contracts 

 are not outside the pleadings and declines to convert the pending motion to one for 
 summary judgment.                                                         
IV.  INTERVENORS’ AFFRIMATIVE DEFENSES                                      
      Intervenors alternatively allege that their affirmative defenses preclude Southern’s 

 requested relief.  “When a defendant raises an affirmative defense in his answer it will 
 usually bar judgment on the pleadings.”  Lasser v. Am. Gen. Life Ins. Co., No. 14-3326, 
 

, at *4 (D. Minn. Apr. 3, 2015).  “A grant of judgment on the pleadings 

 is appropriate where no material issue of fact remains to be resolved and the movant is 
 entitled to judgment as a matter of law.”  Poehl v. Countrywide Home Loans, Inc., 

 (8th Cir. 2008).  Because Intervenors’ affirmative defenses raise no material 
 issues of fact, the Court will not deny Southern’s Motion.                

      A. Statute of Limitations                                            
      Intervenors argue that Southern’s constitutional claims are barred by the statute 
 of limitations because Southern entered the market in 2010 and did not challenge the 
 Coleman Act until 2021.  Southern does not contest this fact but alleges that the Coleman 

 Act’s unconstitutional restrictions constitute a continuing harm.         
      “[A]  ‘constitutional  claim  can  become  time-barred  just  as  any  other  claim 
 can[.]”  United States v. Clintwood Elkhorn Mining Co., 

 (2008) (quoting Block 
v. North Dakota, 

 (1983)).  However, continuing violations of law, which 
inflict continuing and accumulating harm, can provide relief from a statute of limitation’s 

effects.  Hanover Shoe, Inc. v. United Shoe Mach. Corp., 

, 502 n.15 (1968) 
(“We are not dealing with a violation which, if it occurs at all, must occur within some 
specific and limited time span. . . . Rather, we are dealing with conduct which constituted 
a  continuing  violation  of  the  Sherman  Act  and  which  inflicted  continuing  and 

accumulating harm[.]”); Montin v. Est. of Johnson, 

 (8th Cir. 2011) 
(“[Plaintiff]  appears  to  allege,  however,  that  he  suffers  daily  and  unconstitutional 
restrictions of his liberty of movement .  . . . His claim, therefore, may be akin to a 

prisoner's Eighth Amendment claim or claims involving repeated enforcement of policies 
against a plaintiff rather than claims alleging merely ongoing consequences from an older, 
challenged action.”).                                                     
    Here, Southern alleges that the Coleman Act’s allegedly discriminatory provisions 

produce a continual harm.  Southern’s claims therefore rest on continual violations 
resulting  in  an  inability  to  enforce  otherwise  valid  provisions  of  its  contracts.    The 
inapplicability  of  statutes  of  limitations  to  on-going  and  continuous  harm  is  clearly 
established and Intervenors’ statute of limitations defense does not raise issue of material 

fact sufficient to preclude Rule 12 relief.                               
    B.  Laches and Waiver                                                
    Intervenors argue that both laches and waiver bar Southern’s relief.  The equitable 
 doctrine of laches may permit dismissal of a claim if there is both an unreasonable delay 
 and some change in position in reliance upon the delay which makes maintenance of the 

 claim inequitable.  In re Panther Mountain Land Dev., LLC, 

 (8th Cir. 2012).  
 Similarly, under Minnesota law, a waiver is “an intentional relinquishment of a known 
 right, and it must clearly be made to appear from the facts disclosed.”  Slidell, Inc. v. 
 Millennium Inorganic Chems., Inc., 

 (8th Cir. 2006) (citation omitted); 

 W. Cas. & Sur. Co. v. Beverforden, 

 (8th Cir. 1937) (“A waiver is a voluntary 
 relinquishment of a known right, the intended giving up of a known privilege or power.”). 
      Here, Intervenors have not pled any change in reliance base upon Southern’s 

 alleged delay in challenging the Coleman Act.  While Intervenors claim that they have 
 conformed their businesses to account for open wholesaling over the last forty years, 
 such allegations do not demonstrate that Intervenors changed their positions in reliance 
 on Southern’s actions.  Instead, Intervenors’ argument concedes that they have not made 

 any changes and have simply maintained the status quo.  Similarly, Intervenors have not 
 identified any facts demonstrating Southern intentionally relinquished a “known right” 
 related to challenging the Coleman Act’s constitutionality or that Southern intended to 
 waive a challenge to the Coleman Act.                                     

      Accordingly, the Court finds that neither laches nor waiver present issues of 
 material fact barring Rule 12(c) relief.                                  
V.  SOUTHERN’S MOTION FOR JUDGMENT ON THE PLEADINGS                         
    A.   Dormant Commerce Clause                                         
    The Commerce Clause in Article I, Section 8, of the United States Constitution 

grants Congress the power to regulate interstate commerce.  U.S. Const. art. I, § 8, cl. 3. 
The Commerce Clause “has long been understood to have a ‘negative’ aspect that denies 
the States the power unjustifiably to discriminate against or burden the interstate flow of 
articles of commerce.”  Or. Waste Sys., Inc. v. Dep't of Envtl. Quality of State of Or., 

  (1994);  see  also  S.D  Farm  Bureau,  Inc.,

  (“The  dormant 
Commerce Clause is the negative implication of the Commerce Clause: states may not 
enact laws that discriminate against or unduly burden interstate commerce.”).  State law 

discriminates in violation of the dormant Commerce Clause when the law “mandate[s] 
‘differential treatment of in-state and out-of-state economic interests that benefits the 
former and burdens the latter.’” Granholm, 

 (quoting Or. Waste Sys., 

).                                                              

    Under Section 2 of the Twenty First Amendment, States are allowed to regulate 
the “transportation or importation . . . for delivery or use therein of intoxicating liquors.”  
U.S. Const. amend. XXI, § 2.  While the Supreme Court initially interpreted Section 2 as 
conferring the power to regulate alcohol in ways that would normally violate the dormant 

Commerce Clause, the Supreme Court’s modern jurisprudence recognizes that Section 2 
does not provide a blanket authorization to take actions violating other constitutional 
provisions.  Granholm, 544 U.S. at 486–87.  Thus, although the three-tiered distribution 
system itself is unquestionably legitimate, previous cases establish that the ways in which 
a State implements a three-tiered system under the Twenty-first Amendment are not 

immune from dormant Commerce Clause scrutiny.  Instead, the appropriate question is 
whether  “the  principles  underlying  the  Twenty-first  Amendment  are  sufficiently 
implicated . . .to outweigh the Commerce Clause principles that would otherwise be 
offended.”  Bacchus Imports, Ltd. v. Dias, 

 (1984).      

    The Supreme Court has further clarified the amorphous relationship between the 
constitutional provisions by stating that the Twenty-first Amendment provides States 
with the ability to enact measures that are “appropriate to address the public health and 

safety effects of alcohol use and [] serve other legitimate interests” but prohibits “States 
[from  adopting]  protectionist  measures  with  no  demonstrable  connection  to  those 
interests.”  Tenn. Wine & Spirits, 

.  The Eighth Circuit has closely followed 
this tenant by upholding laws that “’serve[] valid health, safety, and regulatory interests’” 

as well as licensing requirements and restrictions that are “essential” components of a 
three-tiered system.  Sarasota Wine Market, LLC v. Schmitt, 

, 1181–82 (8th 
Cir. 2021) (citing S. Wine and Spirits of Am., Inc., v. Div. of Alcohol and Tabaco Control, 

, 810–11 (8th Cir. 2013)).5                                   


    5 Numerous courts have similarly upheld essential or inherent components of a state’s 
three-tiered system when considering a dormant Commerce Clause challenge.  See Tenn. Wine 
& Spirits, 

 (invalidating a state liquor law under the dormant Commerce Clause 
when it “[was] not an essential feature of a three-tiered scheme[.]”); Byrd v. Tenn. Wine & Spirits 
Retailers Ass’n, 

 (6th Cir. 2018) (“[R]equiring wholesaler or retailer businesses 
to be physically located within Tennessee may be an inherent aspect of a three-tier system[.]”); 
    Therefore, this Court must decide whether the Coleman Act violates the dormant 
Commerce  Clause  and,  if  so,  whether  the  unconstitutional  aspects  are  essential 

components of Minnesota’s three-tiered system or otherwise serve valid interests that 
cannot be achieved without discriminatory means.                          
         1.   Facial Discrimination                                      
    A state law that is challenged on dormant Commerce Clause grounds is subject to 

a two-step analysis.  The Court first considers whether the challenged law discriminates 
against  interstate  commerce.    Or.  Waste  Sys.,  

.    If  the  statute  is 
discriminatory, it is “per se invalid.”  C & A Carbone, Inc. v. Town of Clarkstown, N.Y., 

 (1994).  If the law is not discriminatory, the second step of analysis requires 
that the law be struck down only if the burden it imposes on interstate commerce “is 
clearly excessive in relation to its putative local benefits.”  Pike v. Bruce Church, Inc., 

 (1970).                                                     

    The Supreme Court recognizes three forms of discrimination against out-of-state 
interests.  First, a state law may have an impermissible discriminatory purpose.  Bacchus 
Imports, 

.  Second, a law may facially discriminate against out-of-state 


Cooper v. Tex. Alcoholic Beverage Comm'n, 

 (5th Cir. 2016) (distinctions between 
in-state and out-of-state retailers and wholesalers are permissible “if they are an inherent aspect 
of the three-tier system.”); Wine Country Gift Baskets.com v. Steen, 

 (5th Cir. 
2010) (“[D]iscrimination that would be questionable, then, is that which is not inherent in the 
three-tier system itself.”); Brooks v. Vassar, 

 (4th Cir. 2006) (noting that 
challenging the requirement that out-of-state retailers sell through Virginia's three-tier system 
“is nothing different than an argument challenging the three tier system itself.”). 
interests.  Chem. Waste Mgmt. v. Hunt, 

 (1992).  Third and lastly, a law 
may have a discriminatory effect.  Maine v. Taylor, 

, 148 n. 19 (1986).   

    Southern argues that the Coleman Act is facially discriminatory and prohibits out-
of-state  products  and  producers  from  establishing  exclusive  distributorships  while 
explicitly exempting Minnesota producers and products.  Intervenors contend that the 
Coleman Act is not discriminatory because it applies the same requirements to both in-

state and out-of-state importers and additionally provides a mechanism allowing out-of-
state producers to qualify for the same exemptions that in-state producers enjoy. 
    The  Court  is  not  persuaded  by  Intervenors’  arguments.    A  law  is  facially 

discriminatory if it expressly provides for “differential treatment of in-state and out-of-
state economic interests that benefits the former and burdens the latter.”  Or. Waste Sys., 
511 U.S. at 99.  The Coleman Act explicitly permits alcohol produced or further refined in 
Minnesota  to  be  distributed  through  exclusive  wholesaler  agreements  in  order  to 

circumvent the open wholesaling requirement imposed on alcohol produced outside of 
Minnesota.  Although Intervenors are correct that the Coleman Act applies equally to all 
importers, the Coleman Act still disfavor out-of-state-producers by exempting Minnesota 
producers from the wholesaling requirement.  Further, Intervenors’ argument does not 

remedy the fact that the Coleman Act impermissibly discriminates against out-of-state 
products by prohibiting exclusive dealerships in the first place.         
    Intervenors’ argument that out-of-state producers and products may qualify for 
the exemptions in-state producers and products are privy to is similarly unpersuasive.  It 

is immaterial that out-of-state producers can qualify for the Coleman Act’s exemptions 
by producing or further refining their product in Minnesota.  A law that discriminates 
between in-state and out-of-state economic interests is impermissible regardless of the 
degree of disparate treatment because “the magnitude and scope of the discrimination 

have no bearing on the determinative question,” which is “whether discrimination has 
occurred.”  Assoc. Indus. of Mo. v. Lohman, 

 (1994).  The crucial fact is 
that  the  Coleman  Act  applies  different  requirements  to  out-of-state  producers  and 

products that would necessitate a workaround in the first place.  Moreover, it can hardly 
be said that a law comports with the dormant Commerce Clause by forcing out-of-state 
producers to further distill, refine, or blend their product within the state to be treated 
the same as domestic products.  Minn. Stat. § 340A.307, subd. 4.          

    The Coleman Act only prohibits exclusive distributorships of alcohol produced 
outside of Minnesota and expressly favors in-state producers and products by allowing 
them to enter into such exclusive agreements.  Accordingly, the Court finds that the 
Coleman Act facially imposes differential treatment of in-state and out-of-state economic 

interests and is facially discriminatory.                                 
         2.   Essential Element                                          
    Under  the  Twenty-first  Amendment,  the  Coleman  Act’s  open  wholesaling 

requirement may still be a constitutional exercise of the State’s right to regulate alcohol.  
The relevant question is whether the discriminatory provision is an essential component 
of a three-tiered system of regulation or otherwise “’serves valid health, safety, and 
regulatory  interests’”  for  which  there  are  no  other  non-discriminatory  alternatives.  

Sarasota, 

 (citing S. Wine and Spirits of Am., 731 F.3d at 810–11); Tenn. 
Wine & Spirits, 

.                                 
    Intervenors  argue  that  the  Coleman  Act  must  be  upheld  because  its  open 

wholesaling requirement is an essential element of Minnesota’s three-tiered system and 
serves valid interests by preventing market concentration, increasing competition, and 
reducing prices.  The Court finds that none of these reasons make the Coleman Act’s 
discriminatory provision an essential function of a three-tiered system.  

    The  Supreme  Court  in  Tennessee  Wine  &  Spirits  held  that  the  Twenty-first 
Amendment allows states to enact measures that its citizens believe are appropriate to 
address the public health and safety effects of alcohol use and to serve other legitimate 
interests, but it does not license the States to adopt protectionist measures with no 

demonstrable connection to those interests.  

.  While striking down the 
law at issue, the Supreme Court noted that the law was “ill suited to promote responsible 
sales and consumption practices” and “there [were] obvious alternatives that better serve 
that goal without discriminating against nonresidents.”  

.  In the Eighth 
Circuit, courts have upheld licensing requirements as essential elements of a state’s 

three-tiered  system  when  they  were  similar  to  laws  that  defined  the  extent  and 
requirements of the producer, wholesaler, and retailer tiers.  S. Wine & Spirits of Am., 731 
F.3dat 809 (citing Granholm, 

).  In Sarasota, the Eighth Circuit’s most recent 
case on the issue, the Eighth Circuit again found that a challenged licensure requirement 

was  an  essential  element  defining  the  three-tiered  system  because  the  licensure 
requirements applied even-handedly to all retailers and set forth the requirements 
allowing retailers to sell alcohol directly to consumers.  987 F.3d at 1183–84. 

    Here, the Coleman Act does not attempt to even-handedly regulate any form of 
Minnesota’s three-tiered structure like the licensure requirements in Sarasota.  Similarly, 
assuming that the Coleman Act was intended to reduce prices, as Intervenors assert, the 
law is not analogous to the residency requirement at issue in Southern Wine and Spirits 

that was intended to promote social responsibility and temperance.  

.  
Instead,  the  Coleman  Act  attempts  to  regulate  the  manner  in  which  out-of-state 
producers  offer  their  products  while  protecting  in-state  interests  from  the  same 
requirements.  In this light, the Coleman Act is more akin to Tennessee Wine & Spirits as 

a law that is “ill suited to promote responsible sales and consumption practices” when 
“there are obvious alternatives that better serve that goal without discriminating against 
nonresidents.” 

.  As Intervenors acknowledge while arguing that 
the Coleman Act is severable, there are a plethora of alternatives to discriminating against 
out-of-state producers and products—most easily by requiring all producers and products 

to be subject to open wholesaling and prohibited from exclusive distributorships.  Indeed, 
current proposed legislation in both the Minnesota Senate and House of Representatives 
provides this exact remedy.  Compare S.F. 3008, 92nd Leg., First Engrossment and H.F. 
2767, 92nd Leg, As Introduced, with Minn. Stat. § 340A.307, subds. 1, 4.  

    In sum, the Coleman Act facially discriminates against out-of-state producers and 
products, is not an essential element of Minnesota’s three-tiered system, and is ill suited 
to serve valid regulatory interests when non-discriminatory alternatives that better serve 

such goals exist.  Accordingly, the Court finds that the Coleman Act’s open-wholesaling 
requirement and prohibition against exclusive distributorships is unconstitutional. 
    B.   Severability                                                    
    The Court must also determine whether any of the Coleman Act’s unconstitutional 

provisions are severable.  Severability is a matter of state law.  See Leavitt v. Jane L., 

 (1996).  The Minnesota statute governing severability provides that: 
    Unless there is a provision in the law that the provisions shall not be 
    severable, the provisions of all laws shall be severable.  If any provision of a 
    law is found to be unconstitutional and void, the remaining provisions of 
    the law shall remain valid, unless the court finds the valid provisions of the 
    law are so essentially and inseparably connected with, and so dependent 
    upon, the void provisions that the court cannot presume the legislature 
    would have enacted the remaining valid provisions without the void one; or 
    unless the court finds the remaining valid provisions, standing alone, are 
    incomplete and are incapable of being executed in accordance with the 
    legislative intent.                                                  

.  The chapter encompassing the Coleman Act includes a severability 
clause.  Minn. Stat. §340A.910.  Therefore, the Court must consider whether the Coleman 

Act’s provisions are sufficiently interconnected such that the legislature would not have 
enacted  the  statute  in  its  severed  form  or  whether  the  valid  provisions  would  be 
incomplete and incapable of being executed in accordance with the legislative intent.  

.                                                     

         1.   The Void and Valid Provisions are Interconnected           
    Intervenors  contend  that  subdivision  1,  subdivision  2,  and  the  exceptions  in 
subdivision 4 of the Coleman Act are severable in various forms.  The Court will first 

consider whether “all the provisions are connected in subject-matter,  depending  on 
each  other,  operating  together  for  the  same  purpose,  or otherwise so connected 
together in meaning that it cannot be presumed the legislature would have passed the 
one without the other.”  State ex rel. Grozbach v. Common Sch. Dist. No. 65, 5  

 (Minn. 1952).                                                    
    While interpreting Minnesota law, the Eighth Circuit has held that a statute is not 
severable when the valid sections were “conceived together as a unified effort to regulate 
certain practices[.]”  Cellco P’ship v. Hatch, 

 (8th Cir. 2005).  In Cellco, 

the Eighth Circuit found that three valid provisions—a definitional section and two 
sections regarding conduct ancillary to the heart of the legislation’s purpose—worked in 
tandem with the void provision in order to achieve the legislature’s intent.  

  Here, 
subdivision  1  (nondiscriminatory  sales),  subdivision  2  (prohibited  practices),  and 
subdivision 4 (exceptions) are part of a singular scheme to regulate producers’ sale of 

their products.  Because of their dependency on each other, it is unlikely that the 
Minnesota  Legislature  would  have  passed  any  of  the  subdivisions  on  their  own.  
Subdivision  1  provides  a  general  rule,  subdivision  2  provides  examples  of  conduct 
breaching the rule, and subdivision 4 provides exceptions to the rule and conduct 

described in subdivisions 1 and 2 respectively.                           
    The subdivisions of the Coleman Act are connected in subject-matter, depend on 
each  other, and operate  together  for  the  same  purpose.  The Court finds that the 

subdivisions  of  the  Coleman  Act  are  therefore  sufficiently  interconnected  and  not 
severable.                                                                
         2.   The  Valid  Provision  Would  be  Incapable  of  Being  Executed  in 
         Accordance with the Legislature’s Intent                        

    Even if the provisions of the Coleman Act were not interconnected, the valid 
provisions would be “incomplete and [] incapable of being executed in accordance with 
the legislative intent.”  

.                           
    Both Intervenors and Southern direct the Court to Archer Daniels Midland Co. v. 
State ex rel. Allen, 

 (Minn. 1982) to support their respective positions 
regarding severability of the Coleman Act.  In Archer Daniels Midland, the Minnesota 

Supreme Court refused to sever a discriminatory tax on out-of-state products after 
determining that doing so would violate the legislature’s intent. Specifically, the court 
held that:                                                                

         [T]he unconstitutional language of the Act explicitly limits the four-
    cent  per  gallon  tax  reduction  to  Minnesota  gasohol.  This  indicates  a 
    legislative  intent  to  benefit  only  intrastate  concerns.  If  the 
    unconstitutional  language  of  the  Act  were  stricken  and  the  Act’s  tax 
    reduction  extended  to  out-of-state  concerns  such  as  [plaintiff],  this 
    legislative intent would be completely frustrated. We conclude, therefore, 
    that the remaining provisions of the Act, standing alone, are incapable of 
    being executed in accordance with the legislative intent.”           
Archer Daniels Midland Co., 

.  Intervenors contend that the Archer 
Daniels court invalidated the discriminatory law in toto because the “legislative intent 
[wa]s not at all clear.”  

  However, this is an incorrect reading of the case.  In the 
quotation Intervenors rely on, the Archer Daniels court was considering an argument that 
the discriminatory tax should be severed under State v. Minnesota Federal Savings & Loan 
Ass'n, 

 (1944).  

  The Archer Daniels court noted that the Minnesota 
Federal Savings court severed a discriminatory portion of an income tax statute because 
there was a clear legislative intent to sustain a limited application of the tax rather than 
to eliminate it completely.  

  The Archer Daniels court then noted that “[i]n this case, 
however, a similar legislative intent is not at all clear” and instead found that the 
legislature only intended to benefit intrastate concerns.  

  Contrary to Intervenors 
contentions, the Archer Daniels court did not refuse to sever the discriminatory tax 
because of a lack of legislative intent but, rather, refused to sever the discriminatory 
language of the tax because the legislature intended to benefit in-state actors and striking 
the discriminatory language would frustrate this intent.  

             

    Like  Archer  Daniels,  the  language  of  the  Coleman  Act  is  indicative  of  the 
Legislature’s intent to benefit Minnesota producers and products by exempting them 
from open wholesaling.  Moreover, the Legislature reaffirmed its intention when it 
amended the Coleman Act in response to an unfavorable Minnesota Supreme Court 

decision holding that alcohol processed within the state was regulated by the Coleman 
Act.  Compare Fed. Distillers, 229 N.W.2d at 155–56, with Minn. Stat. § 340A.307, subd. 
4(2).    Because  the  Minnesota  Legislature  initially  exempted  in-state  producers  and 

products from the Coleman Act and later doubled-down by amending the Coleman Act to 
rectify an unfavorable Minnesota Supreme Court decision applying the law to in-state 
products, the Court finds that severing the discriminatory language of the Coleman Act 
would not be consistent with the Legislature’s intent and is not the appropriate remedy. 

         3.   Certification to the Minnesota Supreme Court               
    Intervenors lastly argue that the Court should certify the issue of severability to 
the Minnesota Supreme Court.  The Court finds this step unnecessary.      
    Minnesota  law  provides  that  the  Minnesota  Supreme  Court  “may  answer  a 

question of law certified to it by a court of the United States . . . if the answer may be 
determinative of an issue in pending litigation in the certifying court and there is no 
controlling appellate decision, constitutional provision, or statute of this state.”  

, subd. 3.  Use of a State's certification procedure by a federal district court 
rests in the court's sound discretion.  Lehman Bros. v. Schein, 

, 390–91 (1974); 

Allstate Ins. Co. v. Steele, 

, 881–82 (8th Cir. 1996).  Although certification may 
“in the long run save time, energy, and resources and help[ ] build a cooperative judicial 
federalism,” it is never obligatory, even when state law is in doubt.  Lehman Bros., 416 
U.S. at 390–91.  A federal court's “most important consideration” in deciding whether to 

certify a question to a state court is whether it “finds itself genuinely uncertain about a 
question of state law[.]” Johnson v. John Deere Co., 

 (8th Cir. 1991) 
(quoting Tidler v. Eli Lilly & Co., 

 (D.C. Cir. 1988)).  Certification “is not a 

procedure by which federal courts may abdicate their responsibility to decide a legal issue 
when the relevant sources of state law available to it provide a discernible path for the 
court to follow.”  Tidler, 

.  Absent a “‘close’ question of state law or the 
lack of state sources, a federal court should determine all the issues before it.” Johnson, 

 (citing Perkins v. Clark Equip. Co., 

 (8th Cir. 1987)). 
    Though there are multiple overlapping arguments concerning the severability of 
the Coleman Act, neither the arguments nor the principles underlying the severability 
issue are so complex that the Court is faced with a close or genuine question.  The Court 

will decline to certify the severability issue to the Minnesota Supreme Court. 
    For the forgoing reasons, the Court finds that the Coleman Act’s discriminatory 
provisions are unconstitutional and, because the law in not severable, is unconstitutional.  
 Intervenors’ challenges to Southern’s standing are unsuccessful, as is their attempt to 
 preclude Rule 12(c) relief through their affirmative defenses.  The Court will therefore 

 grant Southern’s Motion for Judgment on the Pleadings.6                   
VI.  JOINT MOTION FOR STIPULATED JUDGMENT                                   
      Because Southern’s Motion for Judgment on the Pleadings is granted, the Court 
 need not consider the Joint Motion for Stipulated Judgment and will deny the motion as 

 moot.                                                                     

      Based on the foregoing, and all the files, records, and proceedings herein, IT IS 
 HEREBY ORDERED that:                                                      
      1.  Plaintiffs’ Motion for Judgement on the Pleadings [Docket No. 84] is GRANTED 
        as follows:                                                        

           a.  The Coleman Act, as reflected in Minn. Stat. §340A.307, is DECLARED 
             facially unconstitutional as a violation of the dormant Commerce Clause 
             of the United States Constitution.                            

           b.  Defendant John Harrington, in his official capacity as Commissioner of 
             the  Minnesota  Department  of  Public  Safety,  is  PERMANENTLY 
             ENJOINED from enforcing the Coleman Act, as reflected in Minn. Stat. 
             §340A.307.                                                    


      6 Intervenors’                                                       
     2.  Entry of judgment is STAYED for sixty (60) days pending the resolution of the 
        proposed legislation in the Minnesota Legislature. 
     3.  Plaintiffs’ and  Defendant’s Joint Motion for Stipulated Judgment [Docket No. 
        10] is DENIED as MOOT. 
     4.  Intervenors’ Objection to the Magistrate Judge's Order Denying the Motion to 
        Stay [Docket No. 92] is DENIED as MOOT. 
     5.  Intervenors’ Objection to the Magistrate Judge's Order Denying the Motion to 
        Amend [Docket No. 132] is DENIED as MOOT. 
     6.  Plaintiffs’,  Defendant’s,  and  Intervenors’  Joint  Motion  Regarding  Continued 
        Sealing [Docket No. 133] is GRANTED. 
     LET JUDGMENT BE ENTERED ACCORDINGLY. 

DATED:  March 29, 2022                           Jobo     (bation 
at Minneapolis, Minnesota.                         JOHN R. TUNHEIM 
                                               Chief Judge 
                                               United States District Court 

                                        29 

                  UNITED STATES DISTRICT COURT                          
                     DISTRICT OF MINNESOTA                              

SOUTHERN GLAZER’S WINE AND SPIRITS,   Civil No. 21-1254 (JRT/ECW)        
LLC, AND SOUTHERN GLAZER’S WINE AND                                      
SPIRITS OF MINNESOTA, LLC,                                               

                       Plaintiffs,                                      

v.                                                                       

JOHN HARRINGTON, in his capacity as                                      
Commissioner of the Minnesota                                            
Department of Public Safety,     MEMORANDUM OPINION AND ORDER            
                                 GRANTING PLAINTIFFS’ MOTION FOR        
                      Defendant,   JUDGMENT ON THE PLEADINGS            

v.                                                                       

JOHNSON BROTHERS LIQUOR COMPANY,                                         
AND BELLBOY CORPORATION,                                                 

             Intervenor Defendants.                                     



   Peter J. Schwingler and William Thomson, STINSON LEONARD STREET LLP, 
   50 South Sixth Street, Suite 2600, Minneapolis, MN 55402, for plaintiffs; 

   Jason  Marisam,  MINNESOTA  ATTORNEY  GENERAL’S  OFFICE,  445        
   Minnesota Street, Suite 1100, St. Paul, MN 55101, for defendant;     

   Forrest Tahdooahnippah, Nicholas J. Bullard, Steven J. Wells, and Vanessa J. 
   Szalapski, DORSEY & WHITNEY LLP, 50 South Sixth Street, Suite 1500,  
   Minneapolis, MN 55402; James T. Smith, HUFFMAN, USEM, CRAWFORD &     
   GREENBERG, PA, 5101 Olson Memorial Hwy., Suite 1000, Golden Valley,  
   MN 55422, for intervenor defendants.                                 

   Daniel N. Rosen, ROSEN LLC, 60 South Sixth Street, Suite 3615, Minneapolis, 
   MN 55402, for amicus curiae Kick’s Liquor Store, Inc., Zipp’s Liquor Store, 
    Inc., John Wolf Enterprises, Inc., JPG Corporation, and Keith and Linda’s 
    Place, Inc.                                                          

    Plaintiffs Southern Glazer’s Wine and Spirits, LLC and Southern Glazer’s Wine and 
Spirits of Minnesota, LLC (together, “Southern”) brought this action against Defendant 
John Harrington in his capacity as Commissioner of the Minnesota Department of Public 
Safety (“the State”) alleging that Minn. Stat. § 340A.307—otherwise known as the 

Coleman  Act—unconstitutionally  violated  the  dormant  Commerce  Clause.    After  a 
thorough review by the Minnesota Attorney General’s Office, the State agreed that the 
Coleman Act was unconstitutional.  Southern and the State filed a Joint Motion for Entry 
of Stipulated Judgment and Permanent Injunction prohibiting the State from enforcing 

the Coleman Act against Southern.  Intervenor Defendants Johnson Brothers Liquor 
Company and Bellboy Corporation (together, “Intervenors”) intervened in this action 
with the intention of defending the Coleman Act’s constitutionality.1     
    The case is before the Court on both Southern’s Motion for Judgment on the 

Pleadings and Southern and the State’s Joint Motion for Entry of Judgment.  Because the 
Coleman Act violates the dormant Commerce Clause, the Court will grant Southern’s 
Motion for Judgment on the Pleadings.  The Court will use its inherent authority to stay 

this Order for 60 days because legislation pending before the Minnesota Legislature may 
moot the current controversy.                                             

    1 Sunny Hill Distributors, Inc. was also an Intervenor Defendant but has since withdrawn 
from this action.  (Order on Stip. Withdrawal, Mar. 24, 2022, Docket No. 164.)  
                           BACKGROUND                                     
I.  THE PARTIES                                                            

     Southern is the nation’s largest liquor wholesaler and entered the Minnesota 
market in 2010.  (Compl. ¶¶ 5–6, May 19, 2021, Docket No. 1.)  Although Southern is not 
directly subjected to any alleged unconstitutional discrimination, Southern has multiple 
contracts with out-of-state producers that are regulated by the Coleman Act.  (Id. ¶ 25.)  

Southern’s contracts with out-of-state producers contain language giving it exclusive 
distribution  rights  in  Minnesota  but,  pursuant  to  the  Coleman  Act’s  allegedly 
discriminatory  language,  Southern  is  unable  to  enforce  these  rights  as  out-of-state 

producers are banned from establishing exclusive distributorships and must offer their 
products equally to all wholesalers.  Minn. Stat. § 340A.307, subd. 1; (Decl. Surelda Heard 
(“Heard Decl.”), Exs. A–D, Oct. 12, 2021, Docket No. 88.).                
     The State agrees with Southern that the Coleman Act is unconstitutional after 

reviewing this Court’s decision in Alexis Bailly Vineyard, Inc. v. Harrington, 

 (D. Minn. 2020).  In Alexis Bailly, portions of Minnesota’s Farm Winery Act were found 
unconstitutional under the dormant Commerce Clause for treating out-of-state products 
differently than their instate counterpart.  482 F.Supp.3d at 828.  Rather than defend 

what it determined was an unconstitutional law, the State sought to resolve Southern’s 
challenge and avoid the inefficient use of resources prolonged litigation would require.  
(Reply Supp. Joint Mot. at 2, Dec. 15, 2021, Docket No. 128.)             
      Intervenors are Minnesota-based wholesalers seeking to defend the Coleman Act 
 against Southern’s constitutional challenge due to the allegedly devastating financial 

 effects their businesses would suffer.  (Decl of David Gewolb2 Supp. Mot. Intervene ¶¶ 
 2, 5, June 4, 2021, Docket No. 22; Decl.of Mark Hubler Supp. Mot. Intervene ¶¶ 7–9, 
 June 4, 2021, Docket No. 24.)                                             

II.  THE COLEMAN ACT                                                        
      Minnesota, like most states, employs a “three-tier system” to regulate alcohol 
 classified  by  the  separation  of  manufacturers,  wholesalers,  and  retailers  through 
 licensing requirements.  (Intervenor Defs.’ Mem. Opp. Mot. J. Pleadings at 4, Nov. 17, 

 2021, Docket No. 113.)  In a three-tier system, a manufacturer cannot sell directly to 
 retailers and instead  sells to  wholesalers  while wholesalers cannot sell directly to 
 consumers and subsequently sell to retailers.  See Tenn. Wine & Spirits Retailers Ass’n v. 
 Thomas, 

 (2019).  The three-tiered system has routinely been 

 upheld and is “unquestionably legitimate.”  Granholm v. Herald, 

 
 (2005).                                                                   
      In its current form, the Coleman Act prohibits exclusive distribution agreements 
 for alcohol produced outside of Minnesota and instead requires that the products be 

 offered on an equal basis to all wholesalers—a practice known as open wholesaling.  


      2 Although it appears that the correct spelling is “Geowolb” based upon the declaration’s 
 signature page, the Court has referenced the declaration as it was titled when filed for clarity of 
 the record.                                                               
Minn. Stat. § 340A.307, subd. 1.  Open wholesaling has not always been a requirement 
in Minnesota as exclusive distributorships were previously permitted.  Fed. Distillers Inc. 

v. State, 

, 152–53 (Minn. 1975).  However, the Minnesota Legislature 
became concerned about exclusive distribution under which a “retailer . . . in order to 
sell a particular brand of liquor, was compelled to deal with a particular wholesaler and 
to  pay  that  wholesaler’s  price”  and  passed  legislation  prohibiting  exclusive 

distributorships in 1969.  

 at 153 n. 10 (quoting 

).  The 1969 
legislative effort initially proved to be ineffective because “distillers and wholesalers 
found it to their advantage to continue the practice of sole distributorships by the 

distillers, declaring that they had no agreement but simply cho[osing] in their discretion 
to limit sales to a wholesaler of demonstrated loyalty, efficiency, and selling ability.”  Id. 
at 152.  Therefore, the Minnesota Legislature attempted to remedy its previous failure 
and passed the Coleman Act in 1973.                                       

    Under the Coleman Act, only out of-state liquor producers must offer their 
products on equal terms to all wholesalers.    Minn. Stat. § 340A.307, subd. 1 (“All 
licensed importers must offer for sale on an equal basis to all licensed wholesalers and 
manufacturers all intoxicating liquor brought into the state of Minnesota.”)  After the 

Minnesota Supreme Court held in Fed. Distillers that the term “licensed importer” 
applied to a company that imported bulk liquor, rectified and bottled it in the state, the 
Minnesota  Legislature amended  the  Coleman  Act  to explicitly exempt products that 
 further are “distilled, refined, rectified, or blended” liquor within the state.  Minn. Stat. 
 § 340A.307, subd. 4.  As it stands, the Coleman Act currently imposes open wholesaling 

 on out-of-state producers and products while exempting Minnesota producers and 
 products and allowing the latter to establish exclusive distributorships. 
III.  PROCEDURAL BACKGROUND                                                 
      On May 19, 2021, Southern filed the Complaint in this case seeking both a 

 declaration that the Coleman Act is unconstitutional and an injunction against future 
 enforcement.  (Compl. ¶¶ 27–36.)  After this Court’s ruling in Alexis Bailly Vineyard, 
 Southern contacted the State and inquired about the Coleman Act’s constitutionality.  

 (Pls.’ Mem. Supp. Mot. J. Pleadings at 3, October 12, 2021, Docket No. 86.)  The State 
 agreed that the Coleman Act violated the dormant Commerce Clause.  (Id.)  Accordingly, 
 Southern  filed  this  Complaint  and  the  parties  filed  a  Joint  Motion  for  Stipulated 
 Judgment, asking the Court to enter the requested declaratory judgment and injunction.  

 (Id. at 3–4; Joint Mot. Stip. J, May 21, 2021, Docket No. 10.)            
      Intervenors moved to intervene as defendants due to their interest in defending 
 the Coleman Act.  (Intervenor Mem. Supp. Mot. Intervene at 3–4, June 4, 2021, Docket 
 No. 20.)  After successfully intervening, Intervenors requested the Court stay the case 

 until the end of the 2022 legislative session to permit the Minnesota Legislature to 
 consider proposed amendments to the Coleman Act.  (Mot. Stay at 1, Aug. 13, 2021, 
Docket No. 45.)  On September 10, the Magistrate Judge denied Intervenors’ Motion.  
(Order Denying Mot. Stay, Sept. 29, 2021, Docket No. 68.)3                

    Intervenors also requested that the Court allow them to amend their pleadings 
to  assert  crossclaims  seeking  declaratory  judgments  that  (1)  the  Coleman  Act  is 
constitutional and (2) can be preserved through severance.  (Mot. Am., Ex. B, Nov. 1, 
2021, Docket No. 102.)  The Magistrate Judge denied Intervenors’ Motion because “the 

Intervenor Defendants all but admit their crossclaims are redundant of the factual and 
legal issues already in the case.”  (Order Denying Mot. Am. at 5, Dec. 7, 2021, Docket 
No. 121.)4                                                                

    While Southern and the State’s Joint Motion was pending, Southern filed a 
Motion for Judgment on the Pleadings and all of the relevant parties agreed to a briefing 
schedule permitting a single hearing on the Joint Motion and Southern’s Motion for 
relief under Rule 12(c).  (Stip. Briefing Schedule, Sept. 29, 2021, Docket No. 66; Pls.’ Mot. 

J. Pleadings, Oct. 12, 2021, Docket No. 84.)                              




    3Intervenors objected to the Magistrate Judge’s Order.  (Intervenor Defs.’ Objs. Order 
Mot. Stay, Oct. 13, 2021, Docket No. 92.)  However, because of this Order, the Intervenors’ 
objections are moot.                                                      
    4Intervenors also objected to the Magistrate Judge’s Order denying their Motion to 
Amend.  (Intervenor Defs.’ Objs. Order Mot. Am., Jan. 03, 2022, Docket No. 132.)  Even if the 
Court were to reach a different conclusion than the Magistrate Judge, this Order moots their 
proposed crossclaims and objections.                                      
                             DISCUSSION                                    
I.  STANDARD OF REVIEW                                                     

      Rule  12(c)  of  the  Federal  Rules  of  Civil  Procedure  provides  that  “[a]fter  the 
 pleadings are closed . . . a party may move for judgment on the pleadings.”  Fed. R. Civ. P. 
 12(c).  The Court analyzes a motion for judgment on the pleadings under the same 
 standard as a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).  See Ashley 

 Count, Ark. v. Pfizer, Inc., 

 (8th Cir. 2009).  The Court “accept[s] as true 
 all facts pleaded by the non-moving party and grant[s] all reasonable inferences from the 
 pleadings in favor of the non-moving party.”  Syverson v. FirePond, Inc., 

, 749 

 (8th Cir. 2004).  “Judgment on the pleadings is appropriate only when there is no dispute 
 as to any material facts and the moving party is entitled to judgment as a matter of law.”  
 Wishnatsky v. Rovner, 

 (8th Cir. 2006).                  
      “When considering a motion for judgment on the pleadings . . . , the court generally 

 must ignore materials outside the pleadings, but it may consider some materials that are 
 part of the public record or do not contradict the complaint, as well as materials that are 
 necessarily embraced by the pleadings.”  Porous Media Corp. v. Pall Corp., 

 (8th Cir. 1999) (cleaned up).                                        

II.  STANDING                                                               
      Intervenors contend that Southern lacks standing to bring this action because its 
 injury is not redressable and the third-party standing doctrine bars Southern’s claims.  The 
Court must therefore first determine whether Southern has standing to request the relief 
it seeks.                                                                 

    A. Redressability                                                    
    Assuming the Coleman Act is found unconstitutional, Intervenors argue that the 
Coleman Act is severable, and the invalid discriminatory provisions would be severed such 
that Southern would still be prohibited from exercising its exclusive distribution rights.  

    Article III of the Constitution limits the jurisdiction of federal courts to deciding 
cases and controversies.  Lujan v. Defs. of Wildlife, 

 (1992).  Standing is 
essential to the case-or-controversy requirement.  

.  To establish standing, a 

plaintiff must show (1) that it suffered a concrete and particularized injury-in-fact that is 
actual or imminent; (2) a causal connection between the injury and the defendant's 
conduct; and (3) that it is likely the plaintiff's injury will be redressed by the remedy.  

 
at 560–61.  “To determine whether an injury is redressable, a court will consider the 

relationship between ‘the judicial relief requested’ and the ‘injury suffered.’”  California 
v. Texas, 

, 2115 (2021) (citation omitted).                
    In the Eighth Circuit, the general rule requires assuming that a plaintiff would be 
successful in their claims.  Graham v. Catamaran Health Sols. LLC, 

, 407–08 

(8th Cir. 2017).  “Therefore, if a claim presents a question of statutory interpretation under 
which one interpretation leads to possible relief and the other does not, standing exists.”  

  However, redressability must be established by more than a “merely speculative” 
showing that the court can grant relief to redress the plaintiff's injury.  Advantage Media 
v. Eden Prairie, 

, 801 (8th Cir. 2006).                       

    As  discussed  infra,  the  Court  finds  that  the  Coleman  Act  is  not  severable.  
Accordingly, Southern’s injury is redressable because a favorable decision finding that the 
Coleman  Act  is  unconstitutional  would  eliminate  the  prohibition  on  exclusive 
distributorships.                                                         

    B.  Third-Party Standing                                             
    Intervenors also contend that Southern lacks standing because it is not directly 
regulated by the Coleman Act and Southern cannot challenge the law by asserting the 

rights of third parties.                                                  
    “[O]nly in exceptional cases may a party have standing to assert the rights of 
another.”  Ben Oehrleins & Sons & Daughter, Inc. v. Hennepin Cty., 

, 1378–
79 (8th Cir. 1997).  Plaintiffs alleging a violation of a constitutional or statutory right must 

show that their interests are arguably within the zone of interests to be protected or 
regulated by the statute or constitutional guarantee in question.  Id.  “In Commerce 
Clause jurisprudence, cognizable injury is not restricted to those members of the affected 
class against whom states or their political subdivisions ultimately discriminate.”  S.D. 

Farm Bureau, Inc. v. Hazeltine, 

, 591–92 (8th Cir. 2003).     
    Though Intervenors are correct that the Coleman Act regulates out-of-state liquor 
producers and that Southern is not directly regulated, the Court finds that Southern has 
 standing because its interest in exercising its exclusive distribution contracts with out-of-
 state producers is firmly within the zone of interests under the dormant Commerce 

 Clause.  Hazeltine, 

 (finding that loss of business as a result of a challenged 
 statute satisfied the injury-in-fact requirement); Ben Oehrleins, 115 F.3d at 1379 (finding 
 sufficient injury-in-fact where county ordinance prohibited plaintiffs from gaining access 
 to a market).                                                             

III.  DOCUMENTS OUTSIDE THE PLEADINGS                                       
      Intervenors argue next that Southern’s request for Rule 12(c) relief should be 
 converted to a motion for summary judgement because Southern relies on documents 

 outside  of  the  pleading.    Specifically,  Intervenors  contend  that  the  four  contracts 
 Southern attached to a declaration supporting its Motion for Judgment on the Pleadings 
 are not embraced by its Complaint and are inappropriate for this Court to rely on without 
 converting the motion to one for summary judgment.  (Heard Decl., Exs. A–D (“Southern 

 contracts”).)                                                             
       “In general, materials embraced by the complaint include ‘documents whose 
 contents are alleged in a complaint and whose authenticity no party questions, but which 
 are not physically attached to the pleadings.’”  Zean v. Fairview Health Servs., 

 (8th Cir. 2017) (citation omitted).                              
      Although Southern attached examples of it contracts to a declaration and not to 
 its Complaint, the Southern contracts were sufficiently alleged in and embraced by the 
 Complaint.  (Compl. ¶ 25.)  Additionally, Intervenors have not argued that the Southern 
 contracts are fake or otherwise unreliable.  The Court finds that the Southern contracts 

 are not outside the pleadings and declines to convert the pending motion to one for 
 summary judgment.                                                         
IV.  INTERVENORS’ AFFRIMATIVE DEFENSES                                      
      Intervenors alternatively allege that their affirmative defenses preclude Southern’s 

 requested relief.  “When a defendant raises an affirmative defense in his answer it will 
 usually bar judgment on the pleadings.”  Lasser v. Am. Gen. Life Ins. Co., No. 14-3326, 
 

, at *4 (D. Minn. Apr. 3, 2015).  “A grant of judgment on the pleadings 

 is appropriate where no material issue of fact remains to be resolved and the movant is 
 entitled to judgment as a matter of law.”  Poehl v. Countrywide Home Loans, Inc., 

 (8th Cir. 2008).  Because Intervenors’ affirmative defenses raise no material 
 issues of fact, the Court will not deny Southern’s Motion.                

      A. Statute of Limitations                                            
      Intervenors argue that Southern’s constitutional claims are barred by the statute 
 of limitations because Southern entered the market in 2010 and did not challenge the 
 Coleman Act until 2021.  Southern does not contest this fact but alleges that the Coleman 

 Act’s unconstitutional restrictions constitute a continuing harm.         
      “[A]  ‘constitutional  claim  can  become  time-barred  just  as  any  other  claim 
 can[.]”  United States v. Clintwood Elkhorn Mining Co., 

 (2008) (quoting Block 
v. North Dakota, 

 (1983)).  However, continuing violations of law, which 
inflict continuing and accumulating harm, can provide relief from a statute of limitation’s 

effects.  Hanover Shoe, Inc. v. United Shoe Mach. Corp., 

, 502 n.15 (1968) 
(“We are not dealing with a violation which, if it occurs at all, must occur within some 
specific and limited time span. . . . Rather, we are dealing with conduct which constituted 
a  continuing  violation  of  the  Sherman  Act  and  which  inflicted  continuing  and 

accumulating harm[.]”); Montin v. Est. of Johnson, 

 (8th Cir. 2011) 
(“[Plaintiff]  appears  to  allege,  however,  that  he  suffers  daily  and  unconstitutional 
restrictions of his liberty of movement .  . . . His claim, therefore, may be akin to a 

prisoner's Eighth Amendment claim or claims involving repeated enforcement of policies 
against a plaintiff rather than claims alleging merely ongoing consequences from an older, 
challenged action.”).                                                     
    Here, Southern alleges that the Coleman Act’s allegedly discriminatory provisions 

produce a continual harm.  Southern’s claims therefore rest on continual violations 
resulting  in  an  inability  to  enforce  otherwise  valid  provisions  of  its  contracts.    The 
inapplicability  of  statutes  of  limitations  to  on-going  and  continuous  harm  is  clearly 
established and Intervenors’ statute of limitations defense does not raise issue of material 

fact sufficient to preclude Rule 12 relief.                               
    B.  Laches and Waiver                                                
    Intervenors argue that both laches and waiver bar Southern’s relief.  The equitable 
 doctrine of laches may permit dismissal of a claim if there is both an unreasonable delay 
 and some change in position in reliance upon the delay which makes maintenance of the 

 claim inequitable.  In re Panther Mountain Land Dev., LLC, 

 (8th Cir. 2012).  
 Similarly, under Minnesota law, a waiver is “an intentional relinquishment of a known 
 right, and it must clearly be made to appear from the facts disclosed.”  Slidell, Inc. v. 
 Millennium Inorganic Chems., Inc., 

 (8th Cir. 2006) (citation omitted); 

 W. Cas. & Sur. Co. v. Beverforden, 

 (8th Cir. 1937) (“A waiver is a voluntary 
 relinquishment of a known right, the intended giving up of a known privilege or power.”). 
      Here, Intervenors have not pled any change in reliance base upon Southern’s 

 alleged delay in challenging the Coleman Act.  While Intervenors claim that they have 
 conformed their businesses to account for open wholesaling over the last forty years, 
 such allegations do not demonstrate that Intervenors changed their positions in reliance 
 on Southern’s actions.  Instead, Intervenors’ argument concedes that they have not made 

 any changes and have simply maintained the status quo.  Similarly, Intervenors have not 
 identified any facts demonstrating Southern intentionally relinquished a “known right” 
 related to challenging the Coleman Act’s constitutionality or that Southern intended to 
 waive a challenge to the Coleman Act.                                     

      Accordingly, the Court finds that neither laches nor waiver present issues of 
 material fact barring Rule 12(c) relief.                                  
V.  SOUTHERN’S MOTION FOR JUDGMENT ON THE PLEADINGS                         
    A.   Dormant Commerce Clause                                         
    The Commerce Clause in Article I, Section 8, of the United States Constitution 

grants Congress the power to regulate interstate commerce.  U.S. Const. art. I, § 8, cl. 3. 
The Commerce Clause “has long been understood to have a ‘negative’ aspect that denies 
the States the power unjustifiably to discriminate against or burden the interstate flow of 
articles of commerce.”  Or. Waste Sys., Inc. v. Dep't of Envtl. Quality of State of Or., 

  (1994);  see  also  S.D  Farm  Bureau,  Inc.,

  (“The  dormant 
Commerce Clause is the negative implication of the Commerce Clause: states may not 
enact laws that discriminate against or unduly burden interstate commerce.”).  State law 

discriminates in violation of the dormant Commerce Clause when the law “mandate[s] 
‘differential treatment of in-state and out-of-state economic interests that benefits the 
former and burdens the latter.’” Granholm, 

 (quoting Or. Waste Sys., 

).                                                              

    Under Section 2 of the Twenty First Amendment, States are allowed to regulate 
the “transportation or importation . . . for delivery or use therein of intoxicating liquors.”  
U.S. Const. amend. XXI, § 2.  While the Supreme Court initially interpreted Section 2 as 
conferring the power to regulate alcohol in ways that would normally violate the dormant 

Commerce Clause, the Supreme Court’s modern jurisprudence recognizes that Section 2 
does not provide a blanket authorization to take actions violating other constitutional 
provisions.  Granholm, 544 U.S. at 486–87.  Thus, although the three-tiered distribution 
system itself is unquestionably legitimate, previous cases establish that the ways in which 
a State implements a three-tiered system under the Twenty-first Amendment are not 

immune from dormant Commerce Clause scrutiny.  Instead, the appropriate question is 
whether  “the  principles  underlying  the  Twenty-first  Amendment  are  sufficiently 
implicated . . .to outweigh the Commerce Clause principles that would otherwise be 
offended.”  Bacchus Imports, Ltd. v. Dias, 

 (1984).      

    The Supreme Court has further clarified the amorphous relationship between the 
constitutional provisions by stating that the Twenty-first Amendment provides States 
with the ability to enact measures that are “appropriate to address the public health and 

safety effects of alcohol use and [] serve other legitimate interests” but prohibits “States 
[from  adopting]  protectionist  measures  with  no  demonstrable  connection  to  those 
interests.”  Tenn. Wine & Spirits, 

.  The Eighth Circuit has closely followed 
this tenant by upholding laws that “’serve[] valid health, safety, and regulatory interests’” 

as well as licensing requirements and restrictions that are “essential” components of a 
three-tiered system.  Sarasota Wine Market, LLC v. Schmitt, 

, 1181–82 (8th 
Cir. 2021) (citing S. Wine and Spirits of Am., Inc., v. Div. of Alcohol and Tabaco Control, 

, 810–11 (8th Cir. 2013)).5                                   


    5 Numerous courts have similarly upheld essential or inherent components of a state’s 
three-tiered system when considering a dormant Commerce Clause challenge.  See Tenn. Wine 
& Spirits, 

 (invalidating a state liquor law under the dormant Commerce Clause 
when it “[was] not an essential feature of a three-tiered scheme[.]”); Byrd v. Tenn. Wine & Spirits 
Retailers Ass’n, 

 (6th Cir. 2018) (“[R]equiring wholesaler or retailer businesses 
to be physically located within Tennessee may be an inherent aspect of a three-tier system[.]”); 
    Therefore, this Court must decide whether the Coleman Act violates the dormant 
Commerce  Clause  and,  if  so,  whether  the  unconstitutional  aspects  are  essential 

components of Minnesota’s three-tiered system or otherwise serve valid interests that 
cannot be achieved without discriminatory means.                          
         1.   Facial Discrimination                                      
    A state law that is challenged on dormant Commerce Clause grounds is subject to 

a two-step analysis.  The Court first considers whether the challenged law discriminates 
against  interstate  commerce.    Or.  Waste  Sys.,  

.    If  the  statute  is 
discriminatory, it is “per se invalid.”  C & A Carbone, Inc. v. Town of Clarkstown, N.Y., 

 (1994).  If the law is not discriminatory, the second step of analysis requires 
that the law be struck down only if the burden it imposes on interstate commerce “is 
clearly excessive in relation to its putative local benefits.”  Pike v. Bruce Church, Inc., 

 (1970).                                                     

    The Supreme Court recognizes three forms of discrimination against out-of-state 
interests.  First, a state law may have an impermissible discriminatory purpose.  Bacchus 
Imports, 

.  Second, a law may facially discriminate against out-of-state 


Cooper v. Tex. Alcoholic Beverage Comm'n, 

 (5th Cir. 2016) (distinctions between 
in-state and out-of-state retailers and wholesalers are permissible “if they are an inherent aspect 
of the three-tier system.”); Wine Country Gift Baskets.com v. Steen, 

 (5th Cir. 
2010) (“[D]iscrimination that would be questionable, then, is that which is not inherent in the 
three-tier system itself.”); Brooks v. Vassar, 

 (4th Cir. 2006) (noting that 
challenging the requirement that out-of-state retailers sell through Virginia's three-tier system 
“is nothing different than an argument challenging the three tier system itself.”). 
interests.  Chem. Waste Mgmt. v. Hunt, 

 (1992).  Third and lastly, a law 
may have a discriminatory effect.  Maine v. Taylor, 

, 148 n. 19 (1986).   

    Southern argues that the Coleman Act is facially discriminatory and prohibits out-
of-state  products  and  producers  from  establishing  exclusive  distributorships  while 
explicitly exempting Minnesota producers and products.  Intervenors contend that the 
Coleman Act is not discriminatory because it applies the same requirements to both in-

state and out-of-state importers and additionally provides a mechanism allowing out-of-
state producers to qualify for the same exemptions that in-state producers enjoy. 
    The  Court  is  not  persuaded  by  Intervenors’  arguments.    A  law  is  facially 

discriminatory if it expressly provides for “differential treatment of in-state and out-of-
state economic interests that benefits the former and burdens the latter.”  Or. Waste Sys., 
511 U.S. at 99.  The Coleman Act explicitly permits alcohol produced or further refined in 
Minnesota  to  be  distributed  through  exclusive  wholesaler  agreements  in  order  to 

circumvent the open wholesaling requirement imposed on alcohol produced outside of 
Minnesota.  Although Intervenors are correct that the Coleman Act applies equally to all 
importers, the Coleman Act still disfavor out-of-state-producers by exempting Minnesota 
producers from the wholesaling requirement.  Further, Intervenors’ argument does not 

remedy the fact that the Coleman Act impermissibly discriminates against out-of-state 
products by prohibiting exclusive dealerships in the first place.         
    Intervenors’ argument that out-of-state producers and products may qualify for 
the exemptions in-state producers and products are privy to is similarly unpersuasive.  It 

is immaterial that out-of-state producers can qualify for the Coleman Act’s exemptions 
by producing or further refining their product in Minnesota.  A law that discriminates 
between in-state and out-of-state economic interests is impermissible regardless of the 
degree of disparate treatment because “the magnitude and scope of the discrimination 

have no bearing on the determinative question,” which is “whether discrimination has 
occurred.”  Assoc. Indus. of Mo. v. Lohman, 

 (1994).  The crucial fact is 
that  the  Coleman  Act  applies  different  requirements  to  out-of-state  producers  and 

products that would necessitate a workaround in the first place.  Moreover, it can hardly 
be said that a law comports with the dormant Commerce Clause by forcing out-of-state 
producers to further distill, refine, or blend their product within the state to be treated 
the same as domestic products.  Minn. Stat. § 340A.307, subd. 4.          

    The Coleman Act only prohibits exclusive distributorships of alcohol produced 
outside of Minnesota and expressly favors in-state producers and products by allowing 
them to enter into such exclusive agreements.  Accordingly, the Court finds that the 
Coleman Act facially imposes differential treatment of in-state and out-of-state economic 

interests and is facially discriminatory.                                 
         2.   Essential Element                                          
    Under  the  Twenty-first  Amendment,  the  Coleman  Act’s  open  wholesaling 

requirement may still be a constitutional exercise of the State’s right to regulate alcohol.  
The relevant question is whether the discriminatory provision is an essential component 
of a three-tiered system of regulation or otherwise “’serves valid health, safety, and 
regulatory  interests’”  for  which  there  are  no  other  non-discriminatory  alternatives.  

Sarasota, 

 (citing S. Wine and Spirits of Am., 731 F.3d at 810–11); Tenn. 
Wine & Spirits, 

.                                 
    Intervenors  argue  that  the  Coleman  Act  must  be  upheld  because  its  open 

wholesaling requirement is an essential element of Minnesota’s three-tiered system and 
serves valid interests by preventing market concentration, increasing competition, and 
reducing prices.  The Court finds that none of these reasons make the Coleman Act’s 
discriminatory provision an essential function of a three-tiered system.  

    The  Supreme  Court  in  Tennessee  Wine  &  Spirits  held  that  the  Twenty-first 
Amendment allows states to enact measures that its citizens believe are appropriate to 
address the public health and safety effects of alcohol use and to serve other legitimate 
interests, but it does not license the States to adopt protectionist measures with no 

demonstrable connection to those interests.  

.  While striking down the 
law at issue, the Supreme Court noted that the law was “ill suited to promote responsible 
sales and consumption practices” and “there [were] obvious alternatives that better serve 
that goal without discriminating against nonresidents.”  

.  In the Eighth 
Circuit, courts have upheld licensing requirements as essential elements of a state’s 

three-tiered  system  when  they  were  similar  to  laws  that  defined  the  extent  and 
requirements of the producer, wholesaler, and retailer tiers.  S. Wine & Spirits of Am., 731 
F.3dat 809 (citing Granholm, 

).  In Sarasota, the Eighth Circuit’s most recent 
case on the issue, the Eighth Circuit again found that a challenged licensure requirement 

was  an  essential  element  defining  the  three-tiered  system  because  the  licensure 
requirements applied even-handedly to all retailers and set forth the requirements 
allowing retailers to sell alcohol directly to consumers.  987 F.3d at 1183–84. 

    Here, the Coleman Act does not attempt to even-handedly regulate any form of 
Minnesota’s three-tiered structure like the licensure requirements in Sarasota.  Similarly, 
assuming that the Coleman Act was intended to reduce prices, as Intervenors assert, the 
law is not analogous to the residency requirement at issue in Southern Wine and Spirits 

that was intended to promote social responsibility and temperance.  

.  
Instead,  the  Coleman  Act  attempts  to  regulate  the  manner  in  which  out-of-state 
producers  offer  their  products  while  protecting  in-state  interests  from  the  same 
requirements.  In this light, the Coleman Act is more akin to Tennessee Wine & Spirits as 

a law that is “ill suited to promote responsible sales and consumption practices” when 
“there are obvious alternatives that better serve that goal without discriminating against 
nonresidents.” 

.  As Intervenors acknowledge while arguing that 
the Coleman Act is severable, there are a plethora of alternatives to discriminating against 
out-of-state producers and products—most easily by requiring all producers and products 

to be subject to open wholesaling and prohibited from exclusive distributorships.  Indeed, 
current proposed legislation in both the Minnesota Senate and House of Representatives 
provides this exact remedy.  Compare S.F. 3008, 92nd Leg., First Engrossment and H.F. 
2767, 92nd Leg, As Introduced, with Minn. Stat. § 340A.307, subds. 1, 4.  

    In sum, the Coleman Act facially discriminates against out-of-state producers and 
products, is not an essential element of Minnesota’s three-tiered system, and is ill suited 
to serve valid regulatory interests when non-discriminatory alternatives that better serve 

such goals exist.  Accordingly, the Court finds that the Coleman Act’s open-wholesaling 
requirement and prohibition against exclusive distributorships is unconstitutional. 
    B.   Severability                                                    
    The Court must also determine whether any of the Coleman Act’s unconstitutional 

provisions are severable.  Severability is a matter of state law.  See Leavitt v. Jane L., 

 (1996).  The Minnesota statute governing severability provides that: 
    Unless there is a provision in the law that the provisions shall not be 
    severable, the provisions of all laws shall be severable.  If any provision of a 
    law is found to be unconstitutional and void, the remaining provisions of 
    the law shall remain valid, unless the court finds the valid provisions of the 
    law are so essentially and inseparably connected with, and so dependent 
    upon, the void provisions that the court cannot presume the legislature 
    would have enacted the remaining valid provisions without the void one; or 
    unless the court finds the remaining valid provisions, standing alone, are 
    incomplete and are incapable of being executed in accordance with the 
    legislative intent.                                                  

.  The chapter encompassing the Coleman Act includes a severability 
clause.  Minn. Stat. §340A.910.  Therefore, the Court must consider whether the Coleman 

Act’s provisions are sufficiently interconnected such that the legislature would not have 
enacted  the  statute  in  its  severed  form  or  whether  the  valid  provisions  would  be 
incomplete and incapable of being executed in accordance with the legislative intent.  

.                                                     

         1.   The Void and Valid Provisions are Interconnected           
    Intervenors  contend  that  subdivision  1,  subdivision  2,  and  the  exceptions  in 
subdivision 4 of the Coleman Act are severable in various forms.  The Court will first 

consider whether “all the provisions are connected in subject-matter,  depending  on 
each  other,  operating  together  for  the  same  purpose,  or otherwise so connected 
together in meaning that it cannot be presumed the legislature would have passed the 
one without the other.”  State ex rel. Grozbach v. Common Sch. Dist. No. 65, 5  

 (Minn. 1952).                                                    
    While interpreting Minnesota law, the Eighth Circuit has held that a statute is not 
severable when the valid sections were “conceived together as a unified effort to regulate 
certain practices[.]”  Cellco P’ship v. Hatch, 

 (8th Cir. 2005).  In Cellco, 

the Eighth Circuit found that three valid provisions—a definitional section and two 
sections regarding conduct ancillary to the heart of the legislation’s purpose—worked in 
tandem with the void provision in order to achieve the legislature’s intent.  

  Here, 
subdivision  1  (nondiscriminatory  sales),  subdivision  2  (prohibited  practices),  and 
subdivision 4 (exceptions) are part of a singular scheme to regulate producers’ sale of 

their products.  Because of their dependency on each other, it is unlikely that the 
Minnesota  Legislature  would  have  passed  any  of  the  subdivisions  on  their  own.  
Subdivision  1  provides  a  general  rule,  subdivision  2  provides  examples  of  conduct 
breaching the rule, and subdivision 4 provides exceptions to the rule and conduct 

described in subdivisions 1 and 2 respectively.                           
    The subdivisions of the Coleman Act are connected in subject-matter, depend on 
each  other, and operate  together  for  the  same  purpose.  The Court finds that the 

subdivisions  of  the  Coleman  Act  are  therefore  sufficiently  interconnected  and  not 
severable.                                                                
         2.   The  Valid  Provision  Would  be  Incapable  of  Being  Executed  in 
         Accordance with the Legislature’s Intent                        

    Even if the provisions of the Coleman Act were not interconnected, the valid 
provisions would be “incomplete and [] incapable of being executed in accordance with 
the legislative intent.”  

.                           
    Both Intervenors and Southern direct the Court to Archer Daniels Midland Co. v. 
State ex rel. Allen, 

 (Minn. 1982) to support their respective positions 
regarding severability of the Coleman Act.  In Archer Daniels Midland, the Minnesota 

Supreme Court refused to sever a discriminatory tax on out-of-state products after 
determining that doing so would violate the legislature’s intent. Specifically, the court 
held that:                                                                

         [T]he unconstitutional language of the Act explicitly limits the four-
    cent  per  gallon  tax  reduction  to  Minnesota  gasohol.  This  indicates  a 
    legislative  intent  to  benefit  only  intrastate  concerns.  If  the 
    unconstitutional  language  of  the  Act  were  stricken  and  the  Act’s  tax 
    reduction  extended  to  out-of-state  concerns  such  as  [plaintiff],  this 
    legislative intent would be completely frustrated. We conclude, therefore, 
    that the remaining provisions of the Act, standing alone, are incapable of 
    being executed in accordance with the legislative intent.”           
Archer Daniels Midland Co., 

.  Intervenors contend that the Archer 
Daniels court invalidated the discriminatory law in toto because the “legislative intent 
[wa]s not at all clear.”  

  However, this is an incorrect reading of the case.  In the 
quotation Intervenors rely on, the Archer Daniels court was considering an argument that 
the discriminatory tax should be severed under State v. Minnesota Federal Savings & Loan 
Ass'n, 

 (1944).  

  The Archer Daniels court noted that the Minnesota 
Federal Savings court severed a discriminatory portion of an income tax statute because 
there was a clear legislative intent to sustain a limited application of the tax rather than 
to eliminate it completely.  

  The Archer Daniels court then noted that “[i]n this case, 
however, a similar legislative intent is not at all clear” and instead found that the 
legislature only intended to benefit intrastate concerns.  

  Contrary to Intervenors 
contentions, the Archer Daniels court did not refuse to sever the discriminatory tax 
because of a lack of legislative intent but, rather, refused to sever the discriminatory 
language of the tax because the legislature intended to benefit in-state actors and striking 
the discriminatory language would frustrate this intent.  

             

    Like  Archer  Daniels,  the  language  of  the  Coleman  Act  is  indicative  of  the 
Legislature’s intent to benefit Minnesota producers and products by exempting them 
from open wholesaling.  Moreover, the Legislature reaffirmed its intention when it 
amended the Coleman Act in response to an unfavorable Minnesota Supreme Court 

decision holding that alcohol processed within the state was regulated by the Coleman 
Act.  Compare Fed. Distillers, 229 N.W.2d at 155–56, with Minn. Stat. § 340A.307, subd. 
4(2).    Because  the  Minnesota  Legislature  initially  exempted  in-state  producers  and 

products from the Coleman Act and later doubled-down by amending the Coleman Act to 
rectify an unfavorable Minnesota Supreme Court decision applying the law to in-state 
products, the Court finds that severing the discriminatory language of the Coleman Act 
would not be consistent with the Legislature’s intent and is not the appropriate remedy. 

         3.   Certification to the Minnesota Supreme Court               
    Intervenors lastly argue that the Court should certify the issue of severability to 
the Minnesota Supreme Court.  The Court finds this step unnecessary.      
    Minnesota  law  provides  that  the  Minnesota  Supreme  Court  “may  answer  a 

question of law certified to it by a court of the United States . . . if the answer may be 
determinative of an issue in pending litigation in the certifying court and there is no 
controlling appellate decision, constitutional provision, or statute of this state.”  

, subd. 3.  Use of a State's certification procedure by a federal district court 
rests in the court's sound discretion.  Lehman Bros. v. Schein, 

, 390–91 (1974); 

Allstate Ins. Co. v. Steele, 

, 881–82 (8th Cir. 1996).  Although certification may 
“in the long run save time, energy, and resources and help[ ] build a cooperative judicial 
federalism,” it is never obligatory, even when state law is in doubt.  Lehman Bros., 416 
U.S. at 390–91.  A federal court's “most important consideration” in deciding whether to 

certify a question to a state court is whether it “finds itself genuinely uncertain about a 
question of state law[.]” Johnson v. John Deere Co., 

 (8th Cir. 1991) 
(quoting Tidler v. Eli Lilly & Co., 

 (D.C. Cir. 1988)).  Certification “is not a 

procedure by which federal courts may abdicate their responsibility to decide a legal issue 
when the relevant sources of state law available to it provide a discernible path for the 
court to follow.”  Tidler, 

.  Absent a “‘close’ question of state law or the 
lack of state sources, a federal court should determine all the issues before it.” Johnson, 

 (citing Perkins v. Clark Equip. Co., 

 (8th Cir. 1987)). 
    Though there are multiple overlapping arguments concerning the severability of 
the Coleman Act, neither the arguments nor the principles underlying the severability 
issue are so complex that the Court is faced with a close or genuine question.  The Court 

will decline to certify the severability issue to the Minnesota Supreme Court. 
    For the forgoing reasons, the Court finds that the Coleman Act’s discriminatory 
provisions are unconstitutional and, because the law in not severable, is unconstitutional.  
 Intervenors’ challenges to Southern’s standing are unsuccessful, as is their attempt to 
 preclude Rule 12(c) relief through their affirmative defenses.  The Court will therefore 

 grant Southern’s Motion for Judgment on the Pleadings.6                   
VI.  JOINT MOTION FOR STIPULATED JUDGMENT                                   
      Because Southern’s Motion for Judgment on the Pleadings is granted, the Court 
 need not consider the Joint Motion for Stipulated Judgment and will deny the motion as 

 moot.                                                                     

      Based on the foregoing, and all the files, records, and proceedings herein, IT IS 
 HEREBY ORDERED that:                                                      
      1.  Plaintiffs’ Motion for Judgement on the Pleadings [Docket No. 84] is GRANTED 
        as follows:                                                        

           a.  The Coleman Act, as reflected in Minn. Stat. §340A.307, is DECLARED 
             facially unconstitutional as a violation of the dormant Commerce Clause 
             of the United States Constitution.                            

           b.  Defendant John Harrington, in his official capacity as Commissioner of 
             the  Minnesota  Department  of  Public  Safety,  is  PERMANENTLY 
             ENJOINED from enforcing the Coleman Act, as reflected in Minn. Stat. 
             §340A.307.                                                    


      6 Intervenors’                                                       
     2.  Entry of judgment is STAYED for sixty (60) days pending the resolution of the 
        proposed legislation in the Minnesota Legislature. 
     3.  Plaintiffs’ and  Defendant’s Joint Motion for Stipulated Judgment [Docket No. 
        10] is DENIED as MOOT. 
     4.  Intervenors’ Objection to the Magistrate Judge's Order Denying the Motion to 
        Stay [Docket No. 92] is DENIED as MOOT. 
     5.  Intervenors’ Objection to the Magistrate Judge's Order Denying the Motion to 
        Amend [Docket No. 132] is DENIED as MOOT. 
     6.  Plaintiffs’,  Defendant’s,  and  Intervenors’  Joint  Motion  Regarding  Continued 
        Sealing [Docket No. 133] is GRANTED. 
     LET JUDGMENT BE ENTERED ACCORDINGLY. 

DATED:  March 29, 2022                           Jobo     (bation 
at Minneapolis, Minnesota.                         JOHN R. TUNHEIM 
                                               Chief Judge 
                                               United States District Court 

                                        29