Jack Daniel may have to make room at the bar, following an appeals court ruling.
The U.S. Sixth Circuit Court of Appeals said that Tennessee's liquor license requirement unlawfully discriminates against out-of-towners. The two-year residency requirement is unconstitutional, the court said in Byrd v. Tennessee Wine and Spirits Association.
That was good news for two companies that sued to do business in the state. For Jack Daniel's whiskey or Tennessee bourbon, not so much.
One Whiskey, One Bourbon
Under Tennessee Code Section 57-3-204, a person must have been a bona fide resident for two years before applying. To renew a license, the state imposes a ten-year residency requirement.
Two businesses applied for licenses, but they did not qualify under the residency requirements. The conflict went to a federal district judge, who ruled that the residency requirements violated the U.S. Constitution.
The Sixth Circuit agreed. The appeals panel looked to Bacchus Imports, Ltd. v. Dias, which held Hawaii's tax exemption for pineapple wine violated the dormant Commerce Clause by discriminating against imported liquors.
The panel saw some ambiguity in later decisions, but followed the Fifth Circuit in resolving the question. To preserve any valid portions of the Tennessee statute, the Sixth Circuit severed only the residency requirements.
Doctrine of Elision
The appeals court approached severing the statute delicately. It said the doctrine of elision is not favored.
"The rule of elision applies if it is made to appear from the face of the statute that the legislature would have enacted it with the objectionable features omitted, and those portions of the statute which are not objectionable will be held valid and enforceable provided, of course, there is left enough of the act for a complete law capable of enforcement and fairly answering the object of its passage," the court said.
Ultimately, the judges decided that the legislature would have enacted the statute with the unconstitutional portion omitted.They then severed Section 57-3-204(b)(2)(A), (3)(A)-(B), and (3)(D) from the rest of the law.