Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—6th Cir.: Ohio direct wine delivery and personal transport restrictions are unconstitutional under dormant Commerce Clause, (May 7, 2026)

By Justin Marcus Smith, J.D.

The Sixth Circuit said the district court could use its broad discretion to fashion equitable remedies to address only the discriminatory aspects of challenged statutes.

A district court erred when it determined that certain Ohio restrictions on wine direct delivery and personal transport were constitutional, held the United States Court of Appeals for the Sixth Circuit. The district court should have applied the Tennessee Wine test to the restrictions at issue rather than to Ohio’s three-tier alcohol regulatory system as a whole. Further, the court held that the plaintiffs had standing because their injuries were redressable if the district court were to exercise its discretion to fashion equitable remedies addressing just the out-of-state discriminatory aspects of the wine restrictions under the dormant Commerce Clause. As for the constitutionality of the wine restrictions, the Sixth Circuit found Ohio did not appear to have solid health and safety reasons for them. The court could not exclude that protectionism was the predominant effect of the restrictions. In any event, there was no actual three-tier regulatory system for wine given the exceptions specific to it. The Sixth Circuit remanded with instructions to (1) enter summary judgment for the Ohio consumer and Illinois wine retailer plaintiffs; (2) declare both restrictions unconstitutional; and (3) determine the appropriate remedies for the constitutional injuries inflicted by the restrictions (Block v. Canepa, No. 25-3305 (6th Cir. May 6, 2026)).

Background. An Ohio consumer and an Illinois wine retailer challenged Ohio laws that prohibit out-of-state retailers from shipping wine directly to Ohio consumers (the direct ship restriction) and that place a 4.5 liter limit on Ohio consumers who transport wine into the state during any thirty-day period (the transportation restriction). The plaintiffs filed suit in 2020 against Ohio Attorney General David Yost and other Ohio liquor code enforcement officials (collectively, the Ohio defendants). They plaintiffs alleged the restrictions impermissibly discriminate against out-of-state businesses in violation of the Commerce Clause. They sought declaratory judgment that the laws are unconstitutional and an injunction barring the defendants from enforcing both laws.

In 2022, the district court held the Ohio laws constitutional and granted summary judgment to the Ohio defendants. The district court held the direct ship restriction was a valid exercise of Ohio’s Twenty-first Amendment power to regulate the sale of alcohol within its borders. The district court also found the plaintiffs did not have standing to challenge the transportation restriction.

On appeal, the United States Court of Appeals for the Sixth Circuit reversed the district court determination that the direct ship restriction was constitutional. The Sixth Circuit said the district court erred in treating a Sixth Circuit decision as creating a per se rule that state restrictions on direct-to-consumer wine shipments by out-of-state retailers were constitutional. The Sixth Circuit also reversed the district court determination that the plaintiffs lacked standing to challenge the transportation restriction.

The Sixth Circuit remanded with instructions to the district court to weigh the evidence and apply how the restrictions fare under the Tennessee Wine test. See Tennessee Wine & Spirits Retailers Association v. Thomas, 588 U.S. 504 (2019). Under the Tennessee Wine test, a discriminatory law will survive a Commerce Clause challenge if it (1) is justifiable on some legitimate non-protectionist ground, like public health or safety; and (2) has the predominant effect of advancing that legitimate goal, rather than protectionism.

After additional discovery on remand, the district court found the restrictions were integral to Ohio’s three-tier system for regulating the sale and distribution of alcohol at the manufacturer, wholesale, and retail tiers. In granting summary judgment to the Ohio defendants, the district court also found the plaintiffs’ evidence insufficient to impeach or significantly undermine the Ohio defendants’ health and safety justifications.

Standing. On de novo review of the parties’ standing arguments, the Sixth Circuit held the plaintiffs had standing to challenge the direct ship and transportation restrictions.

Direct ship standing. The court began its standing analysis with a review of how a federal court may cure a discriminatory injury that violates the dormant Commerce Clause by either “leveling up” or “leveling down” the restriction. Leveling up entails extending the withheld benefit to out-of-state interests. That would mean allowing out-of-state retailers to ship directly to Ohio consumers. Leveling down would mean leaving the direct ship restriction intact but also applying it to in-state retailers. Either approach would redress discriminatory injury by eliminating disparate treatment between in- and out-of-state retailers. The plaintiffs sought injunctive relief to level up, but the Sixth Circuit said federal courts have broad discretion to fashion an equitable remedy and level down in this context with a “partial redress” satisfying the standing requirement.

As for the parties’ standing arguments, AG Yost argued the plaintiffs did not challenge Ohio Revised Code § 4303.35. Yost reasoned that even if the district court enjoined the direct ship restriction, § 4303.35 would still require out-of-state retailers to obtain all of the wine they ship to Ohio consumers exclusively from sellers located in Ohio, insofar as Ohio issues A and B permits only to Ohio manufacturer and wholesaler entities, respectively.

The court found this argument unconvincing, and actually incorrect, because § 4303.35 does not cover out-of-state retailers with no physical presence in Ohio. It does not regulate out-of-state retailers like the Illinois retailer plaintiff. In 2021, Ohio stopped allowing some out-of-state retailers to ship wine directly to Ohio consumers under an S permit, rather than a C-2 retail permit.

The court continued that even if Yost’s argument had been correct, the plaintiffs’ injury would still be redressable by leveling down to enjoin in-state retailer direct-to-consumer wine shipments. Or, the court could level up by enjoining the § 4303.35 in-state purchase requirement. The court could use its equitable powers to redress, and that meant Yost’s standing argument failed.

The court added that the Wholesale Beer and Wine Association of Ohio (WBWAO) was incorrect in arguing that the court did not have Article III power to engage in “impermissible legislative drafting.” The court said it certainly had the power to level down, a “straightforward revocation of a benefit is well within an Article III court’s powers.” It could also level up, but the fact that it could level down was enough to satisfy the redressability element.

WBWAO contended the lack of facial discrimination meant the plaintiffs did not have standing, and WBWAO was correct that the direct ship restriction did not explicitly differentiate between in- and out-of-state retailers. However, the court found that Ohio clearly understood the statutes only authorized direct-to-consumer shipping from retailers with an in-state physical presence. The Ohio code was explicit about situations where out-of-state entities could sell wine in Ohio without going through Ohio wholesalers.

Transportation standing. As for the transportation restriction, AG Yost made a similar argument that Ohio Rev. Code § 4301.20(L), which contained the restriction, was an exception to Ohio’s blanket ban on transporting any wine into the state under § 4303.25. He said the § 4303.25 blanket ban would remain intact and forbid consumers from bringing in any out-of-state wine, even if the court were to enjoin § 4301.20(L) leaving the plaintiffs’ injury unredressed.

The court said Yost’s argument was “misplaced” because it did not apply to the instant case. Enjoining the § 4301.20(L) six-bottle limit would cure the plaintiffs’ injury even with § 4303.25 intact, because § 4301.20(L) would instead clarify that § 4303.25 allows of-age, personal use importation of up to 288 bottles per year under Ohio Rev. Code § 4303.236(A). This would remedy the discrepancies between the out-of-state and in-state wine amounts a consumer may buy and transport, thus curing the consumer plaintiff’s injury. Yosts’ argument only worked if the court accepted his contention that it had to strike down the entirety of § 4301.20(L), not just the out-of-state discriminatory parts. The plaintiffs always confined their challenge to the discriminatory provisions. The plaintiffs had standing to challenge the transportation restriction insofar as the court could equitably redress their injury.

Constitutionality. On de novo review of the constitutional challenges, the court disagreed with the district court conclusion that both restrictions were valid exercises of Ohio’s Twenty-first Amendment authority to regulate alcohol sales within its borders. The record as a whole did not support the restrictions as legitimate health and safety measures. The predominant effect was protectionism because the connection to health and safety objectives was “tenuous or nonexistent[.]” The court held both restrictions unconstitutional under the dormant Commerce Clause.

The district court erred in applying the Tennessee Wine test to Ohio’s three-tier system as an integral whole. The Twenty-first Amendment does not sanction every discriminatory feature a state may incorporate into its three-tiered scheme. It protects only basic, essential features of the three-tier regulatory model. Each variation beyond that must be judged on its own features.

The Sixth Circuit said it had “little difficulty” in concluding the restrictions here were neither basic nor essential components of a three-tier system. Many states with three-tier systems allow direct both in- and out-of-state wine retailers to ship wine directly to residents. Transportation limits are also not essential because they do nothing to keep producers, wholesalers, and retailers distinguishable.

Maybe more importantly, extensive exceptions for wine meant that Ohio does not actually have a three-tier system with respect to wine. Out-of-state wineries can already direct ship up to 288 bottles of wine to each Ohio household annually. They can also sell unlimited wine to Ohio retailers without going through a wholesaler.

Because neither restriction was essential to Ohio’s three-tier system, the district court should have applied the Circuit’s “normal framework” for analyzing the constitutionality of state alcohol laws and considered each restriction in light of the Tennessee Wine test.

Direct ship constitutionality. Applying the Tennessee Wine test to the direct ship restriction, the Sixth Circuit found the record as a whole showed the restriction had only a “tenuous and unsubstantiated” connection with Ohio’s three purported health and safety objectives: (1) on-site retailer safety inspections; (2) imposition of price controls to promote temperance; and (3) curbing underage drinking.

Ohio offered only one example of how the physical presence requirement helped root out, specifically, unsafe wine, and that was only where an unlicensed amateur producer used a home wine-making kit. Ohio also already allows in-shipment of large amounts of wine while tracking out-of-state winery shipments without requiring an in-state presence.

As for price controls to promote temperance, Ohio could control the number of permits it issues to out-of-state retailers to avoid flooding the market with cheap wine. The evidence was mixed on whether states that allow shipping by out-of-state retailers actually have higher rates of wine consumption. There was insufficient evidence showing that the direct ship restriction was necessary to promote temperance by controlling the price of wine and collecting taxes from its sale.

Curbing underage drinking was the least-convincing justification for the direct ship restriction. Entities that sell and ship wine to consumers are already supposed to make a bona fide effort to confine sales and delivery to those at least 21 years old. Altogether, the court held the direct ship restriction unconstitutional because it could not exclude protectionism as the predominant effect.

Transportation constitutionality. Applying the Tennessee Wine test to the transportation restriction, the court found the Ohio defendants advanced “virtually no arguments or evidence” to show that the restriction itself protects public health and safety. Their entire argument depended on a finding that it was “essential” to Ohio’s three-tier system, but it was clearly not essential because there was no three-tier system for wine. The state already allowed Ohioans to personally transport up to 72 un-inspected bottles of out-of-state wine into the state every year. More importantly, Ohio already allows out-of-state wineries to directly ship up to 288 bottles of wine to each household every year and to ship an unlimited quantity to Ohio retailers. These were already big loopholes belying the inspection health and safety rationale. The Ohio defendants also presented no concrete evidence that Ohio would be flooded with out-of-state wine, causing dangerously low prices for temperance, without a personal transport limit. The court held the transportation restriction unconstitutional accordingly.

Remand. The Sixth Circuit remanded with instructions to engage in further consideration of remedies. Enjoining the six-bottle limit of § 4301.20(L) would allow Ohioans to bring 288 bottles of wine into the state annually regardless of whether it comes from an in-state or out-of-state source. That would hew more closely to legislative intent that a leveling down to six bottles, and Ohio Revised Code § 1.50 provides for severability.

The remedy for the direct ship restriction was more complicated. The Sixth Circuit said it did not have enough information to guide the district court here, except to say the district court must choose a remedy that adheres best to legislative intent without violating the Constitution, and that it should consider § 1.50 severability.

The Case is No. 25-3305.

Judge: Clay, E.

Attorneys: James Alexander Tanford (Epstein, Cohen, Seif & Porter LLP) for Derek Block. Kaitlyn M. Kachmarik, Office of the Attorney General, for James V. Canepa.

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