Case: 61CH1:17-cv-02064 Document #: 43 Filed: 07/02/2018 Page 1 of 19

IN THE CHANCERY COURT OF RANKIN COUNTY, MISSISSIPPI

JIM HOOD, ATTORNEY GENERAL
OF THE STATE OF MISSISSIPP, ex
rel. THE STATE OF MISSISSIPPI
COMMISSIONER OF REVENUE HERB
FRIERSON, MISSISSIPPI DEPARTMENT
OF REVENUE PLAINTIFF

VS. CIVIL ACTION NO 17-02064

WINE EXPRESS, INC.
THE CALIFORNIA WINE CLUB,
GOLD MEDAL WINE CLUB, AND
BOTTLE DEALS INC. DEFENDANTS

MEMORANDUM IN SUPPORT OF
MOTION TO DISMISS

Defendants Bottle Deals, Inc., Gold Medal Wine Club, and Wine Express, Inc.,
by and through Joel W. Howell, III, their attorney, provide this memorandum in support
of their motion to dismiss this action, and, in support thereof, would show:
I. Introduction
The Amended Complaint suffers from multiple and fundamental flaws.
First, it runs afoul of the 21st Amendment because Mississippi has no authority to go to
California and New York, enter into an unquestionably legal purchase transaction in those
states, take title and possession to the purchased alcohol in California and New York, and then
to create an alleged crime by arranging to have the alcohol delivered to the state agents in
Mississippi. Any crime committed was committed by the Mississippi agents, not by the
Defendant merchants legally doing business in their own marketplace subject to the laws of
their own marketplace.
Second, the Amended Complaint violates constitutional standards of Due Process,
because it fails to allege facts sufficient to show the “minimum” level of contacts required
between Defendants and Mississippi.
Third, the Amended Complaint alleges only tenuous and sporadic connections between
the forum State of Mississippi and Defendants, who are New York and California

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corporations, doing business in New York and California. Even had Plaintiffs pled that
Mississippi’s long-arm statute should apply, it could not apply here. Defendants performed no
contracts (or parts thereof) in Mississippi, nor did any of them otherwise do business here. For
this reason alone, this Court lacks personal jurisdiction over Defendants.
Defendants respectfully request that this Court dismiss the Amended Complaint, with
prejudice.
II. Relevant Facts
A. Plaintiffs Filed This Case Against Nonresident Corporations Not Licensed To Do
Business In Mississippi, But Failed To Plead The Long-Arm Statute.

This case was originally filed in December 2017 by Plaintiffs Attorney General Jim
Hood and Commissioner of Revenue Herb Frierson (“Plaintiffs”). Plaintiffs filed this case for
injunctive relief against four out-of-state corporations, including Bottle Deals, Inc., Wine
Express, Inc. and Gold Medal Wine Club (“Defendants”). A subsequent amended complaint
was filed in January 2018 adding monetary relief.

Defendants are out-of-state alcohol retailers, none of whom have agents for service of
process in Mississippi. (Am. Complaint, ¶¶3-6.) In addition, Defendants possess no
Mississippi business permits. (Id., ¶11.) The only jurisdictional allegations of the complaint are
under Article 6, §159 of the Mississippi Constitution of 1890 and Miss. Code §9-5-81 (paragraph one
of the amended complaint). The Mississippi Long-Arm Statute Miss. Code S9-5-81 is not pled.
B. Plaintiffs Allege Sporadic Contacts Between Defendants And Mississippi.
Plaintiffs’ sole allegations against Defendant Bottle Deals, Inc. concern two occasions,
between March 2 and October 20, 2017, where they allege that it “caused to be dispatched” a
total of three bottles of whisky and champagne to Mississippi, one of which went to a “dry”
county. (Id., ¶¶12-13.) Those sales involved total payments of $28.35. (March 27, 2018
Affidavit of Maneet Anand [“Anand Affidavit”].)
Similarly, Plaintiffs’ sole allegations against Defendant Wine Express, Inc. concern six
occasions, between February 17 and November 16, 2017, where they allege that it “caused to

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be dispatched” a total of seven bottles of wine to Mississippi, five of which went to “dry”
counties, and 2 of which were addressed to minors. (Am. Complaint, ¶¶14-19.) Those sales
involved total payments of $225.34. (March 27, 2018 Affidavit of Josh Farrell [“Farrell
Affidavit”].)
Plaintiffs’ only allegations against Defendant Gold Medal Wine Club concern three
occasions, between February 1 and October 14, 2017, where they allege that it “caused to be
dispatched” a total of five bottles of wine to Mississippi, two of which went to “dry” counties
and one of which was addressed to a minor. (Am. Complaint, ¶¶24-26.) Those sales involved
total payments of $181.45. (March 2, 2018 Affidavit of David Chesterfield [“Chesterfield
Affidavit”].)
C. Defendants Entered Into, Consummated And Fully Performed All Contracts
Outside Mississippi.

Defendants Bottle Deals, Inc. and Wine Express, Inc. are New York corporations that
do their business in New York. (Anand Affidavit; Farrell Affidavit.) Gold Medal Wine Club
is a California corporation that does its business in California. (Chesterfield Affidavit.)
All of the sales alleged in the Amended Complaint were made online. (Anand
Affidavit, ¶2; Farrell Affidavit ¶2; Chesterfield Affidavit, ¶2.) There is no legal difference
between an on-line transaction and one made physically in person Butler v. Beer across
America, 83 F.Supp.2d 1261 (N.D. Ala., 2000). In each transaction, Defendants received,
processed, finalized and completed the sales orders in their places of business in New York
and California. At that time, title and control of the purchases was passed to the buyers in the
State of New York and the State of California. (Anand Affidavit, Ex. 3; Farrell Affidavit, Ex.
1; Chesterfield Affidavit, Ex. 1.) Indeed, Wine Express in New York charged New York sales
tax. (Farrell Affidavit, Ex. 3).
1. Title To All Goods Passed Outside Mississippi, And Buyers Assumed All
Risks And Responsibilities Related to Delivery.

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As a condition of sale, Defendants’ sales contracts specified that title to all goods
passed to the buyers at the time of sale and at the sellers’ place of business – New York and
California. (Anand Affidavit, ¶2 and 7, Ex. 3; Farrell Affidavit ¶10 and Ex. 1; Chesterfield
Affidavit, ¶8 and Exs. 1-2.). the buyers expressly assumed all risks and responsibilities
thereafter, including those related to delivery. (Anand Affidavit, ¶¶2 and 7, Ex. 1; Farrell
Affidavit ¶10; Chesterfield Affidavit, ¶8 and Exs. 1-2.)
Defendant Gold Medal’s sales contracts specified that “the buyer is solely responsible
for the shipment of wine and other goods purchased and for determining the legality and the
tax/duty consequence of having the wine and other goods shipped to the applicable
destination” and “Title to, and ownership of, all wine passes from seller to buyer in the State of
California.” (Chesterfield Affidavit, Ex. 1.) Similarly, Defendant Bottle Deals, Inc.’s sales
contracts expressly required buyers to “certify that it is legal to ship alcohol into the state and
county of the intended recipient” and “Title to all wine purchases passes to the purchaser at
our premises in Syosset, NY.” (Anand Affidavit, Exs. 1 and 3.) Defendant Wine Express’
sales contracts stated that it “make[s] no representation to the legal rights of anyone to ship or
import wines into any state outside of New York,” “Title passes to the buyer in New York and
Westchester County, NY sales tax is collected.” and that the “buyer is solely responsible for the
shipment of alcoholic beverage products.” (Farrell Affidavit, Ex. 1.).
These were the terms of sale, and the terms were agreed to by the agents of the State of
Mississippi when they traveled to New York and California to make their purchases. It could
not be clearer that the agents of the state of Mississippi owned and controlled the alcohol they
purchased in New York and California. Butler v. Beer across America, 83 F.Supp.2d 1261
(N.D. Ala., 2000). From the point of sale in New York and California onward the agents of
the state of Mississippi expressly and legally assumed full responsibility for compliance with
Mississippi law. That the Mississippi agents falsely completed the sales documentation is not
the responsibility of the Defendants, and is not sufficient to bring the Defendants within the
jurisdiction of the state of Mississippi.

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All sales were made “FOB” Defendants’ places of business in New York and
California. (Anand Affidavit, ¶3 and 7, Ex. 1; Farrell Affidavit, Ex. 1; Chesterfield Affidavit,
¶8 and Exs. 1-2.) In each case, after title to the goods had passed, Defendants assisted the
buyers in arranging for the goods (then owned by the buyers), via common carrier, to
addresses specified by the buyers. (Anand Affidavit, Ex. 3; Farrell Affidavit, Ex. 3;
Chesterfield Affidavit, ¶8 and Ex. 1.).
2. Each Buyer Represented He Was 21 Or Older.
As a condition of sale, all buyers affirmatively represented that they were 21 or older.
(Anand Affidavit, ¶2 and Ex. 1; Farrell Affidavit ¶10 an Ex. 3; Chesterfield Affidavit, ¶8 and
Ex. 1.) Defendant Bottle Deals’ sales contracts also required buyers to certify that the
recipients of the package would be at least 21 and legally permitted to possess alcohol.
(Anand Affidavit, ¶7 and Exs. 1 and 3.) Likewise, Defendants Wine Express’ and Gold
Medal’s sales contracts notified buyers that, at the time of delivery, the person receiving the
delivery would have to show identification proving that he or she was over 21. (Farrell
Affidavit, Ex. 1; Chesterfield Affidavit, Exs. 1-5.)
III. This Court Lacks Personal Jurisdiction Over Defendants. Mississippi’s Long-Arm
Statute Does Not Apply; Defendants Neither “Contracted” Nor “Did Business” In
Mississippi.
It is an elementary requirement that personal jurisdiction must always be established
before a court has power to render any judgment. Insurance Corp. of Ireland v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 702, 102 S. Ct. 2099, 72 L. Ed. 2d 492 (1982). Where, as
here, a plaintiff makes claims against a non-resident, out-of-state corporation, that plaintiff
bears the burden of making a prima facie case showing that Mississippi’s long-arm statute
applies. (Rittenhouse v. Mabry, 832 F.2d 1380, 1382 (5th Cir. 1987); Classic Motel, Inc. v.
Coral Group, Ltd., 149 F.R.D. 528 (S.D. Miss. 1993) (affirming dismissal).)
The Mississippi long-arm statute authorizes jurisdiction over non-residents who: (1)
make a contract with a Mississippi resident to be performed in whole or in part by any party in

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Mississippi; (2) commit a tort in whole or in part in Mississippi; or (3) do any business or
perform any character of work or service in Mississippi. (Miss. Code § 13-3-57.) To qualify
under the third prong of the statute, the “doing business” prong, a “nonresident corporation
must purposefully do some act or consummate a transaction in Mississippi” from which the
cause of action arises. (Hogrobrooks v. Progressive Direct, 858 So.2d 913, 921 (Miss. Ct.
App. 2003) (emphasis added)(affirming dismissal); Gross v. Chevrolet Country, Inc., 655
So.2d 873, 877 (Miss. 1995)(affirming dismissal).)
Plaintiffs cannot meet their burden here, because the long-arm statute simply does not
apply. Defendants entered into, consummated, fully performed, and received payment for all
sales contracts in New York and California, not Mississippi. (Anand Affidavit, Ex. 3; Farrell
Affidavit, Ex. 1; Chesterfield Affidavit, Ex. 1.)
A. Due Process Also Mandates Dismissal.
1. Defendants Have Not Engaged In Constitutionally Cognizable “Minimum
Contacts” With Mississippi.

Even if Plaintiffs could plead a prima facie case showing that the long-arm statute applied -
- which they did not -- constitutional Due Process further requires: (1) “minimum contacts”
between Defendants and Mississippi that “come about by [] action[s] of the defendant[s]
purposefully directed towards the forum State”; (2) a nexus between Defendants’ contacts
and Plaintiffs’ claims; and (3) that exercising jurisdiction over Defendants be fair and
reasonable. (Sorrells v. R&R Custom Coach Works, Inc., 636 So.2d 668, 674 (Miss. 1994)
(approving dismissal for lack of personal jurisdiction over out-of-state manufacturer)(emphasis
in original); Wilson v. Highpointe Hospitality, Inc., 62 So.3d 999 (2011)(citing Hanson v.
Denckla, 357 U.S. 235, 253 (1958) (affirming dismissal))

Courts examine the facts of each case to assess “defendants’ contacts with the forum
State itself, not [] defendants’ contacts with persons who reside there.” (Nordness v.
Faucheux, 170 So.3d 454 (Miss. 2015) (reversing denial of dismissal).) Jurisdiction comports
with Due Process only if Defendants “deliberately” engaged in “significant activities” in

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Mississippi, or if Defendants “create ‘continuing obligations’ between [themselves] and

residents of the forum.” (Sorrells, 636 So.2d at 674.) Defendants’ contacts with Mississippi
must be “regular and continuous rather than sporadic and isolated.” (Dunn v. Yager, 58
So.3d 1171, 1186 (Miss. 2011).)

Here, Defendants did not “deliberately” engage in “significant activities” in Mississippi;

Defendants did not engage in any activities in Mississippi. (Anand Affidavit, Ex. 3; Farrell
Affidavit, Ex. 1; Chesterfield Affidavit, Ex. 1.) They entered into, consummated, fully
performed and received payment for the sales transactions in New York and California. (Id.)
Likewise, Defendants created no “continuing” obligations between themselves and Mississippi
residents. The contracts were all for one-time sales. They specified that title passed to the
buyers at the time of sale and that the buyers were solely responsible for any shipment.
(Anand Affidavit, ¶3 and 7, Ex. 1; Farrell Affidavit, Ex. 1; Chesterfield Affidavit, ¶8 and Exs.
1-2.)

In addition, Defendants’ contacts with Mississippi were not “regular and continuous.”
Plaintiffs’ allegations against Defendant Bottle Deals, Inc. concern only two occasions and a
total of three bottles of alcohol. (Am. Compl., ¶¶12-13.). Plaintiffs’ allegations against
Defendant Wine Express concern only six occasions and a total of seven bottles of wine. (Id.,
¶¶14-19.) Similarly, Plaintiffs’ allegations against Defendant Gold Medal concern only three
occasions and a total of five bottles of wine. (Id., ¶¶24-26.) These meager allegations reflect
tenuous contacts between Defendants and persons purportedly residing in Mississippi that are
sporadic and isolated, not regular or continuous.
2. Defendants’ Mere Placement Of Products Into The Stream of Commerce
With Knowledge That They Would Be Shipped To Mississippi Did Not
Amount To “Minimum Contacts.”
It is well-established that Plaintiffs must show that Defendants did more than simply
place their products into the stream of commerce knowing those products would end up in
Mississippi. The U.S. Supreme Court and the Mississippi Supreme Court agree that “a

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defendant’s awareness that the stream of commerce may or will sweep the product into the
forum State does not convert the mere act of placing the product into the stream into an act
purposefully directed toward the forum State.” (Sorrells, 636 So.2d at 674, citing Asahi Metal
Inc. Super. Ct., 480 U.S. 102, 112 (1987). Thus, “[o]nce a product has reached the end of the
stream [of commerce] and is purchased, a consumer’s unilateral decision to take a product to a
distant state, without more, is insufficient to confer personal jurisdiction over the manufacturer
or distributor.” (Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266 (5th Cir. 2006), citing
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298 (S. Ct. 1980).)
Personal jurisdiction does not exist in out-of-state sale cases, even where the out-of-state
seller knows that the buyer intends to take the product into the forum state and assists the
buyer in arranging post-transaction delivery. (See Charia v. Cigarette Racing Team, Inc., 583
F.2d 184 (5th Cir. 1978)(affirming dismissal); Benjamin v. Western Boat Building Corp., 472
F.2d 723 (5th Cir. 1873)(same), Cert. Denied, 414 U.S. 830; R. Clinton Const. Co. v. Bryant &
Reaves, Inc., 442 F.Supp. 838 (1977).) In Charia, the Fifth Circuit upheld a Louisiana District
Court’s dismissal of a case for lack of personal jurisdiction over a Florida boat manufacturer
whose sole contacts with Louisiana had been its sale, in Florida, of a boat to a Louisiana
resident, for whom it arranged delivery to Louisiana by a third party, “FOB Florida,”1 and
similar sales to three other Louisiana residents. (583 F.2d at 185.)
As an initial matter, the Court determined that mere use of mail and telephone systems to
contract with an out-of-state seller does not amount to “purposeful activity invoking the
benefits and protections of Louisiana’s law.” (Id., citing Benjamin, 472 F.2d 723 (denying
Louisiana jurisdiction over a Washington boat builder who knew the boat would be home-
ported in Louisiana).)
The Fifth Circuit also rejected the notion that the FOB shipment established a contact
with Louisiana sufficient to invoke Louisiana law. It concluded that the seller’s “shipment of

1
Shipping FOB Florida” means that title to the goods and the risk of their loss passed to the buyer in Florida, and
that the buyer bore the cost of shipping from Florida to Louisiana. (Id. at 188.)

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the boat ‘FOB Miami’ [was] no different than if [the buyer] had picked up the boat himself
outside of Louisiana.” (Id. at 189.) The Court reasoned that title had passed outside of
Louisiana, and the risk of loss during shipment had been assumed by the buyer. (Id.)
Although the seller had made other similar sales to three Louisiana residents (together
amounting to $115,000), the Court held these sales were “sporadic and isolated,” and “did not
involve purposeful conduct” within Louisiana so as to invoke Louisiana law. (Id.)
Mississippi courts agree. In R. Clinton Const. Co. v. Bryant & Reaves, Inc., a Mississippi
resident purchased goods over the telephone from an out-of-state seller, “pursuant to which he
caused goods to be shipped into Mississippi, f.o.b. [place of sale], by common carrier.” (442
F.Supp. 838, 849-50 (1977).) The Court specifically noted that the seller “did not solicit
business or send agents into the state” and that he “owned no property there.” (Id. At 850.)
The seller’s conduct did not amount to “sufficient minimum contacts” or “purposeful activity”
because “the isolated act of receiving a telephone call and supplying goods from a point
outside Mississippi does not rise to such quality or substance as to satisfy fundamental notions
of fair play and substantial justice required by due process.” (Id.) The seller’s out-of-state act
“f[ell] far short of purposeful commercial entry into the forum state” of Mississippi. (Id.)
The facts of this case align with R. Clinton Const. Co. and Charia. As in R. Clinton
Const. Co. and Charia: (1) title to the goods at issue here passed outside of the forum State; (2)
all risks related to shipment were assumed by the buyers; and (3) the out-of-state sellers
assisted the buyers with arranging, via common carrier, that the goods be shipped FOB to an
address of the buyers’ choosing. (Anand Affidavit, ¶3 and 7, Ex. 1; Farrell Affidavit, Ex. 1;
Chesterfield Affidavit, ¶8 and Exs. 1-2.)
Compared to the four sales that the Charia court reviewed, Defendants’ tenuous contacts
with Mississippi are similarly “sporadic and isolated.” Plaintiffs’ allegations against
Defendants concern only two, six and three sales, respectively. (Am. Compl., ¶¶12-19, 24-26;
Formatted: Font color: Auto
Anand Affidavit Ex 1__; Farrell Affidavit Ex. 1; __; Chesterfield Affidavit Ex. 1__.) The total
Formatted: Font color: Auto

payments here are less than 1% of the $115,000 in payments assessed by the Chiara court – the

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total payments at issue here are $28.35, $225.34 and $181.45, respectively. (Anand Affidavit,
Farrell Affidavit; and Chesterfield Affidavit.) Plaintiffs’ allegations fall far short of
“purposeful commercial entry” by Defendants into Mississippi. Due Process precludes this
Court from exercising personal jurisdiction over Defendants.
IV. The 21st Amendment Bars The Amended Complaint.

While Mississippi may regulate within its borders under the Commerce Clause of the U.S.

Constitution, the 21st Amendment prohibits assertion of jurisdiction over Defendants in the manner

sought by Plaintiffs.

A. Mississippi’s Power to Regulate Alcohol ends at the Mississippi state border –

Going to New York and California to initiate Legal Transactions Where the State
Agents Owned the Alcohol in New York and California, and then directed that
Delivery be made to Mississippi, where receipt of Alcohol is Prohibited, exceeds
the Authority Granted Mississippi by the 21st Amendment to the US Constitution.
1. The Ability of a State to Regulate Alcohol Ends at the State Border

The 21st Amendment to the US Constitution provides:

Section 2. The transportation or importation into any State,

Territory, or possession of the United States for delivery or use
therein of intoxicating liquors, in violation of the laws thereof, is
hereby prohibited.

The United States Supreme Court has made very clear that the authority of a state to

regulate alcohol ends at the border of the state. Hostetter, et.al. v. Idlewild Bon Voyage Liquor

Corporation, 377 U.S. 324, 84 S.Ct. 1293 (1964). Further, a state may not take internal action

that has the effect of regulating alcoholic beverages in another state. Brown-Forman Distillers

Corp v. New York State Liquor Authority, 476 U.S. 573, 106 S.Ct. 2080 (1986); Healy v. The

Beer Institute, 491 U.S. 324, 109 S.Ct. 2491 (1989).

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These two bedrock principles of constitutional law were violated by the Mississippi law

enforcement agents who traveled virtually to California and New York, ordered alcohol products

legally sold to them in California and New York, and then directed the sellers to assist them in

having the alcohol delivered to them in Mississippi.

Mississippi, by the complaint, is attempting to regulate the sale of alcohol in New York

and California by creating a new crime in California and New York. That is, the legal sale of

alcohol in those states would be rendered unlawful if the owner of the product in New York and

California, who took title in New York and California, was a Mississippi resident.

2. Title and Possession passed to the Mississippi Agents in New York and
California, and they violated the law in Mississippi.

Title and possession legally passed to the Mississippi agents in New York and California.

Their act in directing delivery to themselves in MS did not bring the sellers (acting solely and

legally within their own state) within the jurisdiction of Mississippi. To find otherwise would be

to charge every seller of alcohol in the world outside of Mississippi with responsibility to know

and be subject to Mississippi law when conducting legal business in their home state or country.

Mississippi’s 21st Amendment authority simply does not extend that far.

The violation of the law in this transaction was by the Mississippi enforcement agents

conducting the sting. They cannot bootstrap themselves into having jurisdiction over the sellers

by going to the other states, making a purchase legal in the state of sale, arranging for the goods

to be shipped to a jurisdiction where local law prohibited the sale of the alcohol, and then

charging the seller with violating the local law of a jurisdiction in which the sellers are not

residents and are not doing business.

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As soon as they realized (by affirmative representations and agreement with the terms of

sale) that they legally owned the alcohol in New York and California, the Mississippi law

enforcement agents should have terminated the operation.

3. Supreme Court Precedent on the limitations of a state’s 21 st Amendment

Power is clear and mandate dismissal of the complaints

The first case dealing with this issue (the territorial restrictions placed on a state’s

exercise of its 21st Amendment authority by the Commerce Clause) in depth was Hostetter, et.al.

v. Idlewild Bon Voyage Liquor Corporation, 377 U.S. 324, 84 S.Ct. 1293 (1964). There, New

York attempted to shut down a Duty-free store selling liquors in the John F. Kennedy Airport

because New York stated that the duty-free store was unlicensed and could not be licensed under

state law. The store was approved and operations overseen by the U.S. Customs. All liquor was

purchased from bonded warehouses in New York on approved Customs documents, delivered

directly to the store at the airport on bonded trucks, sold only to travelers whose tickets and

boarding passes indicated immediate departure, delivered the purchased liquor directly to the

departing aircraft and the traveler only received possession of the liquor on arrival at the foreign

destination.

Although a state has broad power under the 21st Amendment to supervise and regulate the

transportation of liquor through its territory to guard against a diversion of such liquor into the

state, diversion was not an issue. Rather, the state of New York desired to license the sales and

have authority over the sellers regarding those sales. The Supreme Court rejected that

proposition.

In this caseMississippi desires to exercise the same measure of authority over the sellers in New

York and California it exercises over sellers of alcohol in Mississippi. That it cannot do.

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The issue in Hostetter is the same as the issue in this case. Mississippi, like New York,

has no power to regulate transactions occurring outside of the physical boundaries of the state.

The Court acknowledged the state’s power to fully regulate liquors within its borders:

This view of the scope of the Twenty-first Amendment with

respect to a State's power to restrict, regulate, or prevent the traffic
and distribution of intoxicants within its borders has remained
unquestioned. See California v. Washington, 358 U.S. 64, 79 S.Ct.
116, 3 L.Ed.2d 106. [Hostetter, et.al. v. Idlewild Bon Voyage
Liquor Corporation, 377 U.S. 324, 330, 84 S.Ct. 1293 (1964)]

But the Court also noted the Commerce Clause places limitations on the State’s power to

regulate liquor under the 21st Amendment:

To draw a conclusion from this line of decisions that the Twenty-

first Amendment has somehow operated to ‘repeal’ the Commerce
Clause wherever regulation of intoxicating liquors is concerned
would, however, be an absurd oversimplification. If the Commerce
Clause had been pro tanto ‘repealed,’ then Congress would be left
with no regulatory power over interstate or foreign commerce in
intoxicating liquor. Such a conclusion would be patently bizarre
and is demonstrably incorrect. [Hostetter, et.al. v. Idlewild Bon
Voyage Liquor Corporation, 377 U.S. 324, 331-332, 84 S.Ct. 1293
(1964)]

The Court continued:

In Jameson & Co. v. Morgenthau, 307 U.S. 171, 59 S.Ct. 804, 83

.Ed. 1189, ‘the Federal Alcohol Administration Act was attacked
upon the ground that the Twenty-first Amendment to the Federal
Constitution, U.S.C.A., gives to the States complete and exclusive
control over commerce in intoxicating liquors, unlimited by the
commerce clause, and hence that Congress has no longer authority
to control the importation of these commodities into the United
States.’ The Court's response to this theory was a blunt one: ‘We
see no substance in this contention.’Id., 307 U.S. at 172—173, 59
S.Ct. at 805.See also:United States v. Frankfort Distilleries, 324
U.S. 293, 65 S.Ct. 661, 89 L.Ed. 951. (Sherman Act.). [Hostetter,
et.al. v. Idlewild Bon Voyage Liquor Corporation, 377 U.S.
324,332, 84 S.Ct. 1293 (1964)]

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This analysis of the prohibited extraterritorial effect of the actions taken by the state agents

has been consistently affirmed by the Supreme Court in case after case over the last four

decades.

In Brown-Forman Distillers Corp v. New York State Liquor Authority, 476 U.S. 573, 106

S.Ct. 2080 (1986) New York’s law required Brown-Forman to either: (1) offer New York

wholesalers the products at a price lower than the price recognized by other states and forcing

Brown-Forman to violate other states’ affirmation laws, or (2) stop offering promotional

allowances in the other states. Brown-Forman argued that the New York regulation directly

regulated interstate commerce in violation of the Commerce Clause.

The Court held:

Appellant relies on United States Brewers Assn. v. Healy, 692 F.2d

275 (CA2 1982), summarily aff'd, 464 U.S. 909, 104 S.Ct. 265, 78
L.Ed.2d 248 (1983), in seeking to distinguish the present case
from Seagram. [Joseph E. Seagram & Sons, Inc. v. Hostetter, 384
U.S. 35, 86 S.Ct. 1254, 16 L.Ed.2d 336 (1966).] In Healy, the
Court of Appeals for the Second Circuit considered a Connecticut
price-affirmation statute for beer sales that is not materially
different from the current New York ABC Law. The Connecticut
statute, like the ABC Law, required sellers to post prices at the
beginning of a month, and proscribed deviation from the posted
prices during that month. The statute also required brewers to
affirm that their prices in Connecticut were as low as the price at
which they would sell beer in any bordering State during the
effective month of the posted prices. The Court of Appeals
distinguished Seagram based on the “prospective” nature of this
affirmation requirement. It concluded that the Connecticut statute
made it impossible for a brewer to lower its price in a bordering
State in response to market conditions so long as it had a higher
posted price in effect in Connecticut. By so doing, the statute
“regulate[d] conduct occurring wholly outside the state,” 692
F.2d, at 279, and thereby violated the Commerce Clause. We
affirmed summarily. [Brown-Forman Distillers Corp v. New York
State Liquor Authority, 476 U.S. 573, 581-582, 106 S.Ct. 2080
(1986)] [emphasis added].

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That the ABC Law is addressed only to sales of liquor in New

York is irrelevant if the “practical effect” of the law is to control
liquor prices in other States. Southern Pacific Co. v. Arizona ex rel.
Sullivan, 325 U.S. 761, 775, 65 S.Ct. 1515, 1523, 89 L.Ed. 1915
(1945).”….[Id. At 583]

…. “That Amendment [the 21st], therefore, gives New York

only the authority to control sales of liquor in New York, and
confers no authority to control sales in other States. The
Commerce Clause operates with full force whenever one State
attempts to regulate the transportation and sale of alcoholic
beverages destined for distribution and consumption in a foreign
country. Idlewild Bon Voyage Liquor Corp., supra, or another
State. [ Brown-Forman Distillers Corp v. New York State Liquor
Authority, 476 U.S. 573, 585, 106 S.Ct. 2080 (1986)]

Mississippi agents have no power to travel, virtually or otherwise, to New York and

California, engage in transactions in those states and then attempt to overlay Mississippi legal

delivery requirements onto the merchants operating in those states. That violates the Commerce

Clause and is beyond Mississippi’s 21st Amendment authority.

The Mississippi agents would have the court somehow believe that virtual travel over the

internet into another state differs from physical travel. It is not when the transaction

documentation expressly provides for where the buyer owns the goods – in this case the state of

sale. Alabama law is instructive:

Here, the facts are simple. In early April of 1999, plaintiff's minor
son, who apparently was left home unsupervised (but with a credit
card issued in his name) while his parents vacationed, placed an
order for twelve bottles of beer with defendants through Beer
Across America's Internet site on the World Wide Web. _Under
the applicable _*/_*1264_/*_ provisions of the U.C.C., the sale
occurred in Illinois.6 The beer was then shipped to plaintiff's son in
Alabama and delivered to the Butler residence by the carrier
acting, the entire time, as the agent of the plaintiff's son. The sale
was not discovered by plaintiff until she returned home and found
several bottles of beer from the shipment remaining in the family's
refrigerator. [Butler v. Beer across America, 83 F.Supp.2d 1261
(N.D. Ala., 2000), id. 1263-1264]

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Footnote 6, referenced above, enlarges on this;

According to the sales invoice and the shipping documents, the

beer was essentially sold F.O.B. seller, with the carrier acting as
the buyer's agent. The sales invoice and shipping documents also
correctly note that ownership of the goods passed to plaintiff's son
upon tender to the carrier, which is consistent with both Alabama's
and Illinois's versions of the U.C.C., providing that title passes at
the time and place of shipment when the contract does not require
the seller to make delivery at the destination. /See/ Ala.Code § 7–
2–401(2)(a) (1997) Ill.Comp.Stat. 5/2–401(2)(a) 1999). Under both
codes, “[a] ‘sale’ consists in the passing of title from the seller to
the buyer for a price. Ala.Code § 7–2–106(1) (1997) Ill.Comp.Stat.
5/2–106(1) 1999). Clearly, then, the sale was completed in Illinois.
[Butler v. Beer across America, 83 F.Supp.2d 1261 (N.D. Ala.,
2000), id. 1269,fn. 6]

Article 2-401 of the Uniform Commercial Code has been adopted in Mississippi (75-2-401),

New York (Uniform Commercial Code Section 2-401), and California (California Commercial

Code 2401). The result here should be the same as in the foregoing Alabama case.

Had the agents physically traveled to New York and California, agreed to the terms of sale,

and then arranged for their purchases to be shipped to Mississippi the result would be the same –

Mississippi would have no jurisdiction over the sellers operating legally in their licensed

jurisdictions and any crime that occurred in Mississippi would be by the agents, not by the

merchant.

4. The Type of Extraterritorial action by the Mississippi Agents does not

matter. 21st Amendment jurisprudence prohibits all forms of Extraterritorial
Action

Healy v. The Beer Institute, 491 U.S. 324, 109 S.Ct. 2491 (1989) is another example of

this principle in action. In Healy, a Connecticut law required out-of-state shippers to affirm their

posted prices sold to Connecticut wholesalers were, at the time of posting, no higher than the

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prices at which those products were sold in the bordering states of Massachusetts, New York and

Rhode Island.

The initial 1981 statute was facially invalid under the Commerce Clause because it had

the practical effect of prohibiting out-of-state shippers from selling beer in any neighboring state

in a given month at a price below what it had posted in Connecticut at the beginning of the

month. United States Brewers Assn., Inc. v. Healy, 692 F.2d 275, 282 (CA2 1982) (Healy I). The

decision was summarily affirmed in 464 U.S. 909, 104 S.Ct. 265, 78 L.Ed.2d 248 (1983). The

Court discussed the Brown-Forman Distillers Corp v. New York State Liquor Authority, 476 U.S.

573, 106 S.Ct. 2080 (1986) case, and noted in that case:

The Court was “reaffirming and elaborating on our established

view that a state law that has the “practical effect” of regulating
commerce occurring wholly outside that State's borders is invalid
under the Commerce Clause. [Healy v. The Beer Institute, 491 U.S.
324,332, 109 S.Ct. 2491 (1989)]

The Court noted this case was “the fourth expedition into the area of price-affirmation

statutes,” and summarized the Court’s established principles in deciding a case in which the

Commerce Clause limits the states’ 21st Amendment rights:

The principles guiding this assessment, principles made clear

in Brown-Forman and in the cases upon which it relied, reflect the
Constitution's special concern both with the maintenance of a
national economic union unfettered by state-imposed limitations
on interstate commerce and with the autonomy of the individual
States within their respective spheres. Taken together, our cases
concerning the extraterritorial effects of state economic regulation
stand at a minimum for the following propositions: First, the
“Commerce Clause ... precludes the application of a state statute to
commerce that takes place wholly outside of the State's borders,
whether or not the commerce has effects within the State,” Edgar
v. MITE Corp., 457 U.S. 624, 642-643, 102 S.Ct. 2629, 2640-
2641, 73 L.Ed.2d 269 (1982) (plurality opinion); see also Brown-
Forman, 476 U.S., at 581-583, 106 S.Ct., at 2085-2087;and,
specifically, a State may not adopt legislation that has the practical

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effect of establishing “a scale of prices for use in other states,

[Seelig, 294 U.S., at 528, 55 S.Ct., at 502.]

Second, a statute that directly controls commerce occurring

wholly outside the boundaries of a State exceeds the inherent limits
of the enacting State's authority and is invalid regardless of
whether the statute's extraterritorial reach was intended by the
legislature. The critical inquiry is whether the practical effect of
the regulation is to control conduct beyond the boundaries of
the State. Brown-Forman, 476 U.S., at 579, 106 S.Ct. at
2084. Third, the practical effect of the statute must be evaluated
not only by considering the consequences of the statute itself, but
also by considering how the challenged statute may interact with
the legitimate regulatory regimes of other States and what effect
would arise if not one, but many or every, State adopted similar
legislation. Generally speaking, the Commerce Clause protects
against inconsistent legislation arising from the projection of one
state regulatory regime into the jurisdiction of another State.
Cf. CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 88-89,
107 S.Ct. 1637, 1649-1650, 95 L.Ed.2d 67 (1987). And,
specifically, the Commerce Clause dictates that no State may force
an out-of-state merchant to seek regulatory approval in one State
before undertaking a transaction in another. Brown-Forman, 476
U.S., at 582, 106 S.Ct., at 2086. [Healy v. The Beer Institute, 491
U.S. 324, 335-337, 109 S.Ct. 2491 (1989) (footnotes omitted)]

The critical inquiry is whether the practical effect of the regulation is to control conduct

beyond the boundaries of the State. Brown-Forman, 476 U.S., at 579, 106 S.Ct., at 2084.

When that inquiry is made in this case the result is clear. When the agents of Mississippi

traveled to New York and California to legally buy alcohol in those states, and then arranged for

their purchases to be delivered to themselves in Mississippi, the agents violated the law in

Mississippi – not the merchants operating legally in their own marketplace.

The complaints should be dismissed as an invalid exercise of Mississippi’s 21 st

Amendment authority.

V. Conclusion

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The Amended Complaint suffers from several fatal defects. It fails to properly allege

personal jurisdiction over Defendants, which this Court lacks. It also fails to comport with the

14th and 21st Amendment. Defendants Bottle Deals, Inc., Gold Medal Wine Club, and Wine

Express, Inc. pray this action be dismissed with prejudice.

Respectfully submitted,
Bottle Deals, Inc.,
Gold Medal Wine Club,
Wine Express, Inc.,
Defendants

By: s/Joel W. Howell, III ______________

Joel W. Howell, III Their Attorney

OF COUNSEL:
Joel W. Howell, III
5446 Executive Place
P.O. Box 16772
Jackson, Mississippi 39236
601/362-8129
MSB #2756

CERTIFICATE
I, Joel W. Howell, III, of counsel for defendants Bottle Deals, Inc., Gold Medal Wine Club,
and Wine Express, Inc., hereby certify that I have this day filed via EFC the foregoing Memorandum
in Support of Motion to Dismiss, which provided a copy to:

jbobo@ago.state.ms.us
James A. Bobo, Esq.
david.caldwell@ dor.ms.gov
David J. Caldwell
This the 2nd day of July, 2018.

_s.Joel W. Howell, III_________________________

Joel W. Howell, III

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