Three Washington breweries are suing Oregon for discrimination

Lawsuit alleges unfair, unconstitutional discrimination against out-of-state breweries

It’s been called a wall. Oregon’s beer drinkers are fiercely provincial. Beer consumers in Oregon prefer Oregon beer above all others. It’s a tough nut to crack for an out-of-state brewery trying to sell beer in Oregon. There’s a lot of in-state beer pride. That’s what people say.

Maybe Oregon’s fierce dedication to locally brewed beer is not related to any sort of provincial predilection. A newly filed lawsuit alleges that Oregon’s laws are discriminatory against out-of-state breweries. In fact, the Plaintiffs (three breweries in Washington) allege that Oregon’s laws violate the U.S. Constitution.

The lawsuit was filed yesterday (July 26, 2022) in the United States District Court in Portland, Oregon. The lawsuit addresses two Oregon statutes, which the Plaintiffs allege violate the U.S. Constitution by unlawfully discriminating against out-of-state breweries.

The Plaintiffs in the case are Garden Path Fermentation (Burlington, WA), Fortside Brewing (Vancouver, WA), and Mirage Beer [MIRAGE] (Seattle, WA). The Plaintiffs seek to self-distribute their beer to retailers and also ship beer directly to consumers in Oregon. Both are not allowed under Oregon’s laws.

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Oregon law allows in-state breweries to self-distribute beer to licensed retail businesses but prohibits out-of-state breweries from doing the same. To sell beer in Oregon, out-of-state breweries must use a licensed Oregon distributor, which is a financial burden, a contractual commitment, that many breweries, especially small and mid-sized breweries, cannot bear.

Also, Oregon law allows in-state breweries to ship beer directly to Oregon consumers but expressly prohibits Washington breweries from doing the same.

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The Plaintiffs allege that these two laws unlawfully discriminate against out-of-state breweries, including Washington breweries specifically. In particular, the Plaintiffs allege that the laws violate the Commerce Clause of the U.S. Constitution.

The Commerce Clause of the U.S. Constitution grants Congress the authority to regulate interstate commerce. It has evolved into a legal doctrine, sometimes referred to as the “Dormant Commerce Clause,” which includes a nondiscrimination principle that prohibits individual states from enforcing laws that discriminate against, or unduly burden, interstate commerce.

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The 21st Amendment, which repealed Prohibition, does allow states some flexibility in terms of regulating the sale of alcohol. However, there is precedence to support the principle that a state’s laws cannot favor its own alcohol industry. (U.S. Supreme Court’s ruling in Granholm v. Heald)

Want to dig into the legalese? The Complaint is captioned as Garden Path Fermentation v. Brown under Case No. 3:22-cv-01086. You can read it here. The Washington Beer Blog will keep an eye on things as the case moves forward.

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