TFWS, Inc. v. Schaefer , 325 F.3d 234 ( 2003 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
TFWS, INCORPORATED, t/a Beltway 
Fine Wine and Spirits,
Plaintiff-Appellant,
v.
WILLIAM DONALD SCHAEFER, in his
official capacity as Comptroller of
the Treasury of the State of  No. 02-1199
Maryland; CHARLES W. EHART, in
his official capacity as
Administrator of the Alcohol and
Tobacco Tax Unit of the
Comptroller of the State of
Maryland,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-99-2008-S)
Argued: October 30, 2002
Decided: March 31, 2003
Before LUTTIG, MICHAEL, and TRAXLER, Circuit Judges.
Vacated and remanded by published opinion. Judge Michael wrote
the opinion, in which Judge Luttig and Judge Traxler joined.
2 TFWS, INC. v. SCHAEFER
COUNSEL
ARGUED: William James Murphy, MURPHY & SHAFFER, Balti-
more, Maryland, for Appellant. Steven Marshall Sullivan, Assistant
Attorney General, Baltimore, Maryland, for Appellees. ON BRIEF:
John J. Connolly, MURPHY & SHAFFER, Baltimore, Maryland, for
Appellant. J. Joseph Curran, Jr., Attorney General of Maryland,
Andrew H. Baida, Solicitor General, Meredyth Smith Andrus, Assis-
tant Attorney General, Baltimore, Maryland, for Appellees.
OPINION
MICHAEL, Circuit Judge:
This case is on its second trip to this court. TFWS, Inc., a large
liquor retailer in Maryland, is suing the State Comptroller to obtain
a declaration that certain Maryland regulations governing the whole-
sale pricing of liquor and wine violate the Sherman Act. When the
case was before us the first time, we affirmed the district court’s
determination that the regulations violate the Sherman Act, but we
remanded for further consideration of the Comptroller’s Twenty-first
Amendment defense. On remand the district court granted summary
judgment to the Comptroller, ultimately concluding that Maryland’s
interest in promoting temperance, which is protected by the Twenty-
first Amendment, outweighs the federal interest in promoting compe-
tition under the Sherman Act. However, one of the questions that was
to be decided on remand — whether the regulations are effective in
promoting temperance — involves disputed factual issues that cannot
be resolved on summary judgment. We therefore vacate the award of
summary judgment to the Comptroller and remand once again for fur-
ther proceedings.
I.
The Maryland liquor regulations under challenge by TFWS are
explained in some detail in our first opinion, see TFWS, Inc. v. Schae-
fer, 242 F.3d 198, 202-03 (4th Cir. 2001), so we offer only a brief
summary here. The first regulation, the post-and-hold pricing system,
TFWS, INC. v. SCHAEFER 3
prescribes how and when liquor wholesalers may change their prices.
See Md. Ann. Code art. 2B, § 12-103(c) (Lexis 2001). By the fifth of
each month, wholesalers must post a schedule of prices with the
Comptroller. Md. Regs. Code tit. 03, § 02.01.05B(2) (2003). These
prices are locked in for the following month. Id. § .05B(3)(a). The
Comptroller makes each wholesaler’s monthly posting available to all
other wholesalers. Id. § .05D. The second regulation is known as the
volume discount ban or the antidiscrimination rule. It requires a
wholesaler to offer every retailer the same price for a given product.
See Md. Ann. Code art. 2B, § 12-102(a) (Lexis 2001); Md. Regs.
Code tit. 03, § 02.01.05B(3)(c) (2003). Wholesalers cannot cut prices
to large retailers because discounts "of any nature" are prohibited. See
Md. Regs. Code tit. 03, § 02.01.05B(3)(c) (2003).
In our first opinion we affirmed the district court’s determination
(1) that the post-and-hold regulation is a hybrid restraint that is illegal
per se under § 1 of the Sherman Act, (2) that the volume discount ban
is a per se violation of § 1, and (3) that Maryland cannot claim "state
action" immunity from the Sherman Act because the regulatory
scheme is not actively supervised by the state. See TFWS, 242 F.3d
at 208-11; see also id. at 213-15 (Luttig, J., concurring). We held,
however, that the district court’s dismissal of TFWS’s complaint on
Twenty-first Amendment grounds was premature. In the first round
the district court concluded on its own motion that "despite their anti-
competitive effect," the regulations "should be upheld under the
[liquor control] powers reserved to the states under the Twenty-first
Amendment." TFWS, Inc. v. Schaefer, Civ. No. S99-2008, slip op. at
16-17 (D. Md. Sept. 1, 1999). We held that it was too early for the
district court to reach that conclusion because "neither side had a
chance to make its case on the Twenty-first Amendment issue."
TFWS, 242 F.3d at 211. As a result, we vacated the order of dismissal
and remanded the case with the following instructions:
On remand Maryland should be given the opportunity to
assert and substantiate its Twenty-first Amendment defense,
and TFWS should be permitted to respond. The analysis the
district court should undertake in analyzing Maryland’s
interest and then balancing it against the federal interest is
straightforward. First, the court should examine the
expressed state interest and the closeness of that interest to
4 TFWS, INC. v. SCHAEFER
those protected by the Twenty-first Amendment. We
acknowledge that little analysis is needed on this point.
Temperance is the avowed goal of the Maryland regulatory
scheme, and the Twenty-first Amendment definitely allows
a state to promote temperance. Second, the court should
examine whether, and to what extent, the regulatory scheme
serves its stated purpose in promoting temperance. Simply
put, is the scheme effective? Again, the answer to this ques-
tion may ultimately rest upon findings and conclusions hav-
ing a large factual component. Finally, the court should
balance the state’s interest in temperance (to the extent that
interest is actually furthered by the regulatory scheme)
against the federal interest in promoting competition under
the Sherman Act.
Id. at 213 (quotation marks and citation omitted).
On remand the parties conducted discovery, which included the
exchange of reports from expert witnesses, who were also deposed.
In due course the parties filed cross-motions for summary judgment.
The district court granted summary judgment for the Comptroller, (1)
finding that the Maryland regulations achieved their stated purpose of
promoting temperance and (2) concluding that Maryland’s interest in
promoting temperance outweighed the federal interest in preserving
free competition. TFWS appeals. We conduct a de novo review of the
grant of summary judgment. Bond v. Blum, 317 F.3d 385, 394 (4th
Cir. 2003).
II.
TFWS’s appeal boils down to the argument that the district court
relied on disputed evidence to grant summary judgment to the Comp-
troller on his Twenty-first Amendment defense. We will look at key
issues considered on remand to see whether they could be decided on
summary judgment.
A.
The district court’s first job in deciding whether the Comptroller
had established his Twenty-first Amendment defense was to "exam-
TFWS, INC. v. SCHAEFER 5
ine the expressed state interest [in establishing the regulatory scheme]
and the closeness of that interest to those protected by the Twenty-
first Amendment." TFWS, 242 F.3d at 213 (emphasis added). The
Maryland legislature authorized the regulations for the express pur-
pose of "fostering and promoting temperance" and "eliminat[ing] the
undue stimulation of the sale of alcoholic beverages." Md. Ann. Code
art. 2B §§ 12-102(a), -103(a) (Lexis 2001). See also id. at § 1-101(a).
The district court therefore concluded that Maryland established its
post-and-hold liquor pricing system and its volume discount ban with
the "avowed goal of promoting temperance," which "is a proper
objective under the Twenty-first Amendment." TFWS, 183 F. Supp.
2d at 791. This conclusion cannot be disputed, so we agree.
B.
1.
Our second question for the district court on remand was "whether,
and to what extent, the regulatory scheme serves its stated purpose in
promoting temperance." TFWS, 242 F.3d at 213. This inquiry, we
said, should focus on a basic question, "[I]s the scheme effective?" Id.Whether the regulatory scheme actually serves its stated purpose is
essentially a question of fact. In the summary judgment proceedings
on remand, each side presented its case on this question largely
through experts, who offered two types of evidence, theoretical and
empirical. The theoretical evidence applies general principles of eco-
nomics to Maryland’s regulatory scheme. Each side’s theoretical evi-
dence predicts the consumption results that it claims should follow
from Maryland’s scheme. The empirical evidence includes actual data
about alcohol prices and consumption in Maryland and other states or
localities.
The Comptroller’s evidence showed the various ways that the regu-
lations could, according to economic principles, promote temperance.
The Comptroller’s first expert was Dr. Frank J. Chaloupka, a profes-
sor of economics at the University of Illinois. Dr. Chaloupka offered
the opinion, based on his review of published studies, that (in general)
alcohol consumption falls as prices rise. This, he said, is in line with
"one of the fundamental laws of economics — that of the downward
sloping demand curve, which states that as the price of a product
6 TFWS, INC. v. SCHAEFER
rises, the quantity demanded of that product falls." The Comptroller’s
second expert was Dr. David T. Levy, a professor of economics at the
University of Baltimore. Dr. Levy suggested ways in which the Mary-
land scheme could, as a theoretical matter, reduce price competition
and lead to higher liquor prices. Dr. Levy talked first about the vol-
ume discount ban. The discount ban prevents a wholesaler from offer-
ing its customers (liquor retailers) price discounts. If wholesale price
discounts were legal, the lower prices would likely be passed on to
consumers with a resulting increase in demand. Further, because
wholesalers cannot provide discounts as a reward to retailers who
increase sales of a given product, the retailers have less incentive to
offer price promotions or sales on that product. Dr. Levy also
explained why the post-and-hold regulation should have an anticom-
petitive effect. This regulation, he said, reduces price competition
because a wholesaler’s prices are locked in and may not be reduced
for thirty days after they are posted with the Comptroller. Further-
more, even when prices are reduced in a new filing, the cuts will be
less effective because of the regulation. The price posting requirement
means that a price cutter’s action is immediately known to his com-
petitors. According to Dr. Levy, when there is no price posting and
a seller reduces prices, he should gain sales until his competitors grad-
ually learn of his reductions and match them. Under Maryland’s price
posting scheme, this period of advantage is limited to a single month,
making price cuts less worthwhile and thus less likely.
Dr. Levy also presented some empirical evidence suggesting that
alcohol prices in Maryland are "generally higher" than in other states.
His figures were drawn from data gathered by the American Chamber
of Commerce Research Association (ACCRA). Every quarter
ACCRA samples prices of consumer goods, including beer, wine, and
spirits, in cities around the country. Dr. Levy calculated the average
price of these beverages for each state for the years 1996 through
1999. After adjusting the averages for cost-of-living differences in the
various locales, he concluded that Maryland’s 1999 average wine
price exceeded the average in other states by more than a dollar.
Maryland prices for spirits, according to Dr. Levy, were about five
percent lower than the average in other states. He attributed this result
to higher taxes or (sometimes) to state monopolies in the other juris-
dictions. Dr. Levy’s report singles out Delaware, a Maryland neighbor
with higher taxes on liquor, for comparison. He concluded that Dela-
TFWS, INC. v. SCHAEFER 7
ware’s prices for spirits are about fifteen percent lower than Mary-
land’s after adjustment for differences in the cost-of-living. He noted
that wine and beer prices are also lower in Delaware, but declined to
put a figure on the difference.
TFWS offered a single expert, Dr. Thomas R. Overstreet, Jr., who
is an economist. Dr. Overstreet advanced both theoretical evidence
and empirical data. On the theoretical side, he offered several reasons
why the Maryland regulations might fail to reduce liquor consump-
tion despite increased prices. First, consumers might respond to
higher prices by buying less expensive brands or types of alcoholic
beverages. Spending the same amount of money, they could consume
just as much as they did before the price increase. On the other hand,
they might allocate more money to alcohol purchases. Second,
increased prices will expand wholesalers’ profit margins, leaving
them extra money to invest in marketing, which might increase con-
sumption or at least counteract the effect of higher prices. Third, by
reducing competition between large and small liquor retailers, the reg-
ulations may increase the number of small retailers across the state,
and this could increase consumption.
Although Dr. Overstreet, like the Comptroller’s experts, did not
gather any data of his own, he used available data to run a series of
empirical comparisons. First, he compared Maryland’s per capita con-
sumption of wine, spirits, and beer with that of the other forty-nine
states. He found that while Maryland was in the top half of all states
in the consumption of wine and spirits between 1980 and 1997, its
consumption of beer has been falling relative to other states. Mary-
land beer prices are not regulated by the challenged scheme. Dr.
Overstreet suggested that if the one beverage not subject to the regu-
lations is also the one beverage with declining consumption, the regu-
lations may not be effective in reducing consumption. Second, Dr.
Overstreet compared the changes in Maryland’s per capita consump-
tion of the three categories of alcoholic beverages with the trends for
the United States as a whole. He found a very tight correlation
between Maryland and the country for wine and spirits consumption.
With respect to these two beverages, Maryland’s consumption pat-
terns and trends were very similar to the country as a whole. In the
1970-97 period evaluated by Dr. Overstreet, Maryland beer consump-
tion was considerably below the national average. Indeed, beer con-
8 TFWS, INC. v. SCHAEFER
sumption in Maryland fell faster and further than the national average.
According to Dr. Overstreet, this suggests "that the absence of [post-
and-hold] regulations do[es] not prevent other factors [such as culture
or demographics] from tempering consumption." Finally, Dr. Over-
street examined alcohol consumption patterns in California and
Nebraska, two states where post-and-hold regulations had been struck
down by courts. (California’s regulations were invalidated by Califor-
nia Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S.
97 (1980), and Nebraska’s by Finocchiaro v. Liquor Control Com-
mission, 351 N.W.2d 701 (Neb. 1984).) Specifically, Dr. Overstreet
looked at whether consumption rates changed after the regulations
were invalidated. In California consumption did not change very
much for the seven years immediately after the regulations ended, but
then it tailed off sharply. In Nebraska consumption did not change
significantly in the period after invalidation.
In addition to Dr. Overstreet’s expert evidence, TFWS offered the
deposition testimony of David J. Trone, the president of TFWS.
Trone or members of his family own companies that run liquor stores
in the Mid-Atlantic region. Trone, based on what he said was first-
hand information, testified that liquor and wine prices are lower in
Maryland than in Delaware, New Jersey, Pennsylvania, and Virginia.
TFWS also attacked the weight of Dr. Levy’s evidence. Dr. Levy’s
figures, TFWS argued, are based on inappropriate data and do not
support his conclusions. The ACCRA quarterly price samples upon
which he depends consist of the price of a single brand and size of
wine, a single brand and size of liquor, and six-packs of two brands
of beer, each taken from a single liquor store in each of two to four
Maryland cities, depending on the year. The sampled stores were not
randomly selected within the cities, nor is there any showing that
alcohol prices in these cities are representative of prices across the
state. The Comptroller responded by noting that ACCRA data are
widely used and are the most accurate available for tracking alcohol
prices.
In addition to questioning the quality of the underlying data used
by Dr. Levy, TFWS argued that his calculations do not lead to mean-
ingful results. Because the cities sampled by ACCRA are of widely
varying populations, taking a straight average of their prices does not
TFWS, INC. v. SCHAEFER 9
properly reflect the price paid by the average Marylander; Dr. Levy
should have weighted the prices to reflect population differences,
TFWS claimed. TFWS further questioned whether the cost-of-living
adjustment was properly applied or even appropriate. And perhaps
most important, TFWS suggested a flaw in the logic that leads from
Dr. Levy’s averages to the conclusion that Maryland’s scheme is
actually effective. Dr. Levy compares Maryland prices to the rest of
the country and to Delaware and finds Maryland’s to be generally
higher. Maryland’s regulatory scheme is just one way in which Mary-
land is different from other states. Any number of other variables —
for example, culture, economics, or demographics — could explain
why Maryland’s prices are generally higher than the average in the
rest of the country. Dr. Levy’s analysis does not come to grips with
the effect of other variables on consumption in Maryland and else-
where.
In deciding whether Maryland’s scheme is effective, the district
court discussed only the theoretical evidence offered by the three
experts. In the end, the court credited Maryland’s experts. TFWS, Inc.
v. Schaefer, 183 F. Supp. 2d 789, 793 (D. Md. 2002). The court
rejected the theories advanced by TFWS’s expert, Dr. Overstreet, say-
ing that his deposition testimony and report "lack[ed] the persuasive-
ness of the evidence offered by the [Comptroller], in the form of the
expert testimony of Drs. Chaloupka and Levy." Id. The district court
rebutted each of Dr. Overstreet’s attacks on the Comptroller’s basic
argument that higher alcohol prices lead to lower demand. First, the
district court rejected Dr. Overstreet’s contention that because the reg-
ulations have the effect of protecting small retailers, the scheme
increases the number of retail liquor outlets. The court said that the
state could control the number of retailers through its licensing sys-
tem. Id. Second, the court rejected Dr. Overstreet’s contention that
higher prices might trigger switches to cheaper brands by repeating
the Comptroller’s theory that a drinker faced with higher prices
"might prefer to [stick to his brand but] drink less." Id. at 793-94.
Finally, the court dealt with Dr. Overstreet’s point that Maryland’s
scheme allows for wide profit margins for wholesalers, who can
devote some of that money to marketing efforts and thereby maintain
or increase consumption levels. "While this is a possibility," the court
said, "it is a remote, speculative, and tolerable one, in light of the
direct effect the scheme has on keeping prices high." Id. at 794. The
10 TFWS, INC. v. SCHAEFER
court did not address either side’s empirical evidence about alcohol
prices or consumption trends. In crediting the reports and deposition
testimony of the Comptroller’s experts, Dr. Chaloupka and Dr. Levy,
the district court determined that their opinions supported the conclu-
sion that Maryland’s scheme leads to higher alcohol prices and is
effective in reducing alcohol use. The district court ultimately found
that the Comptroller had "adequately substantiated [Maryland’s]
avowed [temperance objective] of preventing undue stimulation of
alcohol sales and consumption through regulation of price competi-
tion." Id.
2.
We first consider TFWS’s evidentiary objection, which the district
court rejected. TFWS argues that Dr. Levy’s empirical evidence on
state-by-state liquor price comparisons is so unreliable as to be inad-
missible under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509
U.S. 579 (1993). See also Kumho Tire, Inc. v. Carmichael, 526 U.S.
137 (1999) (extending Daubert to technical experts). We give "great
deference" to a district court’s decision to admit or exclude expert tes-
timony under Daubert. United States v. Barnette, 211 F.3d 803, 816
(4th Cir. 2000); Talkington v. Atria Reclamelucifers Fabrieken BV,
152 F.3d 254, 265 (4th Cir. 1998). In applying Daubert, a court eval-
uates the methodology or reasoning that the proffered scientific or
technical expert uses to reach his conclusion; the court does not eval-
uate the conclusion itself. See Freeman v. Case Corp., 118 F.3d 1011,
1016 n.6 (4th Cir. 1997). Dr. Levy’s basic methodology was to use
ACCRA pricing data for metropolitan areas (not states), calculate
average prices, and apply cost-of-living adjustments. TFWS does not
mount a true Daubert challenge, for it does not argue that these meth-
ods have not been tested, have not withstood peer review and publica-
tion, have excessive rates of error, have no standards for their
application, or have not been accepted in their field. See Daubert, 509
U.S. at 593-95. Rather, TFWS basically argues that Dr. Levy’s calcu-
lations do not support his conclusion that Maryland has higher alcohol
beverage prices than most other states. This is a challenge to the
proper weight to be given to Dr. Levy’s evidence, not to its admissi-
bility. The district court did not abuse its discretion in ruling that Dr.
Levy’s evidence was admissible.
TFWS, INC. v. SCHAEFER 11
3.
TFWS’s essential argument is that the Comptroller did not present
undisputed evidence that Maryland’s post-and-hold and volume dis-
count ban regulations actually result in higher liquor prices and lower
consumption, making summary judgment for the Comptroller inap-
propriate. The district court credited the evidence advanced by the
Comptroller’s experts, rejected the conflicting evidence offered by
TFWS’s expert, and found that Maryland’s regulatory scheme pro-
motes temperance. The district court justified its factfinding, which
was based solely on the summary judgment record, as follows:
[B]oth parties have submitted cross-motions for summary
judgment . . . . Neither party has asserted that the factual
issue now in dispute (whether Maryland’s statutory scheme
promotes temperance) presents an issue that must be
decided by a jury, by a bench trial, or otherwise by a viva
voce proceeding. There is ample evidence accompanying
both parties’ motions in this case, including the depositions
and reports of both parties’ experts. Because both parties
had a full and complete opportunity to cross-examine each
other’s witnesses at deposition and to challenge their asser-
tions in arguments supported by evidence, this Court finds
itself in the position to make a factual determination without
resort to further development of the evidentiary record.
TFWS, 183 F. Supp. 2d at 791. On appeal TFWS argues that if it was
not entitled to summary judgment, the district court was required to
conduct an evidentiary hearing as a prerequisite to any factfinding.
We agree that the district court had no warrant in this case to take the
summary judgment record and engage in factfinding.
A party is entitled to summary judgment only if it can "show that
there is no genuine issue as to any material fact and that [it] is entitled
to judgment as a matter of law." Fed. R. Civ. P. 56. That standard
does not change when, as in this case, both parties move for summary
judgment. "The fact that both parties simultaneously are arguing that
there is no genuine issue of fact does not establish that a trial is
unnecessary thereby empowering the court to enter judgment as it
sees fit." Podberesky v. Kirwan, 38 F.3d 147, 156 (4th Cir. 1994)
12 TFWS, INC. v. SCHAEFER
(brackets omitted) (quoting 10A Charles Alan Wright et al., Federal
Practice and Procedure § 2720 (2nd ed. 1983)). In other words, "[a]
district court may not resolve conflicts in the evidence on summary
judgment motions." Id. at 157. Because much of the evidence in this
case is expert opinion and statistics, we can appreciate why the dis-
trict court believed that it was more efficient to go ahead and resolve
the evidentiary conflicts in the summary judgment record. But that
procedure was inappropriate here because the parties did not consent
to it or waive their right to a trial if there turned out to be disputed
issues of material fact. See Satellite Television & Associated Res., Inc.
v. Cont’l Cable of Va., 714 F.2d 351, 354 (4th Cir. 1983); see also
Garcia-Ayala v. Lederle Parenterals, Inc., 212 F.3d 638, 643-45 (1st
Cir. 2000).
The district court arrived at its conclusion that the Maryland regu-
lations were effective in promoting temperance by weighing conflict-
ing evidence. To obtain summary judgment, the Comptroller had to
show by uncontested facts that alcohol consumption in Maryland is
lower, or growing more slowly, than it would be without the regula-
tions. To make this case, the Comptroller took Dr. Levy’s empirical
evidence and combined it with Dr. Chaloupka’s application of general
economic theory: Dr. Levy maintains that Maryland’s alcohol prices
are generally higher, and Dr. Chaloupka claims that higher prices lead
to lower consumption. To get from these propositions to the conclu-
sion that the Comptroller has carried his burden, the court had to first
find that Dr. Levy’s figures are reliable. Next, it had to find that the
higher prices Dr. Levy shows are due at least in part to the regula-
tions. The court then had to infer that higher prices have led to falling
consumption.
TFWS challenges the district court’s findings and conclusions in
several ways. First, TFWS argues that Dr. Levy’s figures are not suf-
ficiently representative or comprehensive to prove that alcohol prices
in Maryland are higher than in the rest of the country. In addition,
TFWS says that Dr. Levy’s figures are contradicted by David Trone,
who testified that prices are lower in Maryland than in surrounding
states. Second, TFWS points to Dr. Overstreet’s theoretical evidence
suggesting that even if Maryland’s regulations do result in higher
prices, reduced consumption does not necessarily follow. According
to him, higher prices do not necessarily bring lower consumption
TFWS, INC. v. SCHAEFER 13
because consumers might switch to cheaper brands or opt to pay the
high prices. Moreover, reduced competition results in more retail
stores. Third, TFWS attacks the final, crucial inference that the regu-
lations reduce Maryland’s consumption. Even if Dr. Levy is right that
Maryland’s prices are generally higher than the rest of the country’s,
that does not show that the regulations are the reason. And Dr. Over-
street’s empirical evidence suggests that Marylanders actually con-
sume wine and spirits in about the same quantities as the rest of the
United States, further calling into question whether the regulations
affect consumption. Finally, Dr. Overstreet’s evidence shows that the
elimination of post-and-hold rules in California and Nebraska had lit-
tle effect on consumption. Contrary to the Comptroller’s argument,
Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S.
209, 242 (1993), does not prevent TFWS from using Dr. Overstreet’s
theoretical evidence to challenge the Comptroller’s factual assertions.
Brooke Group specifically allows TFWS to use Dr. Overstreet’s
expert opinion — that high liquor prices do not necessarily reduce
demand in this regulatory regime — "as a guide to interpreting [the
Comptroller’s] market facts." Id.Here, the Comptroller, in order to obtain summary judgment, had
to show that there is no genuine issue of material fact about the effec-
tiveness of the regulations. He failed to make this showing. To find
that the Comptroller carried his burden, the district court had to
choose the Comptroller’s version of the evidence over TFWS’s ver-
sion. It had to find that TFWS’s challenges leave Dr. Levy’s evidence
of high prices intact and reliable. It had to find that high prices lead
to reduced consumption in Maryland, notwithstanding Dr. Over-
street’s contentions to the contrary. It had to find either that Dr. Over-
street’s figures about relatively high consumption in Maryland are
wrong or that Maryland’s consumption would be even higher without
the regulations. In making each of these findings, the district court
had to decide which party’s evidence on economic theory was more
persuasive and which party’s data were entitled to greater weight.
These are not decisions that can be made on summary judgment. We
see no alternative to a trial on the question of whether, and to what
extent, Maryland’s regulatory scheme is effective in promoting tem-
perance.
14 TFWS, INC. v. SCHAEFER
C.
Because the district court could not decide on summary judgment
whether and to what extent Maryland’s regulations serve their stated
purpose in promoting temperance, it could not perform its last task.
Specifically, it was not in a position to "balance the state’s interest in
temperance (to the extent that interest is actually furthered by the reg-
ulatory scheme) against the federal interest in promoting competition
under the Sherman Act." TFWS, 242 F.3d at 213. That balancing, of
course, will determine whether the regulations may stand, even if they
are anticompetitive.
We vacate the order granting summary judgment to the Comptrol-
ler and remand for further proceedings consistent with this opinion.
VACATED AND REMANDED