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Thursday, February 12, 2004

Law - Another Circuit Weighs in on the Interstate Sale of Wine

The 2nd Circuit today in a long-awaited ruling upheld the challenged New York restrictions against the direct shipment of wine to New York consumers by out-of-state wineries and retailers. The Court said:

We do not approach this case with a blank slate. Five other circuits have decided similar cases; a common thread runs throughout. Each challenged a state regulatory scheme that prohibited out-of-state wineries from importing and selling wine directly to consumers, but permitted local wineries to avoid the three-tier distribution system with direct sales to consumers. Four circuits have struck down the regulatory schemes in question, utilizing a two-step analytical framework, similar to that used by the district court here, in which the statute is first examined in the context of the dormant Commerce Clause. Heald v. Engler, 342 F.3d 517, 524 (6th Cir. 2003); Dickerson v. Bailey, 336 F.3d 388, 400 (5th Cir. 2003); Beskind v. Easley, 325 F.3d 506, 514 (4th Cir. 2003); Bainbridge v. Turner, 311 F.3d 1104, 1108 (11th Cir. 2002). * * *

A second mode of analysis recognizes that “[b]oth the Twenty-first Amendment and the Commerce Clause are parts of the same Constitution,” and considers each “in the light of the other, and in the context of the issues and interests at stake in any concrete case.” * * * We adopt this approach acknowledging that only one other circuit court has employed it in a similar case. See Bridenbaugh v. Freeman-Wilson, 227 F.3d 848 (7th Cir. 2000) (upholding an Indiana statute restricting the direct shipment of wine on the ground that it was a permissible expression of the state’s authority under section 2 of the Twenty-first Amendment).

Access the 2nd Circuit opinion here: Swedenburg v. Kelly.

[Update 2/13/04] The NY Times has a very brief story on the decision this monring. A somewhat longer story appears here in Newsday.

A story published Feb. 12, 2004 (but before the NY decision was announced) in the San Franscisco Chronicle, reports:

The battle over direct-to-consumer wine shipping may be headed for the big leagues -- the Supreme Court of the United States.

On Jan. 30, Michigan petitioned the high court to overturn a ruling that would let Michiganders order wine from out of state and have it delivered to their homes -- something that seems perfectly innocent to us here in California, but which is illegal in 24 states and a felony in seven. Prohibitions on direct shipping have been the subject of lawsuits in 11 states, but this is the first serious run at the high court. * * *

Pro-shipping forces hope the Supreme Court won't take the case and leave their appellate victory standing. They also want more time to build on their successful record -- four out of the five appeals courts that have heard anti-shipping cases have found the laws discriminatory, while several additional state legislatures, seeing the direction the courts were taking, have passed laws allowing interstate wine deliveries.

In just the last few months, wineries and enophiles have filed new lawsuits in Ohio, Rhode Island, New Jersey and Arizona. A New York court has ruled against that state's shipping ban and last month, shortly after meeting with Wine Institute president Robert Koch and several California wineries, Gov. George Pataki issued a proposal to legalize interstate shipping.

Here are links to some earlier IBL interstate wine entries [on old site, user browser back key to return], latest first: 12/22/04, 9/15/03, 8/29/03.

[Update 2/14/04] Here are stories from the LA Times and Wine Spectator.

Posted by Marcia Oddi on February 12, 2004 05:32 PM
Posted to General Law Related