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Tuesday, November 29, 2005

Ind. Decisions - Temporary order OKs in-state shipping

"Temporary order OKs in-state shipping" is the headline to this story today in the Indianapolis Star business section, by Dana Knight. Some quotes:

Indiana's 31 wineries won a temporary victory in their fight to ship products directly to consumers' homes when Marion Superior Court Judge Thomas Carroll signed a preliminary injunction last week that allows in-state shipments through March.

The ruling is the result of a lawsuit filed this month by nine state wineries against the Indiana Alcohol & Tobacco Commission. The lawsuit challenges a May letter sent to the state's wineries by Dave Heath, chairman of the commission, warning them it is against state law to ship wine in state.

Robert Epstein, an Indianapolis lawyer for the wineries, said the temporary injunction will help retailers serve customers through the holidays. After that, he hopes lawmakers will address the issue. If not, the wineries will seek a permanent injunction.

Winery owners were ecstatic Monday after hearing news of the victory. They say they started losing money as soon as they stopped shipments to comply with Heath's order. "We've been shipping since 1979, and it was presumed we could ship, so (the letter) was a big shock," said Jim Butler, owner of Butler Winery with two locations in Bloomington. * * *

Wineries in Indiana had been doing that for nearly 30 years until a Supreme Court ruling in May shook things up. In a 5-4 decision, the nation's highest court said it is unconstitutional for a state to allow local wineries to ship to in-state customers while banning out-of-state wineries from doing so.

When asked to clarify what that ruling meant for Indiana wineries, Heath said it had no effect because Indiana wineries weren't allowed to ship in-state. More than 10 wineries contacted by The Indianapolis Star in May said they had been shipping wine for years.

Heath immediately put a notice on the commission's Web site saying state law prohibits shipments. A few days later, he mailed letters to all wineries, reiterating the point.

Now that Heath's interpretation of the law has been overruled, at least temporarily, Heath said he is planning his next step. "We're going to have to see what to do next," he said, adding he stands by his May statement. "I don't see anywhere in the state law where it allows the shipment of wine, and I don't think anybody else can find it, either." * * *

Epstein also said he thinks Heath violated administrative procedures by imposing a law that doesn't exist.

Heath said he simply was pointing to a law that says those holding a farm winery permit can manufacture and bottle their wine, serve complimentary samples and sell wine by the bottle or glass on the licensed premises. They also can sell wine to a wholesaler or retailer. Heath interprets the law to mean that only those with a valid wholesaler's permit are allowed to ship.

State Rep. Cindy Noe, R- Indianapolis, said Monday the law is unclear. She is drafting legislation for consideration next year that would allow small wineries to ship in-state and out-of-state. Noe said she hasn't decided what would constitute a "small" winery. "(Until) now, you had to be standing across a counter to buy wine," she said. "I want to open things up for small vintners and grow these businesses."

For background, see this ILB entry from 11/17/05.

This 12/22/04 entry reports that "David Heath, 57, of Lafayette, a former two-term mayor of Lafayette and former two-term sheriff of Tippecanoe County, was named director of the State Alcohol and Tobacco Commission." This is the text of the letter sent out by Heath, dated May 17, 2005:

Supreme Court Ruling Clarification for Indiana Residents
May 17, 2005

The U.S. Supreme Court ruled yesterday that Michigan and New York must allow out-of-state wineries to ship wine directly to consumers in those states, since both states permit in-state wineries to do so. The basis of the Court's reasoning was that by permitting only in-state wineries to ship directly to consumers, these states were harming interstate commerce by discriminating against out-of-state wineries.

This ruling will not allow out-of-state wineries to ship wine to Indiana residents, because Indiana law does not permit Indiana wineries to ship wine directly to consumers. However, in light of the recent decision, the Alcohol and Tobacco Commission is undergoing a thorough review of Indiana's regulatory scheme to ensure that it does not improperly favor Indiana producers of alcoholic beverages.

Dave Heath
Chairman
Indiana Alcohol & Tobacco Commission

It is currently still posted on the Alcohol and Beverage Commission website.

I'd like to post Marion Superior Court Judge Thomas Carroll's injunction which, according to the story this morning, was issued last week, as well as the plaintiffs' filings, if anyone can send them to me.

[More] The Fort Wayne Journal Gazette also has a story today, by Dan and Krista Stockman. Some quotes from the end of their story:

While winemakers are rejoicing, state officials likely aren’t exactly pleased with the decision. Officials reached declined to comment on the decision, but the state’s argument against the injunction, filed by Attorney General Steven Carter on behalf of Gov. Mitch Daniels and David Heath, executive director of the Alcohol and Tobacco Commission, contends state law does prohibit in-state shipping despite what the wineries say.

“Furthermore, they have not shown that the economic harm alleged in their claim outweighs the interest of the state in enforcing its alcoholic beverage laws,” the response said.

The judge obviously disagreed, and that’s good news for now. But this doesn’t mean the battle between the two sides is over yet. Expect more action when legislators return in January. The only way for the issue to truly be settled is for legislators to clear up the law and explicitly allow wineries to ship to their customers wherever they live.

Posted by Marcia Oddi on November 29, 2005 07:46 AM
Posted to Ind. Trial Ct. Decisions