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Tuesday, August 22, 2006

Law - Federal judge strikes down Kentucky law prohibiting wine shipments [Updated again]

AP reporter Brett Barrouquere reports this afternoon, via the Lexington Herald-Leader:

LOUISVILLE, Ky. - Kentucky's prohibition on out-of-state wineries shipping their products to the state is unconstitutional because it discriminates against some businesses, a federal judge ruled Tuesday.

The ruling, by U.S. District Judge Charles Simpson, opens the door for wineries in other states that are licensed in Kentucky to ship wine across state lines.

The ruling came in a lawsuit filed by Huber Winery in southern Indiana, which claimed Kentucky's law violated the Commerce Clause of the U.S. Constitution by giving preference to Kentucky businesses over out-of-state merchants.

Until a new law goes into effect in January, Kentucky cannot enforce the criminal statute against out-of-state wineries shipping into Kentucky, Simpson said. * * *

Earlier this year, the Kentucky General Assembly passed a law requiring in-state wineries to sell their wares through wholesalers, just like other producers of beer or spirits.

Because of laws enacted in the 1930s following the repeal of Prohibition, alcoholic beverages are distributed under a three-tiered system in which brewers, winemakers and distillers are required to sell their products to a distributor, who then sells the product to retailers such as bars, restaurants and retail stores.

The new law will eliminate a provision in Kentucky law that allows small wineries to ship their product directly to retailers rather than having to use the services of a distributor.

[Updated 8/23/06] David Goetz of the Louisville Courier Journal has a few more details this morning:
Small wineries inside and outside Kentucky can ship products anywhere in the state, a federal judge ruled yesterday, if they have a state license.

The ruling, by U.S. District Judge Charles Simpson in Louisville, said the state cannot enforce the criminal statute against out-of-state wineries shipping into Kentucky.

The ruling also strikes down provisions of current Kentucky law requiring consumers who want wine shipped to order it in person. That could allow orders of out-of-state wine by telephone, mail or Internet.

Simpson said requiring customers to order in person gives too much advantage to Kentucky wineries, violating interstate commerce protections.

It's unclear what the ruling means for a new state law governing small wineries that goes into effect in January. Legislators most familiar with the new law could not be reached late yesterday.

I haven't been able to locate the opinion via the Lexington federal district court site.

[Update] Here, thanks to a mention in the Kentucky Law Blog, is a new Kentucky blog, Musings of a Bluegrass Barrister, that has a comprehensive report on yesterday's decision, with links to relevant documents.

Posted by Marcia Oddi on August 22, 2006 07:41 PM
Posted to General Law Related