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Thursday, February 08, 2007

Law - More on: Federal judge rules on wine shipping into Kentucky [Updated]

In a Dec. 27, 2006 entry, the ILB quoted from an AP story that began:

LOUISVILLE - Out-of-state wineries can ship their wares into Kentucky, even if a customer buys the wines online or over the phone, a federal judge ruled Tuesday.

The ruling by U.S. District Judge Charles R. Simpson III upholds a state law set to take effect in January, but eliminates the requirement that someone purchase the wine in person before it is shipped.

Included in the entry is a link to the 36-page opinion in Cherry Hill Vineyards v. Hudgins.

Today Alex Davis of the Louisville Courier Journal is reporting, in a story headlined "State drops out of wine suit," that the State will not appeal the ruling. The paper's "Quick Take" reads:

Last we knew: A judge ruled in December that a Kentucky law limiting shipments of wine from small out-of-state producers that was to take effect Jan. 1 was unconstitutional.

The latest: State regulators have dropped out of the case. Kentucky residents can place telephone or online orders for wine rather than having to order at wineries.

What's next: Out-of-state wineries making less than 50,000 gallons a year can apply for a license to ship to Kentucky. The state's 43 licensed wineries can start shipping.

From the story itself:
The decision means that 43 licensed wineries in Kentucky are now able to ship wine to customers who place phone or online orders. Small wineries in other states will be eligible to do the same, but the state Office of Alcoholic Beverage Control hadn't received any applications for licenses as of yesterday.

To be considered for a shipping license, a winery must produce no more than 50,000 gallons of wine annually.

Kentucky's wine-shipping laws have been the target of a lawsuit since May 2005. The case was launched by the Huber Orchard and Winery in Clark County, Ind., although the most recent plaintiff was Oregon-based Cherry Hill Vineyards.

U.S. District Judge Charles R. Simpson III ruled in late December that a state law set to take effect Jan. 1 would be unconstitutional because it required a customer to visit a winery in person to order a shipment by mail. The theory was that Kentucky wineries would benefit unfairly from the in-person rule, because they are more accessible to the state's consumers than out-of-state operations. * * *

In a related matter, the plaintiffs' lawyers in the lawsuit are seeking $205,048 in attorney fees. A Jan. 24 request for the fees names both the state and the wholesalers, although Meyer said his group has no plans to cover any of the costs. The largest request came from James Tanford, a law professor at Indiana University in Bloomington seeking more than $80,000, including $400 an hour for legal work and $100 an hour for travel.

Tanford said there will be "a huge amount of room for judicial discretion" in the amount of fees actually awarded, partly because the court ruled for the state in some parts of the case.

Tanford has worked on wine-shipping suits in 16 other states, and he said the Kentucky case was the only one in which a state government hired outside legal counsel to assist with its defense.

Ploskonka said the private firms that helped the state have not yet made their requests for payment.

[Updated 2/18/07] See also this 2/5/07 article titled "Kentucky’s Legislature Cashes In - Will Kentucky’s Wineries Have to Cash Out?" from AppellationAmerica.com. [Thanks to Kentucky Law Blog.com for the link.]

Posted by Marcia Oddi on February 8, 2007 02:56 PM
Posted to General Law Related