Chardonnay Crowd Takes on the Empire State

Lawyers for a group of independent wineries recently had their day in a New York courtroom where they uncorked their case to transport direct wine shipment regulations out of the stone age and into the internet age.

A group of free-market minded vintners and wine enthusiasts, calling itself the Free Trade Coalition (FTC) is suing New York’s State Liquor Authority over its ban on direct wine shipments into the state, including those resulting from online purchases. New York is one of the nation’s largest wine markets and FTC is thirsty for a piece of the action.

The plaintiffs argue the moratorium on out-of-state deliveries of their chardonnay is unconstitutional and against free-market principles. They claim the ban violates the Commerce Clause of the U.S. Constitution (see Commerce Clause in Cyberspace ) that gives Congress the authority to regulate interstate commerce and promote a country without trade barriers within its borders.

Plaintiff Juanita Swedenburg of Swedenburg Winery of Middleburg, Virginia, claims that this is certainly not a case of sour grapes. "This is why we have a constitution. We’re not some little Podunk country that throws out their constitution every 10 years, are we?"

Attorneys for the state counter that the 21^st Amendment, in repealing Prohibition, gave states the exclusive authority to regulate the alcoholic beverage industry and that is precisely what the state is doing. The questions before the court are whether the commerce clause supersedes the 21^st amendment and whether consumer rights trump the right of large wholesalers to continue to harvest the benefits from a protectionist system while small producers are kept out.

In two similar cases, also brought by the FTC and assisted by the Institute for Justice, Virginia and North Carolina’s alcohol control laws were stomped out. Both of those not only outlawed out-of-state shipments into the state, but also discriminated against non-state wine producers by allowing local merchants to ship directly to in-state consumers.

The Virginia and North Carolina decisions are being appealed to the Fourth Circuit Court of Appeals while a small number of other courts, including the Seventh Circuit Court of Appeals have upheld direct shipment bans. This disparity between the courts could eventually place this dispute on the Supreme Court’s table.

Will wine connoisseurs be clinking their glasses in victory any time soon? We certainly hope so. And, when they do, we hope that they’ll be able to make their toast with an out-of-state vintage, if they so choose.

Related Links:

• Internet Taxation Section

• Institute for Justice

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