Supreme Court Overturns Restrictions on Interstate DTC Wine Shipments

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Consumers in New York and Michigan are free to have wine from out-of-state wineries shipped directly to them thanks to yesterday's 5-4 U.S. Supreme Court decision to overturn laws in those states.


The New York and Michigan laws banned direct-to-consumer wine shipments from out of state while allowing in-state wineries to ship direct to residents. Small wineries and some consumers argued that such state laws are discriminatory and force vintners to market their products out of state through wholesalers.


Previously, the 6th U.S. Circuit Court of Appeals ruled that Michigan's ban on interstate DTC wine shipments was unconstitutional. However, the 2nd Circuit Court upheld a New York law requiring out-of-state wineries to establish a physical presence in New York to ship direct to consumers.


The majority opinion delivered by Justice Anthony M. Kennedy said the New York and Michigan laws violate the Commerce Clause of the U.S. Constitution. The opinion reads in part, "Laws such as those at issue contradict the principles underlying this rule by depriving citizens of their right to have access to other states' markets on equal terms."


The ruling requires states that do not ban in-state DTC wine shipments to allow out-of-state DTC wine shipments.


The cases were argued before the high court Dec. 7.


"This ruling should allow wine drinkers to buy directly from hard-to-get wineries even if the winery is from another state," said Andrew B. Lustigman, an attorney with The Lustigman Firm PC and a DM News columnist. "More significantly, there is now a new Supreme Court ruling that can be used by direct marketers when a state tries to enforce a law that places too great of a burden on interstate business."


The Institute for Justice, Washington, which represents the consumer and winery plaintiffs, petitioned the case to the Supreme Court in March 2004. Direct-shipping bans also have been challenged in other states.


According to the institute, the 24 states that either restrict out-of-state DTC wine shipments or ban all DTC wine shipments are Alabama, Arizona, Arkansas, Connecticut, Delaware, Florida, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Ohio, Oklahoma, Pennsylvania, New Jersey, New York, South Dakota, Tennessee, Utah and Vermont.


"In a dollar sense it's not a big deal," Institute for Justice client and wine shipper David Lucas, founder of The Lucas Winery, Lodi, CA, said of the ruling.


Though Lucas said his satisfaction regarding the ruling was more philosophical than fiscal, he thinks it will benefit even some entities who opposed it.


"This is a win for everybody -- small family farmers, wineries, the consumer and even wholesalers, though they may not buy into that," he said. "If I ship five to 10 cases in the next year to New York it's not a big deal, but if those 10 cases are shared with the friends of the people who ordered them, they will go down to their local wine shop and ask them to order it and in turn they will call the distributor."


But he said the fight is not over. Since Lucas' case was against New York, the ruling means that the Supreme Court is sending it back to New York's 2nd Circuit Court, which had upheld the ban to be reconsidered.


Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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