Winemakers welcomed the U.S. Supreme Court decision Monday that found bans against direct sales by wineries to consumers in Michigan and New York have unconstitutionally discriminated against interstate commerce.
The ruling requires states to apply laws regulating shipments from wineries to consumers equally, whether located in-state or out-of-state. Strict state-by-state regulations on retailers’ direct shipments of wine to consumers remain in place, despite the court ruling, said George Garrick, president and CEO of Wine.com. His firm ships wine to consumers indirectly through state licensed retail distributors.
Outside of the top 25 winemakers, most wineries are small, family-run enterprises. Winery-direct shipping to consumers represents probably less than 1% of the overall wine market, according Garrick.
“This is a major victory in the 20-year battle to end discrimination against America’s small, family wineries,” said in a statement Robert P. Koch, CEO of Wine Institute, a California winery trade group. “The states of New York and Michigan can now choose to enjoy increased tax revenues from a more diverse and orderly wine market by adopting legislation similar to that which currently benefits consumers in the majority of states.”
The ruling pertaining to shipments from wineries is the culmination of eight years of court battles, according to the Family Winemakers of California (FWC), an industry group based in Sacramento, CA.
After Florida enacted a law in 1997 making it a felony to ship wine from other states to Florida, a series of lawsuits were filed in Indiana, Florida, Texas, Virginia, North Carolina, Michigan and New York, according to the FWC, which filed several amicus briefs in appellate courts, backed by a legal team that included Kenneth W. Starr.
The FWC said the high court decision opens the door for more than 3,500 wineries nationwide for interstate direct marketing in states that previously prohibited direct shipments to consumers from out-of-state wineries.
Last February, a federal appeals court upheld a New York state law that blocked out-of-state wineries from shipping wine to consumers there.
The decision by three judges of the Second U.S. Circuit Court of Appeals overturned a lower court ruling two years ago that said the ban interferes with interstate commerce. (Direct Newsline, Feb. 6, 2004).
The three-judge panel was not moved by evidence that the Internet and easier travel have created easier access for an “increasingly sophisticated national market of wine connoisseurs.”
The New York case was brought by Swedenburg Estate Vineyards, in Middleburg, VA, a small winery that produces about 2,500 cases of wine annually. Its customers can order from the vineyard over the Internet at swedenburgwines.com.
The Supreme Court later agreed to hear three cases involving state bans that prevented consumers from buying wine directly from out-of-state wineries, including by telephone or online.
Federal courts had previously issued conflicting rulings about whether direct shipments are legal and constitutional, prompting the high court to step in and settle this question for wineries.
Network
