By: Staff and wire reports -
WASHINGTON ---- Wine shipments to consumers cannot be selectively banned from out-of-state wineries, the Supreme Court ruled Monday. Wineries in North San Diego and Southwest Riverside counties praised the ruling, predicting it will benefit both them and consumers by allowing greater freedom of choice.
The 5-4 decision strikes down state laws banning the practice, which has flourished because of the Internet and the growing popularity of winery tours.
The case was brought by wine connoisseurs and wineries against out-of-state shipment laws in New York and Michigan. Supporters of those laws said they were aimed at protecting local wineries and limiting underage drinkers from purchasing wine without showing proof of age. In all, 24 states have laws barring interstate shipments. The court said the state bans are discriminatory and anticompetitive.
<TABLE cellSpacing=0 cellPadding=0 align=right>
<T>
<TR>
<TD =photo align=middle></TD></TR></T></TABLE>
"I've been waiting for this for 25 years, since my days in Napa Valley," said an ebullient Leon Santoro, winemaker at Orfila Vineyards and Winery in San Pasqual. "This is a victory for consumers who want to buy wines that are very limited in production, and there are hundreds of wineries like us in California, Washington and Oregon."
"Small wineries drown in a big distributorship," Santoro said, meaning that small wineries such as Orfila are usually ignored by large distribution companies, which prefer to deal with large wineries.
Joe Hart, owner and winemaker of Hart Winery in Temecula, was somewhat more cautious, saying he wanted to see how the states would respond to the decision. However, Hart said it is likely the winery could expand its 800-member wine club, which regularly ships wine out of state where it is allowed.
"It was a 5-to-4 ruling, but it was the right five," Hart said.
Being able to ship to New York will provide a significant benefit, Hart said. Most states with large wine industries have reciprocial shipping agreements, but New York is an exception, he said.
Jim Rizzo, operations manager of Bernardo Winery in Rancho Bernardo, also said he was looking forward to shipping wine to New York and other Eastern states.
While the ruling only involves wine sales, industry groups expect that it will soon apply to beer and other alcoholic beverages currently regulated through state-licensed wholesalers and retailers.
The Supreme Court case centered on the 21st Amendment, which ended Prohibition in 1933 and granted states authority to regulate alcohol sales. Nearly half the states subsequently passed laws requiring outside wineries to sell their products through licensed wholesalers within the state, allowing state governments to collect millions in alcohol taxes.
But the Constitution also prohibits states from passing laws that discriminate against out-of-state businesses. That led to a challenge to the Michigan and New York laws.
"States have broad power to regulate liquor," Justice Anthony Kennedy wrote for the majority. "This power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers."
"If a state chooses to allow direct shipments of wine, it must do so on evenhanded terms," he wrote in an opinion joined by Justices Antonin Scalia, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.
The ruling means that legislatures in the 24 states barring out-of-state shipments will have to review their laws to make sure in-state and out-of-state wineries are treated equally. As a result, states could choose to allow wineries to sell to consumers directly, but could also bar all wineries from doing so.
In a dissent, Justice Clarence Thomas argued the ruling needlessly overturns long-established regulations aimed partly at protecting minors. State regulators under the 21st Amendment have clear authority to regulate alcohol as they see fit, he wrote.
"The court does this nation no service by ignoring the textual commands of the Constitution and acts of Congress," Thomas wrote. He was joined by Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor and John Paul Stevens.
Wine lovers immediately cheered the ruling.
"This is the best day for wine lovers since the invention of the corkscrew," said Clint Bolick, counsel for the Institute for Justice, which represented local wineries in the dispute. "It demonstrates that in the era of the Internet, the court will vindicate the principles of free trade that made this country great."
The Washington-based Institute for Justice says the 24 states that ban direct shipments from out-of-state wineries 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.
The cases are Granholm v. Heald, 03-1116; Michigan Beer & Wine Wholesalers Association v. Heald, 03-1120; and Swedenburg v. Kelly, 03-1274.
The decision is available at: www.tinyurl.com/987zu.
Bradley J. Fikes contributed to this article.
WASHINGTON ---- Wine shipments to consumers cannot be selectively banned from out-of-state wineries, the Supreme Court ruled Monday. Wineries in North San Diego and Southwest Riverside counties praised the ruling, predicting it will benefit both them and consumers by allowing greater freedom of choice.
The 5-4 decision strikes down state laws banning the practice, which has flourished because of the Internet and the growing popularity of winery tours.
The case was brought by wine connoisseurs and wineries against out-of-state shipment laws in New York and Michigan. Supporters of those laws said they were aimed at protecting local wineries and limiting underage drinkers from purchasing wine without showing proof of age. In all, 24 states have laws barring interstate shipments. The court said the state bans are discriminatory and anticompetitive.
<TABLE cellSpacing=0 cellPadding=0 align=right>
<T>
<TR>
<TD =photo align=middle></TD></TR></T></TABLE>
"I've been waiting for this for 25 years, since my days in Napa Valley," said an ebullient Leon Santoro, winemaker at Orfila Vineyards and Winery in San Pasqual. "This is a victory for consumers who want to buy wines that are very limited in production, and there are hundreds of wineries like us in California, Washington and Oregon."
"Small wineries drown in a big distributorship," Santoro said, meaning that small wineries such as Orfila are usually ignored by large distribution companies, which prefer to deal with large wineries.
Joe Hart, owner and winemaker of Hart Winery in Temecula, was somewhat more cautious, saying he wanted to see how the states would respond to the decision. However, Hart said it is likely the winery could expand its 800-member wine club, which regularly ships wine out of state where it is allowed.
"It was a 5-to-4 ruling, but it was the right five," Hart said.
Being able to ship to New York will provide a significant benefit, Hart said. Most states with large wine industries have reciprocial shipping agreements, but New York is an exception, he said.
Jim Rizzo, operations manager of Bernardo Winery in Rancho Bernardo, also said he was looking forward to shipping wine to New York and other Eastern states.
While the ruling only involves wine sales, industry groups expect that it will soon apply to beer and other alcoholic beverages currently regulated through state-licensed wholesalers and retailers.
The Supreme Court case centered on the 21st Amendment, which ended Prohibition in 1933 and granted states authority to regulate alcohol sales. Nearly half the states subsequently passed laws requiring outside wineries to sell their products through licensed wholesalers within the state, allowing state governments to collect millions in alcohol taxes.
But the Constitution also prohibits states from passing laws that discriminate against out-of-state businesses. That led to a challenge to the Michigan and New York laws.
"States have broad power to regulate liquor," Justice Anthony Kennedy wrote for the majority. "This power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers."
"If a state chooses to allow direct shipments of wine, it must do so on evenhanded terms," he wrote in an opinion joined by Justices Antonin Scalia, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.
The ruling means that legislatures in the 24 states barring out-of-state shipments will have to review their laws to make sure in-state and out-of-state wineries are treated equally. As a result, states could choose to allow wineries to sell to consumers directly, but could also bar all wineries from doing so.
In a dissent, Justice Clarence Thomas argued the ruling needlessly overturns long-established regulations aimed partly at protecting minors. State regulators under the 21st Amendment have clear authority to regulate alcohol as they see fit, he wrote.
"The court does this nation no service by ignoring the textual commands of the Constitution and acts of Congress," Thomas wrote. He was joined by Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor and John Paul Stevens.
Wine lovers immediately cheered the ruling.
"This is the best day for wine lovers since the invention of the corkscrew," said Clint Bolick, counsel for the Institute for Justice, which represented local wineries in the dispute. "It demonstrates that in the era of the Internet, the court will vindicate the principles of free trade that made this country great."
The Washington-based Institute for Justice says the 24 states that ban direct shipments from out-of-state wineries 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.
The cases are Granholm v. Heald, 03-1116; Michigan Beer & Wine Wholesalers Association v. Heald, 03-1120; and Swedenburg v. Kelly, 03-1274.
The decision is available at: www.tinyurl.com/987zu.
Bradley J. Fikes contributed to this article.
