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Decanting a controversy that could upset the state regulation of wine and alcoholic beverage sales, the Supreme Court on May 24 agreed to consider the constitutionality of state laws that restrict interstate shipment of wine to consumers. The Court granted review in a trio of cases that present conflicting lower court decisions involving laws from Michigan and New York. “This case will decide whether consumers or a cartel of billion-dollar liquor distributors will determine what wine is available to consumers in New York and two dozen other states,” says Clint Bolick of the Institute for Justice, who represents a Virginia vintner in the challenge to New York’s wine import ban in Swedenburg v. Kelly, No. 03-1274. The Michigan cases are Granholm v. Heald, No. 03-1116, and Michigan Beer and Wine Wholesalers Association v. Heald, No. 03-1120. A pair of other cases involving the beef industry rounded out a gourmet menu of sorts for the Court on May 24. The Court granted review of two First Amendment challenges against the government’s promotional program for beef, including the slogan “Beef: It’s What’s for Dinner.” Beef ranchers who disagree with the marketing strategy objected to the fee they were required to pay to fund it. The beef cases are Veneman v. Livestock Marketing Association, No. 03-1164, and Nebraska Cattlemen Inc. v. Livestock Marketing Association, No. 03-1165. The wine dispute pits Congress’ power to regulate interstate commerce against the 21st Amendment. That amendment ended Prohibition in 1933 and gave states considerable power to regulate the transport of alcoholic beverages. The Court, in granting review in the wine cases, consolidated them and asked parties to confine their arguments to the following question: “Does a State’s regulatory scheme that permits in-state wineries directly to ship alcohol to consumers but restricts the ability of out-of-state wineries to do so violate the dormant Commerce Clause in light of Sec. 2 of the 21st Amendment?” The dormant commerce clause doctrine generally prohibits state actions affecting interstate commerce, unless Congress has affirmatively authorized states to regulate a given area. Stakes in the case are high for U.S. wineries, whose expansion into e-commerce has been slowed by a patchwork of state restrictions. States and wholesalers stand to lose substantial tax and sales revenue if the traditional system of alcohol distribution is loosened. About half the states restrict shipment of wine directly to out-of-state consumers. “We welcome the opportunity to challenge laws whose sole purpose is economic protectionism,” says Kirkland & Ellis partner Kenneth Starr, counsel to the Coalition for Free Trade, a nonprofit group representing wineries in the interstate commerce dispute. For their part, wine wholesalers have cast the dispute as a fight to prevent uncontrolled sales of alcohol — not just wine — to minors through the Internet. “We believe the Supreme Court will use this opportunity to let states know that they have the right to protect their communities, safeguard their children, and track sales and distribution of alcohol within their borders,” says Juanita Duggan, president of the Wine and Spirits Wholesalers of America. “The Constitution and common sense do not distinguish between wine and other types of alcohol,” adds Georgetown University Law Center professor Viet Dinh, who is part of the wholesalers’ legal team. “The plaintiffs’ arguments create a regulatory loophole that you can drive a Captain Morgan’s truck through. It would eliminate the eye-to-eye contact at the point of sale that is the linchpin of the system.” In the two Michigan cases, the state and beer and wine wholesalers challenge a ruling by the U.S. Court of Appeals for the 6th Circuit that struck down the state’s ban on alcohol imports. The 2nd and 7th circuits have ruled in favor of state regulation, while the 4th, 5th, 6th, and 11th circuits have ruled that the commerce clause’s discouragement of state-imposed trade barriers supersedes the states’ 21st Amendment powers. In Swedenburg, the 2nd Circuit in February found that the New York restriction on wine import “serves valid regulatory interests,” not “mere economic protectionism.” New York state, in a brief by state Solicitor General Caitlin Halligan, agrees that the high court should review both Swedenburg and the Michigan appeal to resolve a circuit split that “appears irreconcilable and is quickly deepening.”

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