X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Decanting a controversy that could upset the tight state regulation of wine and alcoholic beverage sales nationwide, the U.S. Supreme Court agreed in May 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 restrictive 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,” said 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. The Michigan cases are Granholm v. Heald and Michigan Beer and Wine Wholesalers Association v. Heald. The wine dispute pits the Constitution’s commerce clause, which gives Congress the power to regulate interstate commerce, against the Twenty-first 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 section two of the Twenty-first 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,” said Kirkland & Ellis partner Kenneth Starr, counsel to the Coalition for Free Trade, a nonprofit organization 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,” said 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,” added 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 Sixth Circuit that struck down the state’s ban on alcohol imports. The Second and Seventh circuits have ruled in favor of state regulation, while the Fourth, Fifth, Sixth, and Eleventh have ruled that the commerce clause’s discouragement of state-imposed trade barriers trumps the states’ Twenty-first Amendment powers. In Swedenburg, the Second 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.”
A version of this story originally appeared in Legal Times, a sibling publication of Corporate Counsel.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.