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Wine lovers, wineries and retailers will lock arms to fight wholesalers and state attorneys general in three federal appellate courts this year, battling yet again over shipping wine across state lines directly to consumers. Wineries, retailers and consumers are challenging state laws that they say still illegally restrict interstate commerce despite some states’ legislative changes to comply with the U.S. Supreme Court’s 2005 decision in Granholm v. Heald, 544 U.S. 460. The ruling barred states from discriminating against out-of-state wineries in sales directly to consumers. The courts now have to consider what to do “when a state law makes interstate commerce difficult, but not impossible,” said James Tanford, a professor at Indiana University School of Law-Bloomington who is working with challengers. The lawsuits have bubbled up through U.S. district courts in the past two years and are now pending in the 2d, 6th and 7th U.S. circuit courts of appeals. Several of the laws require a prospective wine buyer to meet face-to-face with a winery representative on the seller’s premises to order a wine shipment, nixing phone and Internet orders. Opponents of the laws argue that forcing consumers to travel to 5,000 boutique wineries that have sprung up during the past decade infringes on the interstate commerce clause. State regulators contend that the Constitution’s 21st Amendment gives them the right to regulate alcohol, and that the requirements help enforce drinking-age laws. Wholesalers are guarding their state markets while some retailers are seeking to expand into them. The 6th Circuit must weigh district court decisions that went in opposite directions. Kentucky wholesalers are appealing a ruling from the U.S. District Court for the Western District of Kentucky that shot down the state’s law requiring in-person purchases before shipping because it discriminated against out-of-state wineries. Cherry Hill Vineyards v. Lilly, No. 07-5128. On the flip side, the 6th Circuit also must consider a winery and consumer appeal from the Eastern District of Tennessee, which affirmed that state’s law requiring alcohol be sold to a consumer on site before shipment. S.L. Thomas Family Winery and Jelovsek v. Bredesen, nos. 07-5524 and 07-5443. The wholesalers are led in part by Craig Wolf, an attorney and the chief executive of Wine and Spirits Wholesalers of America, with help on occasion from other attorneys, including Sidley Austin’s Carter Phillips in the Washington office and Ice Miller’s Fred Biesecker in Indianapolis. “The courts are starting to understand Granholm and what it meant and what it didn’t mean,” Wolf said. “So far, the prevailing winds have been in favor of the states.” Not according to Tanford and attorney Robert Epstein of Epstein Cohen Donahoe & Mendes in Indianapolis, who are bringing many of the legal challenges. Kirkland & Ellis attorneys Tracy Genesen and Kenneth W. Starr have also represented specialty retailers and consumers. Tanford will argue this month in an appeal before the 2d Circuit that New York shouldn’t be immune to lawsuits on the issue under the 21st Amendment, as was determined by the Southern District of New York. The lawsuit challenges a prohibition on out-of-state retailers shipping directly to consumers. Arnold’s Wine v. Boyle, No. 07-4781. In the Indiana case pending before the 7th Circuit, the Southern District of Indiana struck down the state’s requirement that there be a face-to-face transaction prior to shipment, saying it violated the commerce clause, but found other state restrictions valid. Wine and Spirit Wholesalers of Indiana has filed the appeal. Baude v. Heath, No. 07-03323. In Texas, Genesen said wine retailers and consumers are likely to appeal to the 5th Circuit a decision this month in the Northern District of Texas allowing shipments to Texas customers by out-of-state retailers, but requiring retailers to buy from Texas-licensed wholesalers. Her retail clients don’t want to be forced to buy from the Texas wholesalers, she said.

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