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A federal judge has struck down a Pennsylvania law that prohibits out-of-state wineries from making direct sales to Pennsylvania consumers, hotels and restaurants after rejecting an argument that the law’s constitutional defect could be cured by extending the prohibition to in-state wineries. In his six-page opinion in Cutner v. Newman, Senior U.S. District Judge John P. Fullam concluded that a recent regulation passed by the Pennsylvania Liquor Control Board was not enough to fix a discriminatory law. “I decline the defendants’ invitation to resolve the constitutional dilemma by purporting to impose upon in-state wineries the same restrictions which the challenged statutes now impose on out-of-state wineries. That is a matter for the Legislature to address,” Fullam wrote. Fullam’s ruling is the fourth such decision handed down in the wake of the U.S. Supreme Court’s May ruling in Granholm v. Heald that struck down similar laws in New York and Michigan. Applying Granholm, federal judges have struck down laws in Massachusetts, Florida and Ohio. Two states — Connecticut and California — voluntarily repealed their laws. But court challenges are currently pending over similar laws in Arkansas, Indiana, Kentucky, Maine and New Jersey. In the Pennsylvania case, Senior Deputy Attorney General Howard G. Hopkirk conceded that Pennsylvania’s law, as written, is unconstitutional, but argued that it has now been cured. Hopkirk urged Fullam to dismiss the case as moot because the LCB has issued an “advisory” that effectively cures the constitutional defect by prohibiting both in-state and out-of-state wineries from shipping directly to customers. But the lawyers for the plaintiffs — professor James A. Tanford of the Indiana University School of Law and Robert D. Epstein of Epstein Cohen Donahoe & Mendes in Indianapolis — argued that the “advisory” was a legal nullity because the LCB does not have the power to repeal Pennsylvania statutes which expressly permit in-state wineries to make direct sales and shipments. In their brief, Tanford and Epstein argued that the Pennsylvania law is “a classic trade barrier” that “discriminates against out-of-state wineries, obstructs interstate commerce, and forecloses nonresident wine producers from access to the Pennsylvania market” and therefore must be struck down. The LCB, they said, was urging the court “to allow the trade barrier to remain in place and make the law nondiscriminatory by taking away rights from the unrepresented in-state wineries.” But such a ruling would be improper, they argued, because it would affect the rights of in-state wineries who were not even involved in the litigation. “Imagine the in-state winemakers’ surprise to wake up one morning and find that a federal judge has taken away their right to ship wine in a case in which they were not even parties,” Tanford and Epstein wrote. By the time the case was argued before Fullam, the in-state wineries had also gone to court. The Pennsylvania Wine Association and two in-state wineries filed suit in the Pennsylvania Commonwealth Court to challenge the validity of the advisory notice. On Nov. 7, the same day that Fullam heard argument, the Commonwealth Court granted a temporary restraining order that prohibited enforcement of the advisory notice. Now Fullam has ruled that since the Commonwealth Court’s decision effectively kept a discriminatory law in place, the law must be struck down. “At least for the present, the restrictions against direct sales and shipments by out-of-state wineries continue to be unconstitutional under Granholm,” Fullam wrote. Fullam rejected the LCB’s argument that its advisory had eliminated the discriminatory aspects of the law by extending the prohibition on direct sales to in-state wineries. Instead, Fullam said, the plaintiffs were correct in arguing that such a decision “would violate due process to impair the statutory rights of in-state wineries in litigation in which they are not represented.”

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