You Just Got a Victory
Here’s the good news…the REALLY good news:
A Texas judge has declared that a state may not discriminate against out-of-state retailers. This means, if a state let’s its own retailers ship inside its state, it must allow out of state retailers to ship into their state.
The fact that this issue even had to be litigated in the first place should give you an idea of how screwed up American wine laws are. After all, the 2005 Granholm v. Heald Supreme Court decision declared:
"States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses"
But, when you have a the state-mandated monopolists who distribute wine being full scale against this and when they contribute millions upon millions of dollars to legislatures that make the laws, you get an idea how the lawmakers buy the argument that the Supreme Court decision did not apply to retailers. Silly, but sadly a reality.
That charade is done with. In fact, I suspect we’ll have more judicial decision this year that simply confirm what this judge said.
However, the Texas Judge’s very clear decision regarding retailers and shipping, he did get one thing wrong that will have to be addressed. Imagine the following:
1. Idaho wine store wants to sell wine to a Texan.
2. Idaho wine store must buy wine from Texas wholesaler.
3. Texas Wholesaler puts wine on truck and sends it up to Idaho.
4. Idaho wine store takes wine off truck.
5. Idaho wine store puts wine on a new truck and sends it back down to Texas wine lover.
Crazy? You bet.
But this scenario has a few other light hearted elements to it. First it’s illegal both in Texas and in Idaho, not to mention nearly every other state I can think of. Second, the Judge in Texas actually said this is what is required.
…..I’ll wait while you clean up that wine you just spit up on your nice white carpet…..
This rather odd part of the Texas Decision does raise some very interesting questions:
1. If a number of states put this rule into effect that retailers must by wine from wholesalers in the state to which they want to ship wine, does this mean that a national wholesale wine market has just been created because retailers will now be able to buy wine from wholesalers around the country—shopping for the best price, as it were? A corollary to this question is does this pretty much dismantle the traditional model of wine distribution that America’s wholesalers have been spending a Gazillion Dollars to protect?
2. If there is now no longer a residency requirement in order to get a Texas retailers license, will California and New York and Illinois retailers begin talking more slowly and with longer syllables?
3. What happens if this requirement that out-of-state retailers buy their wine from a Texas wholesaler is completely unworkable, illegal and therefore a severe burden on Interstate Commerce?
There are in fact many other issues at hand with this part of the decision. Many of them are likely to be fleshed out in the 5th Circuit Court of Appeals.
But for now, if you are a supporter of fair trade, if you believe protectionism is poor public policy, if you believe that the consumer of wine should have legal access to the wines you want then you need to let me leave you with this very simple message:
You Just Got a Victory in Court.
My suspicion is that when the judge came up with the methodology he didn’t fully understand how the strange three tier system works from state to state. How could he? Hardly anyone knows for sure.
Strange, very strange. Nonetheless, WooHoo!
This is definitely a step in the right direction! Yah-hoo for our retailers. The requirement to buy is still protectionism and unsupportable, in my opinion. Say you have a gardening company and you want to sell heirloom seeds to someone in Texas. Are they required to buy seeds from Texas? When you think of all the GMO-related issues, is this any less important to Texas consumers than an occasional order of fine wine? This could be taken down to microscopic levels of ridiculousness.
Tom, congratulations on a huge victory. This is great news for retailers and consumers.
You’re right, it is a victory.
I don’t want to take too much of the wine out of the sails on this one, but haven’t similar verdicts been handed down in others states (I think PA is one of these) and the states’ solution was to require in-state wineries to stop direct shipments to in-state customers (i.e., they would need to use the monopoly distributors just like out of state wineries)?
A full congrats to Tom on this matter. It’s a big win and hopefully the ball keeps on rolling.
I would also like to thank Tom for helping me create a recent press release wherein ClassicWines.com decided to drop Wine.com as an advertiser due to its recent conduct. Subsequently, ClassicWines.com also decided to join the SWRA. Tom contributed a great deal of knowledge and even some quoting material. The release is located here: “Online Wine Sellers Fight Back” – http://www.classicwines.com/shipping-laws.php – and I appreciate anyone who could drop by!