Just A Warning

Posted by Tom Wark on Aug 12, 2008

Who recalls this year’s Supreme Court decision titled "Rowe V. New Hampshire Motor Transport Association?

Let me remind you of its substance. The Supreme Court ruled that a state may not require an interstate transportation company to get a signature at the place of delivery. By doing so the state would be engaging in the regulation of interstate commerce, a privilege reserve to the Federal Government, not the states. The case involved the home delivery of cigarettes.

Since the decision came down, some people involved in the wine shipping battles have pointed to this decision as a way of trying to scare the bejesus out of state legislators, telling them, "you have no ability to demand that delivery drivers such as Fed EX and UPS obtain signatures at the door when delivering alcohol…You’d better just ban wine shipping  all together!"

When this argument is brought up it’s pretty easy to knock it down. You simply remind those concerned that the case did not in any way examine the issue of wine shipment, that the 21st Amendment gives the states extraordinarily wide latitude in how they regulate the distribution of alcohol, and that there has yet to be any common carrier or seller of wine that has demanded that no signature be obtain at the door.

Unless the fear mongers are extraordinarily immune to the consequences of embarrassing themselves, they’ll usually back off at this point.

But what happens when a federal judge adopts the absurd reading of the Rowe decision to conclude that states may not require a signature upon delivery of alcohol?

That’s exactly what happened in one of the most interesting federal decisions having to do with wine and wine shipping to come down in a long time.

In the case of Baude v. Heath, decided in the 7th Circuit court of appeals, a panel of judges including the immensely respected Judge Easterbrook and Judge Posner, 1) determined that a state may require a face to face transaction before wine can be shipped, 2) struck down an Indiana’s law that prohibited any entity that had a wholesalers licenses from shipping to consumers.

The first determination is unfortunate and probably a result of the plaintiffs not developing a sufficient record showing that on-line age verification is indeed reliable. the second determination was identified by the panel of Judges as being in place for one reason: protect wholesalers.

But in the course of writing their opinion, this little nugget appeared: "But we know from Rowe v. Motor Transport Ass’n, that states can not require interstate carriers to verify the recipients age."

This is stunning misreading of the Rowe case and frankly I’m surprised this panel of Judges made such a frivolous mistake. It seems particularly odd that this mistake would creep into their opinion given how correct their reading was of the interplay of the commerce clause and the 21st Amendment. In another part of the decision they wrote: “Once a state allows any direct shipment, it has agreed that the wholesaler may be bypassed.”

I’m not sure what the impact will be of the 7th Circuit court’s complete misreading of the Rowe decision. However, I do know that parties to lawsuits pick out these kinds of words to support their cases. Legislators too will be told that an appeals court has confirmed that states may not constitutionally require drivers to get signatures. This, though completely incorrect, could find a life of its own.

Just a warning.