Consumers & American Wineries Win in MA

Reason apparently lives and discrimination for the sake of discrimination is again shot down.

That's the conclusion I draw from a decision today that came out of the 1st Circuit Court of Appeals in Boston where Family Winemakers of California challenged that state's law that forced wineries over 30,000 gallons annual production to choose to sell direct to consumers or be distributed only by wholesalers. Wineries under 30,000 gallons did not have to make this choice. Furthermore, under the MA law, wineries under 30,000 could sell directly to retailers. Wineries over 30,000 could under no circumstances sell directly to retailers and restaurants.

The 1st Circuit Court of Appeals, reasonably, said this scheme was unconstitutional noting that the law:

"violates the Commerce Clause because
the effect of its particular gallonage cap is to change the
competitive balance between in-state and out-of-state wineries in
a way that benefits Massachusetts's wineries and significantly
burdens out-of-state competitors. Massachusetts has used its
30,000 gallon grape wine cap to expand the distribution options
available to "small" wineries, including all Massachusetts
wineries, but not to similarly situated "large" wineries, all of
which are outside Massachusetts. The advantages afforded to
"small" wineries by these expanded distribution options bear little
relation to the market challenges caused by the relative sizes of
the wineries. Section 19F's statutory context, legislative
history, and other factors also yield the unavoidable conclusion
that this discrimination was purposeful.
Nor does § 19F serve any
legitimate local purpose that cannot be furthered by a non-discriminatory alternative."

Of course this kind of discrimination was purposeful. It was purposefully passed into law by state legislators at the behest of MA wholesalers who believed that they deserve some sort of protection from competition.

Who supported the discriminatory law that sought to protect wholesalers at the expense of wineries, consumers and the state of MA? The National Beer Wholesalers Association, The Wine & Spirit Wholesalers Association and the Wine & Spirit Wholesalers of America.

Well, they lost the battled to screw consumers and producers…Again.

The law that has just been invalidated was passed in 2006 over Governor Romney's Veto. It's important to note that MA wholesalers contributed in excess of $4.3 Million dollars to state legislators in the years 2005 and 2006. It may also be important to note that Governor Romney only received $5,400 from wholesalers when he was elected to office. On the other hand, the sponsor of the original bill that enacted this discriminatory regulatory regime, Michael Morrissey, counted alcohol wholesalers as his third largest contributor to his campaign.

It should also be noted that while brought and financed by Family Winemakers of California, the lawsuit against MA and its wholesalers was carried out and argued by the law firm of  Kirkland & Ellis. The attorneys that brought this suit to a happy conclusion were Tracy Genesen and Ken Starr, two people who have done as much for wine consumers, wineries and retailers who merely want to access the true American wine market than any other two people in America.


6 Responses

  1. wine of the month club - January 14, 2010

    Tom-I know I’ve said it time and time again, but thank you for doing so much to keep these court cases and hypocrisy in the news. I can only hope that over time the laws change finally in favor of the average consumer so that they truly have a choice in wine. We’re getting there and I’m looking forward to the day I can ship directly as a 3rd party wine club to each and every state.

  2. 1WineDude - January 15, 2010

    Nice to have some good news on this front!

  3. El Jefe - January 15, 2010

    Indeed good news and a very good start, however in practice it is (still) impossible to ship into MA no matter what. UPS and FedEX will not ship there for reasons not related to this decision (the old aggregate case total per consumer), and the application process is quite onerous. (You should read the application sometime for a laugh – 14 pages including essay questions, about the only thing they don’t ask for is your first born. The application for selling into MA via a distributor is a half page, by contrast. Here’s a link:
    I’d love to be able to ship there, but I’m afraid more will have to change than was affected by this decision.

  4. eaglesnestwine - January 15, 2010

    Alcohol laws in the US are a convoluted mess – politics, greed, and untoward influence pervades all. El Jefe shares some insight into the tangled web of direct shipping laws that wineries must comply with. In many instances, a winery can direct ship but the fees and paperwork hurdles make it unfeasible to conduct business (profit is such a damning requirement for businesses). Hat’s off the the wonderful Family Winemakers of California organization for their tireless work on this front. Hooray in a small way, for wine consumers!

  5. Richard Beaudin - January 15, 2010

    A votre sante … its about time!

  6. Bill Miller - January 21, 2010

    Someone send this legal decision to UPS and get them to deliver wine into MA! The state of MA has harassed the common carriers so much in the past with stings, threats, fines, that they are so sick of the games with that state.
    UPS needs to stand up to the bullying of MA and challenge the unconstitutional laws too! Free Trade! This is America, correct?

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