Consumers & American Wineries Win in MA

Posted by Tom Wark on Jan 14, 2010

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.