New Developments in the Wine Shipping World

It should surprise no one that in the wake of last year’s Tennessee Wine v Thomas Supreme Court decision, lawsuits challenging discriminatory shipping bans on wine retailers have been filed in a number of states. Two important developments in this effort to bring fairness to wine regulations and access to wine for consumers recently occurred.

First, we note that a petition to the Supreme Court to hear an appeal in the Michigan wine retail case was filed last week. Lebamoff v Whitmer is a case arising out of Michigan. Prior to the Tennessee Wine Supreme Court decision last year, a federal judge in Michigan ruled that Michigan’s discriminatory ban on wine shipments from out-of-state retailers violated the constitution. That decision was appealed by the state of Michigan to the Sixth Circuit Court of Appeals. A three-judge panel of that Court heard the case AFTER the Supreme Court ruled on Tennessee Wine.

We should remind readers now what was said in that Supreme Court decision. In that case, it was argued that the non-discrimination principles of the 2005 Granholm v Heald Supreme Court case that overturned laws banning shipments from out-of-state wineries did not apply to retailers. The Supreme Court in Tennessee Wine replied to that argument this way:

“Granholm never said that its reading of history or its Commerce Clause analysis was limited to discrimination against products or producers. On the contrary, the Court stated that the Clause prohibits state discrimination against all “‘out-of-state economic interests,’ and noted that the direct-shipment laws in question “contradict[ed]” dormant Commerce Clause principles because they “deprive[d] citizens of their right to have access to the markets of other States on equal terms.”

In other words, the same reasoning in Granholm that forbids discrimination against out-of-state wineries applies to retailers.

Somehow, the Sixth Circuit Court of Appeals in the Lebamoff v Whitmer case forgot about that part of the Tennessee Wine decision and upheld the discriminatory law that bans out-of-state retailers from shipping into that state. The petition asking the Supreme Court to hear an appeal of this decision notes this problem with the 6th Circuits reasoning and also notes that in the Seventh Circuit there is a ruling that discriminatory bans on retailer shipping are unconstitutional, creating the kind of “circuit split” the Supreme Court prefers to have before taking a case.

The chances of the Supreme Court taking on a case are small. The odds are against this being taken. However, in this case, there is an apparent circuit split and the judges in the Sixth Circuit completely ignored the findings in the recent Tennessee Wine Supreme Court case. So, we are hopeful.

The second thing to take note of is that in the wake of the Ohio Attorney General suing a number of out-of-state retailers for shipping into the state, a federal lawsuit has been filed against the state of Ohio challenging its discriminatory law banning out-of-state retailers from shipping to residents of that state.

Ohio now joins Michigan, Illinois, Indiana, Missouri, New Jersey, Rhode Island and North Carolina as targets of lawsuits that challenge laws that allow residents in those states to receive wine shipments from in-state retailers but bar them from receiving shipments of wine from out-of-state retailers.

It’s notable that earlier in the year the National Association of Wine Retailers reached out to the Ohio Attorney general, informed him that his states retailer wine shipping law was unconstitutional and offered to work with them to reform the law — even providing draft legislation that would allow out-of-state retailers to ship to Ohio residents on even-handed terms as in-state retailers. That offer was ignored.

Now, instead of Ohioans being able to access hundreds of thousands of wines not available to them as a result of the current discriminatory law and instead of the state receiving literally millions of dollars in tax revenue, those same Ohio residents will be on the hook to pay for the Attorney Generals lawsuit as well as defend against the newly filed lawsuit challenging the state’s discriminatory law.  Bad decisionmaking there.

In 2020 there is no reasonable justification for banning consumers from accessing wines from out-of-state sellers of wine, be they wineries or retailers. But the bans continue in a number of states either as a result of bureaucratic and legislative inertia or due to lawmakers’ desires to pay back those who don’t want shipments into their state and will pay large amounts of campaign contributions to get lawmakers on board.

The stage is set for the wine shipping road to be widened. However, it will take time and it will take support from the wine trade and consumers. That support appears to be enlarging every day.

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7 Responses

  1. Bill St. Croix - July 23, 2020

    Thanks for the update, Tom. I’m disappointed, but not surprised, that Kentucky has not been sued yet. Maybe I should take up that with an attorney and see what happens? 🙂

    Wine auctions are another challenge, since many are held by retailers and often the only way to get older vintages, in any quantity, is through an auction.

  2. VVP - July 24, 2020

    This happens only because while some parties are monopolies all parties are ignoramuses.

    State is not authorized to license anybody outside of its borders, the thing Lebamoff’s laymen lawyers are asking for.

    We might take this fandango seriously only if somebody proves that one state can prohibit alcohol sales in another.

  3. Tom Wark - July 24, 2020

    No one has ever argued that a state may prohibit alcohol sales outside their state. The argument too many states are making is that the alcohol that is purchased outside the state may not be brought into the state.

  4. VVP - July 24, 2020

    If no one has ever argued that a state may prohibit alcohol sales outside of its borders, then the argument that the alcohol that is purchased outside the state may not be brought into the state must be proved by a preponderance of the evidence, as it is required by law. So far we’ve never heard any good one. All other arguments are already rejected by the highest court of the country. Also, the same law requires a state law to be a valid exercise of power vested in the state. Same court ruled long ago that states cannot regulate commerce that is whole interstate.

  5. VVP - July 24, 2020

    In addition, “the argument of many states … that the alcohol that is purchased outside the state…” means that such alcohol indeed is sold outside the state. The same law suggests that Ohio Attorney General cannot bring any action against one licensed or otherwise authorized to sell intoxicating liquor.

  6. Steve Fisher - July 24, 2020

    You are right–it’s just amazing to me that almost 90 years after the repeal of prohibition, we are stuck with the most archaic laws around. Ask the question: “Why shouldn’t wine be allowed to ship across state lines the same way as (fill in the blanks–books, electronics, food, clothing)?” Follow the money and you’ll get the answer. Still, the courts have to view that fair and open interstate commerce trumps the needs of long-entrenched financial interests.

  7. Manolo Álvarez - August 9, 2020

    It’s Like the guys from Vinos El Kiosco who arranged all their logistics directly from the ports to people’s homes, incredible work, check them out:

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