In yet another in a series of recent legal victories for wine consumers, a federal appeals court has paved the way for Michigan residents to begin ordering wines from out-of-state producers.
The 6th Circuit Court of Appeals ruled that Michigan's ban on direct-to-consumer wine shipments is unconstitutional, overturning a lower court's ruling in 2001 that upheld the state's liquor laws. Current Michigan regulations allow local wineries to ship to consumers' homes, but make it a misdemeanor for out-of-state wineries to send their products directly to Michigan residents. Those laws have "the effect of benefiting the in-state wineries and burdening those from out of state," wrote the court.
The lawsuit was filed in 2000 by 13 wine consumers, including wine writers Eleanor and Ray Heald, and a boutique California winery, Domaine Alfred. Their attorneys, Robert Epstein and James Tanford, argued that Michigan's system interfered with the free flow of interstate trade and therefore violated the Commerce Clause of the U.S. Constitution. They also argued that Michigan wineries were given greater access to customers and greater profits by allowing them to avoid wholesaler and retailer markups, while small out-of-state wineries could be shut out of the Michigan market entirely if they couldn't afford a wholesaler.
"We conclude that the regulations in question are discriminatory in their application to out-of-state wineries, in violation of the dormant Commerce Clause, and cannot be justified as advancing the traditional 'core concerns' of the Twenty-first Amendment," wrote the panel of three judges in their decision.
The U.S. District Court that first heard the case said that Michigan's regulations fell within its powers under the 21st Amendment, which repealed Prohibition and granted states the right to control the alcohol sales within their borders. That court said the shipping ban met the amendment's "core concerns" by ensuring the collection of taxes and preventing sales to minors. The appeals court disagreed, saying that the state failed to show that "no reasonable non-discriminatory means exists to satisfy these concerns."
"This is the second ringing endorsement this summer for the principles of antidiscrimination and consumer choice," said Tracy Genesen, legal director for the Coalition for Free Trade, a nonprofit organization that assists wineries and consumers with direct-shipping lawsuits. "The court confirmed that states do not have the right to discriminate against out-of-state wineries under the guise of the 21st Amendment."
Earlier this summer, the 5th Circuit Court of Appeals overturned Texas' similar ban on interstate wine shipments. This week, the state decided not to ask the U.S. Supreme Court to take the case, and Texas opened its market to direct shipping.
Michigan has 14 days to request a rehearing from the appeals court, or 90 days from the date the judgement is entered to petition the U.S. Supreme Court to hear the case. Meanwhile, Michigan consumers are not yet free to receive direct shipments.
This fall, the number of states that allow interstate direct shipping will reach 26, with Texas following Virginia and North Carolina in opening up their borders in response to court rulings. In addition, the South Carolina legislature recently passed a law allowing direct shipping. The Coalition for Free Trade is still working on pending cases in Florida and in New York, where oral arguments in appeals court are scheduled for next week. Consumers recently filed lawsuits in New Jersey and Ohio; those are being handled by the Michigan plaintiff's lawyers, Epstein and Tanford.
For a complete overview and past news on the issue of wine shipments, check out our package on The Direct Shipping Battle.
Read more about the Michigan case:
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