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Consumers Sue New Jersey and Ohio Over Home Delivery of Wine

Plaintiffs join others around the country in arguing that bans on interstate winery-to-consumer shipments violate their right to free trade.

Dana Nigro
Posted: July 18, 2003

What do Orthodox Jews, home winemakers and a New York City commuter have in common? They are among six New Jersey residents who are suing the state in an effort to get out-of-state wines delivered to their homes. At the same time, five Ohio wine lovers are also going to federal court to challenge their state's ban on direct-to-consumer shipments of wine.

In both cases, the plaintiffs are arguing that, by prohibiting the interstate shipment of alcoholic beverages, New Jersey and Ohio are denying their right to free trade and violating the U.S. Constitution.

"We like to travel and buy wine in New York and California. That's the reason we got involved with this," said Robert Freeman. He and his wife, Judy, are small-scale wine collectors and home winemakers from New Jersey. "We go to California, visit a little winery and want to have wine shipped home. They ask where we're from, and if they're following the law, that's the end of the discussion."

Judy added that while they buy wines from local merchants, they are also interested in ordering wines via Internet or phone and in joining wine clubs, so they can get certain boutique wines not available in New Jersey. "I never see them in our liquor store. They don't sell retail, only at restaurants or right out of the winery," she said.

The problem is that the 21st Amendment, in addition to repealing Prohibition, granted states the right to control alcohol sales within their borders. Most states set up what is known as the "three-tier system," in which all alcohol must go from the producer to a wholesaler to a retailer for sale to the consumer. About half the states in the country still prevent wine from being shipped across their borders directly to consumers. But in the Internet age, as it has become easier for small wineries to market nationally, more wine drinkers are becoming dissatisfied with such systems.

According to the lawsuit, New Jersey and Ohio allow in-state wineries to sell wine directly to customers and either to ship wine by parcel delivery services or to deliver directly. But neither state allows out-of-state wineries to get a license to sell or ship wine. By treating local wineries differently, the suit argues, a state "discriminates against interstate sales and delivery, reserves to in-state wineries and retailers the exclusive market in wine, and provides a direct economic advantage to in-state wine businesses, all in violation of the Commerce Clause of the United States Constitution."

The Freemans and their fellow plaintiffs are following in the footsteps of wine lovers in numerous other states -- Florida, Indiana, Michigan, New York, North Carolina, Texas and Virginia -- who have likewise asked the federal courts to allow direct-to-consumer wine shipping.

Unlike those cases, however, the New Jersey and Ohio lawsuits are not part of the wine industry's organized legal initiative to open up the direct-shipping market. The Coalition for Free Trade, a winery-supported nonprofit organization, is coordinating six pending lawsuits, with the goal of eventually taking one to the U.S. Supreme Court to resolve the issue. In fact, a federal appeals court recently ruled in favor of wine consumers in Texas, and the group is waiting to see if the state decides to appeal to the Supreme Court.

The coalition had not planned on launching any new cases yet, and it has not yet decided what its involvement with the New Jersey and Ohio suits will be. "Their existence is not surprising," said Jeremy Benson, who works with CFT and is director of Free the Grapes!, an advocacy group. "The same thing happens on the legislation side of the campaign: Consumers get frustrated with these direct-shipping restrictions and introduce bills."

The New Jersey and Ohio lawsuits are being handled by attorney Robert Epstein of Epstein & Frisch in Indianapolis, in conjunction with Indiana University law professor James Tanford. The two are responsible for the first consumer shipping lawsuit -- in Indiana, in which an appeals court upheld the state laws -- and for the cases in Florida and Michigan, in which the CFT is also involved.

Asked why the plaintiffs chose to file now, Epstein said, "It's my judgment that a case may never get to the Supreme Court. If you want to free the grapes, you have to look at it on a state-by-state basis. We don't know that it's going to go to the Supreme Court. They could turn down the case. Another possibility is that the court gives a very narrow decision that doesn't apply to any other state."

There are some unique aspects to the case filed in U.S. District Court in New Jersey. In addition to the Freemans, the plaintiffs include Meyer and Beverly Friedman, Orthodox Jews who would like to be able to obtain kosher wines that are not available in New Jersey. And Peter Mancuso, who commutes to his job in New York City, would like to be able to buy wine there and carry it back home or have it delivered. (He is joined in the suit by his wife, Lois.)

"My reading is that it's illegal to bring back wine from New York to New Jersey," said Epstein. "I'm sure that everyone who works in New York City and lives in New Jersey is a criminal by now, but that's the way the law reads."

The suit notes that New Jersey law allows residents to buy unlimited quantities of wine in person at in-state wineries and transport it home. But if they buy wines in person from out-of-state sources, they can only carry one gallon back with them, unless they have obtained a license.

The New Jersey plaintiffs are also joined by Walter Hansel Winery in California's Sonoma County, which is seeking to ship to New Jersey residents. Likewise, in the case filed in the U.S. District Court for the Southern District of Ohio, Eastern Division, the five wine drinkers and collectors are joined by two Indiana producers, Chateau Thomas Winery and Butler Winery and Vineyards, both of which want to fill orders in Ohio. The participation of the wineries is intended to demonstrate economic harm to out-of-state businesses.

Freeman said he expects the legal fight to be a tough one. In other shipping lawsuits, powerful alcohol-beverage wholesalers have gotten involved on behalf of the state in an effort to maintain the current distribution system, and New Jersey wholesalers could do the same. But he concluded, "We've got to keep hammering away at this. You have to speak up on these things when the opportunity arises. The worst it can cost me is some time and effort."

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For a complete overview and past news on the issue of wine shipments, check out our package on The Direct Shipping Battle.

Read other recent news about direct shipping:

  • June 27, 2003
    Consumer Victory: Appeals Court Overturns Texas Ban on Interstate Wine Shipments

  • July 3, 2003
    Federal Trade Commission Encourages Online Sales of Wine

  • June 2, 2003
    South Carolina Allows Wine Shipments to Consumers

  • April 15, 2003
    Appeals Court Rules North Carolina Must Change Unconstitutional Wine-Shipping Laws

  • March 4, 2003
    From Whitewater to Wine: Kenneth Starr Joins Direct-Shipping Fight

  • Feb. 6, 2003
    Virginia Poised to Allow Direct Shipments of Wine to Consumers

  • Dec. 10, 2002
    Federal Judge Rules New York Can't Enforce Interstate Wine-Shipping Ban

  • Nov. 8, 2002
    Appeals Court Presses Florida to Justify Wine-Shipping Ban

  • Nov. 4, 2002
    President Signs Law Allowing Wine-Shipping to More States

  • Sept. 16, 2002
    Texas Appeals Court Decision on Direct-Shipping of Wine

  • July 18, 2002
    Federal Judge Overturns Texas' Wine-Shipping Laws

  • April 8, 2002
    Court Rules North Carolina's Ban on Wine Shipments Is Unconstitutional

  • April 1, 2002
    Federal Judge Overturns Virginia's Ban on Direct Wine Shipments

  • Oct. 3, 2001
    Federal Judge's Ruling Backs Michigan's Ban on Direct Shipping of Wine

  • April 23, 2001
    Supreme Court Refuses to Hear Indiana Residents' Wine-Shipping Lawsuit
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