Lawyers representing a group of Virginia wine-lovers and three out-of-state wineries gave their final arguments last Friday in a lawsuit that aims to overturn the state's ban on home deliveries of out-of-state wines. U.S. District Judge Dennis Donhal is expected to rule on the issue by late spring.
Virginia law currently makes it a misdemeanor for out-of-state sellers to ship alcoholic beverages directly to residents' homes and for residents to receive such shipments. Virginia wineries, wine clubs and retailers, however, can ship directly to state residents.
The lawsuit, filed in Nov. 1999, by attorney Matthew Hale of Hale & Hall of Williamsburg, Va., seeks an injunction to prevent the state from enforcing those laws, which the plaintiffs claim violate provisions of the U.S. Constitution.
"One of the things I rely on is direct shipping," said plaintiff Bernie Lerch, owner and winemaker of Hood River Vineyards. "I get frustrated when I have to turn down, literally, thousands and thousands of orders." Lerch said that the majority of his sales are to tourists visiting his winery, and that the inability to ship wines back to their homes hurts sales of the 5,000 cases he produces each year.
The plaintiffs' case argued that the 21st Amendment -- which gives states the power to regulate the sale of alcohol within their borders -- was intended to simply help dry counties and communities remain alcohol-free, without the interference of outside governmental regulation. Meanwhile, the commerce clause of the U.S. Constitution protects and promotes free trade between states. Therefore, the lawyers argued, bans on direct shipments violate the wineries' and residents' Constitutional rights to trade if the laws' core purpose is not temperance and if the bans discriminate against out-of-state sellers to protect in-state businesses.
"We feel pretty good that the verdict will have a favorable outcome," said Vivienne Nishimura, executive director of the nonprofit Coalition for Free Trade, which provided research support for the wine lovers and wineries' case. "I think this was the first time we were able to present the legislative intent, in a broader scope, of those who wrote the federal laws [regulating trade.]"
"Our people have the exact opposite view," said Craig Wolf, general council for the Wine and Spirits Wholesalers of America, which filed an amicus brief in support of Virginia's direct shipping regulations. "We believe [he] will dismiss the proceedings brought by the plaintiffs. We have the understanding that the judge understands the true nature of the 21st Amendment."
The issue of direct shipping is currently in front of the courts in six other states.
In Michigan, where a case seeking to overturn the state's shipping ban was filed last March, both sides have filed motions for a summary judgment. Oral arguments, which begin on Jan. 31, will present an opportunity for the attorneys to plead their case directly to the judge or ask for an early ruling.
In Texas, a U.S. district judge overturned the state's direct-shipping ban in Feb. 2000. Since then, the state has filed a motion for the judge to reconsider the case. "Procedurally, it's stuck," said Bill Kinzler, general counsel for the Coalition for Free Trade. "We're waiting for the judge to conclude the case and [officially] enter judgment."
In Indiana, the U.S. Court of Appeals for the 7th Circuit dealt a setback to wine lovers last September, reversing a lower-court ruling that would have allowed direct shipping. Currently, the plaintiffs are deciding whether to file an appeal to the U.S. Supreme Court.
Cases in New York, North Carolina and Florida are in the preliminary discovery phases -- a time for the legal teams on both sides to research their cases before going to court. Hearing dates have not yet been set.
If the courts rule in favor of wineries and wine lovers, Lerch said, "In the short term, there probably will not be a lot of change, but in the long term, we will see a lowering of these trade barriers. However, I would like to see them eliminated entirely, and I will challenge any such laws."
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