In a prompt response to the U.S. Supreme Court's recent decision on direct-to-consumer wine shipping, a federal district court has ruled that Ohio regulations that prevent adult residents from receiving orders from out-of-state wineries are unconstitutional.
Late on July 19, the U.S. District Court for the Southern District of Ohio enjoined the state from enforcing its interstate shipping ban. The court ordered that, until new legislation or a rule change is enacted, consumers be allowed to order directly from all wineries, as long as they report their purchases and pay excise and use taxes. No further restrictions--such as limits on case quantities or requirements for a shipping permit--were specified.
Although the judge's order means that Ohio consumers currently may have wine shipped directly to their homes, it is a temporary solution. "What it does not do is predict the future," said Alexander Tanford, a professor at the Indiana University School of Law who, along with attorney Robert Epstein of Epstein & Frisch in Indianapolis, handled the Ohio lawsuit. The two also represented the consumers in the Michigan case on which the Supreme Court ruled in May. "I would suspect that the Ohio legislature or Liquor Control Commission will, over the next year or so, attempt to put some kind of new regulatory structure in place that will affect the shipments," Tanford explained.
In the meantime, organizations such as the Wine Institute are busy lobbying the Ohio legislature, which reconvenes in September, to pass a bill that allows regulated direct shipping rather than banning it. "Now it's our job to make sure that the legislature doesn't do anything that makes us go backward," said Steve Gross, head of state relations at the San Francisco-based Wine Institute, which represents California wineries.
Even though Ohio state Sen. Eric Fingerhut (D) is currently drafting a bill that would allow direct shipping, influential organizations in the state have been pushing for a ban. "The Ohio wine wholesalers are not going to go quietly," Tanford predicted. The Wholesale Beer and Wine Association of Ohio has already teamed up with law-enforcement and other organizations, such as Mothers Against Drunk Driving, in a group called Coalition for a Safe and Responsible Ohio. However, the coalition, which is headed by Ohio's former speaker of the house Jo Ann Davidson (R), has yet to take an official stance on the direct-shipping issue.
Wine shipments won't begin immediately to Ohio, as not all the necessary mechanisms are in place yet. The Wine Institute has passed on a copy of the judge's order to package carriers such as UPS and FedEx "so they could begin their work to determine when they can open up the state," Gross explained. "As soon as they announce they're ready to go, we will notify people that they can ship."
Ohio becomes the third state, following New York and Connecticut, to allow shipping since May. Michigan, whose laws were deemed discriminatory by the U.S. Supreme Court, has yet to pass a new shipping law; currently state legislators, wholesalers and wineries are battling over a bill that would ban all wine shipments, from local and out-of-state producers alike.
The Ohio case, Stahl v. Taft, was originally filed in 2003 by five Ohio wine lovers and two Indiana wineries--Chateau Thomas and Butler--that wanted to sell to Ohio customers. The suit was part of a concerted effort among wineries and consumers across the country to use the federal courts to force change in states' wine-shipping laws.
Epstein and Tanford are responsible for the first-ever federal shipping lawsuit filed by consumers, in Indiana; there, an appeals court upheld the state laws. They also have cases pending in Florida and New Jersey, which date to 1999 and 2003, respectively. This year, they filed new lawsuits in Indiana, Kentucky and Massachusetts, hoping to gain momentum from their Supreme Court victory.
In a 5-4 ruling, the country's top justices decided that Michigan and New York violated the Constitution's Commerce Clause by discriminating against out-of-state wineries. The majority decision declared that states must treat all wineries equally, either by allowing in-state and out-of-state wineries to ship or by banning all shipments.
Following that reasoning, U.S. district judge George Smith determined that Ohio's regulations, which allowed in-state wineries to sell and ship wine directly to customers but did not permit out-of-state wineries to obtain a license to do the same, were also unconstitutional. The agreed order he signed came as a result of settlement negotiations between the Tanford-Epstein legal team and Ohio's Liquor Control Commission.
The state liquor code contains one exception: Consumers can apply to the Division of Liquor Control for a personal importation order to bring back or ship wine from out-of-state. They must pay the excise and use taxes at the time of request, can only order wines not for sale within Ohio and are limited to 6 cases per household in a three-month period. Residents do not face the same hurdles when ordering from an Ohio winery.
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