Victory for Consumers in New York Wine-Shipping Lawsuit

Federal judge rules state's ban on interstate wine shipments is unconstitutional; remedy to law has yet to be decided.

Dana Nigro
Posted: November 12, 2002

In the latest in a string of legal victories for wine consumers, a federal judge ruled today that New York state's ban on interstate shipments of wine to consumers is unconstitutional.

Whether wine lovers will be able soon to order hard-to-find bottlings from out-of-state wineries remains to be seen. The judge is holding a follow-up conference on Dec. 5 on how to remedy the state law, and an appeal is expected.

The decision, from the U.S. District Court for the Southern District of New York, comes only days after a federal appeals court concluded that Florida's wine-shipping ban is discriminatory. The case has been turned back over to trial court for the state to show whether such a strict law is really needed to enforce collection of taxes from out-of-state producers.

The New York ruling "is a decisive victory against the monopolists who would stand between consumers and their wine," said attorney Clint Bolick, vice president for the Institute for Justice, which litigated the case.

New York state currently allows in-state wineries to ship directly to their New York customers, but prohibits out-of-state producers from doing the same. The latter must distribute all their wine through the three-tier system, selling it to a wholesaler who then resells it to retailers.

U.S. District Judge Richard Berman ruled that this discrepancy violates the Commerce Clause of the U.S. Constitution, which protects the free flow of commerce among the states. He concluded that such economic protectionism was not supported by the 21st Amendment (which grants states the right to control alcohol sales within and across their borders) and that there are other methods available to support goals such as temperance and the prevention of underage drinking.

"That the New York direct shipping ban on out-of-state wineries burden interstate commerce and is discriminatory (on its face) is clear from the very wording (let alone the impact) of the exemptions favoring in-state wineries," Berman wrote in his decision. He added that the evidence shows that these exemptions "provide an impermissible economic benefit and (protection) to only in-state interests -- but also that there are nondiscriminatory alternatives available. Indeed, the defendants explicitly concede the exceptions were intended to be protectionist."

Now the judge must decide whether to give out-of-state wineries the ability to ship to New York residents, which is what the plaintiffs are seeking. He also has the option to strike down the portion of the law that allows in-state wineries to ship. The state and wine-and-spirits wholesalers participating in the defense argued for the latter approach.

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

Read about the recent court decision in Florida: