A preliminary ruling by a Virginia judge is being hailed as a victory by direct-shipping advocates. U.S. Magistrate Judge Dennis Dohnal said Friday that two regulations enforced by Virginia¿s Alcoholic Beverage Control Board were unconstitutional.
Dohnal took issue with a Virginia law that allows wineries inside the state to ship directly to consumers, while prohibiting out-of-state wineries the same privilege. "Such an obvious preference for equally-obvious economic advantage violates fundamental principles involving the Commerce Clause," Dohnal said in his ruling.
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., sought an injunction to prevent the state from enforcing those laws, which the plaintiffs claim violate provisions of the U.S. Constitution.
It¿s now up to U.S. District Judge Richard Williams to interpret Dohnal¿s findings and rule on them. Williams had referred the case to Dohnal, who as a magistrate judge specializes in untangling procedural issues of the court. Direct-shipping cases have typically involved conflicts between the Commerce Clause of the Constitution, which protects and promotes free trade between states, and the 21st Amendment, which gives states the right to tax and regulate the distribution of alcohol.
"We¿re very pleased with the decision," said Tracy Genesen, president of the Coalition for Free Trade. "The judge does find that it is economic protectionism."
Clint Bolick, litigation director for the Washington, D.C.-based Institute for Justice and a plaintiff in the case, compared the ruling to a glass of young wine: "It tastes pretty good today but it has an even more promising future."
Bolick believes that Dohnal¿s decision will help a similar case he is arguing in New York. That suit, filed in February 2000, pits three New York wine consumers and two small out-of-state wineries against the state of New York, wine distributors and wholesalers. A ruling is expect this winter.
"I think this is a very positive sign," Bolick said.
Dohnal¿s decision, if Williams concurs, would make it illegal for Virginia wineries to ship in-state, a remedy that neither Bolick or Genesen find acceptable.
"I¿m optimistic that [Williams] will hold the findings of unconstitutionality but find a better remedy," Bolick said.
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