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Clash Over Wine Merchant Shipping Laws Expands to Missouri and Michigan

In a Missouri courthouse and the Michigan statehouse, retailers are battling for the right to ship wine to customers across state lines
Photo by: iStock/RiverNorthPhotography
The Michigan state senate will consider a new law banning out-of-state merchants from selling wine to residents.

Ben O'Donnell
Posted: October 19, 2016

Lawyers who filed a suit last month in an Illinois federal court challenging a ban on wine sales by out-of-state retailers have launched another salvo, this time in Missouri. And in Michigan, legislators are considering a bill that would allow in-state shipping by retailers but explicitly ban sales by out-of-state stores. Supporters of allowing wine consumers to have access to more wines by legalizing retailer sales across state lines hope the fights will eventually lead to the U.S. Supreme Court.

The Show-Me Suit

Missouri bans most retailer-to-consumer direct shipping, but it does allow "reciprocal" shipping—merchants in states that permit Missouri stores to sell to their residents can sell to Missourians. Florida does not allow out-of-state sales, and in the latest lawsuit, Sarasota Wine Market, LLC et al v. Nixon et al, filed Sept. 23, the owner of a Sarasota store called Magnum Wine and Tastings is challenging the restriction.

“Magnum Wine and Tastings has customers from all over the country, including many from Missouri, who visit while on vacation or have retired to Sarasota,” the complaint states. “Magnum Wine and Tastings obtains and sells many wines that cannot be obtained in retail stores in Missouri, including older vintage wines, limited-production allocated wines, private-label wines, and wines that have sold out in Missouri."

The suit also notes that Magnum, owned by Heath Cordes, has favorable access to wines auctioned at estate sales because of Florida's high population of retirees. The biggest beneficiaries to a new law, said plaintiff lawyer Robert Epstein, who is involved in both the Missouri and Illinois cases, would be Missouri residents "who are not situated right around Kansas City and St. Louis, where there are some decent wine shops."

St. Louis resident Michael Schlueter, a wine consumer, is also a plaintiff in the case. The defendants are Missouri's governor, attorney general and supervisor of Alcohol and Tobacco Control.

Like the Illinois complaint, the filing in Sarasota makes a two-pronged attack against the constitutionality of Missouri's shipping code: that it violates the dormant Commerce Clause by treating interstate sales, shipment and delivery of wine by retailers less favorably than intra-state sales, and that it violates the Privileges and Immunities Clause by denying Cordes the privilege to engage in his occupation in the state upon the same terms as Missouri citizens.

While the Sarasota suit has no court date yet, the case in Illinois may soon move to a pretrial hearing; Epstein and co-counsel James Alexander Tanford formally requested it be scheduled after Nov. 13.

Michigan Considers Changing the Rules

Epstein and Tanford were also lawyers in a Michigan case that became part of the landmark Granholm v. Heald Supreme Court decision that struck down discriminatory bans on direct shipping by wineries. And in 2008's Siesta Village Market, LLC et al v. Granholm et al, the pair successfully argued to a federal district court in Michigan that Granholm should apply to retailers as well.

The Michigan legislature responded by passing a law that any retailer could deliver in the state … so long as they used their own vehicles. "So if you're a Chicago retailer, if you want to get [a Michigan customer] wine, you have to use your own vehicle to deliver it," explained Tom Wark, executive director of the National Association of Wine Retailers (NAWR). "Of course, that's not ever going to happen, right?"

On Sept. 20, state Sen. Peter MacGregor introduced Senate Bill 1088. According to an analysis by the Michigan Senate Fiscal Agency, the bill would amend the Michigan Liquor Control Code to allow a retailer with a specially designated merchant (SDM) license to use a common carrier, such as FedEx or UPS, to sell and deliver wine to a consumer in the state. But the bill deletes references to out-of-state retailers with similar licenses.

Epstein and Tanford recently submitted a letter to the Michigan senate, writing that they "have successfully sued Michigan twice over its discriminatory wine shipping laws that gave favorable treatment to in-state businesses …. Will we really have to sue the state a third time?"

“This is all to protect wholesalers," Wark told Wine Spectator. NAWR has also submitted a letter to the Michigan legislature opposing the bill. “We believe it's because they can't do anything more than deliver boxes in today's market, which has become expansive,” said Wark. “And they don't want to have to compete. They certainly know they can't provide Michigan consumers with access to the hundreds of thousands of wines available in the U.S. that many Michigan consumers desire but are not brought into the state by wholesalers."

The state's wholesalers support the bill. “Senate Bill 1088 will open up more options for consumers, allowing them to purchase the wines they love and have them shipped to their homes from retailers in Michigan," said Spencer Nevins, president of the Michigan Beer and Wine Wholesalers Association. "The Michigan Beer and Wine Wholesalers Association opposes out-of-state retailers shipping wine into Michigan because the practice is inconsistent with the three-tier system and isn't subject to adequate regulation to ensure there is compliance with state laws."

The bill was approved by the senate's Committee on Regulatory Reform yesterday. A vote by the full senate is expected this week. “All the people that I've talked to told me that it was going to pass through the senate," said Wark. "But then it has to go through the house, and that's where we're going to fight it."

"If the bill is passed and becomes law, it's very, very likely to be challenged, and we would welcome such a challenge," said Wark. “If a third lawsuit was filed it would make it even more likely it would get to the Supreme Court."

Lawrence Newcombe
bay City , MI —  October 19, 2016 6:50pm ET
Retailers can't stock or carry every wine . Wholesalers are in the same situation. Wholesalers may only get a few of the highly desired wines . Just look at the WS wine of the day picks . Some are so extremely limited in quantity it is nearly impossible to locate them let alone acquire them . The collector , aficionado goes on the search . Then who is to say the wholesalers don't keep some of these wines for themselves or special interests. We get what this is all really about don't we.

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