US direct wine sales in legal turmoil

  • Thursday 8 February 2007

Around 30 lawsuits have been filed in the US, with producers and consumers attacking state laws that limit direct wine sales.

Some lawsuits challenge legal mandates that customers must buy wine in person. In other suits, producers are attacking shipping limits that are linked to the volume of their production.

In each category, out-of-state producers are accusing states of discriminating against them, according to a survey by business publication the National Law Journal.

Many new cases arise from the US Supreme Court decision in 2005 in which the court ruled that New York State and Michigan laws discriminated against out-of-state wineries by permitting only in-state wineries to ship straight to consumers. Laws must all go one way or the other, the court said.

About 30 cases are under way. Most have been filed by consumers and wineries, who allege discrimination. Ultimately, the Supreme Court may be asked to amplify its decree.

‘Ironically, many of those suits are challenging recent revisions in state laws that were drafted in order to comply with the Supreme Court ruling,’ said the National Law Journal.

Direct shipping was allowed by 26 of America’s 50 states when the court issued its ruling. Now 34 do.

James Tanford, an Indiana University School of Law professor who has filed 21 suits for wineries, said many states altered their laws ‘to give the appearance of an equal economic opportunity for out-of-state wineries but to impose so many regulatory burdens it wouldn't happen.’

Tanford said that in-person buying requirements discriminated against out-of-state wineries because ‘95% of the wine is grown on the West Coast, and if you have to go there to make a face-to-face appearance it won't happen. It puts a barrier on sales that will exclude most out-of-state wineries.’

In Arizona, a revised law allows direct shipping from wineries that produce less than 20,000 gallons of wine yearly. In a suit, five Arizona consumers and a Michigan winery say the law discriminates against out-of-state wineries.

Such legal conflicts arise because the Constitution requires states not to discriminate against one another economically but allows all states to regulate alcoholic beverages in their own ways.

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