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New York must lift shipping ban

A federal judge in Manhattan ruled yesterday that New York State must lift its ban on outside vintners shipping wines to the state's consumers.

In November, Judge Richard M Berman of the Federal District Court declared that New York State law erected unconstitutional barriers to commerce, was discriminatory and that its protectionism favoured wholesalers. But yesterday, after a hearing to resolve the constitutional issue, he ruled that shipments from out of state must be permitted.

After the announcement, a spokesman for New York attorney general Eliot Spitzer said that the state would appeal the decision in federal appeals court. He was supported by lawyers representing major New York wholesalers.

Some 28 other states outlaw the direct sale of wine from out-of-state producers. The New York State case is considered very significant because the state is the nation’s second biggest wine market, behind California.

The case is considered so crucial to the future of the nation’s three-tier system and to the viability of many small wineries that it is likely to wind up in federal Supreme Court.

Under that system, out-of-state vintners must sell their wine to wholesalers or distributors, who are then the only ones who can supply retailers. The system is rooted in the 21st Amendment to the Constitution, which vests in states the authority to regulate the importation and sale of alcoholic beverages.

Clint Bolick, vice president of the Washington-based Institute for Justice, which brought the suit against New York State law, described Judge Berman’s decision as ‘the crest of a tidal wave that is washing away protectionist barriers to direct shipment of wine’.

But Randy M Mastro, lawyer for wholesaler giant Peerless, appeared unperturbed by the ruling. ‘No appellate court in this country has ever found a state’s direct-shipping ban unconstitutional. We are confident the decision will be reversed,’ he said.

Written by Howard G Goldberg in New York11 December 2002

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