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New York ruling allows inter-state shipment

A New York State law barring out-of-state wineries from shipping their wines into the state is unconstitutional, a federal judge in Manhattan ruled yesterday.

The ruling is likely to have a major impact nationwide because New York State is the second biggest wine market in the country after California. Across America, 29 other states have a comparable law on the books.

The judge, Richard M Berman, delivered his ruling in a lawsuit brought primarily by a Virginia boutique winery, Swedenburg Estate Vineyards, which makes about 2,500 cases a year.

New York law bars out-of-state wineries from shipping wines to consumers in New York while raising no such obstacle to such shipments by wineries inside the state.

As for out-of-state wineries, the state requires that their wines reach the public only through licensed distributors (wholesalers), merchants and restaurateurs. The ostensible purpose of the law is to ensure accountability, to keep wines away from minors under 21 and to guarantee that taxes are paid.

John Kramer, a spokesman for the Institute for Justice, a Washington firm that brought the lawsuit, told decanter.com, ‘This is a seismic victory for the free market and for wine consumers. The wine wholesalers had poured their all into preserving the status quo.’

An Institute lawyer, Steve Simpson, said New York’s ban on interstate shipping was ‘protectionism, pure and simple.’ The state, he said, ‘couldn’t justify it as a temperance or a tax measure, and the court understood that.’

Judge Berman, in the United States District Court, wrote that New York law ‘constituted a cut-and-dried example of direct discrimination against interstate commerce.’ He added, ‘The defendants explicitly concede the exceptions were intended to be protectionist.’

While the Institute, Swedeneburg and other plaintiffs were jubilant, they understood that the road might be longer.

Clinton Bolick, vice president of the Institute, said that the United States Supreme Court was likely to decide the case, since comparable suits are working their way through other state courts.

Juanita Swedenburg, the key plaintiff, said: ‘This will be great for our many New York customers who visit Virginia wine country.’

On December 5, the court will hold a hearing to consider proposals to resolve the constitutional issue. The judge could eliminate the ban on direct shipping or, alternately, erase the exception in the law that allows New York State’s producers to ship their wines to in-state buyers.

New York was one of 11 states that remained unaffected by a law recently signed by President Bush that contained a provision allowing Americans to have wine shipped home from wineries that they visited in other states. This new law does not supersede state laws that ban direct shipments.

Written by Howard G Goldberg in New York13 November 2002

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