WASHINGTON, May 15 - The Supreme Court ruled today, in a case of
interest to millions of wine-drinkers and those who make a living in
the multibillion-dollar industry, that people can buy wine directly
from out-of-state vineyards.
In a 5-to-4 decision that struck down laws in New York and Michigan,
and by extension calls into question the laws in 22 other states, the
court held that laws that discriminate against out-of-state vineyards
violate the Constitution's Commerce Clause, which empowers Congress to
regulate interstate commerce.
"Laws such as those at issue contradict the principles underlying
this rule by depriving citizens of their right to have access to other
states' markets on equal terms," the majority held, in an opinion by
Justice Anthony M. Kennedy.
Today's ruling does not leave state lawmakers powerless to regulate
direct shipments of alcohol, but if they do so they must not favor
their own states over other states. Indeed, Nida Samona, the chairwoman
of the Michigan Liquor Control Commission, told The Associated Press
that her commission would urge lawmakers to bar direct shipments for
both local and out-of-state wineries.
Today's ruling is of intense interest not only to the states - 26 of
which already allow direct shipment from out-of-state wineries - but
also to the wholesale liquor industry, which fears eventually being
left out of what is now a state-run three-tier system: liquor producer
to licensed wholesaler to licensed retailer.
The worry for liquor wholesalers has been that if the justices ruled
that consumers could buy wine directly from out-of-state producers, so
might liquor retailers be able to do so, at least in theory.
Today's decision, in the cases of Granholm v. Heald, No. 03-1116,
from Michigan, and Swedenburg v. Kelly, No. 03-1274 from New York, had
to do with interpretation of the Constitution, the intent of the 1933
Amendment that ended Prohibition and changing personal tastes in the
age of the Internet.
When the case was argued before the justices on Dec. 7, lawyers for
New York and Michigan asserted that the Prohibition-ending 21st
Amendment to the Constitution gave states such wide authority over the
importation of alcohol that it trumped the principle embodied in the
Commerce Clause: that the states may not, without Congressional
authorization, discriminate against one another.
New York's and Michigan's lawyers insisted then that the goals of
preventing minors' access to alcohol and assuring that the states could
collect taxes from out-of-state shippers justified their states'
statutes. Solicitor General Caitlin J. Halligan of New York told the
justices that the case "goes to the very core of the 21st Amendment."
Justice Kennedy responded - tellingly, it would appear from today's
ruling - that "it also goes to the very core of the Commerce Clause."
Justice Kennedy wrote today that the real object of the Michigan and
New York statutes was not protection of minors but rather to give
in-state wineries a competitive advantage over those in other states.
Justice Kennedy, who was joined by Justices Antonin Scalia, David H.
Souter, Ruth Bader Ginsburg and Stephen G. Breyer, said New York and
Michigan "provide little evidence for their claim that purchasing wine
over the Internet by minors is a problem."
"The 26 states now permitting direct shipments report no such
problem, and the states can minimize any risk with less restrictive
steps, such as requiring an adult signature on delivery," the majority
said. Moreover, the majority said, the states could devise
tax-collection procedures without resorting to discrimination in
interstate commerce.
"In all but the narrowest circumstances" the states violate the
Commerce Clause if they erect barriers to help in-state business at the
expense of outsiders, the majority said in describing the Commerce
Clause as "essential to the foundations of the Union."
The majority observed that "the current patchwork of laws - with
some states banning direct shipments altogether, others doing so only
for out-of-state wines, and still others requiring reciprocity - is
essentially the product of an ongoing, low-level trade war."
Chief Justice William H. Rehnquist and Justices John Paul Stevens, Sandra Day O'Connor and Clarence Thomas dissented.
Justice Stevens conceded that the New York and Michigan laws would
be "patently invalid" if they regulated sales of "an ordinary article
of commerce," not wine. "But ever since the adoption of the 18th
Amendment and the 21st Amendment, our Constitution has placed commerce
in alcoholic beverages in a special category," Justice Stevens wrote.
(The 18th Amendment ushered in the era of Prohibition and, some social
historians have said, the bootleggers and speak-easies that accompanied
it.)
"Today, many Americans, particularly those members of the younger
generations who make policy decisions, regard alcohol as an ordinary
article of commerce, subject to the same market and legal controls as
other consumer products," Justice Stevens wrote. "That was definitely
not the view of the generations that made policy in 1919 when the 18th
Amendment was ratified or in 1933 when it was repealed by the 21st
Amendment."
That alcoholic beverages are something apart in the world of
commerce is obvious from what happened after Prohibition ended, Justice
Stevens went on: "So-called 'dry states' entirely prohibited such
commerce; others prohibited the sale of alcohol on Sundays; others
permitted the sale of beer and wine but not hard liquor; most created
either state monopolies or distribution systems that gave
discriminatory preferences to local retailers and distributors."
Small local wineries were elated by today's ruling. "This is the
best day for wine lovers since the invention of the corkscrew," Clint
Bolick, counsel for the Institute for Justice, which represented local
wineries, told The Associated Press. "It demonstrates that in the era
of the Internet the court will vindicate the principles of free trade
that made this country great."
And Juanita Swedenburg, the Middleburg, Va., vintner who sued to
overturn the New York law, told The A.P. that the ruling was "a boon
for America's wine-loving consumers who like to have various wines from
throughout the nation."
The laws overturned today are not identical. Michigan's statute
flatly prohibited direct shipments by out-of-state wineries. New York's
permitted such shipments in theory - as long as the winery maintained a
physical presence in New York, including a warehouse to store wines
before sale. No out-of-state winery has qualified for this exception in
the 35 years that the law has been on the books.
Among the other states that ban direct shipments from out-of-state
wineries are Connecticut, Delaware, Pennsylvania, New Jersey, Vermont,
Massachusetts and Florida. A few states even make importing a felony.
(A map showing the wine laws throughout the country can be viewed on
the Institute for Justice's Web site, www.ij.org.)
In issuing their ruling today, the justices reversed the United
States Court of Appeals for the Second Circuit, which had affirmed the
New York law, and it upheld the Court of Appeals for the Sixth Circuit,
which had voided the Michigan law.
A nod to K&L Wine Merchants for the note below in an effort to raise awareness of this -- see what this proposed legislation means for you and what you can do about it. 
