Justices to Hear Arguments on Interstate Wine Sales -- The New York Times > Business

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Justices to Hear Arguments on Interstate Wine Sales
By BOB TEDESCHI

For many wine aficionados, the most important case in years is about to be opened.

On Dec. 7, the United States Supreme Court will hear arguments from small wineries and state regulators to decide whether those wineries can sell directly to out-of-state consumers, or whether they must use a state-mandated distribution system that, the winemakers argue, is far too costly.

The issue has implications for the 24 states, including Florida and New Jersey, that do not allow direct shipments to their residents, but none more than New York, the nation's second-largest wine-consuming state, after California.

With the Internet fast becoming the marketing method of choice for smaller wineries to reach faraway customers, the court's decision could shape how the industry will market itself in the future.

At the heart of the matter are regulations enacted after the approval of the 21st Amendment in 1933, which ended Prohibition and allowed states to regulate the sale of alcoholic beverages. At that time, New York and other states passed laws requiring out-of-state sellers of alcoholic beverages to sell only to licensed wholesalers in the state, who would then market the wine and other drinks to retailers.

Since this "three tier" distribution system bars the import of out-of-state wines by retail customers, small operators like David Lucas, of the Lucas Winery in Lodi, Calif., cannot ship wine to consumers like Robin Brooks-Rigolosi, a commercial real estate broker and a fan of red wines in Manhattan.

In 2000, Ms. Brooks-Rigolosi tried to order a zinfandel from Mr. Lucas's Web site but found that such a sale was illegal. Shortly thereafter, she and Mr. Lucas, along with a libertarian public interest law firm, the Institute for Justice, among others, brought suit in Federal District Court in Manhattan, contending that New York's law violated the commerce clause of the Constitution, which, among other things, bars states from enacting laws that unduly interfere with interstate commerce. Read More...
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