MIXED VICTORY IN KENTUCKY
Mixed victory for wineries last week after U.S. District Judge Charles Simpson stuck down a provision in a Kentucky state law that required face-to-face wine purchases before the product can be shipped directly.
QUICK REVIEW. Simpson ruled in August 2006 that portions of Kentucky’s existing law were unconstitutional under Granholm by requiring face-to-face sales and preventing consumers from ordering wine via phone and the internet. Afterwards, the state appealed. The August ruling was set to go into effect January 1.
LET’S GET UP TO SPEED. Out-of-state wineries are now able to ship directly to Kentucky residents, even if the consumer purchases the wine online or over the phone. That means people in Kentucky can legally order wine from California and have it shipped without ever stepping foot on the winery’s property – but only if the winery produces less than 50 gallons a year.
Judge Simpson ruled to maintain the 50,000-gallon limit from the August ruling. He also chose to uphold the two-case limit and the creation of the Kentucky Grape and Wine Council, which is designed to promote bluegrass wines and cut deals with wholesalers to sell them, calling the provisions “evenhanded” and saying they do not violate the Commerce Clause.
“There are no Commerce Clause implications in a state’s decision to sponsor and encourage economic development of its industries,” Simpson wrote.
The latest ruling came after the state appealed in August and a cross-appeal was filed by Cherry Hill Vineyards, an Oregon winery, which claimed Kentucky’s law violated the Commerce Clause of the U.S. Constitution by giving preference to Kentucky businesses over out-of-state merchants. (Cherry Hill’s attorney, J. Alex Tanford, is an Indiana University law professor who has filed suits of a similar nature in other states.)
Let’s take a look at the plaintiff’s arguments:
Tanford challenged the state law drafted last summer on the grounds that
1. The provision limiting shipments to wineries that produce less than 50,000 gallons a year unfairly favors Kentucky’s small wineries.
2. Requiring wine purchases to be made in-person discriminates against out-of-state wineries by giving Kentucky wineries the upper hand.
3. Limiting shipments to two cases at a time favors local wineries.
4. The creation of the Kentucky Grape and Wine Council allows Kentucky businesses to be treated differently from out-of-state businesses.
Tanford argued that defining a small winery as one that produces 50,000 gallons or less annually amounts to protectionism, because all Kentucky wineries currently fit that description.
"If he [Simpson] doesn't see it, its because he doesn't want to," Tanford said.
NOW IT’S UP TO THE 6TH CIRCUIT COURT OF APPEALS. The future lies in the appeals court. The state’s and wholesaler’s appeal from the August ruling has been parked in the Court of Appeals, pending last week’s judgment. The appeal from both will likely now go forward, but it is currently unknown whether the plaintiffs will cross-appeal on the issues of volume cap and two case shipments.
QUICK REVIEW. Simpson ruled in August 2006 that portions of Kentucky’s existing law were unconstitutional under Granholm by requiring face-to-face sales and preventing consumers from ordering wine via phone and the internet. Afterwards, the state appealed. The August ruling was set to go into effect January 1.
LET’S GET UP TO SPEED. Out-of-state wineries are now able to ship directly to Kentucky residents, even if the consumer purchases the wine online or over the phone. That means people in Kentucky can legally order wine from California and have it shipped without ever stepping foot on the winery’s property – but only if the winery produces less than 50 gallons a year.
Judge Simpson ruled to maintain the 50,000-gallon limit from the August ruling. He also chose to uphold the two-case limit and the creation of the Kentucky Grape and Wine Council, which is designed to promote bluegrass wines and cut deals with wholesalers to sell them, calling the provisions “evenhanded” and saying they do not violate the Commerce Clause.
“There are no Commerce Clause implications in a state’s decision to sponsor and encourage economic development of its industries,” Simpson wrote.
The latest ruling came after the state appealed in August and a cross-appeal was filed by Cherry Hill Vineyards, an Oregon winery, which claimed Kentucky’s law violated the Commerce Clause of the U.S. Constitution by giving preference to Kentucky businesses over out-of-state merchants. (Cherry Hill’s attorney, J. Alex Tanford, is an Indiana University law professor who has filed suits of a similar nature in other states.)
Let’s take a look at the plaintiff’s arguments:
Tanford challenged the state law drafted last summer on the grounds that
1. The provision limiting shipments to wineries that produce less than 50,000 gallons a year unfairly favors Kentucky’s small wineries.
2. Requiring wine purchases to be made in-person discriminates against out-of-state wineries by giving Kentucky wineries the upper hand.
3. Limiting shipments to two cases at a time favors local wineries.
4. The creation of the Kentucky Grape and Wine Council allows Kentucky businesses to be treated differently from out-of-state businesses.
Tanford argued that defining a small winery as one that produces 50,000 gallons or less annually amounts to protectionism, because all Kentucky wineries currently fit that description.
"If he [Simpson] doesn't see it, its because he doesn't want to," Tanford said.
NOW IT’S UP TO THE 6TH CIRCUIT COURT OF APPEALS. The future lies in the appeals court. The state’s and wholesaler’s appeal from the August ruling has been parked in the Court of Appeals, pending last week’s judgment. The appeal from both will likely now go forward, but it is currently unknown whether the plaintiffs will cross-appeal on the issues of volume cap and two case shipments.
posted at 12:30 PM
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