THE NEW WAVE OF DIRECT SHIPPING LAWS
The U.S. alcohol industry is now well into the second wave of litigation that will eventually set the tone for how the industry will look in the future. This new wave of post-Granholm lawsuits, over 30 in all, seem to focus on two common provisions in state alcohol codes that the direct-shippers believe are anticompetitive: required face-to-face transactions and state volume caps which determine who can self-distribute based on annual case volume. A handful of those 30 suits involve shipping to retailers, but most have been filed in the past two years by wineries and consumers seeking to overturn direct-to-consumer laws considered discriminatory under the Supreme Court's definition.
At the time of the Granholm decision, 26 states allowed direct shipping of wine to consumers. Now, 34 states allow it, but the vintners are seeking direct shipping privileges in all fifty states. Many of those lawsuits are challenging newer state laws which were drafted after Granholm, usually with volume restrictions or face-to-face requirements. Wineries argue, however, that these are still protectionist devices.
The first three decisions concerning face-to-face requirements hailed from Maine, Kentucky and Indiana. In the Maine case a magistrate judge issued a decision in July to uphold the in-person requirement in Maine's law. Both sides await a district court judge's opinion.
In Kentucky, a district court judge ruled that the face-to-face requirement discriminated against out-of-state wineries, but upheld the volume caps to self-distribute.
This ruling could create a split in the circuit courts if a district court judge reaffirms the Maine decision. That could send the case to the Supreme Court, where the good Justices will have the opportunity to clarify what exactly they meant in Granholm.
However, in a surprise move, the Kentucky liquor board decided not to appeal their case. The state’s decision not to appeal means wineries will be able to ship directly to Kentucky consumers for the first time.
According to sources, Kentucky regulators decided to drop the appeal because while the judge threw out the face-to-face provision, he upheld the other challenged portions of the law. While the state has dropped out of the case, the Wine and Spirits Wholesalers of Kentucky have filed an appeal.
In Indiana, two out-of-state wineries and five Indiana residents are challenging portions of the state's law that were revised last year, including a requirement that requires a face-to-face sale.
The wineries claim the new law is discriminatory and acts out of accordance of Granholm. In response, the state's defendants called the lawsuit "part of a national litigation campaign" against alcohol regulations in several states.
Massachusetts and Arizona have both faced lawsuits that challenged volume caps. On Sept. 18, the Family Winemakers of California and two Massachusetts consumers filed suit over a revised law that became effective last year. The revised law allows wineries to obtain a direct-shipping license if they make less than 30,000 gallons of wine each year, which includes every winery in Massachusetts.
In Arizona, the volume cap was set even lower, 20,000, as a part of a revised law that became effective last year. Currently, both Massachusetts’ and Arizona’s volume cap laws remain in effect.
Meanwhile, a state bill to create a state government run nonprofit wine distributor within the Virginia Department of Agriculture and Consumer Services to serve Virginia farm wineries passed the state Senate, 39-0, yesterday. The bill is designed to help replace the wineries' loss of self-distribution rights after Granholm.
What does this mean? Well, for the most part, a sizable chunk of the industry agrees that the Supreme Court will have to get involved once again and clear up questions concerning its ruling.
To get further information, check out this great article at law.com.
ANOTHER ISSUE OF A LEGAL NATURE:
Spirits wholesalers in Texas (Dallas-based Glazer’s and San Antonio-based Republic) are currently pushing for changes that would allow them to sell directly to on-premise accounts. The law currently prohibits liquor wholesalers from selling to restaurants and bars, allowing only packaged liquor stores (such as Twin Liquors, Spec's and Austin Wine Merchants) to do the honors. The same restriction does not apply to wine and beer. Texas is one of three states - Kansas and South Carolina are the others - that have this additional link in the chain of commerce for liquor.
"We think it's an inefficient and archaic system for the distribution of distilled spirits, and we're going to seek a change," said Alan Gray, a spokesman for Glazer’s, to the Dallas Morning News.
Package stores, on the other hand, claim that if wholesalers get their way, higher prices and poor service will result.
At the time of the Granholm decision, 26 states allowed direct shipping of wine to consumers. Now, 34 states allow it, but the vintners are seeking direct shipping privileges in all fifty states. Many of those lawsuits are challenging newer state laws which were drafted after Granholm, usually with volume restrictions or face-to-face requirements. Wineries argue, however, that these are still protectionist devices.
The first three decisions concerning face-to-face requirements hailed from Maine, Kentucky and Indiana. In the Maine case a magistrate judge issued a decision in July to uphold the in-person requirement in Maine's law. Both sides await a district court judge's opinion.
In Kentucky, a district court judge ruled that the face-to-face requirement discriminated against out-of-state wineries, but upheld the volume caps to self-distribute.
This ruling could create a split in the circuit courts if a district court judge reaffirms the Maine decision. That could send the case to the Supreme Court, where the good Justices will have the opportunity to clarify what exactly they meant in Granholm.
However, in a surprise move, the Kentucky liquor board decided not to appeal their case. The state’s decision not to appeal means wineries will be able to ship directly to Kentucky consumers for the first time.
According to sources, Kentucky regulators decided to drop the appeal because while the judge threw out the face-to-face provision, he upheld the other challenged portions of the law. While the state has dropped out of the case, the Wine and Spirits Wholesalers of Kentucky have filed an appeal.
In Indiana, two out-of-state wineries and five Indiana residents are challenging portions of the state's law that were revised last year, including a requirement that requires a face-to-face sale.
The wineries claim the new law is discriminatory and acts out of accordance of Granholm. In response, the state's defendants called the lawsuit "part of a national litigation campaign" against alcohol regulations in several states.
Massachusetts and Arizona have both faced lawsuits that challenged volume caps. On Sept. 18, the Family Winemakers of California and two Massachusetts consumers filed suit over a revised law that became effective last year. The revised law allows wineries to obtain a direct-shipping license if they make less than 30,000 gallons of wine each year, which includes every winery in Massachusetts.
In Arizona, the volume cap was set even lower, 20,000, as a part of a revised law that became effective last year. Currently, both Massachusetts’ and Arizona’s volume cap laws remain in effect.
Meanwhile, a state bill to create a state government run nonprofit wine distributor within the Virginia Department of Agriculture and Consumer Services to serve Virginia farm wineries passed the state Senate, 39-0, yesterday. The bill is designed to help replace the wineries' loss of self-distribution rights after Granholm.
What does this mean? Well, for the most part, a sizable chunk of the industry agrees that the Supreme Court will have to get involved once again and clear up questions concerning its ruling.
To get further information, check out this great article at law.com.
ANOTHER ISSUE OF A LEGAL NATURE:
Spirits wholesalers in Texas (Dallas-based Glazer’s and San Antonio-based Republic) are currently pushing for changes that would allow them to sell directly to on-premise accounts. The law currently prohibits liquor wholesalers from selling to restaurants and bars, allowing only packaged liquor stores (such as Twin Liquors, Spec's and Austin Wine Merchants) to do the honors. The same restriction does not apply to wine and beer. Texas is one of three states - Kansas and South Carolina are the others - that have this additional link in the chain of commerce for liquor.
"We think it's an inefficient and archaic system for the distribution of distilled spirits, and we're going to seek a change," said Alan Gray, a spokesman for Glazer’s, to the Dallas Morning News.
Package stores, on the other hand, claim that if wholesalers get their way, higher prices and poor service will result.
posted at 1:10 PM
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