Justices Rule Wine Can Flow Freely over State Borders
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The US Supreme Court gave a major victory to wine lovers and producers today. It struck down state laws that limit shipments of wine directly to consumers. NPR's Nina Totenberg has details.
NINA TOTENBERG reporting:
The tables in the elegant Crystal Room of the Willard Hotel were set with the hotel's best china today. The luncheon had been planned for some time as part of the Wine Institute's annual lobbying trip to Washington, DC. But instead it turned into a champagne celebration. Wine Institute President Robert Koch, who just happens to be married to President Bush's younger sister Doro, rose glass in hand.
Mr. ROBERT KOCH (President, Wine Institute): So I would simply like to propose a toast to the United States Supreme Court.
Luncheon Members: (In unison) Hear! Hear!
TOTENBERG: Indeed, just two hours earlier the US Supreme Court had ruled that states may not bar the direct shipment of wine to consumers when in-state wineries are permitted to make such shipments. The court's ruling struck down laws in New York and Michigan that are similar to those in some 22 other states. The cases were brought by small-winery owners, who typically produce only a few thousand bottles of wine a year and cannot afford to market through distributors, as required in half the states. Juanita Swedenburg, a retired foreign service worker who owns a small winery in the Virginia countryside, was in the vineyard when news of the court ruling in her case came.
Ms. JUANITA SWEDENBURG (Winery Owner): For us, the small wineries, it's absolutely wonderful.
TOTENBERG: At issue in the case were two provisions of the Constitution: the Commerce Clause, which guarantees the free flow of goods and services across state lines, and the 21st Amendment to the Constitution, which repealed Prohibition and explicitly gave states the power to regulate the importation and sale of alcoholic beverages within a state's borders.
The decision was close, 5-to-4, with an unusual alignment of justices. Writing for the court majority, Justice Anthony Kennedy said that the 21st Amendment was never meant to trump the Constitution's guarantee of non-discriminatory commerce across state lines. States, he said, are still free to regulate the sale of liquor, but if they choose to allow the direct shipment of wine to consumers, those transactions must be regulated in an evenhanded way, not with preferences for in-state wineries. Joining him in the majority were Justices Scalia, Souter, Ginsburg and Breyer.
Wine is a booming, $21 billion business in the United States with 3,700 wineries, most of them small, family-owned operations and located in every state. Advocates of unrestricted shipping expect today's ruling to open up yet more business on the Internet. Stanford law Professor Kathleen Sullivan argued and won the Michigan case decided by the court today.
Professor KATHLEEN SULLIVAN (Stanford): This opens up a tremendous potential in the market for Internet and interstate shipment of wine. You're right that that potential is subject to the potential for new state laws, but if new state laws say you have to have all or nothing, our prediction is they're going to allow all rather than nothing.
TOTENBERG: But Matt Kramer, a contributing editor at Wine Spectator magazine, cautions that distributors are longtime campaign contributors who will fight hard to stop direct shipment.
Mr. MATT KRAMER (Contributing Editor, Wine Spectator): Just because the Supreme Court has overturned the ban doesn't mean that anything necessarily changes automatically. What we will really be seeing is the economic equivalent of a house-to-house urban warfare from state legislature to state legislature. The distributors are not going to take this lying down.
TOTENBERG: Indeed, a broad coalition is in place to join the distributors, organizations that range from the American Trauma Society and Mothers Against Drunk Driving to the National Association of Evangelicals and the Eagle Forum. And in Michigan, for instance, Nida Simona, the chairman of the Michigan Liquor Control Board, says she will urge a total bar on direct shipments of wine. Yes, the Michigan wineries will be upset, she says, but her first obligation is to protect minors.
Ms. NIDA SIMONA (Chairman, Michigan Liquor Control Commission): The best way to ensure that is to tighten the rules and to be more strict. And so the consistency that the Supreme Court is asking us to do by recommendation would be that no one is able to do that; that the only way you sell alcohol, wine or otherwise, is to sell directly to the consumer face to face.
TOTENBERG: Dissenting from today's ruling were Justices Stevens, Thomas, O'Connor and Chief Justice Rehnquist. Said Stevens, `Today's decision may represent sound economic policy. It is not, however, consistent with the policy choices made in 1933 when the Constitution was amended to repeal Prohibition.' Nina Totenberg, NPR News, Washington. Transcript provided by NPR, Copyright NPR.