But some of the laws, including the Michigan and New York laws at issue Tuesday, permit in-state wineries to sell directly to consumers. (New York lets out-of-state wineries ship directly if they set up an office in New York.)
The states and the wholesalers argue that the laws are needed to keep alcohol away from minors and help collect tax revenue. Michigan, for example, collected $168.3 million from liquor taxes, license fees, fines and penalties in 2003.
Virginia winemaker Juanita Swedenburg is one of the parties to the suit seeking to overturn laws barring direct interstate wine sales.
(Tracy A. Woodward -- The Washington Post)
|
| | | | ___Tech Policy/Security E-letter___ Written by washingtonpost.com's tech policy team, the e-mail version of this weekly feature includes an original news article and links to policy and cyber-security stories from the previous week.
• Click Here for Free Sign-up
• Read E-letter Archive
| | | | | | |
|
And this is constitutional, they argue, because the 21st Amendment was intended as an exception to the usual rule of free interstate trade.
In their brief, Michigan wholesalers warn the court bluntly that "this case would challenge the whole three-tier system."
"This isn't about access to wine; this is about state control of the regulatory system," said M. Craig Wolf, general counsel of the Wine and Spirits Wholesalers of America.
Wolf noted that, in a separate case, Costco is suing in a Washington state federal court for the right to import wine directly from California to its stores. Together, Costco, Sam's Club and Trader Joe's accounted for more than $1 billion in wine sales last year, according to ACNielsen. Kendall-Jackson wines are among the most popular on Costco's shelves, according to industry sources.
But the wineries and wine drinkers point to a 2003 Federal Trade Commission report that said that consumers reap significant benefits from direct shipment in the states that permit it and that those states report few problems with tax collection or underage purchases.
Opponents of the bans on direct interstate shipments say the fact that Michigan and New York let their in-state producers ship to consumers proves their laws do nothing more than protect local businesses from competition.
That makes them unconstitutional, opponents say, because when the framers of the Constitution gave Congress the power to regulate interstate commerce, they implicitly denied it to the states.
"This is the latest round in a battle that has been raging longer than the republic has been around," said Clint Bolick, a lawyer who will represent Middleburg, Va., winemaker Juanita Swedenburg on Tuesday. "The battle between economic protectionism and free trade."
Bolick is counsel for strategic litigation at the Institute for Justice, a libertarian legal group, which received no funds from the Coalition for Free Trade.
Tanford was the first to test the opponents' constitutional argument in court, filing suit in Indiana in 1998 on behalf of Russell Bridenbaugh, a wine critic in Indiana who found that he could no longer receive free review bottles of wine from out-of-state wineries.
Though the Indianan lost his case at the U.S. Court of Appeals for the 7th Circuit, his effort attracted Jackson's attention and, eventually, his support. Soon the Coalition for Free Trade was offering technical advice to plaintiffs in Florida, North Carolina and Michigan and filing friend-of-the-court briefs.
"As we saw the effort underway, we jumped in as an industry to become a central, important part of it," said Tracy K. Genesen, legal director of the coalition. The group is not out to overthrow the three-tier system, she said, but Jackson "has a vision where you have a complement, or an augmentation, to the three-tier system that will benefit all size wineries."
