Lawsuits Take Aim at Interstate Shipping

A concerted effort is underway to to get shipping laws before the Supreme Court, W. Blake Gray reports.

Source: https://www.wine-searcher.com
05-Dec-2017

Here’s some good news for wine lovers in middle America: lawsuits have been filed in three states that could allow wine lovers to order wines from any state. And not just by any law firm – it’s the same lawyers who opened up the country to direct shipping from wineries.

Currently residents of only 13 states and the District of Columbia can legally order wine online from an out-of-state retail store. This is a big contrast to ordering from a winery: residents of 42 states can order wine from out-of-state wineries.

Three of the largest states that don’t allow interstate wine shipments from retailers are Illinois, Michigan and Missouri. Two Indianapolis-based attorneys, Bob Epstein and Alex Tanford, have filed suits in each of these states challenging the laws. They’re looking at filing lawsuits in other states as well, and they hope eventually the US Supreme Court will rule on the issue – which would have an impact nationwide.

“Going into the 21st Century we need to be able to open up the markets,” Epstein told Wine-Searcher. “The two younger lawyers we work with in the Michigan lawsuit said: ‘We don’t want to have to go into a wine shop. We buy everything online. Why can’t we buy wine online?'”

Epstein and Tanford were attorneys behind the landmark 2005 US Supreme Court case Granholm v. Heald. In that case, the states of Michigan and Florida had laws that allowed local wineries to ship wine to state residents, but not out-of-state residents. By a 5-4 decision, the Supreme Court ruled that those laws violated the commerce clause of the US constitution by favoring one state’s products over another.

Many states immediately changed their laws to allow out-of-state wineries to ship to their residents. But it wasn’t clear whether the Granholm decision should apply to retailers, and with the ruling expressly calling the three-tier system “unquestionably legitimate”, states have been much slower to address differential treatment of retailers.

Not many wine lovers paid attention to the dichotomy until this year, when – encouraged by alcohol wholesalers who invest heavily in politicians – states began cracking down on UPS, FedEx and other common carriers that deliver wine. The upshot is that fewer Americans can order wine online today from an out-of-state retail store than could in the immediate wake of the 2005 Supreme Court decision.

“People who want to buy an anniversary wine or a birthday wine, or are collectors and want older vintages, they have trouble finding these wines unless they go on the Internet,” Epstein told Wine-Searcher. “There are retailers in California and New York that carry some of these wines.”

Because each state’s alcohol laws are different, each lawsuit is slightly different at the state level. But the principle is the same, and that could allow the suits to be combined. But to win at a higher level, Epstein and Tanford first have to lose.

“As a constitutional litigator, it is easier to get the Supreme Court to settle it is if you have a split between circuits,” Epstein said.

In other words, the lawyers need the cases to be appealed to US appellate courts, and for the 6th circuit, which covers Michigan, to rule one way and the 7th circuit (Illinois) or 8th circuit (Missouri) to make the opposite ruling.

The other way to get to the US Supreme Court is for the state to lose the case and then decide to appeal. Michigan has already lost more than once because its legislature just can’t write a statute that conforms to Granholm v. Heald, but it hasn’t appealed.

“In Michigan, we originally gained a victory there, and then they legislated against it,” said Epstein. “My partner Alex Tanford went up there and testified and said: ‘If you do this, we’re going to sue again.’ And we did.”

Epstein says that because of its restrictions on out-of-state retailers, Michigan currently allows only about 40,000 different wines into the state. That may sound like a lot, but more than 400,000 wines are registered with the US Alcohol and Tobacco Tax and Trade Bureau, so Michigan is allowing less than 10 percent of all wines sold in the US to be purchased by its residents.

Epstein and Tanford are not undefeated in these cases. They won a post-Granholm case in Michigan before the current one, and lost one in New York state. They walked away from a case in Texas, leaving attorney Ken Starr – most famous for his blow-by-blow investigation into Bill Clinton’s relationship with Monica Lewinsky – to win a tightly ruled case that didn’t end up opening shipping into the state.

They also have some wins that won’t reach the Supreme Court level. Indiana had a law requiring residents who wanted to order from wineries to have a one-time face-to-face meeting at the winery.

“We argued that there are many wineries that are not open to the public, so people can’t have the face-to-face meeting,” Epstein said. “So they dropped that requirement.”

Even if they get these cases back to the Supreme Court, it’s no certainty that the court will rule the same way. The 2005 ruling was by a 5-4 verdict with an unusual grouping of justices, with Antonin Scalia joining the court’s more liberal judges to give wine lovers the win. Scalia, who died in 2016, was famously conservative, but he was also a wine lover.

It’s hard to predict how long it might take these cases to wind to the Supreme Court, or even if the court will hear them if they get that far. Epstein said he expects a ruling in the Michigan case next year. If the attorneys get the right combination of rulings, “five or six years might be a reasonable projection” for the Supreme Court to take a look at it.

“I’m not the youngest guy in the world,” said Epstein, who has been a lawyer since 1970. “But it’s a labor of love for me.”

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