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Judge Rules Against Wine Ban

November 13, 2002|From Bloomberg News

NEW YORK — It's unconstitutional for New York state to ban direct-to-customer shipments of wine from out-of-state producers, while allowing such sales by in-state wineries, a federal judge concluded Tuesday.

The law at issue in the case required vintners outside New York, such as California wineries, to use state-authorized wholesalers. Several out-of-state wineries sued, calling the law discriminatory.

The issue of direct wine shipments across state lines is gaining steam. Last week, President Bush signed into law a provision backed by California's wineries allowing wine purchased by winery visitors to be shipped to their home states even if those states prohibit direct shipments of alcohol.

U.S. District Judge Richard Berman ruled that New York's ban is discriminatory.

His ruling followed the lead of courts in Texas, Illinois, Virginia and North Carolina that have blocked similar statutes. Other courts, including a federal appeals court in Chicago, have upheld state bans on direct wine shipments.

The judge said he was persuaded by evidence "that the direct shipping ban was designed to protect New York state businesses from out-of-state competition."

The plaintiffs called the practice "economic protectionism."

Berman left unresolved whether all vintners, including those based in New York and other states, would be allowed to ship directly -- or whether none would be. He asked to hear additional arguments in the case.

Industry officials were watching the case because 26 states restrict the direct sale of wine, and New York is the second-largest wine-consuming state after California.

The American Vintners Assn., which represents about 600 of the nation's 1,600 mostly small wine producers, has said wineries have long sought the repeal of the restrictive Depression-era laws.

A California winemaker joined three New York consumers in alleging that the state law ran afoul of the U.S. Constitution's commerce clause.

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