Direct Shipping Issue May Go to US Supreme Court
May 18, 2004
Michael Brill Newman - San Francisco
With February's decision by the 2nd Circuit Court of Appeals upholding New
York’s prohibition on interstate wine shipments, the debate over direct shipping
may be headed for the Supreme Court. Two circuits have now upheld direct
shipment prohibitions (7th Circuit upheld Indiana's law), while four circuits
(Texas, North Carolina, Virginia, and Michigan) have struck them down.
The latest development is disagreement over whether the time is right for
review by the Supreme Court. The Institute for Justice, a Washington, D.C.-based
interest group representing consumers and wineries in the New York case,
recently filed a Petition for Certiorari asking the Supreme Court to review the
2nd Circuit's decision. Additionally, the State of Michigan which last year
lost before the 6th Circuit when that circuit struck down Michigan’s ban, also
filed a petition in January seeking review of its case. Also, Attorneys General
in 36 states filed petitions last month as amici curia (“friends of the court”)
asking the Supreme Court to review the issue of their right to ban shipments.
(California’s Attorney General has refused to participate.)
The Coalition for Free Trade (CFT), however, a wine industry association
supporting shipping, opposes these petitions. CFT believes it would be better,
in states allowing direct shipments, for the industry to develop a positive
track record of collecting taxes, preventing sales to minors, and meeting other
requirements.
If the Supreme Court accepts one or more of the petitions, the fundamental
issue will be whether state shipping bans violate the U.S. Constitution’s
Commerce Clause (because several states' laws allow in-state, but not
out-of-state, companies to ship). Shipping proponents argue such state laws
discriminate unconstitutionally against out-of-state suppliers. Shipping
opponents argue the 21st Amendment and each state's police powers to control
alcohol shipments into their state authorize direct shipping prohibitions.
The U.S. Supreme Court likely will decide by this summer whether it will
grant any of the petitions. The Court grants less than 2% of certiorari
petitions. However, these cases are just begging to be heard by the Court
because of their substantial constitutional issues. If the cases are accepted,
they are sure to make history for our generation.