1The Institute for Justice scored a huge victory for wine entrepreneurs and free-market believers this past May when the U.S. Supreme Court struck down protectionist laws that prevented out-of-state wineries from selling directly to consumers in New York and Michigan.
A ripple effect here in Minnesota was that legislators opened the state to direct shipping from wineries in all 50 states—up from only 12. But wineries across the country that want to ship to local residents are still stymied by unconstitutional speech restrictions that prohibit wineries from advertising, soliciting or using the Internet to accept orders for direct sales of wine from Minnesotans.
In essence, wineries are free to ship directly, but forbidden from telling any Minnesotan about their direct-shipping services. The state-imposed silence has trumped the wineries’ newfound commercial freedom. Even worse than an advertising ban, Minnesota law takes away small wineries’ most effective selling tool—the Internet. When it comes to ordering wine online, Minnesotans must log off their computer, put down their mouse and order by telephone, fax or mail. By contrast, in a striking example of reflecting near-perfect regulatory capture, Minnesota regulators allow the corner liquor store to advertise direct shipping and to sell wine online.
Having the freedom to ship wine doesn’t mean much if you cannot tell anyone about it. That is why consumer Kim Crockett, Fieldstone Vineyards and White Winter Winery joined with the Institute for Justice Minnesota Chapter (IJ-MN) to challenge Minnesota’s advertising and Internet speech ban. We filed suit on their behalf in federal court on October 12, 2005.
Crockett, Fieldstone and White Winter are typical IJ clients—hardworking, sympathetic and principled. Crockett is a wife, busy mother of two school-aged children, city councillor and an attorney. She is also a wine enthusiast, but her free time rarely coincides with when wineries are open. She joined the lawsuit to challenge the idea that the State can allow speech over certain media, like the phone or mail, but prohibit it over another medium, the Internet.
Located on a century-old family farm, Fieldstone Vineyards (www.fieldstonevineyards.com) was founded five years ago when Don Reding, his son, Chad, and son-in-law, Charlie Quast, pooled their resources and planted 256 cold-hardy grapevines. In a stunning success, 238 vines survived Minnesota’s bitterly cold winter, proving that grapes are a viable alternative crop here. Charlie, Don and Chad then joined with Mark Wedge, a self-taught winemaker, who succeeded in crafting a variety of specialty wines by counteracting the excessive fertileness of Minnesota’s soil. The four are parties to the lawsuit because Fieldstone’s growth depends on its ability to advertise their direct-shipping services to existing and potential customers.
White Winter Winery (www.whitewinterwinery.com) specializes in mead wine—an ancient form of wine made with honey and fresh fruit, like strawberries, blueberries and apples. Jon and Kim Hamilton founded White Winter in 1996 after years of backyard beekeeping and amateur winemaking. Located near the shores of Lake Superior, White Winter benefits from a microclimate that allows for cool nights and warm days, extending the growing season by several weeks. At first reluctant to sue the government, Jon and Kim joined the lawsuit after recognizing that to be successful, they must be able to solicit wine-lovers in northern Minnesota cities, like Duluth—just 40 miles west of their winery.
At the well-attended case-launch press conference, Charlie turned to reporters and asked, “Are we supposed to ignore the fact that our website gets 2,000 hits per month?” Judging from the widespread coverage in USA Today, Minnesota Public Radio, St. Paul Pioneer Press, Minneapolis Star Tribune and the local NBC and CBS affiliates, the overwhelming response has been an emphatic, “No!”
Of course, Minnesota’s speech ban does not just inconvenience consumers and threaten the dreams of entrepreneurs. It also violates the First Amendment by stifling free speech. Nearly 30 years ago, the U.S. Supreme Court held that the First Amendment protects the free flow of information necessary for a market economy. And barely 10 years ago the Court said, “The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.”
Banning advertising, solicitations and the use of the Internet undermines the free exchange of information between wineries and consumers. Moreover, it tramples a consumer’s right to receive information about wine and to order it using the most convenient medium—the Internet. For these reasons, IJ-MN is determined to have the U.S. District Court strike down Minnesota’s senseless advertising and Internet speech ban.
Nick Dranias is an Institute for Justice Minnesota Chapter attorney.