Sweet Nectar of Victory

June 2006

By Lee McGrath Salud! Prost! Cheers!

In any language we raise our glasses to the clients who joined with the Institute for Justice Minnesota Chapter (IJ-MN) to challenge a State law that prohibited wineries from advertising their direct shipping services and accepting wine orders over the Internet.

Charlie Quast, of Fieldstone Vineyards, Kim and Jon Hamilton, of White Winter Winery, and consumer Kimberly Crockett took on the State and those interested in maintaining the distribution cartel . . . and won! Thanks to their efforts, and IJ’s toil in the legal vineyard, Minnesota consumers who enjoy surfing the web to find boutique wines may now legally use their mouse to place an order.

In a consent judgment entered on April 3, 2006, by the U.S. District Court for the District of Minnesota, the State of Minnesota acknowledged that it could not constitutionally prohibit wineries from truthfully advertising the direct shipment of wine. The State also conceded that it would violate the First Amendment if it enforced a law that forbade wineries across the country from accepting online orders from Minnesotans.

Extending to the Internet the holdings in the case of 44 Liquormart v. Rhode Island—a U.S. Supreme Court case in which IJ filed one of its earliest amicus briefs—our lawsuit forced the State of Minnesota to recognize that it cannot prohibit wineries from truthfully informing consumers about the wines they can legally buy. Equally important, IJ made the State of Minnesota recognize that the First Amendment protects the right to communicate over the Internet.

“Minnesota conceded, in effect, that America cannot be an information economy if the government restricts the free flow of information between lawful businesses and consumers over the Internet,” said Nick Dranias, IJ-MN’s staff attorney. “Now wineries nationwide can promote their lawful products and freely exchange information about them—and Minnesota consumers can hear what they have to say.”

In June 2005, Minnesota Gov. Tim Pawlenty signed legislation allowing in-state and out-of-state wineries to ship directly to consumers across the country and freeing Minnesota wine lovers to order from their favorite wineries, wherever they may be. The new legislation was signed shortly after a May 2005 U.S. Supreme Court ruling striking down state barriers that had prohibited wineries from direct shipping across state lines. The Institute for Justice litigated that U.S. Supreme Court case on behalf of Virginia and California vintners and New York state consumers. Unfortunately, as Minnesota tore down one barrier to free trade, it let another stand: the advertising and Internet speech ban.

Above, a victory toast in Minnesota as Jon Hamilton of White Winter Winery, John Mahoney of Cannon River Winery, Nick Dranias of IJ-MN and Charlie Quast of Fieldstone Vineyards uncork freedom in honor of free speech. Top right, Charlie Quast of Fieldstone Vineyards and Lee McGrath. Visit IJ’s Freedom Market at fmarket.ij.org to pick up an IJ bottle opener (right).

But now, less than six months after IJ-MN filed suit challenging this senseless restriction, family-run wineries like Fieldstone Vineyards and White Winter Winery are free to grow their businesses through e-commerce and effective marketing to distant customers like plaintiff Kim Crockett.

As Jon Hamilton, vice president of White Winter Winery, explained, “We are located in the north woods of Wisconsin. The State of Minnesota’s acknowledgment that it cannot constitutionally force us to rely solely on word-of-mouth or foot traffic is not only immensely gratifying, it ensures that we can let our customers in Duluth and the rest of Minnesota know they have access to our product from the convenience of their own home—which is the key to our success.”

“There is no question that combining e-commerce and direct shipping will allow us to grow our business substantially,” said Charlie Quast, co-owner of Fieldstone Vineyards, located in Morgan, Minn., 115 miles southwest of the Twin Cities. “This consent judgment confirms that the First Amendment stops the State from cracking down on truthful marketing of our legal product or our Internet sales.”

In addition, Crockett said, “Striking down the ban just makes sense because it is ridiculous that the State ever prohibited me from talking online about getting a legal product delivered in a perfectly legal way.”

We can all drink to that.Lee McGrath is executive director of the Institute for Justice Minnesota Chapter.