Vino Victory at the U.S. Supreme Court!

June 2005

By Steve Simpson

The Washington Post headline said it all: “Virginia vintner’s challenge ends in triumph.”

On May 16th, the U.S. Supreme Court issued a decisive victory to IJ and our clients Juanita Swedenburg, David Lucas, and their customers in New York. In a decision that lead lawyer Clint Bolick called “the best day for wine-lovers since the invention of the corkscrew,” the Court struck down discriminatory laws in New York and Michigan that denied out-of-state wineries the same direct shipping opportunities available to in-state wineries.

Writing for a five-justice majority, Justice Anthony Kennedy called the constitutional principle barring protectionism “essential to the foundations of the Union. States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses.” The Court agreed with IJ that the 21st Amendment “did not give the states the authority to pass nonuniform laws in order to discriminate against out-of-state goods, a privilege they had not enjoyed at any earlier time.” And it soundly rejected the States’ claim that the bans were necessary to prevent underage drinking and to facilitate tax collection as mere “unsupported assertions” lacking any evidence whatsoever.

As IJ client David Lucas summed it up, the Court gave wineries and their consumers what the Constitution commands: “the right to economic liberty.” Juanita Swedenburg echoed this sentiment: “This is interstate commerce, as it was meant to be. The Founding Fathers wanted us to be one nation when it came to trade, not 50 states.”

IJ filed the case in U.S. District Court in Manhattan in early 2000 on behalf of Swedenburg, Lucas, and New York wine consumers Robin Brooks Rigolosi, Patrick Fitzgerald and Cortes DeRussy. Before long, the special interests who benefited from New York’s protectionist system sought to intervene in the case. Soon IJ and its clients found themselves facing off against eight teams of highly paid New York lawyers and their powerful clients, including the four largest New York wine wholesalers and two unions. It was a classic David versus Goliath battle.

IJ’s Strategic Litigation Counsel Clint Bolick and client Juanita Swedenburg are both pleased with the U.S. Supreme Court decision.

IJ rose to the challenge, enlisting the efforts at various times of no less than eight IJ attorneys, including IJ President Chip Mellor, Deb Simpson, Miranda Perry, Marni Soupcoff, Clark Neily, Bert Gall, and me. Gretchen Embrey provided unwavering litigation support throughout, and John Kramer and Lisa Knepper managed one of the biggest media blitzes in IJ’s history. Many more IJ employees and supporters provided invaluable help, including our development team, our donors, and more law clerks and interns than we can count. It was truly a team effort from start to finish.

Even though the Supreme Court case is behind us, other related battles will rage on. The Court’s ruling requires states to treat in-state and out-of-state wineries the same, but it does not require them to allow direct shipping at all. Currently, 26 states allow direct shipping in some form, while 24 prevent it. Of those 24, eight states have discriminatory laws that are now unconstitutional. The remaining 16 will have to be analyzed to determine whether they treat all wineries the same.

The states now have a choice: they can either side with the wholesalers and their oligopolies, or they can side with wineries and consumers. Free trade is good policy, however, and the momentum favors direct shipping, so we expect states will increasingly open their borders to trade, rather than close them down.

But the protectionists have not given up.

Indeed, the ink was barely dry on the Court’s opinion when Nida Samona, chairwoman of the Michigan Liquor Control Commission, said that she will recommend that Michigan ban all direct shipping rather than open its borders to wine from other states. This is pure sour grapes, but it no doubt accurately expresses the views of the wholesalers and their allies in the state bureaucracies. So IJ will remain vigilant to ensure that this victory for free trade is not squandered by state legislatures.

After the oral argument in December, IJ supporter and Virginia vintner Lew Parker said, “Only one group was there because of what they believed in, not what they were being paid for. That’s the Institute for Justice. And it showed.”

That’s true, but we could not have done it without our supporters and our heroic clients.

Cheers!

Steve Simpson is an IJ senior attorney.