Washington, DC—If you are a Minnesota consumer who enjoys surfing the web to find and order wines from Minnesota and around the country, put down your mouse. In a set of regulations out of step with the Internet age, the State of Minnesota forbids all wineries—in-state and out-of-state—from accepting orders online from Minnesotans. The State also prohibits wineries from advertising their direct shipping services to consumers, even though direct shipping of wine is perfectly legal in Minnesota.
Minnesota liquor stores, however, may sell wine from the convenience of their websites. And they are free to advertise their direct shipping services. The State’s discriminatory advertising and Internet speech ban against wineries is backed up by the threat of criminal prosecution, fines and jail time.
“Minnesota says to wineries: you can legally make your product, sell it and deliver it directly to customers at home—you just can’t tell consumers it can be delivered, or allow them to order it in the easiest way possible, over the Internet,” said Lee McGrath, executive director of the Institute for Justice Minnesota Chapter. “These unfair and foolish restrictions single out wineries, barring them from communicating with consumers while liquor stores are free to advertise and use the Internet to its fullest potential.”
Instead of consumers being able to point, click and buy, Minnesota law requires its citizens to log off and call up a winery (or fax, send postal mail or, even more difficult, visit in person) to place an order.
These regulations severely restrict the two most effective ways small wineries have to grow their businesses: e-commerce and direct shipping services to distant customers. The law also keeps consumers from learning about legal products they might wish to buy and from ordering those products in the way they choose.
That’s why on October 12, 2005, the Institute for Justice Minnesota Chapter (IJ-MN) filed suit in the U.S. District Court for the State of Minnesota challenging the State’s senseless advertising and Internet speech ban on behalf of Fieldstone Vineyards of Morgan, Minn., White Winter Winery of Iron River, Wis., and consumer Kim Crockett of Deephaven, Minn. The suit, Crockett v. Minnesota Department of Public Safety, seeks to vindicate wineries’ and consumers’ First Amendment rights and the right to equal protection of the law under the 14th Amendment.
“Fieldstone Vineyards and White Winter Winery just want to promote their lawful products and exchange information about them freely and equally—and Kim Crockett wants to hear what they have to say,” said Nick Dranias, IJ-MN’s staff attorney. “America can’t be an ‘information economy’ if the government restricts the free flow of information between lawful businesses and consumers.”
In June, Minnesota Gov. Tim Pawlenty signed legislation allowing in-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 U.S. Supreme Court ruling striking down state barriers that had prohibited wineries from direct shipping across state lines. The Institute for Justice litigated the 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 stand another: the advertising and Internet speech ban.
The victims of the ban are small wineries like Fieldstone (www.fieldstonevineyards.com) and White Winter (www.whitewinterwinery.com) and the consumers who wish to learn about their services. For small wineries in remote locations without significant access to retail distribution, Internet sales and the ability to advertise direct shipments are essential to building a customer base and growing a business.
As Jon Hamilton, vice president of White Winter, explained, “We are far from major metropolitan areas and can’t rely solely on word-of-mouth or foot traffic. The key to our success is letting our customers in Minnesota know they have access to our product from the convenience of their own home.”
“Combining e-commerce and direct shipping will allow us to overcome our problem of being too small to attract distributors,” said Charlie Quast, co-owner of Fieldstone. “It’s an important tool to grow our business.”
In addition, Minnesota consumers like Kim Crockett are deprived of knowledge and freedom of choice. Crockett said that the ban “makes no sense because we’re talking about getting a legal product delivered in a perfectly legal way.”
McGrath concluded, “Minnesota’s senseless direct shipping gag rules trample the free speech rights of both entrepreneurs and consumers.”
The Institute for Justice Minnesota Chapter is a nonpartisan, nonprofit public interest law firm that litigates under the Minnesota and U.S. constitutions to protect individuals whose rights are being violated by the government. Through strategic litigation, training, communication and outreach, IJ-MN secures greater protection for individual liberty and extends the benefits of freedom to those who have been deprived of it by the government. In its lawsuit on behalf of wineries and wine consumers, Crockett v. Minnesota Department of Public Safety, IJ-MN seeks to reinforce and expand the Supreme Court’s recognition that “the free flow of commercial information is indispensable” to a free society.