Washington, D.C.-In a case with national ramifications for Internet commerce, a federal court today delivered an opening-round victory to consumers and small wineries challenging New York’s ban on the direct shipment of out-of-state wines to consumers.
The lawsuit, Swedenburg v. Kelly, pits two small wineries in Virginia and California and three wine-loving New York consumers against the State of New York and seven intervening defendants, including four large liquor wholesalers. The 23-page ruling by Judge Richard M. Berman of the U.S. District Court for the Southern District of New York denied the defendants’ motion to dismiss the lawsuit, clearing the way for a possible trial in this national test case.
“It’s David one, Goliath nothing,” declared Clint Bolick, litigation director for the Institute for Justice, the Washington, DC-based public interest law firm challenging the ban.
The lawsuit argues that the ban violates the Commerce Clause and the Privileges and Immunities Clause of the U.S. Constitution, which forbid protectionist trade barriers. The lawsuit further argues that a related ban on advertising of wine sales across state lines violates the First Amendment.
The State and wholesalers urged the court to dismiss the lawsuit, asserting that the state has plenary authority over alcohol sales and distribution. The Court rejected the State’s arguments in their entirety.
Judge Berman observed, “Technological advancements facilitate—as never before—the commerce between and among states.” He found that laws that promote “mere economic protectionism” would violate the federal constitution.
The ruling means that the case may proceed to trial.
Similar bans exist in 29 states. The New York case is widely watched because New York is the second-largest wine market after California.
“We welcome the chance to prove our case,” Bolick added. “We will demonstrate that the ban on direct wine shipments benefits powerful special interest groups to the detriment of consumers in New York and across America.”