Wine enthusiasts seek to end New York shipping ban

NEW YORK (Reuters) -- New York State, the nation's second-largest wine market, asked a federal judge Friday to throw out a lawsuit challenging its ban against residents receiving direct wine shipments from out-of-state vineyards.

The lawsuit, which was filed on behalf of three New York consumers and two out-of-state wineries, The Lucas Winery in Lodi, California, and Swedenburg Winery in Middleburg, Virginia, is one of a growing number of cases filed throughout the country seeking to end similar bans enforced by at least 29 other states.

The New York lawsuit is being widely-watched by consumers and the liquor industry as this is the largest wine market in which such a challenge has been launched and because the federal trial and appeals courts in Manhattan are considered particularly influential.

U.S. District Judge Richard Berman has taken the case under advisement.

At issue is the "three-tier" system of alcohol distribution that exists in most states. Producers may lawfully sell only to wholesalers, who sell to retailers who in turn sell to consumers.

The New York suit alleges the state's direct shipment and advertising ban is not designed to protect in-state wineries but is "economic protectionism, primarily or exclusively for the benefit of wholesalers."

New York residents can only get direct shipments from New York wineries. They cannot get wine shipped directly from vintners in California, Oregon, Washington or any other state. Also, New York wineries are barred by law from sending orders to residents in other states.

"This is not a system we believe serves the public interest," said Clint Bolick, litigation director of the Washington, D.C.-based libertarian Institute of Justice, which argued on behalf of the plaintiffs.

He said the ban discriminates against out-of-state wineries and violates the U.S. Constitution's interstate commerce clause that is aimed at protecting free trade among states.

But lawyers representing New York State Attorney General Eliot Spitzer, wholesalers and importers argued that New York has the authority to enforce the ban under the 21st Amendment of the U.S. Constitution which they said gives states an exclusive right to regulate alcohol.

"This three-tier system is unquestionably legitimate," said Randy Mastro, a lawyer for one of the importers. "It's the essence of what the 21st Amendment permits."

Lawsuits challenging similar systems have been filed in Florida, Indiana, Michigan, North Carolina, Texas and Virginia. So far, federal trial judges in Indiana and Texas have ruled for the plaintiffs.

The Indiana case, which was brought by Garfield cartoonist and wine collector Jim Davis and others, is on appeal and the Texas judge has been asked to reconsider his ruling, lawyers said during Friday's hearing.

"That road show (Indiana and Texas rulings) won't play on Broadway," Mastro said.

Although numerous vintners sell wine over the Internet, state restrictions force them to either adopt cumbersome arrangements with wholesalers who act as middlemen thus increasing the cost of the wine to consumers or they simply refuse to ship to states with direct shipping bans.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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