August 7th, 2008
Tracy Genesen of Kirkland & Ellis, LLP is one of the prominent forces currently driving legal change in the wine industry and was the keynote speaker at ShipCompliant’s 2008 Users Conference a few weeks ago.
Genesen’s speech analogized her role in the industry to a “court of last resort” when legislative means are unsuccessful in remedying protectionist state laws that have remained in effect despite the Granholm ruling in 2005. Granholm resolved many instances of differential treatment by the states and was extended to apply to self-distribution in the Costco ruling. However, Genesen revealed that the post-Granholm time of prosperity has given way to another host of problems. For example, states like Maine and Arkansas, in which direct shipping markets do not exist, have level playing fields; however, treating everyone the same by not allowing anyone to ship is a detriment to the wine industry. In addition, courts are struggling to deal with retail-to-consumer shipping laws in many states. Challenges to these laws have produced interesting results, like the “funky remedy” by a district court judge in a Texas lawsuit which declared that Granholm applied to retailers, but that retailers must first buy wine through Texas-licensed wholesalers. Wholesalers have also maintained their grip on states like Massachusetts by crafting legislation that is beneficial to them but also facially neutral. The 30,000 gallon capacity cap in Massachusetts exemplifies such economic protectionism and is the contention in the Family Winemakers of California case. Oral arguments in the case took place on July 29th in Boston and the decision is expected sometime this fall.
Many thanks to Tracy Genesen for sharing her insights into the current legal atmosphere of the industry. To view Genesen’s speech in its entirety or that of any of the other speakers at the conference, please see the 2008 Users Conference Simulcast. More information on the cases in Massachusetts and Texas is also available on the ShipCompliant Blog.