buy wordperfect office x4 home student buy windows server 2008 purchase office 2007 online cheap solidworks 2010 discount filemaker pro 10 best price adobe acrobat 9.0 buy cs3 mac uk best price adobe design premium cs4 mac buy 2003 microsoft office software best price autosketch 10 buy windows 7 professional academic discount acronis true image home 2009 purchase rosetta stone software buy newtek lightwave 3d 9 discount quarkxpress
    cheap autodesk inventor buy outlook 2010 download buy encarta dictionary photoshop price canada buy office frontpage buying photoshop cs2 mac discount visio software purchase expression studio 3 purchase anime studio pro 6 purchase autocad 2007 lt price of premiere pro cs5 buying carrara 7 pro outlook 2010 price purchase adobe acrobat 9 buy windows xp calgary

Family Winemakers Court Win is Big for the Industry

On November 19th, 2008, Judge Rya W. Zobel, in the case of Family Winemakers of California v. Jenkins, allowed the plaintiffs’ motion for summary judgment, concluding that Massachusetts General Laws chapter 138, section 19F:

… has a discriminatory effect on interstate commerce because as a practical matter it prevents the direct shipment of 98% of out-of-state wine to consumers but permits all wineries in Massachusetts to sell directly to consumers, retailers and wholesalers.

Therefore, the Massachusetts statute in practice prevents direct shipment of approximately 98% of out-of-state wine while allowing 100% of Massachusetts wineries to sell direct. This clearly confers disproportionate benefits on both Massachusetts wineries and wholesalers.

In the decision, Judge Zobel provided a fascinating account of the history of what became Massachusetts House Bill No. 4498. She details the original lobbying from wholesalers, pleas from in-state wineries, negotiation in the Massachusetts House and Senate, passage of the bill on November 17th, 2005, veto by then-Governor Mitt Romney, and finally an override by the Legislature on February 15th, 2006. The detailed account sheds light on a fact that we known all along – that the 30,000 gallon capacity cap was set conveniently above the production capacity of the largest winery in Massachusetts (24,000 gallons). This cap was designed to allow the Massachusetts wineries to ship directly to consumers, while simultaneously protecting Massachusetts wholesalers by prohibiting out-of-state medium and large wineries from doing the same.

The wine distribution system is shaped like an hourglass, in that there are a large number of producers (the top) and a large number of consumers (the bottom), but significantly fewer wholesalers (the middle). This structure has the effect of giving wholesalers greater bargaining power with both wineries and retailers in states where it is mandatory to have a wholesaler. Generally wholesalers prefer to carry a larger volume of a particular wine, rather than an equivalent volume of several wines, because it is more profitable for a wholesaler to warehouse, manage and sell a single
wine. Many wineries produce both specialty wines in small quantities and higher volume wines. It is rare for a winery producing approximately 30,000 gallons per year to have all of its wines represented by a wholesaler.

Family Winemakers of California put out a press release immediately yesterday, hailing the decision as a win for the industry. Paul Kronenberg, president of Family Winemakers of California, was quoted as saying “State laws that protect and perpetuate wholesaler monopolies at the expense of wineries seeking market opportunities and consumers seeking a wider choice in wine, run counter to the concept of free trade within the nation”. Tracy Genesen, lead attorney on the case from Kirkland & Ellis, said “The decision tracks Granholm, since ‘allowing States to discriminate against out-of-state wine invites a multiplication of preferential trade areas destructive of the very purpose of the Commerce Clause.” Kenneth Starr of Kirkland & Ellis explained that “Freedom to conduct commerce across state boundaries without undue restrictions was a fundamental principle of the framers of the Constitution”.

Free the Grapes! also published a press release yesterday, highlighting the case as a big loss for efforts by wholesalers to ban “legal, regulated wine shipping”. “Today’s ruling in Family Winemakers v. Jenkins strikes a blow to the wholesalers’ campaign by declaring that Massachusetts’ restrictions on winery-to-consumer shipments are unconstitutional”.

This is a big win for the industry. We applaud Family Winemakers of California, Coalition for Free Trade, Kirkland & Ellis, and everyone else involved for all of their hard work in fighting this long battle. The ruling will certainly have ripple effects not only in Massachusetts, but also Ohio, Arizona, and many other states as current and future examples of such non-facial discrimination will be questioned, challenged, and overturned.

We’ll keep you posted as this story develops. The immediate effects in Massachusetts are unknown at this time (see our post “Why Can’t I Have a Boston Wine Party?” from June, 2007). Common carrier restrictions will need to be clarified before any out-of-state shipping can commence. Stay tuned for more information and analysis…

Trackbacks/Pingbacks

  1. Wine Wholesaler Cynicsim Defeated in Massachussetts - [...] Winemakers of California Press Release Free The Grapes Press Release The Bostonist Story ShipCompliant Blog’s Story The Judge’s [...]
  2. Pinot Law » Blog Archive » Big Win in Massachusetts — and Not by the Patriots - [...] folks over at ShipCompliant have a great discussion about a very important (and encouraging) decision out of Massachusetts last …
  3. Kentucky On-Site Requirement Invalidated, but Questions Remain - ShipCompliant - [...] in spite of the recent victory in Massachusetts where the 30,000 gallon capacity cap was declared unconstitutional, the Cherry …
  4. State of Massachusetts files appeal in Family Winemakers of Calif. v Jenkins - ShipCompliant - [...] January 16, 2009, the state filed its notice of appeal in the 2006 Granholm-based federal suit, Family Winemakers of …
  5. Huge win for wineries, but can I ship to Massachusetts now? - ShipCompliant - [...] November, 2008, the District Court ruled in that Massachusetts law had a discriminatory effect on interstate commerce. On Thursday, …
  6. Three cheers for the judiciary! - [...] was Judge Zobel who decided the case Family Winemakers of California v. Jenkins. In that case, she ruled that …

Submit a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>