Untangling the complex world of wine direct shipping and compliance
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On-Site Requirements: Still Standing in the Heartland

May 19th, 2009
By R. Corbin Houchins, Beverage Industry Counsel

Last August, the Seventh Circuit Court of Appeals in Baude v. Heath invalidated an Indiana statute that made most out-of-state wineries ineligible for the “direct wine seller’s permit,” which the law would have limited to in-state wineries and to wineries in the few states that do not grant them local wholesaling privileges. However, the opinion upheld the requirement that a consumer’s first purchase from each winery occur on the winery premises, a ruling that led the plaintiffs to seek review in the Supreme Court by petitioning for a writ of certiorari, based on de facto discrimination against distant wineries.

On May 18, 2009, the Supreme Court denied the plaintiffs’ petition without opinion. The consequence is that the Circuit Court opinion remains the last word on the subject, at least among the federal courts of Illinois, Indiana and Wisconsin. (The case does not address a subsequent statutory change disqualifying wineries with Indiana wholesaler relationships from direct shipment, but a similar Massachusetts provision that fell disproportionately on out-of-state wineries was invalidated in Family Winemakers of California v. Jenkins.)

Denials of certiorari carry no legal weight as to the merits of the issues, but the ruling illustrates the propositions that Granholm does not “open the states” to direct shipment (in case there is anyone who hasn’t yet gotten that message) and that clarification of Granholm is probably not a high priority for the Court. For the near term, Granholm’s many unanswered questions will continue to leave lower courts considerable freedom in deciding how much a state may burden cross-border wine commerce. If conflicts among the circuits develop over time, chances of Supreme Court review will improve.

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