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Wine Industry Celebration: Thursday, June 22, 2005 Ravenswood Winery Presentations at 4:00 by: The Coalition for Free Trade is pleased to announce a post-ruling presentation and celebration featuring members of the wine industry’s direct shipping litigation team. Presentations will address the short-term and long-term implications of the ruling by the attorneys who wrote the amicus brief and argued the case before the High Court, including Dean Kenneth W. Starr, co-counsel and dean of Pepperdine Law School; and Kathleen Sullivan, co-counsel and the Stanley Morrison Professor of Law at Stanford University. Presentations will be followed by a wine and tapas reception. Seating is limited and reservations are required and will be held at “will call.” Reservations are $150 per person and can be made in advance or purchased for $175 at the event. All funds will go toward retiring the CFT legal debt. Special thanks to our hosts, Ravenswood Winery. Questions? Contact Laura Schneider at Benson Marketing Group, (707) 254-1115, or Schneider@bensonmarketing.com. The Coalition for Free Trade is a 501(c)3 non-profit organization and individual donors can take contributions as personal tax deductions. Employer Identification Number: 68-0401409. Arizona - On October 7, 2003, the Institute for Justice filed Parker v. Morrison, which challenges on constitutional grounds the State of Arizona’s law forbidding direct interstate shipments of wine. The suit was subsequently dismissed without prejudice. Florida - The 11th Circuit Court of Appeals ruled on November 4, 2002 that the State of Florida must demonstrate why its felony prohibition on interstate, direct-to-consumer wine shipments is required for it to collect taxes from out-of-state wineries, when these same discriminatory laws do not apply to in-state wineries. The case is pending in the district court on remand from the 11th Circuit. Cross-motions for summary judgment and all reply briefs have been filed. New York - This case is now before the U.S. Supreme Court. On February 12, 2004 the 2nd Circuit Court of Appeals ruled to uphold a previous court decision that allows for New York to prohibit interstate wine shipments to its citizens. The ruling reversed the lower court's finding that the ban was unconstitutional. Meanwhile, Governor George Pataki's budget, introduced January 20, 2004 included interstate wine shipment regulations along the lines of the industry's model direct shipping legislation. Ultimately, the language was not included in the final budget. North Carolina - In April 2003, the U.S. Circuit Court of Appeals ruled that North Carolina's prohibition on interstate shipments was unconstitutional. Following the positive ruling, a favorable direct shipping bill based on the industry's model direct shipping legislation was signed into law and went into effect October 1, 2003. The lawsuit is, therefore, moot. Virginia - Virginia Governor signed into law
a favorable direct shipping bill based on the industry's model direct
shipping legislation and went into effect July 1, 2003 and rendered
substantial portions of the lawsuit moot. As a reminder, U.S. District
Court Judge Williams struck down the state's ban on interstate wine
direct shipments to consumers on March 29, 2002. Texas - The Texas ABC announced August 25, 2003 that it will not seek a Supreme Court review of the 5th Circuit's direct shipping decision, which ruled Texas' prohibition unconstitutional. Texas is considered an open state, and shipments are occurring for sales made at the winery. Lawyers continue to work with regulators on the challenging task of identifying the zip codes that are 100% wet. Michigan - This case is now before the U.S. Supreme Court. The 6th Circuit Court of Appeals ruled August 28, 2003 that Michigan's ban on direct-to-consumer shipments from out-of-state wineries is unconstitutional, overturning a lower court ruling. The panel's vote was unanimous (3-0). The state petitioned for a rehearing en banc and was refused. ### Family Wineries, Consumers Triumph in U.S. Supreme Court Ruling Supporting Wine Direct Shipping May 16, 2005, San Francisco, CA -- In a ruling that will thrill wine lovers and America’s wineries, the United States Supreme Court ruled today to support interstate wine shipments directly from wineries to consumers. The High Court reasoned that state laws banning such shipments are discriminatory and, therefore, unconstitutional. The finding affirms the plaintiffs’ argument that bans violate the enduring concept established in the Commerce Clause, and reinforced by subsequent jurisprudence, that the United States is a national economic union and discrimination is not tolerated. “In this David versus Goliath battle, the ruling is a triumph for America’s family wine farmers,” said W. Reed Foster, president of the Coalition for Free Trade and chairman emeritus of Ravenswood Winery. The Coalition for Free Trade is a non-profit organization seeking judicial relief from laws prohibiting direct-to-consumer shipments of wine, and helped coordinate lawsuits in seven states. The Michigan and New York cases were combined and considered by the Supreme Court on December 7, 2004. www.coalitionforfreetrade.org According to the Coalition for Free Trade, the ruling will help wineries satisfy growing consumer demand for their wines, rather than being shackled by discriminatory state laws that shut them out of important wine markets. “It is an historic day for the U.S. wine industry,” said Paul Kronenberg, president of Family Winemakers of California (www.familywinemakers.org). “The only way that most small wineries can survive economically is to open up new markets and that means shipping directly to consumers,” he added. “Today, there are no losers,” said Fred Reno, president of the Henry Wine Group, a wine wholesaler operating in five states and the District of Columbia. (www.henrywinegroup.com) “The nation’s wineries will be better able to satisfy consumer demand, wine lovers will have access to a broader selection of wines, and retailers and wholesalers will ultimately grow their business as a result of this ruling,” he added. Principle of National Economic Union Defended “The 21st Amendment is alive and well, and continues to be
a useful tool for states to reasonably regulate the interstate sale
of wine. But according to the Court’s ruling, the 21st Amendment
can no longer be used as a pretext for economic protectionism,”
said Tracy Genesen, legal director of the Coalition for Free Trade
and of counsel with Kirkland & Ellis LLP in San Francisco (www.kirkland.com).
Wine Wars Now Focus on Implementing Proven Legislative
Solution States passing the model bill have substantive enforcement mechanisms.
The “21st Amendment Enforcement Act” was signed into
law in October 2000 and allows state Attorneys General to access
federal courts to pursue litigation for alleged violations of alcohol
shipping into a state, although not a single case has been brought
forward. Additionally, alleged violations of state laws governing
direct shipments can be reported by any state to the Tax & Trade
Bureau (TTB, formerly known as ATF) for investigation. Penalties
for infractions can include revocation of a winery’s basic
permit to produce wine, although the TTB has never revoked a winery’s
basic license for a direct shipping infraction. Finally, the model
direct shipping bill requires wineries licensed to direct ship to
consent to the state’s courts concerning enforcement. What the Ruling Means for the Wine Industry The Supreme Court ruling provides another major milestone in the 20-year trend toward opening states to legal, regulated direct shipping. Twenty years ago, no states allowed direct shipments from out-of-state wineries to adult consumers. By late 2004, 26 states allowed such shipments, including four states that changed in 2003. North Carolina, South Carolina and Virginia were opened through legislative changes, and Texas’ ban on shipments was ruled unconstitutional by the 5th U.S. Circuit Court of Appeals. While it is clear that the ruling will help individual wineries, it is more difficult to project the effect on the aggregate wine market. There are now more than 3,500 wineries in the U.S., according to WineAmerica, a trade association based in Washington, D.C. (www.wineamerica.org) But the largest 50 wineries produce over 87% of all U.S. wine and many of these large wineries rely almost exclusively on wholesaler sales rather than direct-to-consumer sales. The retail value of all U.S. wine sales—including imported wines—sold through restaurants, retailers and state-run wine shops is estimated at more than $22 billion in 2004, according to the Wine Institute (www.wineinstitute.org). The San Francisco-based public policy trade association of California wineries estimates that 1 percent to 2 percent of that wine is sold by wineries directly to consumers visiting wineries and through the Internet and telephone. The Supreme Court heard three cases on December 7, 2004: Granholm v. Heald, No. 03-1116, Michigan Beer & Wine Wholesalers Association v. Heald, No. 03-1120 and Swedenburg v. Kelly, No. 03-1274. The Court considered whether or not the 21st Amendment permits states like New York and Michigan to allow intra-state shipments from its wineries to consumers, but deny that same privilege to out-of-state wineries. The High Court ruled that states with this type of statutory scheme are violating the dormant Commerce Clause, which is an unwritten but well understand part of the law that prohibits states from legislating in areas where Congress could legislate, but has decided not to. # # # Coalition For Free Trade Reports on The U.S. Supreme Court Argument December 13, 2004, Sacramento, CA -- On December 7, the Coalition for Free Trade made good on its 1997 promise to bring the wine direct shipping case before the U.S. Supreme Court. Through its work with plaintiffs' attorneys and the wine community, CFT was able to marshall an extraordinary set of amicus briefs and an outstanding presentation before the High Court. A final ruling is expected sometime between April and June 2005. While it is difficult to predict both the final score of a ruling—five votes are needed to be victorious—and the scope of the ruling, the argument itself should give winemakers optimism. As a reminder, the Court considered a narrow question: "Whether a state's regulatory scheme that permits in-state wineries directly to ship alcohol to consumers but restricts the ability of out-of-state wineries to do so violates the dormant commerce clause in light of Section 2 of the 21st Amendment." The cases were Granholm v. Heald, Swedenburg vs. Kelly, and Michigan Beer & Wine Wholesalers Association v. Heald). CFT will post the transcript to www.coalitionforfreetrade.org once available. The Justices appeared to be skeptical of the claims by the states' advocates, represented by Thomas Casey, Solicitor General of Michigan; and Caitlan Halligan, Solicitor General of New York. The two advocates posited that the 21st Amendment allows states to enact outright bans on interstate shipments. But Justice Stephen G. Breyer shot back, "There's not a word" in the history of the 21st Amendment to suggest it was "intended to permit discrimination," as reported by the Washington Post. The state advocates were pressed by several Justices to provide concrete reasons why the states require shipping bans to enforce tax collection and prevent underage access. When Michigan's Casey explained that the laws were required for regulatory reasons and "to promote the state's interest in temperance," Justice David H. Souter asked, "You say that—but how?" Justices Sandra Day O'Connor, David Souter and Antonin Scalia noted that states can enforce their laws through the model direct shipping bill's permit system. We concur with press accounts that characterized the Justices as "skeptical" and that they "seemed unconvinced with the (states’) responses." The CFT team was encouraged that Justice Sandra Day O'Connor, who dissented in the 1984 Bacchus case that ruled that Hawaii cannot protect in-state suppliers with favorable tax treatment, seemed to believe that the Bacchus case was relevant. Justice O'Connor told states' counsel several times that the Bacchus case "cuts against you." (There was laughter in the court when a Justice made light of the "pineapple wine.") The Michigan and New York plaintiffs, and in turn the wine industry, were very well represented by Kathleen Sullivan, former dean and a professor of law at Stanford University, and Clint Bolick of the Institute for Justice. Co-counsel included Judge Ken Starr (with advocate Sullivan) and Alex Tanford (with advocate Bolick), law professor at Indiana University. The plaintiffs' advocates were questioned whether a ruling in their favor would lead to sweeping changes in the three-tier system. Sullivan responded by suggesting that the opponents were recommending sweeping changes to the Bacchus case and the 19-year trend of opening up more states. She also rebuked the opponent's position that Michigan should require out-of-state wineries to establish a physical presence in the state for it to properly regulate. Sullivan responded that such an arrangement was not only impractical, but irrelevant since wineries currently pay taxes directly to the state for 3-tier sales rather than relying on an Michigan wholesaler to do so. Justice Steven Breyer asked whether, in fact, the current "reciprocal" arrangement of 13 states itself created advantages for in-state wineries. Sullivan conceded the possibility but steered the discussion back to the core question. After the argument, CFT president W. Reed Foster, who has led the group since 2002, commented with relief that "the U.S. wine industry just got its money's worth." The Court was filled to capacity, including winemakers Dennis Cakebread, Cakebread Cellars; Jess Jackson and Barbara Banke, Kendall-Jackson; W. Reed Foster, Ravenswood Winery; Pete Saltonstall, King Ferry Winery, plaintiff David Lucas, Lucas Winery; plaintiff Terry Speizer, Domaine Alfred Winery; and Gerhard Reisacher, Delectus. Winery associations were represented by Tracy Genesen, Coalition for Free Trade; Paul Kronenberg, Family Winemakers of California; Steve Gross, Wine Institute, David Sloane and Bill Nelson, WineAmerica; and Jeremy Benson, Free the Grapes! Other attendees included Lesley Berglund, Winetasting Network. Following the 60-minute argument, a press conference took place on the rain-drenched steps of the Court. Media representatives included ABC, CBS, NBC, FOX, CNN, CNBC and a half-dozen other TV outlet; radio networks such as NPR and AP; and at least a dozen newspapers, including the Washington Post, Wall Street Journal, and New York Times, and magazines including Wine Spectator. Benson Marketing Group, which handles PR for CFT, reported that more than 70 TV segments and 250 print stories covered the impending argument between December 4 and 6. On the day of the argument, the story ran in nearly every major national media outlet as one of the top stories of the day, with a favorable emphasis on the "skeptical" questioning by the Justices towards the state's arguments. In a brief ceremony preceding the argument, CFT legal director Tracy Genesen was sworn in to the Supreme Court bar, recommended by Ken Starr. # # # ROAD TO THE U.S. SUPREME COURT (2nd Circuit): Industry's Merits Brief, Plus Ten Amicus Briefs, Filed September 23, 2004 by Proponents of Direct Shipping: List Includes 5 State Attorneys General, 20 Members of Congress, 3 Nobel Laureates, eBay, and Prominent Constitutional Attorneys September 28, 2004 -- The Coalition for Free Trade reports that the industry's "Merits Brief" makes the case that state prohibitions on wine direct shipping based on wineries' geographic locations are inimical to the national economic union. The document was a joint effort by plaintiff's attorneys in the Michigan case, J. Alexander Tanford, professor at Indiana University School of law, and Robert Epstein of Epstein, Cohen, Donahoe & Mendes; Kenneth W. Starr of the law firm Kirkland & Ellis; and Kathleen M. Sullivan, professor of law and former dean of Stanford Law School. The Kirkland legal team also included Steven A. Engel, Susan Engel and Jennifer Sands Atkins. Amicus 'friends of the court' briefs were filed to the U.S. Supreme Court on September 23 from a broad coalition of supporters of direct shipping. (Click here to read a summary of each brief and to download and read individual briefs.) # # # U.S. Supreme Court to Consider
Wine Direct Shipping: May 24, 2004, Sacramento, CA – The U.S. Supreme Court issued a list of cases today indicating that it will consider both the 2nd and 6th Circuit U.S. Court of Appeals cases which challenged New York's and Michigan's discriminatory bans on interstate, direct-to-consumer wine shipments. The Supreme Court has usefully narrowed the cases to one core question: does the 21st Amendment permit states to discriminate against out-of-state wineries? In legal terms the high court will consider whether states with this type of statutory scheme are violating the dormant Commerce Clause. It is expected that arguments for the case will be held in December. The potential winners in this case could be America's 3,000 mostly family-owned wineries and millions of wine consumers who want to purchase wines directly from wineries The only vocal opponents to the direct shipping provisions working in many states are wine wholesaler middlemen who want all sales to flow through them. The wholesaler middlemen have aggressively supported legislation creating state-sanctioned monopolies in wine distribution in many states, triggering a thorough study by the Federal Trade Commission in 2003. The FTC concluded, "State bans on interstate direct shipping represent the single largest regulatory barrier to expanded e-commerce in wine." Additionally, "state bans on direct shipping prevent consumers from saving as much as 21 percent on some wines and from conveniently purchasing many popular wines from suppliers around the country." States that have passed favorable direct shipping legislation have procedural safeguards against shipments to minors, and the FTC's survey of regulators in 11 of these states found "no evidence suggesting direct shipping increases underage access." These findings were consistent with previous sworn testimony by state alcohol regulators as well as anecdotal evidence in states with long-standing, pro-consumer direct shipment provisions. The FTC statement on the report is available at http://www.ftc.gov/opa/2003/07/wine.htm "We welcome the opportunity to challenge laws whose sole purpose is economic protectionism," said Judge Kenneth W. Starr, counsel to the Coalition for Free Trade, a non-profit organization seeking judicial relief from laws prohibiting direct-to-consumer shipments of wine. "Where we have active opposition to positive rulings and favorable legislation that seek to assist family-owned wineries, we also have a terrific chance to modernize archaic laws. This can only benefit businesses, families and consumers," he added. Paul Kronenberg, president of Family Winemakers of California, says that many of his 570 members simply can't meet consumer demand for their wines because they don't have access to consumers in many states. According to Kronenberg, "the only way that most small wineries can survive economically is to open up new markets and that means shipping directly to consumers. New and small wineries, trying the build their brands, are of little interest to large wholesalers who like to truck pallets of wine, not a case or two." At issue is whether states can allow intra-state, direct-to-consumer wine shipments but deny that same privilege to out-of-state wineries. "States should regulate, not discriminate," said Tracy Genesen, legal director of the Coalition for Free Trade and Of Counsel with Nossaman Guthner Knox & Elliott LLP in Sacramento. "We will energetically argue in support of states' rights to regulate wine shipments—this is after all, a state issue. But we will argue with equal conviction that states cannot discriminate against out-of-state wineries by banning interstate shipments, when they grant in-state wineries shipping privileges," she added. The 6th Circuit U.S. Court of Appeals ruled last August that Michigan's ban on direct, interstate shipments was unconstitutional, overturning a lower court ruling. The state's petition for a rehearing en banc (from the full panel of Circuit Court judges) was not granted, but Michigan Attorney General Mike Cox petitioned the state's case to the high court. (See www.coalitionforfreetrade.org for the petition). Despite the 6th Circuit ruling, the state's existing prohibition on direct shipping remains in effect during the appeal process. The 2nd Circuit U.S. Court of Appeals ruled in February to uphold New York's current legal scheme, under which in-state wineries are allowed to ship directly to New York consumers, but out-of-state wineries are required to establish a "physical presence" in New York before being allowed to do so. In March, the Institute for Justice, which represents the consumer and winery plaintiffs, petitioned the case to the U.S. Supreme Court. In similar cases, the 5th Circuit U.S. Court of Appeals ruled in June 2003 that Texas' ban on interstate wine shipping was unconstitutional. But the Texas Attorney General did not petition the ruling to the U.S. Supreme Court. Common carriers and the state are working on regulations to comply with the ruling. In North Carolina and Virginia, state legislatures passed the wine industry's model shipping bill last year after the 4th Circuit Court of Appeals ruled in favor of the plaintiffs. Eighteen years ago, no states allowed direct shipments from out-of-state wineries to consumers over 21 years old. Now, that number has increased to 26 states—four states just changed in 2003. "We've always encouraged legislators to develop solutions that provide wineries with a legal, regulated means of reaching consumers," said Genesen. "But when we face impediments in state capitols, and discrimination against out-of-state wineries, then we have taken the issue to the courts," she added. Genesen said that newly opened states provide a track record of industry compliance with tax payment provisions, timely filings, and other regulations that are being met in the existing legal states. "This track record will provide facts favorable to our side, and relevant to what we hope will be the ultimate endorsement for free trade by the Supreme Court," she added. The Coalition for Free Trade is a non-profit organization seeking judicial relief from laws prohibiting direct-to-consumer shipments of wine. The legal foundation is assisting winery and consumer plaintiffs with active lawsuits in Florida, Michigan, New York, New Jersey and Ohio. (www.coalitionforfreetrade.org) # # # Michigan to Petition Direct Shipping Case to U.S. Supreme Court February 2, 2004, Sacramento, CA -- As expected, Michigan’s Attorney General Mike Cox filed a petition to bring the wine direct shipping issue before the Supreme Court, reported the Coalition for Free Trade. Proponents and opponents of direct-to-consumer wine shipments both believe the issue will ultimately be decided by the Supreme Court. The Coalition for Free Trade has 30 days to oppose Michigan’s writ, and intends to do so. The group prefers to further establish a track record of regulatory success in legal direct shipping states, and to allow time for more scholarly consideration of this issue. This, they believe, will put the issue in the best position to be among the 70 or 80 cases heard by the Supreme Court among the thousands that are petitioned for review each year. # # # 6th Circuit Court of Appeals Denies Michigan Re-hearing November 6, 2003, Sacramento, CA - The 6th Circuit Court of Appeals denied the state of Michigan’s request for a rehearing en banc (from the full Court) on the issue of direct-to-consumer shipments from out-of-state wineries. The state’s only option is to petition the Supreme Court and it has 90-days from the date of the judgment entry to submit a writ of certiorari. On August 28, the 6th Circuit Court of Appeals ruled that Michigan’s ban on direct-to-consumer shipments from out-of-state wineries is unconstitutional, overturning a lower court ruling. Robert Epstein, an Indianapolis attorney, and James A. Tanford, professor at Indiana University, represented the named plaintiffs, Eleanor and Ray Heald, Michigan consumers and wine writers. "We hope that Michigan’s Attorney General Mike Cox is persuaded by the sound legal judgment reflected in the 6th Circuit Court of Appeals," said Tracy Genesen, legal director for the Coalition for Free Trade, and senior counsel at Miller Owen & Trost in Sacramento. "We would love to see Michigan become the 27th state to allow for limited, regulated direct shipments. We are encouraging more states to let favorable direct shipping rulings stand. In so doing, we further establish a positive regulatory track record which will put us in the best position to seek a Supreme Court review," she added. The Coalition for Free Trade is a non-profit organization seeking judicial relief from laws prohibiting direct-to-consumer shipments of wine. The legal foundation is assisting winery and consumer plaintiffs with active lawsuits in Florida, Michigan, Arizona and New York. # # # Coalition for Free Trade Applauds 6th Circuit Court of Appeals Ruling that Michigan's Wine Shipping Ban Unconstitutional August 28, 2003, Sacramento, CA - The 6th Circuit Court of Appeals ruled today that Michigan’s ban on direct-to-consumer shipments from out-of-state wineries is unconstitutional, overturning a lower court ruling. This is the second, complete legal victory for advocates of consumer choice in wine this year; the 5th Circuit Court of Appeals issued a similar ruling overturning Texas’ ban on June 26, 2003. “This is the second ringing endorsement this summer for the principles of anti-discrimination and consumer choice,” said Tracy Genesen, legal director for the Coalition for Free Trade, and senior counsel at Miller Owen & Trost in Sacramento. “The Court confirmed that states do not have the right to discriminate against out-of-state wineries under the guise of the 21st Amendment,” she added. The ruling is available at www.coalitionforfreetrade.org The Coalition for Free Trade is a non-profit organization seeking judicial relief from laws prohibiting direct-to-consumer shipments of wine. The legal foundation is assisting winery and consumer plaintiffs with active lawsuits in Florida and New York, which is scheduled for oral argument in Manhattan on September 3. The state of Michigan has 14 days to request a panel rehearing or a rehearing en banc (from the full Court). If it does not, the state has 90-days from the date of entry of the judgment to petition the Supreme Court. Robert Epstein, an Indianapolis attorney, and James A. Tanford, professor at Indiana University, represented the named plaintiffs, Eleanor and Ray Heald, Michigan consumers and wine writers. The Coalition for Free Trade recommends that wineries wait for further information from the State, as well as instructions from the common carriers, prior to making wine shipments. Eighteen years ago, no states allowed for interstate, direct-to-consumer wine shipments. This year, the number of legal direct shipping states will jump to 26. Favorable rulings in the 4th Circuit Court of Appeals led to legislative solutions in North Carolina and Virginia, and the June 26 ruling in the Texas lawsuit is anticipated to open up that state to such shipments in weeks. Additionally, South Carolina passed favorable legislation this year. # # # 5th Circuit Court of Appeals Overturns Texas Wine Shipping Ban: Coalition for Free Trade Applauds Decisive Ruling June 27, 2003, Sacramento, CA - The 5th Circuit Court of Appeals handed winery and consumer plaintiffs the first complete legal victory in the national campaign to remove restrictions on interstate, direct-to-consumer wine shipments, the Coalition for Free Trade announced today. Yesterday's ruling by the 5th Circuit Court of Appeals confirmed that Texas' ban on interstate direct wine shipments is unconstitutional, and supported the plaintiff's position that such shipments should be open for both interstate and intra-state shipments. "This is the biggest legal win to date," said Tracy Genesen, legal director for the Coalition for Free Trade and senior counsel at Miller, Owen & Trost, of Sacramento. "The Coalition for Free Trade praises the work of the attorneys on the case, and the 5th Circuit's endorsement for free trade and denial of further economic protectionism," she added. The decision conflicts with the 7th Circuit Court of Appeals ruling, and creates a legal environment of unsettled case law. Such conflicts are considered criteria for the U.S. Supreme Court to grant review. Now, the state of Texas could petition the 5th Circuit Court of Appeals for a rehearing and if unsuccessful, may petition the U.S. Supreme Court for review. Filed June 26, the Court's ruling is available at www.coalitionforfreetrade.org, and concludes:
It remains to be seen how and when consumers will be able to receive shipments from out-of-state wineries. The Coalition for Free Trade recommends that wineries wait for further information from the Texas Alcohol Beverage Commission prior making such shipments. Sterling W. Steves, an attorney in Ft. Worth, and Mark C. Harwell, an attorney with Cotham, Harwell & Evans in Houston, represented the plaintiffs. The Coalition for Free Trade is a non-profit organization seeking judicial relief from laws prohibiting the direct shipment of wine, assisting winery and consumer plaintiffs with lawsuits in New York, Florida, North Carolina, Texas, and Michigan. Yesterday's decision confirms previous rulings that Texas' law is unconstitutional. On July 17, 2002 U.S. District Court Judge Melinda Harmon of Houston ruled in favor of wineries and consumers-confirming her February 2000 ruling-although a stay was immediately issued and expired on May 31, 2003. # # # Coalition for Free Trade Applauds Virginia Governor and Legislature for Overturning State's Ban on Wine Direct Shipping, and Comments on North Carolina Ruling: April 14, 2003, Sacramento, CA - Virginia Governor Mark Warner signed wine direct shipping legislation April 9 that will allow Virginians 21 years and older the ability to order and receive wine directly from out-of-state wineries who are licensed to make such shipments. The new law takes effect July 1, 2003 and will allow out-of-state wineries to ship up to two cases of wine per month per consumer, if the winery first obtains a license. Other provisions of the bill are consistent with successful laws in other states that allow direct-to-consumer shipments. "It would have been great to see a win in the Virginia court, but we are pleased with Governor Warner's signing of SB 1117," said Tracy Genesen, grape grower, legal director of the CFT, and senior counsel at Hyde, Miller, Owen & Trost, of Sacramento. "The winners in this case are indisputably Virginia consumers, Virginia wineries and wineries in the other 49 states," Genesen added. Substantial portions of the pending lawsuit in Virginia will now be moot. As a reminder, on March 29, 2002, U.S. District Court Judge Williams struck down the state's ban on interstate wine direct shipments to consumers as unconstitutional and a stay was issued. Then on January 22, 2003, a three-judge panel heard oral arguments. 4th Circuit Court of Appeals Rules North Carolina's Ban Unconstitutional Separately, the U.S. Court of Appeals, 4th Circuit, ruled April 8 that North Carolina's ban on interstate direct-to-consumer shipments is unconstitutional. "We are thrilled that the court ruled that the state's laws as discriminatory, the position we have advanced in this and five other states" said Genesen. "But the Court's remedy is problematic, and seems to counter the ruling's overall position to support free and fair trade. The team of attorneys at the Coalition for Free Trade is aggressively pursuing legal proceedings to address the remedy issue at once," she added. The Coalition for Free Trade is assisting winery and consumer plaintiffs with five additional lawsuits, challenging outright bans on interstate wine direct shipments into New York, Florida, North Carolina, Texas and Michigan. (www.coalitionforfreetrade.org) # # # Coalition for Free Trade Retains
Kenneth W. Starr March 5, 2003, Sacramento, Calif. - The Coalition for Free Trade, a non-profit organization seeking judicial relief from laws prohibiting the direct shipment of wine from wineries to adult wine consumers, has retained Kenneth W. Starr, former Solicitor General of the United States, former United States Circuit Judge, and currently a partner in Kirkland & Ellis. With four consecutive U.S. District Court victories propelling the wine direct shipping issue, CFT and its attorneys will consult with Judge Starr and his Kirkland & Ellis colleagues to advance its coordinated legal strategy. Winery and consumer plaintiffs are working under the umbrella of the CFT to challenge state prohibitions on direct, interstate wine shipments in New York, Texas, Florida, Virginia, North Carolina, and Michigan. The CFT's goal is to resolve the issue in the Supreme Court. "In this David versus Goliath struggle, David's slingshot was just upgraded," said Tracy Genesen, grape grower, legal director of the CFT, and senior counsel at Hyde, Miller, Owen & Trost, of Sacramento. Attorneys representing the consumer and winery plaintiffs welcome Judge Starr's considerable experience and knowledge as the litigation effort evolves toward a Supreme Court review. A grant from the Family Winemakers of California, a non-profit
association of more than 600 wineries, will fund Judge Starr's involvement
in the next stage of the industry's litigation strategy (www.familywinemakers.org).
"From the beginning, Family Winemakers of California and consumers
have recognized the long term benefits of greater choice,"
said Paul Kronenberg, president of FWC. "This cause continues
to gain momentum, as well as proactive support from wineries of
all sizes," he added. "This issue strikes at the heart of protectionist legislation that the Commerce Clause was designed to avoid," said Judge Starr. "Our plan is to parlay the recent direct shipping victories into a winning strategy that ultimately supports wineries and consumer choice," he added. A 'wine war' is pitting America's wine lovers -who want to purchase and receive wine directly from wineries - against wine wholesaler middlemen, who want all sales to flow through their coffers. Twenty-two states currently allow limited interstate direct shipments. Of the 28 remaining states, wine wholesalers have successfully supported legislation in seven states that established a felony penalty for shipping a bottle of wine to an adult 21 years or older. The Coalition for Free Trade is a non-profit organization seeking judicial relief from laws prohibiting the direct shipment of wine. The CFT is assisting winery and consumer plaintiffs with six lawsuits in New York, Florida, North Carolina, Texas, Michigan, and Virginia. # # # August 2003 -- With the Texas win in June, the stunning Federal Trade Commission report in July, and the Michigan win in August, we’ve been on a roll this summer. And as we head into fall, we’re not quite ready to tear down the goal posts, but we can at least start crowding the barriers. My appeal is this: I want each of you who read this piece to look hard at your level of involvement. Make sure that it is the best that you can possibly do. The issue is very important; it’s very broad in its implications; and it would be a shame if the Coalition for Free Trade were to lose its tremendous momentum because everyone who was affected didn’t pitch in to the max. Action: Please complete and return this donation form, including CFT in your budgeting for 2004. On a related note, one of the things that distinguishes CFT from other winery organizations is the fact that we are not a membership group. Unlike Wine Institute or WineAmerica (formerly known as AVA) or Family Winemakers of California, all of which are membership groups because they have long-term, ongoing purposes, CFT exists for one purpose only, to coordinate the various direct shipping lawsuits around the country, and hopefully to get a case decided in our favor at the Supreme Court. CFT’s constituents donate to CFT for one single goal, and there is no need, or even excuse, for on-going membership. If and when we accomplish our goals, we’re done; theoretically, we disband. It is most encouraging to me that all of the (other) wine groups named above are heavily involved in one way or another in our direct shipping battle against the wholesalers. Family Winemakers, bless their hearts, is now heavily involved financially. But each of these winery groups exists for other purposes as well, and wineries have multiple reasons for their ongoing membership. The impact of CFT’s status is that many wineries can find an excuse, sometimes any excuse, not to support our cause, even though they are obvious beneficiaries. This has made financing CFT’s battle both problematic and difficult. And as CFT’s workload has increased, and it has increased very substantially especially with the addition of Ken Starr to the team, our financing for the cause has become dicey. CFT is very fortunate to have a substantial number of both large and small wineries who, accepting their industry responsibility, are regular contributors. The Board of Trustees of CFT, which again has representation from both large and small wineries, is very grateful for the ongoing support we are receiving, but it’s not enough. We must expand our reach to include consumers, grape growers, and other stakeholders who are going to benefit either directly or indirectly from our efforts. We also have to find new ways to raise money. We’re working on all of these. Certainly the IRS approval of our 501c(3) status should change the landscape of our fundraising. Hopefully, some of the winery executives who don’t feel they can contribute as an organization, but are nonetheless sympathetic to the cause, and are drawing down salaries and bonuses above bare subsistence may now feel free to make a tax-deductible, anonymous contribution to the CFT. Similarly, with those thousands of consumers out there who stand to gain much wider access to wines that are now unavailable to them, here’s a chance to make a tax-deductible contribution to assure your future drinking pleasure.
W. Reed Foster, President |
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