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Supreme Court to referee fight over wine sales

Anne Gearan Associated Press

WASHINGTON — God made only water, but man made wine, wrote author Victor Hugo. He neglected to mention that man also made laws, courts and bureaucracies, which is how the Supreme Court came to referee a fight among state governments, wineries and consumers over the sale of wine across state lines.

The high court said Monday it will hear three appeals involving state laws preventing consumers from buying wine directly from out-of-state suppliers. The dispute pits states and a network of alcohol wholesalers against wineries that want to sell their products over the Internet and by phone.

It also pits one part of the Constitution against another, and both sides can point to recent court rulings for support.

Consumers are caught in the middle, unable to order a favorite U.S. vintage because their home state supplier doesn’t stock it, or forced to pay a hefty premium to a middleman if they can get the wine at all, lawyer Clint Bolick said.

“It’s protectionist, and it’s discriminatory,” said Bolick, who represents a family-run winery in Virginia that claims it cannot get its bottles to would-be buyers in New York.

The court will hear that case as well as one involving husband-and-wife wine reviewers in Michigan who challenged the rules and won their case in federal court.

At least 20 states prohibit direct interstate shipment of wine to consumers; others allow it with some restrictions. States say the system helps prevent fraud and underage drinking. They also collect millions of dollars from alcohol taxes.

At issue in the Supreme Court case are laws in Michigan, New York and six other states — Florida, Indiana, New Jersey, Maine, Ohio and Rhode Island. Wineries outside those states cannot ship directly to in-state buyers, and consumers cannot get a given wine if it is not among those carried by the state-approved middlemen. But wineries based in those states can go around the state distribution system and sell directly to in-state buyers.

Most of the more than 2,000 wineries nationwide welcome visitors with tasting rooms or winery tours, the Wine Institute said. In California alone, about 11 million visitors visit wineries every year. Winemakers typically try to sell visitors wine on the spot, but they also would like to guarantee that a visitor can order the same wine back home.

That’s where the bottleneck begins, opponents of the state rules claim. The number of wineries is increasing, yet the number of wholesalers is dropping, and there are so many small wineries producing multiple labels that even an ambitious wholesaler cannot keep up, they say.

That argument misses the point of state regulation, Michigan and its backers at the Supreme Court say.

“The historical basis for the (state) structure, as recognized by this court, is to protect against the collusion, price-fixing and monopolization problems that existed before Prohibition,” lawyers for Michigan Gov. Jennifer Granholm wrote in the state’s appeal.

The 21st Amendment ended Prohibition in 1933 and handed control of alcohol regulation to state governments, rather than leaving it to federal government or localities. But another part of the Constitution gives Congress the power to regulate commerce across state lines.

The cases are Granholm v. Heald, 03-1116; Michigan Beer & Wine Wholesalers Association v. Heald, 03-1120 and Swedenburg v. Kelly, 03-1274.

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