Home Sales & Marketing DTC US Wine DtC Legal Battles—Time to Calm Down

US Wine DtC Legal Battles—Time to Calm Down

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There are many reason for the Supreme Court not to hear a casenone of which the wine industry can influence.

Jeff Siegel

Jay Hack, a senior partner at Gallet Dreyer & Berkey in New York City and the chair of the wine, spirits, and beer law committee for the New York State Bar Association, has a few words of wisdom for the wine business in the wake of last week’s legal disappointment. That’s when the Supreme Court declined to hear the Missouri retail direct shipping case, Sarasota Wine Market v. Schmitt – which might have opened up retail direct shipping across the country.

His advice? Stop getting so worked up about this stuff. It’s not good for your health.

“You’ll give yourself an ulcer if you worry about every direct shipping case,” says Hack, who predicted that the Supreme Court would decline to grant certiorari, the legal term for agreeing to review a lower court ruling (and known as cert for short). “There are many reasons for the Supreme Court not to hear a case, and they mostly have to do with the Supreme Court. Most of the reasons have nothing to do with the subject that you’re worried about, no matter how important you think it is.”

Lady Justice / Unsplash

In other words, that so many people in the wine business were waiting with bated breath for the Supreme Court to finally decide whether retail direct shipping was legal didn’t make any difference to the justices. And it almost certainly won’t make any difference in the half dozen or so cases wending their way through the federal court system.

“Yeah, I think it’s pretty understandable to assume big things will happen when the Supreme Court gets involved, but in the end they’re always more selective than we’d wish,” says Alex Koral, regulatory general counsel at Sovos ShipCompliant, an SaaS/software solutions provider. “Ultimately, the industry will need legislative change to establish more expansive retailer DtC shipping permissions, even if the Supreme Court were to rule that states couldn’t discriminate against all out-of-state shippers.”

So, what caused so much optimism that ultimately wasn’t warranted?

First, the assumption that the Supreme Court’s decision in 2019’s Tennessee Wine Retailers meant more than it did and would lead to a favorable decision in Sarasota.

In Tennessee, the justices overturned a state law that said non-residents couldn’t get a retail liquor license. Justice Samuel Alito, in his majority opinion, implied that any state that was going to discriminate against an out-of-state retailer better have a damn good reason for doing so. In this case, there wasn’t one.

But, says Hack, what many may have lost sight of was that Tennessee Wine Retailers wasn’t as important a case as the 2005 Granholm decision, which legalized winery DtC shipping. Granholm made law; Tennessee just fleshed out the existing law surrounding the vastly complex legal workings that are the relationship between the so-called Dormant Commerce Clause of the Constitution’s 21st Amendment, and how all is interpreted.

And, as Koral noted, before the Supreme Court denied cert in Schmitt, the Tennessee ruling didn’t say there was anything wrong with the current system, in which each state decides how to regulate alcohol. It just said that the Tennessee residency law was unconstitutional.

Second, Sarasota seemed like a good opportunity for the court to finally settle the issue once and for all. But, says Koral, that was probably more wishful thinking: It “may be for the best that the Court didn’t choose to hear Sarasota; they might easily have come down in favor of the states’ ability to discriminate against out-of-state retailers, especially if they saw Sarasota as part of a developing pattern.”

He says that most federal circuit court decisions upheld the ban on retailer direct shipping, so there would be no reason for the Supreme Court to contradict the lower courts and overturn Sarasota.

So, no more getting worked up. Right?

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Jeff Siegel is an award-winning wine writer, as well as the co-founder and former president of Drink Local Wine, the first locavore wine movement. He has taught wine, beer, spirits, and beverage management at El Centro College and the Cordon Bleu in Dallas. He has written seven books, including “The Wine Curmudgeon’s Guide to Cheap Wine.”

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