A Virginia vineyard is hoping to put a
cork on state laws that restrict Internet wine sales by challenging
a New York law that makes it illegal for out-of-state wineries to
ship to consumers.
Swedenburg Estate Vineyards in Middleburg is the lead plaintiff
in the lawsuit filed Thursday in U.S. District Court in Manhattan.
"These direct-shipment prohibitions are hurting small
family-run wineries, and may drive them out of business," said
owner Juanita Swedenburg.
Direct sales by phone or Internet are estimated to account for
$500 million of the $17 billion industry.
The suit is the fifth to be filed across the country as small
wineries seek to overturn state laws that have clamped down on
Internet wine sales.
Other states being sued include Virginia, Indiana, Texas and
Florida, according to the Institute for Justice, a libertarian
organization that is pushing the case on Swedenburg's behalf.
The Swedenburg lawsuit also seeks to overturn New York laws that
limit Internet advertising of wines, which the plaintiffs argue
violate the First Amendment right to free speech.
A spokesman for the New York attorney general's office did not
immediately return a telephone call seeking comment.
Thirty states have laws that prohibit the direct sale of wine
from out-of-state wineries to consumers, and direct sales are a
felony in Florida, Georgia, Indiana, Kentucky, Maryland, North
Carolina and Tennessee, according to the Institute for Justice.
Many states require wineries to sell to wholesalers, who then
sell to stores after collecting any excise taxes and charging a
commission. Internet sales cut out the liquor wholesalers, a
powerful lobby.
But Craig Wolf, counsel for the Wine and Spirits Wholesalers of
America, argued that Internet sales make it impossible for states
to collect excise and sales taxes and allow underage drinkers to
order wine.
"There is this illegal bootlegging going on regardless of the
state laws," Wolf said.
State laws do not violate interstate commerce protections
because the Constitution gives states more authority to regulate
liquor than other products, Wolf said.
The issue is also being debated in Congress. Many states are
pushing federal legislation that would give them power to ask
federal courts to block direct wine shipments to consumers. States
argue that wineries can violate their shipment bans without fear of
consequence.
