Dude, Where's My Wine? the Potential Effect of Granholm v. Heald on Georgia Direct Wine Shipment Regulations

• Jurisdiction: United States,Federal,Georgia
• Publication year: 2010
• Citation: Vol. 23 No. 3

Georgia State University Law Review

Volume 23 j ^

Issue 3 Spring 2007

3-1-2007

Dude, Where's My Wine? The Potential Effect of Granholm v. Heald on Georgia Direct Wine Shipment Regulations

Shri M. Abhyankar

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Recommended Citation

Abhyankar, Shri M. (2006) "Dude, Where's My Wine? The Potential Effect of Granholm v. Heald on Georgia Direct Wine Shipment Regulations," Georgia State University Law Review: Vol. 23: Iss. 3, Article 6. Available at: http://digitalarchive.gsu.edu/gsulr/vol23/iss3/6

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DUDE, WHERE'S MY WINE? THE POTENTIAL EFFECT OF GRANHOLM v. HEALD ON GEORGIA DIRECT WINE SHIPMENT REGULATIONS

Introduction

While enjoying a taste of his favorite beverage, Thomas Jefferson once remarked, "good wine is a necessity of life for me."¹ Presently, Jefferson's penchant for good wine would be difficult to satisfy in those states that prohibit direct shipment of wine from out-of-state wineries. If alive today, the former president's necessity for the "Nectar of the Gods"³ might even land him in a jail cell.⁴ The Supreme Court's 5-4 decision in Granholm v. Heald precludes this disastrous result by invalidating laws that make it more difficult for out-of-state wineries to deliver wine to state residents than it is for instate wineries.⁵ If Jefferson were to decide to take up residence in Georgia, however, his thirst for wine might still be difficult to quench.⁶

In recent years, as the growth of the Internet and increased desire to shop from home have resulted in a boom in the direct shipment business, states have begun moving toward stricter direct shipment laws. Challenges to these restrictions are primarily on the basis of

1. Glen's Place, Wine Quotes, www.glensplace.com/WineQuotes.html (quoting Thomas Jefferson) (last visited Nov. 9, 2005).

2. See Lisa Lucas, Comment, A New Approach to the Wine Wars: Reconciling the Twenty-First Amendment with the Commerce Clause, 52 UCLA L. REV. 899,901 (2005).

3. Gap Adventures, Nectar of the Gods, http://www.gapadventures.com/newsletters/200508-l-Nectar_of_the_Gods.html#feature (last visited Nov. 9, 2005).

4. See Lucas, supra note 2, at 901. See also Vijay Shanker, Note, Alcohol Direct Shipment Laws, The Commerce Clause, and the Twenty-First Amendment, 85 VA. L. REV. 353, 357 n.25 (1999) (listing the seven states that make it a felony to ship wine into their territory as of 1999); Free the Grapes, http://www.freethegrapes.com/research.html (last visited September 4, 2004) (listing the 20 states that prohibit interstate wine shipments as of 2005). Direct wine shipments are a felony in GA, FL, K.Y, MD, TN, and UT. Id.

5. Granholm v. Heald, 544 U.S. 460, 493 (2005).

6. See generally Press Release, Ga. Dept. of Revenue, U.S. Supreme Court Ruling Should Not Impact Georgia's Direct Wine Shipping Statutes (May 17, 2005), available at http://www.etax.dor.ga.gov/pressrel/p051705.pdf (finding that U.S. Supreme Court ruling should not impact Georgia's direct wine shipment statutes).

7. See Shanker, supra note 4, at 356.

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Commerce Clause violations. With regard to general challenges to the Commerce Clause, courts evaluate whether the statute in question is facially discriminatory or discriminatory as applied.⁹ If it is discriminatory, the court considers whether there is a legitimate local purpose that cannot be served by any other nondiscriminatory means.¹⁰ If so, then the statute survives the challenge; if not, the statute is stricken down as unconstitutional.¹¹

The analysis becomes more complex with regard to commerce involving alcohol, where the court must also consider the Twenty-First Amendment, which repealed Prohibition and granted the states seemingly unlimited power over the transportation or importation of

12

alcohol. Before Grcmholm, the circuits were divided over how to reconcile the power granted to the states by the Twenty-First Amendment and the "historical rejection of barriers to interstate commerce at the heart of Commerce Clause jurisprudence."¹³ After the decision, however, it is clear that no reconciliation is needed: when a facially discriminatory statute faces a constitutional challenge under the Commerce Clause, the Twenty-First Amendment will not save it.¹⁴ What remains unclear, however, is the fate of a facially neutral statute whose effect may be construed as discriminatory.¹⁵

In Granholm, the majority focused on the facially discriminatory laws of Michigan and New York, finding both laws unconstitutional

8. See Lucas, supra note 2, at 912.

9. See erwin chemerinsky, constitutional law: principles and policies § 5.3.4 (2d ed. 2002).

10. See id. § 5.3.6. "[I]f the Court concludes that a state is discriminating against out-of-staters, then there is a strong presumption against the law and it will be upheld only if it is necessary to achieve an important purpose." Id. at 410.

11. See id.

12. U.S. const, amend. XXI; see Shanker, supra note 4, at 369, 374 (discussing how the Twenty-First Amendment appears to give states complete discretion in issues involving alcohol and how the Amendment relates to the Commerce Clause).

13. Lucas, supra note 2, at 903.

14 See Granholm v. Heald, 544 U.S. 460, 486 (2005). "[T]he Twenty-first Amendment does not supersede other provisions of the Constitution and ... does not displace the rule that States may not give a discriminatory preference to their own producers." Id.

15. See chemerinsky, supra note 9, at 414-15 (discussing how the Court never "has articulated clear criteria for deciding when proof of a discriminatory purpose and/or effect is sufficient for a state or local law to be deemed discriminatory").

2007] REGULATING DIRECT WINE SHIPMENTS IN GEORGIA 633

as violating the dormant Commerce Clause.¹⁶ The Michigan law in question discriminated against out-of-state wineries by requiring them to distribute wine through licensed in-state wholesalers, while New York law achieved the same result by prohibiting out-of-state wineries from shipping wine directly to consumers unless they established an in-state presence, something that in-state wineries naturally have.¹⁷ Justice Kennedy, in a functionalist opinion, stressed that "[i]f a State chooses to allow direct shipment of wine, it must do so on evenhanded terms."¹⁸

Currently, Georgia law places restrictions on the direct shipment of wine on both in-state and out-of-state wineries.¹⁹ Thus, a Georgia resident, in order to taste the wines of California in the comfort of his residence through direct shipment, must first physically present himself at the winery with identification in hand. This same Georgia resident, wishing to taste the wines of Southern Georgia in the comfort of his Atlanta home, must similarly comply with this restriction.²¹

This Comment contends that because the Georgia direct wine shipping statutes are not facially discriminatory, the decision in Granholm should not impact their constitutionality. Part I discusses the history surrounding the decision in Granholm, including Prohibition, the Twenty-First Amendment, and the driving intent behind the Commerce Clause.²² Part II discusses Granholm in depth, from Justice Kennedy's functionalist approach to Justice Thomas's more formalistic opinion ²³ Part III looks at Georgia's approach to direct wine shipment, and contends that the regulations are

16. Granholm, 544 U.S. at 471-73, 493. See infra Part I.C. for an introduction to the dormant Commerce Clause.

17. Id. at 469-70. New York law requires out-of-state wineries to establish "a branch factory, office or storeroom within the state" before they may ship directly to New York consumers. Id. at 470.

18. A/, at 493.

19. See O.C.G.A. § 3-6-31 (c) (2004).

20. See id. §3-6-31(c)(3).

21. See id.

22. See discussion infra Part I.

23. See discussion infra Part II.

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"evenhanded." As such, this Comment asserts that because Georgia's direct wine shipment law is facially neutral and there is no clear test for determining a discriminatory effect in such a statute, these laws will survive constitutional challenge under the Granholm analysis.²⁵

A. Prohibition: The Rise and Fall of the Eighteenth Amendment

During the first decades of the 19^th century, many Americans consumed alcohol at an alarming rate, often drinking at every meal and even at work.²⁶ "[T]he unease that accompanied the social and cultural changes of the nineteenth century" created an American temperance movement which "sought to curb the prevalence of alcohol through social and legal means." In response, Congress made many legislative attempts to limit the sales of liquor.²⁸ In 1909, the COD Act "regulated interstate sales of liquor by specifying labeling requirements, requiring delivery to the specified consignee, and forbidding the carrier from collecting payment for the shipment from the consignee."²⁹ The Webb-Kenyon Act of 1913 "prohibited the shipment of intoxicating liquor into a state in violation of that state's laws." These attempts to curb liquor consumption were not

24. See discussion infra Part III.

26. See Richard F. Hamm, Short Euphorias Followed By Long Hangovers: Unintended Consequences of the Eighteenth and Twenty-First Amendments, in unintended consequences of Constitutional Amendments 164,166 (David E. Kyvig ed., 2000).

27. Lucas, supra note 2, at 915.

28. See id. at 916-917.

29. Id. "The provisions of the COD Act are now incorporated in 18 U.S.C. § 1263, which is based on Act of March 4, 1909, Pub. L. No. 350, ch. 321, §240, 35 Stat. 1137 (former 18 U.S.C. § 390)." Id. at n.83.

30. Id. at 916.

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