Old whine in a new battle: pragmatic approaches to balancing the Twenty-First Amendment, the dormant commerce clause, and the direct shipping of wine.

AuthorEng, Gordon


There are only two ways an ordinary citizen acting in a private capacity can violate the United States Constitution. One is to enslave someone, violating the Thirteenth Amendment, and the other is to bring a bottle of wine into a state in violation of its alcoholic beverage control laws. (1)

In reaction to what many consider to be senseless and out-of-date prohibitions against the direct shipment of wine from out-of-state wineries to consumers, (2) wine connoisseurs and their legal advocates have mounted a campaign across the country to overturn direct-shipment laws. (3) According to Tracy Genesen, Legal Director for the Coalition for Free Trade ("CFT"), a winery backed advocacy group, the overall strategy is to "target the states with the most punitive direct-shipping statutes, to get a definitive decision from the Supreme Court to clear up the question of whether the Commerce Clause takes precedence over the Twenty-first Amendment or vice versa." (4) The CFT's strategy is to facilitate a split between at least two circuit courts that will have to be resolved in the nation's highest court. (5) Whether the strategy succeeds in getting the Supreme Court's attention remains to be seen, but one element appears to be working: lawsuits seeking to overturn direct-shipment statutes are generating conflicting opinions in federal district courts across the country and in at least two federal appellate courts. (6)

Although not a party to the lawsuit, the CFT probably joined the celebration on December 10, 2002, when Judge Richard M. Berman of the United States District Court for the Southern District of New York ordered New York State to allow wineries from the rest of the country to ship wine directly to New York consumers. (7) Judge Berman's order followed up on his opinion earlier that year holding New York's direct-shipping laws unconstitutional. (8) Clint Bolick, the attorney for the plaintiffs, called Judge Berman's initial ruling "the crest of a tidal wave that is washing away protectionist barriers to the direct shipment of wine." (9) Marc Violette, a spokesman for New York State Attorney General, Eliot Spitzer, said simply: "We are going to appeal." (10)

If New York does appeal, it will have significant ammunition--despite the trend in recent cases where direct-shipment wine advocates appear to be prevailing. For example, the Seventh Circuit Court of Appeals recently upheld an Indiana statute with similar prohibitions against out-of-state shipments. (11) Nevertheless, New York will face a difficult legal battle. On April 8, 2003, the Fourth Circuit Court of Appeals handed down its decision, affirming a federal district court decision last year declaring North Carolina's direct-shipment laws unconstitutional. (12) With this clear circuit split, the CFT may well be getting its wish; ultimately, the Supreme Court may have to settle the issue once and for all. The nation's highest court, however, appears willing to let the conflict age a bit longer. (13)

This Note examines the tension between the Twenty-First Amendment to the United States Constitution and the Dormant Commerce Clause, with respect to state regulations governing of out-of-state direct shipment of wine to consumers. When Judge Melinda Harmon, sitting in the Federal District Court, Southern District Texas, considered this issue in a recent case she noted that, "The question of the constitutionality of state bans on direct importation of wine by in-state consumers from out-of-state wineries has become increasingly controversial, yet thus far there is minimal case law dealing with the question." (14) One side of the debate is emobidied in Section Two of the Twenty-First Amendment, which provides: "The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." The weight of this provision stems from early Supreme Court cases that gave states wide latitude in exercising this power. (15) The other side of this Constitutional debate is embodied in the Commerce Clause, giving Congress the power "to regulate Commerce with foreign Nations, and among the several states." (16) The strength on this position stems not from what is expressed, but from what is not. The courts have traditionally construed the Commerce Clause as both an express grant to Congress of power to regulate interstate commerce, and a restriction on the authority of the states to regulate interstate trade. (17) The Constitution is not clear about where the boundaries of the Commerce Clause lie when Congress has not explicitly addressed an issue. (18) As Constitutional law professors John Nowak and Ronald Rotunda observe: "When Congress has not spoken clearly, the Court and commentators often refer to this question as the dormant (or negative) Commerce Clause problem." (19) The problem is determining the extent to which states can legislate in a manner that may impinge on interstate commerce when there is no federal law on point. (20) As Nowak and Rotunda explain, courts are "in effect attempting to interpret the meaning of Congressional silence." (21) Although not always a straightforward or uncontested position, the courts have generally interpreted the dormant Commerce Clause to prevent States from promulgating protectionist laws that burden interstate commerce. (22)

In the absence of case law on point, district courts apply precedents dealing with resolving conflicts between the Commerce Clause and Twenty-First Amendment, generally. (23) Although the existing body of law provides a starting point for amelioration, as Judge Harmon noted, "It quickly becomes apparent that this is a gray area of law, without bright lines and clear rules, as well as a constantly evolving one. There is little agreement on what approach should be taken. Court opinions in recent years vary widely...." (24)

Part I of this Note follows leading court opinions and commentators in recognizing the importance of history with respect to the Twenty-First Amendments. (25) Part II examines recent court decisions, identifying commonality in these opinions, including four approaches taken by federal courts to address this issue, and distinguishing factors that appear to influence the courts' final holdings. Part III of this Note offers a possible solution to the conflict. Despite the trend toward relaxing alcoholic beverage control laws, the dormant Commerce Clause analysis, being applied by a number of courts against direct-shipment laws, is fundamentally flawed.


    Direct-shipment laws have existed since the repeal of Prohibition, and are often part of a three-tier system embodied in many states' alcoholic beverage control laws ("ABC laws"). (26) Typically, ABC laws constrain manufacturers of alcoholic beverages by requiring them to sell only to licensed wholesalers or distributors. (27) The wholesalers themselves are restricted to selling only to licensed retailers. (28) Then, only licensed retailers are permitted to sell directly to consumers. (29) Many states' ABC laws provide that all out-of-state sellers of alcoholic beverages (of which wine is but one product) must pass through that state's three-tier system before reaching the consumer. Typically, however, these states provide an important exception--permitting in-state wineries to ship directly to in-state consumers. (30) In-state wineries can bypass the wholesale and retail tiers to reach in-state consumers, while out-of-state wineries are subjected to all three tiers with the concomitant costs and taxes. (31) Direct-shipment opponents identify that disparity as an unconstitutional burden on interstate commerce. (32)

    Proponents of direct-shipping bans (33) rest their case primarily on the strength of the Twenty-First Amendment arguing that, although the three-tier system is not perfect, it addresses the core concerns of temperance, tax collection, and the maintenance of orderly markets. (34) Many Americans today find it difficult to relate to the mood in the United States during the time leading up to Prohibition. (35) With the rise of the Internet and the commercial fluidity "e-shopping" provides, many young sophisticates are unable to place the Twenty-First Amendment in proper perspective. (36) When compared to the rise of economics as almost the sine qua non subject in a university education and its mantra of "free trade," there is probably an instinctive leaning among lawyers and law students toward the arguments grounded on the dormant Commerce Clause. (37) To fully appreciate the justification for a broad reading of the Twenty-First Amendment, proponents of direct-shipping laws typically combine their legal arguments with a historical review. As one court explained, this is "not solely out of nostalgia or a fascination with our political history ... but in order to establish the historical background against which, first the Eighteenth and then the Twenty-First Amendments to the Constitution were put in place." (38)

    1. The Early Years

      The tension between the Commerce Clause and state authority to regulate alcoholic beverages dates well into the nineteenth century. (39) The Supreme Court first recognized the authority of the states to regulate alcoholic beverages in the License Cases. (40) The Court noted that state authority was "free from implied restrictions under the Commerce Clause." (41) After the Civil War, the temperance movement picked up momentum and states began to amend their constitutions to increase their control over alcohol. (42) Kansas was the first state to go dry in 1880, via constitutional amendment. (43) The Supreme Court, in Mugler v. Kansas, (44) upheld the amendment despite constitutional challenges holding that the Kansas amendment was fairly adapted to protect the community from the evils of alcohol. (45) This was followed three years...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT