federal judge in PA o.k's direct shipments

[Jeff L]

A federal judge for the Eastern District pf PA ordered Penna authorities yesterday to stop enforcing laws prohibiting out of state wineries from shipping wine directly to PA.

That's the really good news in that this order clears the way for all of us in the state to deal directly with wineries nationally to obtain whatever wines we want and have them shipped to our homes.

Here's the bad news, the ruling imposes upon the state to enact legislation making this all doable. That could take some time as many of you know...don't plan on this getting done in time for the holidays...possibly even the 2006 holidays!

Ooops, I meant to post this in the wine bargains at the plcb thread.

Edited November 10, 2005 by Jeff L (log)

[shacke]

A federal judge for the Eastern District pf PA ordered Penna authorities yesterday to stop enforcing laws prohibiting out of state wineries from shipping wine directly to PA.

That's the really good news in that this order clears the way for all of us in the state to deal directly with wineries nationally to obtain whatever wines we want and have them shipped to our homes.

Here's the bad news, the ruling imposes upon the state to enact legislation making this all doable. That could take some time as many of you know...don't plan on this getting done in time for the holidays...possibly even the 2006 holidays!

Ooops, I meant to post this in the wine bargains at the plcb thread.

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Dont hold your breath based on this one ruling. There are a billion suits still out there on this very issue.

[Jeff L]

A federal judge for the Eastern District pf PA ordered Penna authorities yesterday to stop enforcing laws prohibiting out of state wineries from shipping wine directly to PA.

That's the really good news in that this order clears the way for all of us in the state to deal directly with wineries nationally to obtain whatever wines we want and have them shipped to our homes.

Here's the bad news, the ruling imposes upon the state to enact legislation making this all doable. That could take some time as many of you know...don't plan on this getting done in time for the holidays...possibly even the 2006 holidays!

Ooops, I meant to post this in the wine bargains at the plcb thread.

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Dont hold your breath based on this one ruling. There are a billion suits still out there on this very issue.

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I think most of them are at the state level Evan. What makes this one different is it is at the Federal level.

[cdh]

Anybody have a link to the news story or better yet a link to the Judge's opinion?

The state/federal thing isn't all that important, insofar as a judgment is a judgment, and they're all equally binding. If a state court told the state to stop prohibiting shipments, it would be no more or less binding than if a federal court told them the same thing. You find yourself in federal court if a citizen of another state is suing a state, or if the parties are all from different states, or the subject matter is inherently federal, etc...

The Constitution and the Supreme Court's rulings are just as binding on state court judges as they are on federal court judges, so the commerce clause rationale has the same pursuasive effect on a state court as on a federal court.

[rlibkind]

The Constitution and the Supreme Court's rulings are just as binding on state court judges as they are on federal court judges, so the commerce clause rationale has the same pursuasive effect on a state court as on a federal court.

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God bless Gibbons v Ogden and John Marshall and the Commerce clause.

[Jeff L]

Anybody have a link to the news story or better yet a link to the Judge's opinion? 

The state/federal thing isn't all that important, insofar as a judgment is a judgment, and they're all equally binding.  If a state court told the state to stop prohibiting shipments, it would be no more or less binding than if a federal court told them the same thing.  You find yourself in federal court if a citizen of another state is suing a state, or if the parties are all from different states, or the subject matter is inherently federal, etc...

The Constitution and the Supreme Court's rulings are just as binding on state court judges as they are on federal court judges, so the commerce clause rationale has the same pursuasive effect on a state court as on a federal court.

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I don't have the Judge's opinion. I just saw the article in todays Inquirer Business section.

[Capaneus]

Couldn't find the full text of an opinion. Reading the following, it strikes me that the Commonwealth is free to adopt any of a number of systems that would allow out-of-state wineries to function on the same terms as our native-born winemakers. I would expect them to set something up where places would be able to register, then ship to PLCB stores where state sales taxes could be levied. Not sure how much of an advantage that would be for consumers over the several dodges currently available.

In general, all this seems to me to make life not much better than it used to be. That may be just my life, though.

Any rate, Judge Fullams Memorandum and Order in Cutner v. Newman:

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

CLYDE H. CUTNER, et al. : CIVIL ACTION

:

v. :

:

JONATHAN H. NEWMAN, et al. : NO. 05-03007-JF

MEMORANDUM AND ORDER

Fullam, Sr. J. November 9 , 2005

At the present time, Pennsylvania law discriminates

against out-of-state wineries, and favors in-state wineries.

Out-of-state wineries are not permitted to sell or ship directly

to consumers or restaurants, nor may they take telephone orders

or internet orders. They must sell only to state-run

Pennsylvania liquor stores, and may make such sales only at the

rate of nine liters per month or less. 47 Pa. Stat. §§ 4-488, 4-

404, 4-491; 40 Pa. Code § 9.143. By contrast, a winery which is

“both a citizen and resident of the Commonwealth” may sell wine

on its own premises and at other approved locations, directly to

individuals, hotels and restaurants. 47 Pa. Stat. § 5-505.2; 40

Pa. Code § 11.111. They may make direct sales without limitation

as to quantity, and may ship wine by common carrier. 40 Pa. Code

§ 11.111.

Plaintiff Chateau Thomas Winery, Inc. is an out-of-

state (Indiana) winery which would like to sell its product

directly to Pennsylvania consumers. Plaintiff Clyde H. Cutner, a

Pennsylvania resident, would like to be able to buy and receive

wine from out-of-state wineries. Plaintiffs brought this action

seeking to invalidate the Pennsylvania laws and regulations which

discriminate against out-of-state wineries – discrimination which

has recently been ruled unconstitutional by the United States

Supreme Court, Granholm v. Heald, 125 S. Ct. 1885 (May 16, 2005).

Defendants are the appropriate officials of the Pennsylvania

Liquor Control Board, sued in their official capaciti

es.

Plaintiffs have filed a motion for judgment on the pleadings.

The defendants agree that the current Pennsylvania

statutory scheme is unconstitutional under the Granholm decision,

and agree that plaintiffs are entitled to judgment on the

pleadings. The disagreement has to do with the nature of the

relief to be afforded.

Plaintiffs seek an injunction against continued

enforcement of the limitations on out-of-state wineries.

Defendants argue, among other things, that this court should

simply impose upon in-state wineries the same restrictions

against direct sales and shipments as apply to out-of-state

wineries. Indeed, defendants argue, in the alternative, that

this action is moot, because the Pennsylvania Liquor Control

Board has issued an “advisory” to the effect that in-state

wineries can no longer sell or ship directly to customers.

Plaintiffs counter with the argument that the recent “advisory”

is a nullity, because the Pennsylvania Liquor Control Board does

2

not have the legal authority to repeal Pennsylvania statutes

which expressly permit in-state wineries to make direct sales and

shipments.

It so happens that the Pennsylvania Wine Association

and two in-state wineries have recently filed suit in the

Commonwealth Court of Pennsylvania, Pennsylvania Wine Ass’n v.

Commonwealth of Pennsylvania, No. 564 MD 2005 (Pa. Commw. Ct.,

filed Nov. 4, 2005), challenging the validity of the “advisory”

notice. On November 7, 2005 – the same date the pending motion

for judgment on the pleadings was argued in this court, the

Commonwealth Court granted a temporary restraining order against

enforcement of the “advisory” notice. Thus, at least for the

present, the restrictions against direct sales and shipments by

out-of-state wineries continue to be unconstitutional, under

Granholm. This case has not been rendered moot.

Defendants have also advanced an argument to the effect

that this court should abstain from resolving the constitutional

issue, but I am not persuaded there is any basis for such an

argument. The issue before this court is unconstitutionality

under the United States Constitution. An injunction against

continuation of the unconstitutional application of state

statutes does not, of course, preclude action by the state

legislature to correct the situation – in whatever manner the

legislature deems appropriate.

3

This court does not have the power to declare perfectly

valid state statutes and regulations unconstitutional, but can

only invalidate unconstitutional statutes. It is, obviously, not

unconstitutional for the state to permit in-state wineries to

sell direct to customers. Moreover, as noted by plaintiffs, it

would violate due process to impair the statutory rights of in-

state wineries in litigation in which they are not represented.

For all of these reasons, I decline the defendants’

invitation to resolve the constitutional dilemma by purporting to

impose upon in-state wineries the same restrictions which the

challenged statutes now impose on out-of-state wineries. That is

a matter for the legislature to address.

Accordingly, it is clear that the present restrictions

against out-of-state wineries cannot constitutionally be

enforced. An appropriate Order follows.

4

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

CLYDE H. CUTNER, et al. : CIVIL ACTION

:

v. :

:

JONATHAN H. NEWMAN, et al. : NO. 05-03007-JF

O R D E R

AND NOW, this 9th day of November 2005, upon

consideration of plaintiffs’ Motion for Judgment on the Pleadings

and defendants’ response, IT IS ORDERED:

1. Plaintiffs’ Motion for Judgment on the Pleadings is

GRANTED.

2. It is hereby DECLARED that Pennsylvania’s statutory and

regulatory scheme which prohibits out-of-state wineries from

selling and shipping directly to consumers, hotels and

restaurants, while allowing in-state wineries to do so, is

unconstitutional, under the authority of Granholm v. Heald, 125

S. Ct. 1885 (May 16, 2005).

3. Defendants are hereby ENJOINED from enforcing

Pennsylvania Statutes, Title 47 §§ 4-488, 4-491, and 4-404, and

Pennsylvania Administrative Code, Title 40 §§ 9.143 and 9.145, so

as to prohibit out-of-state wineries from selling and shipping

wine directly to consumers, hotels and restaurants in the

Commonwealth of Pennsylvania, if, and so long as, in-state

wineries are not subject to equivalent restrictions.

5

4. The only alcoholic beverage at issue in this case is

wine. This order does not affect the validity of any statute or

regulation with respect to other types of alcoholic beverages.

5. Plaintiffs may submit an application for attorney’s

fees within 10 days.

BY THE COURT:

/s/ John P. Fullam

John P. Fullam, Sr. J.

[shacke]

Wow.

I hope they are done rebuilding Johnstown.........

[Capaneus]

Wow.

I hope they are done rebuilding Johnstown.........

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Note, however, the penultimate sentence of the Order. Far as I can tell, it is currently a free-for-all. It would be customary at this point for the court to grant an injunction maintaining the status quo (whatever that is right now) until the Legislature can come up with a regulatory framework to satisfy the judgement. As Jeff L implied. But I see no trace of that anywhere. Anybody know?

Or should I get on the horn to my various Pushers, Dealers, Mules and Legmen?

[dagordon]

For those who might have been following this issue:

Does anyone know what is the legal situation regarding shipment of wine from out-of-state retailers, as opposed to wineries, to PA?

The order by Judge Fullam quoted above prohibits PA from preventing out of state wineries from shipping to PA given that in-state wineries are allowed to. But what about out-of-state retail wine shops?

Some retailers will ship to PA, but it seems like most won't. I tried to order some stuff from winelibrary.com a couple of days ago and they refused to ship to PA. They said that the PLCB is claiming that the current situation is that out-of-state wineries can ship to PA, but out of state retailers cannot.

I'm wondering if this is correct. I mean, the only in-state retailers are the PLCB stores, and they can't ship to consumers. (Though they can ship from store A to store B if a customer at B wants something that's not available there.) That is, the discrimination issue is obviously a bit thornier in the case of in-state vs. out-of-state retail stores.

Are we just out-of-luck? Do I really have to rent a mailbox in Cherry Hill?

[MarketStEl]

I've just been informed (via IM) by a hospitality industry veteran and eG lurker that out-of-state retialers won't ship to consumers in Pennsylvania because the state doesn't have reciprocal agreements allowing such shipments. This person also says that this hurts in-state wineries too, because they had counted on out-of-state shipments for a good chunk of their revenue, and even if the state law prohibiting direct shipments from out-of-state wineries is unenforceable, the ongoing retailer prohibition still hurts our in-state wineries.

Edited to elaborate based on further IM exchange: Apparently, the ruling did not require Pennsylvania to allow out-of-state wine shipments. All it did is tell the Commonwealth that it cannot treat in-state and out-of-state businesses differently. Such a ruling can be interpreted in two ways:

--the state drops all restrictions on the shipment of wine within and beyond its borders, or

--the state restricts both internal and external shipments of wine.

Guess which interpretation the Commonwealth chose.

Edited August 2, 2007 by MarketStEl (log)

[dagordon]

Edited to elaborate based on further IM exchange:  Apparently, the ruling did not require Pennsylvania to allow out-of-state wine shipments.  All it did is tell the Commonwealth that it cannot treat in-state and out-of-state businesses differently.  Such a ruling can be interpreted in two ways:

--the state drops all restrictions on the shipment of wine within and beyond its borders, or

--the state restricts both internal and external shipments of wine.

Guess which interpretation the Commonwealth chose.

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Actually, I thought that the state attempted to go the second route before the Fullam order, hence the "advisory" that in-state wineries can no longer ship directly to consumers; but then the in-state wineries got an injunction against enforcement of that advisory. It was in that situation that the Fullam order was issued. Has the state since tried to block in-state wineries from direct shipping again?

[wkl]

there are retailers that will ship to pa. i won't post their names here, however. pm me if interested.