The Wine Retailer Supreme Court Case is Coming

The 13-year-old Granholm v. Heald Supreme Court decision is about to be revisited, only this time with retailer wine shipping at issue. Today, the Supreme Court agreed to hear the case of Tennessee Wine & Spirit Retailers v. Byrd.

In 2005, the U.S. Supreme Court ruled in its Granholm v. Heald decision that states violated the Commerce Clause of the Constitution when they discriminated against out-of-state wineries by prohibiting them from shipping wine to consumers, while at the same time allowing their in-state wineries to ship to consumers in the state.

The Granholm Confusion

In that decision, the Court did not say whether or not this principle of non-discrimination applied to wine retailers as well as wineries. They implied it but did not explicitly say so. This failure to clearly address wine shipping in all its guises resulted in numerous lawsuits being filed to have the question answered. While some courts ruled Granholm did apply to retailers, many lower courts responded to these lawsuits by ruling that since the Supreme Court did not explicitly say its Granholm decision applied to retailers as well as wineries, they were required to take the conservative route and assume it did not.

Today, wineries may legally ship wine to 45 states. However, retailers—whose entire raison d’etre is selling wine to consumers—may only legally ship to consumers in 14 states due to discriminatory laws that are often enforced by courts, defended by lawmakers, and supported by wholesalers and retailers who want to curtail consumer access to wine in order to protect themselves from competition.

The New Case

The case the Supreme Court agreed to hear today is not strictly about wine shipping. The case is about a Tennessee law that requires retailers to reside in the state for two years before they can be granted a retailers licenses. Total Wine challenged the law as unconstitutional on the grounds that the non-discrimination principles laid out in the Granholm Supreme Court case also applied to retailers. Tennessee retailers, not wanting competition from Total Wine, argued Granholm only applies to wineries and that the law is perfectly constitutional since discrimination against retailers has never been ruled unconstitutional.

The Sixth Circuit Court of Appeals agreed with Total Wine, the Tennessee retailers appealed to the Supreme Court and the Court agreed to hear the case.

Some have argued that because this case is about residency requirements, the Supreme Court need not address the question of retailer wine shipping. We don’t see how this is possible. In hearing the case, the Supreme Court will be made well aware of the confusion it sparked by not answering the question of whether or not the principles of economic non-discrimination laid out in Granholm apply beyond wineries to retailers, whether that principle addresses residency requirements or wine shipping laws.

The Significance of a New Supreme Court Case

The outcome of this case will significantly influence the future of wine direct shipping and consumer access to wine. It’s notable that because 36 states prohibit their consumers from receiving wine shipments from out-of-state retailers, these consumers have no access to imported wines that are only sold in the U.S. by retailers. Consumers in most of these 36 states may receive wine from out-of-state wineries and thereby receive shipments of domestic wines. However, these wineries don’t sell the hundreds of thousands of imported wines that are available across the county.

It’s also true that it is primarily retailers that sell rare wines, older wines, collectible wines and memberships in wine-of-the-month clubs, all of which may not be shipped into 36 states due to the discriminatory laws in most of those states prevent out-of-state wine retailer shipments.

NAWR welcomes the arrival of the Tennessee Wine & Spirit Retailers V. Byrd case. Without a judicial resolution to the question of retailer shipping both consumers and retailers live in limbo, are too often prohibited from interacting within the normal stream of commerce and the entire development of U.S. wine industry is retarded. 

Briefs in the case are likely to be due around the end of this year with oral arguments likely to ensue in Washington after the first of the year. A decision could come sometime in late Spring.