Sarasota Wine Market c. Schmitt — What’s the problem?

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A Supreme Court ruling can affect the system at three levels as we know it.

Jeff Siegel

This week, the United States Supreme Court may decide to take a first step in overhauling the way wine is retailed in the United States.

But it is probably – insisting on Probably-habit.

Supreme Court Building, DC / Unsplash

“You really can’t logically answer what the Supreme Court will do,” says Jay Hack, senior partner at Gallet Dreyer & Berkey in New York, and Chairman of the Wine, Spirits and Beer Law Committee of the New York State Bar Association. “It’s almost impossible to predict because you don’t know how they think. “

But if Hack were to guess, he bet there is less than a fifty-fifty chance that they’ll take the case.

So why all the fuss over Sarasota Wine Market versus Schmitt? Because this case challenges a Missouri law that prohibits out-of-state retailers from selling wine to residents of Missouri. The law uses the same argument that was successful in the Granholm case of 2005, which allowed wineries to sell their product to people living in another state. Granholm is the base of the $ 3.7 billion DtC wine market.

The court will decide this week whether or not to grant certiorari, which is legal jargon for agreeing to review a lower court decision (called cert, for short). This hearing could potentially settle the legal dispute that has raged since Granholm: Do out-of-state retailers have the same rights as wineries to sell products to consumers in other states? Most court rulings since Granholm have stated that retailers do not enjoy the same rights and that it is perfectly acceptable for a state to ban such sales.

Several things could happen if the court accepts the case: A ruling in favor of Missouri law would end a string of lawsuits filed across the country in recent years that challenge the ban on retail sales outside the United States. ‘State. This, in effect, would make it clear that Granholm only applied to wineries. Or, he could tell the appellate court that ruled in Missouri’s favor to reconsider its decision and the court would give appellate judges specific instructions on what to look for in the review. Finally, a ruling in favor of Sarasota may allow out-of-state retailers, within certain limits, to sell anywhere in the country. This would overturn a key part of the three tier system that has dominated alcohol sales since the end of Prohibition, thereby bypassing the second tier, that of wholesalers.

It would be really bluffing.

“A lot of people think that if the court grants a certificate, we’ll have the World Series of All Cases,” says Sean O’Leary, a Chicago attorney and former chief legal counsel for the Illinois Liquor Control Board. “It could be a [case] which will solve once and for all the long problem of the decade.

“It may be true and may not be,” he adds. Because, of course, it’s the Supreme Court, O’Leary notes. No one knows exactly what he’s going to do.

In one respect, the arguments in Sarasota are the same old “he said, she said” that surrounded the laws and lawsuits on retail direct shipping from Granholm. Sarasota says out-of-state retailers are discriminated against in Missouri because they cannot sell across state lines, due to what’s called the dormant trade clause of the Constitution, which says that the states can not discriminate like that. Missouri’s position is that no one is preventing out-of-state retailers from opening a store in the state; therefore no discrimination. Missouri also argues that the 21st The amendment (which ended the ban) allows it to ban out-of-state sales, and that has been a legal point that has been settled for 90 years.

In Granholm, the Supreme Court ruled that the dormant trade clause prevailed over the 21st Amendment, says Alex Koral, Senior Regulatory Advisor at Compliant with SOVOS vessels, a wine shipping consulting company. Arguments in retail shipping cases since then have been whether that part of Granholm could be used to authorize retail drop shipping, which the court was reluctant to clarify.

And, he says, there’s no reason to expect him to do anything differently this time around. Allowing a drop-in retail exception would cloud the waters around the three-tier system even more than it already is. The court certainly doesn’t want to do that: A ruling in favor of Sarasota would redefine the relationship between producers, wholesalers and retailers, which the court never said needed to be redefined.

Still, several attorneys said there are slight differences in the drop-shipping environment this time around that could intrigue the court enough to grant the certificate. Foremost among them is its 2019 ruling in Tennessee Wine Retailers, which overturned a state law that prohibited non-residents from obtaining a retail liquor license. Judge Samuel Alito, in his majority opinion, suggested that any state that was going to discriminate against an out-of-state retailer had better have a damn good reason for doing so. In this case, there was none.

Which begs the question: Did the federal appeals court that ruled in favor of Missouri do enough to take Tennessee into account? Or did he just rule for Missouri because that’s the way the law has always been?

It’s an intriguing point, Koral says, but he also points out that the court did not disprove the entire three-tier system. On the contrary, it has simply made states more responsible for how they use it.

United States puzzle pieces
United States puzzle pieces

*The United States Supreme Court will meet to consider whether to grant or deny certiorari to Missouri’s delivery laws to their conference October 8. A decision to grant or deny the certiorari application may be announced on or around October 12. *

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Jeff Siegel is an award-winning wine writer, as well as the co-founder and past president of Drink Local Wine, the first locavore wine movement. He has taught wine, beer, spirits and beverage management at El Centro College and at Le Cordon Bleu in Dallas. He has written seven books, including “The Wine Curmudgeon’s Guide to Cheap Wine”.

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