The U.S. Supreme Court on May 21 agreed to consider “Swedenburg v. Kelly,” in which the Second U.S. Circuit Court of Appeals had upheld New York State’s ban on direct interstate wine shipments to consumers. The Supreme Court will consider whether a state’s regulatory powers should enable in-state wine sellers to ship alcoholic beverages direct to consumers while limiting access by out-of-state sellers.
In February, the Appeals Court overturned a November 2002 verdict by the Southern District of New York court that found the direct shipment ban on interstate alcohol shippers unconstitutional. Currently in New York, out-of-state wine must be sold through distributors. According to the Institute of Justice, which is representing Virginia-based Juanita Swedenburg in “Swedenburg v. Kelly,” distributors typically “siphon off 18%-25% markups on each bottle sold.”
Twenty-five states prohibit interstate shipments of wine direct to consumers; the other states allow it subject to regulation to prevent access to minors and in some cases to collect state taxes. According to the Institute of Justice, the Supreme Court will be ruling on whether the Commerce Clause of the U.S. Constitution, which guarantees free trade and business opportunities among the states, takes precedence over the 21st Amendment, which allows states to regulate alcohol distribution. But the Washington-based law firm’s lead attorney, Clint Bolick, said in a statement that the 21st Amendment doesn’t “empower states to squelch free trade in the interest of economic protectionism.”