Virginia vintner takes on NY courts

Wines & Vines, Jan, 2003 by Elisabeth Frater

Virginia vintner Juanita Swedenburg was familiar with conflict long before she became the lead plaintiff in Swedenburg v. Kelly, the latest crusade against state laws that ban direct shipping of out-of-state wine. Decades before she filed the lawsuit or testified at a deposition, Juanita and her husband Wayne were members of the United States Foreign Service. Diplomatic tours of duty took them to perilous corners of the world, including the then-French colonies in Southeast Asia and Africa. Given that plucky past, it isn't surprising that Swedenburg took on the New York State Liquor Authority--and won.

On Nov. 12, in a victory for wine consumers, Judge Richard M. Berman of the Southern District of New York ruled that the state's direct shipping law is unconstitutional.

What prompted Juanita's legal battle? A simple desire to ship Swedenburg Estate Vineyard's Burgundian-style Chardonnay and plush Pinot noir to a far-flung, but loyal fan base. "We have many visitors from up north and New York State," she says from the winery overlooking their bucolic farm and vineyard in Virginia's hunt country.

Customers wanted Swedenburg wines shipped to them once they were home, Juanita explains. With a hint of passion in her voice, she tells of her awakening to the fact that interstate shipping of wine to New York was illegal. "I began to get cross about it and then began to fuss."

The law at stake prohibited out-of-state wineries from selling directly to New York residents, and instead required them to use state-authorized wholesalers. For small vintners like the Swedenburgs, that was not viable. Higher costs meant higher prices for their customers, and left the Swedenburgs unable to compete with the home state wineries.

The deeper Juanita dug into the issue, the more absurd the laws seemed. "We are a nation of law breakers," she maintains. "We are all carrying wine across state lines." Yet, nobody wanted to do anything about changing the law. "No one in Virginia wanted to pursue it," she says.

By way of illustration, Juanita tells about a seminar on interstate shipping and her confrontation of an Alcohol and Beverage Control representative. "We have all the wines in our stores that our consumers need," the ABC spokesman told her. "In other words," Wayne Swedenburg says, "he was saying the bureaucracy knows more than the common man."

So how did Juanita jump from the tank room into the courtroom? It was through local customer Clint Bolick, a well-regarded attorney for the Institute for Justice in Washington, D.C. Fortuitously, he specializes in cases dealing with individual liberty, free market solutions and limited regulation.

"Clint came here for years and bought wine. When I discovered what he does, I said, 'I have an issue for you. Then I began to pester him." She adds, "I had to fuss at him for five years."

Bolick became convinced that Juanita had a viable challenge to the law for two reasons. First, Bolick and his small legal team determined that the laws in New York, the nation's second-largest wine market, were "blatantly designed to preserve the monopoly by which wholesalers control the distribution and sale of all out-of-state wine." Second, Juanita Swedenburg was an ideal plaintiff because she had clean hands: she had never shipped wine to New York customers in violation of the law.

Swedenburg v. Kelly, filed on Feb. 3, 2000, challenged New York state's ban on direct shipment of wine and advertising by out-of-state wineries to New York consumers. The case was based on several principles found in the U.S. Constitution: the right to engage in interstate commerce, the right to earn an honest living in other states on the same terms and conditions as the residents of those states and freedom of speech.

Juanita tells of the courtroom dramas she witnessed over the two-and-a-half years before Judge Berman's favorable ruling. At one point there were eight teams of lawyers, including those representing the wholesalers, pitted against the Institute for Justice. Big legal names like failed Supreme Court nominee Robert Bork and C. Boyden Gray, the former White House counsel under president George Bush, argued in defense of the state law.

In one of the more interesting moments, a lawyer for the wholesalers argued that rat poison would end up in wine bottles and that middle school students would buy liquor over the Internet if Juanita prevailed.

In the end, the fussing paid off. "These gigantic wholesalers who are used to having their way never met anyone like Juanita Sweden-burg," Bolick says. "She is feisty and courageous, and that is a winning combination."

Ironically, the lawsuit was never intended to increase the demand for their wines or expand their customer base. "We are small enough that we can concentrate on a small quantity," Juanita says. "But we run out of things all the time."

Judge Berman's ruling in Juanita's case has followed the lead of courts in Texas, Illinois, Virginia and North Carolina that have blocked similar statutes. But other courts have upheld state bans on direct wine shipments.