Direct shipping victory in Texas

Wines & Vines, August, 2003

A federal court in Texas has handed a smashing legal victory to the wine industry and consumers in the campaign to remove restrictions on interstate wine shipments. The Coalition for Free Trade (CFT) announced that the 5th Circuit Court of Appeals ruled that the Texas ban on interstate shipments is unconstitutional.

"This is the biggest legal win to date," said Tracy Genesen, legal director for the CFT and senior counsel at Miller, Owen & Trost, of Sacramento. The decision conflicts with the 7th Circuit Court of Appeals ruling, and creates a legal environment of unsettled case law. Such conflicts are considered criteria for the U.S. Supreme Court to grant review.

The ruling read, in part: "As the record makes clear, small out-of-state wineries, which constitute a substantial majority of the total number of wineries throughout the country, are hurt by these discriminatory restrictions, as Texas wholesalers (despite having permits to import their wine) do not import their products because the quantity of product and the consumer demand in each wholesaler's local market are too small to justify the wholesaler's marginal cost in importing and selling the product. The Texas legislature thus achieves exactly what it sought: Texas wines are more available for purchase by Texas consumers because these consumers are essentially denied access to the products of out-of-state wineries, and vice-versa. This is exactly the type of geographic discrimination that is prohibited by the Commerce Clause and, as applied, is a patent violation of Plaintiffs' constitutional rights."

It remains to be seen how and when consumers will be able to receive shipments from out-of-state wineries. The CFT recommends that wineries wait for further information from the Texas Alcohol Beverage Commission prior to making such shipments.