7th Circuit Uncorks Debate Over Wine Shipments

The national squabbling among states over when and how to allow direct shipment of wine between wineries and consumers is enough to drive a lawyer to drink.

The latest to step into the direct winery-to-consumer shipping debate is the 7th U.S. Circuit Court of Appeals. The court on Aug. 7 reinstated a requirement that Indiana consumers verify they are old enough to buy wine by filling out age verification forms in person at the winery (pdf) . It is known as the face-to-face clause in Indiana's direct-shipping privileges law.

Indiana residents are again required to fill out an age-verification form in person at a winery if they want to receive wine directly by mail. That portion of the law was struck down by the trial court over a year ago.

Meanwhile, Georgia opened the state to direct wine shipments in May. A federal judge in Texas approved out-of-state wine shipments to consumers in January. But Tennessee has been fighting over the terms of its law. And Oregon allowed direct-to-consumer shipments in September 2007.

The 7th Circuit's Chief Judge Frank Easterbrook  rejected the notion that traveling to California's Napa Valley wine region to file in-person age verification while touring wineries was all that burdensome, or gave an unfair advantage to Indiana's in-state vintners.

The U.S. Supreme Court's 2005 decision Granholm v. Heald, 544 U.S. 460 (2005), allowed wineries to ship direct and, ever since, states have been revising their laws.

Indiana revised its law in 2006 to require state residents to go to individual wineries, wherever they are in the country, to fill out an age-verification form. Prior to that, wineries had to ship to wholesale merchants and could not ship direct to consumers.

The legal burden in a facial challenge to the age verification requirement falls to the plaintiffs to show that wineries and consumers are disadvantaged by the requirement, Baude v. Heath, 07-3338.

The plaintiffs argued that while the Indiana law treated all vintners the same, as a practical matter, Indiana wineries had a competitive advantage because of the travel distance to fill out forms in California, Oregon and Washington wineries.

Easterbrook noted that while it was not much burden to sign age-verification forms in Michigan, Illinois, Kentucky or Ohio wineries, the plaintiffs have "their hearts set" on the boutique wines of California, Oregon and Washington.

He rejected the claim that Indiana consumers faced more of a burden traveling to California's Napa Valley to fill out the forms than to the various wineries scattered around Indiana.

"Indiana thinks that in-person verification with photo ID helps to reduce cheating on legal rules, for both buying wine and voting (and perhaps other subjects,)" wrote Easterbrook, citing the Supreme Court ruling that allowed voter ID checks earlier this year. If voter photo ID requirements can withstand a first amendment challenge, "it would be awfully hard to take judicial notice that in-person verification with photo ID has no effect on wine fraud and therefore flunks the interstate commerce clause," he said.

He said it is hard to know just how effective the ID checks are in thwarting teen drinking. Minors who "can get beer locally may not want to pay for costly, upmarket wine plus shipping charges," he speculated.

The court upheld the in-person age-verification terms of the 2006 law.