Wineries File Suit Challenging New York Law Affecting Internet Alcohol Sales

(February 3, 2000) Two small wineries in Virginia and California, and three wine consumers in New York, filed suit in federal court in New York City on February 3 alleging that New York State's liquor control laws, which ban direct sales from out of state wineries, violate the Constitution.

The original Complaint in Swedenburg v. Kelly, was filed by Juanita Swedenburg, owner of Swedenburg Winery in Middleburg, Virginia, David Lucas, the owner of the Lucas Winery in Lodi, California, and three New York residents who want to buy wine directly from them. Currently, New York law prohibits these wineries from selling to New York residents by Internet or direct mail.

The Complaint alleges that New York liquor control statutes violate the interstate commerce clause of the Constitution by discriminating against out of state businesses, the privileges and immunities clause by preventing the winery owners from pursuing their livelihood, and the freedom of speech clause by preventing them from advertising their wineries in New York.

"This is a civil rights action seeking declaratory and injunctive relief to vindicate economic liberty, consumer freedom, and freedom of speech," the Complaint alleges. "The statutory regime that separates willing producers from willing purchasers is discriminatory and is intended and has the effect of protecting certain economic interests from competition from out-of-state enterprises. It therefore violates the fundamental rights of American citizens to free commerce, privileges and immunities, and freedom of speech." [Complaint, ¶ 1, at pages 1-2.]

The plaintiffs are being represented by the Institute for Justice, a Washington based civil rights group, and the New York City law firm of Friedman, Kaplan and Seiler.

"This is the oldest gambit of American politics: economic protectionism," said Clint Bolick of the Institute for Justice in a press release. "These laws are designed to preserve the monopoly of liquor wholesalers who control all out-of-state wine in New York."

The complaint does not expressly argue that the New York statute bans Internet sales. It alleges that the statute unconstitutionally bans direct sales from out of state vendors. However, one group affected by this statute is small independent wineries, such as two of the plaintiffs.

Deborah Simpson, another of plaintiffs' attorneys stated that "The impact of these laws is greatest on small wineries. About 20 wineries produce 90 percent of all American wine. Of the 1,600 wineries in the United States, only about 50 are available in a typical retail store."

"For the vast majority of small wineries, direct sales are the only way to do business," said Juanita Swedenburg, the lead plaintiff in the lawsuit. "These direct shipment prohibitions are hurting small family-run wineries, and may drive them out of business."

"The Internet opened up a fantastic new way for boutique wineries to find new customers," said Bolick. "But under New York's laws, every winery or retailer who advertises on the Internet is an outlaw."

The plaintiffs seek declaratory relief. They want the New York statute held unconstitutional and void; they want the defendants enjoined from enforcing the statute, and they want an award of attorney fees.