A Victory for Tennessee Wine Lovers Unless our Legislature Drags Its Feet Again!

Late last week the Sixth Circuit Court of Appeals ruled on a lawsuit brought against the State of Tennessee which prohibits both in-state wineries and out-of-state wineries from shipping wine by mail to Tennessee residents. It was quite an interesting ruling which will force some changes here in Tennessee.

Sixth Circuit Court of Appeals Ruling

On the one hand, the court confirmed the constitutional right of the state to ban out-of-state wine shipping to Tennessee residents because they already ban shipping of wine by in-state wineries to Tennessee residents. Therefore the state is not discriminating between in-state wineries and out-of-state wineries with regard to shipping.

On the other hand, the court found that there are aspects of the Tennessee Grape and Wine Law that are obviously discriminatory and they overruled the district court. They are sending this part of the lawsuit back to the district court to rehear the case and presumably come up with a different ruling. The parts of the Tennessee Grape and Wine Law that the court cited as discriminatory, and therefore unconstitutional, are as follows:

The court noted that "each of these provisions [listed above] impermissibly favor Tennessee interests at the expense of interstate commerce.

They also pointed out:

5. Consumers may lawfully transport “any amount [of wine] which the customer may legally purchase from a Tennessee licensed winery,” while a consumer purchasing wine in person from an out-of-state winery appears to be prohibited from transporting the wine to his home in Tennessee. [ed. note-- Tennessee law (not part of the Grape and Wine Law) makes it a Class E Felony (1-2 years in jail) to transport more than a gallon of wine to one's home.]

Now comes the interesting part of the court's decision. They could have, as other courts have done, ruled that these laws are unconstitutional and therefore not allowable or unenforceable. They did not do this however. The court recognized that if they just struck down this law it would hurt the Tennessee wineries which was certainly not the intent of the lawsuit nor the intent of the state in passing these laws that favor in-state agricultural endeavors in the first place. Therefore the court decided to remand (send the case back) to the district court in Chattanoona (Judge Collier) with the suggestion that:

"The state [Tennessee Attorney General's Office] should be afforded the opportunity to justify the facially discriminatory Grape and Wine Law as serving a legitimate local purpose and establish that no non-discriminatory alternatives exist. If the state is unable to do so, the court should devise a remedy that treats in-state and out-of-state wineries equally. In addition, because striking down the Grape and Wine Law would affect in-state wineries, it may be that they will wish to seek intervention on remand."

It is interesting that the Tennessee Wine and Spirits Wholesalers who had joined the state as defendants in this lawsuit took the position that if the court found any of the laws to be discriminatory, "the appropriate remedy would be to strip the law’s benefits from in-state wineries rather than extending direct-sale benefits to out-of-state wineries." In other words they would rather see all of the tasting rooms, retail sales and wine contributions of Tennessee wineries be discontinued rather than allow Tennessee consumers to legally purchase wine from out-of-state.

The final point to be made is that the intervention the Sixth Circuit Court suggests is the tricky part. They don't explain what sort of intervention is needed. We think the only reasonable intervention is for the legislature to make new laws and/or current law changes that allow direct sales of wine from out-of-state wineries and retailers before Judge Collier and the Tennessee Wine and Spirits Wholesalers choose to totally destroy our Tennessee Farm Wineries by striking down the Tennessee Grape and Wine Law.