Products You May Like
A federal court has issued a ruling that could change how consumers in Ohio are able to buy wine. In Derek Block v. James Canepa, the U.S. Sixth Circuit Court of Appeals has reversed an earlier decision from the Ohio District Court and is remanding the case back to that lower court for further deliberation.
But what exactly is Block v. Canepa? And could this reversal represent a watershed moment in the ongoing battle over wine shipping laws across the country?
A ban on out-of-state wine sellers
Ohio is one of the few remaining states where direct-to-consumer shipping from out-of-state wineries is limited. Following a U.S. Supreme Court decision, the majority of states allow winery shipping, and only a few states outright ban winery shipments. However, there are only a few states that permit shipments from out-of-state retailers.
In July 2020, Ohioan wine consumer Kenneth Miller and Chicago-based alcohol retailer House of Glunz brought the case against Ohio. Under current law, Ohio’s Direct Ship Restriction prohibits out-of-state wine retailers from shipping directly to consumers in the Buckeye State (except for a few sellers who previously shipped under an older regulatory system). Ohio attorney general Dave Yost hasn’t hesitated to enforce this restriction.
“The ban is especially pernicious and the necessary evidence of its health and safety benefits sparse, because Ohio lawmakers have approved wine shipments to Ohio consumers from Ohio wineries, Ohio retailers and out-of-state wineries,” said David A. Parker, president of the National Association of Wine Retailers (NAWR) trade organization, in a statement. “Only out-of-state retailers are prohibited from serving consumers in Ohio via direct shipments.”
Additionally, Ohio’s Transportation Limit rules prevent residents from receiving more than 4.5 liters—equivalent to six 750 ml bottles—of shipped wine from beyond Ohio during any 30-day period. The Block v. Canepa plaintiffs argue that both restrictions violate the Constitution’s Commerce Clause, which prohibits states from discriminating against interstate commerce.
Their case made its way to the District Court for the Southern District of Ohio, where Judge Sarah D. Morrison ruled in favor of the state, maintaining that the Direct Ship Restriction is “non-protectionist” and legitimately promotes public interests. The judge cited the earlier case Lebamoff Enterprises Inc. v. Whitmer as “controlling and dispositive”—that is, unquestionable—precedent. (In Lebamoff, the Sixth Circuit upheld a similar alcohol shipping law in Michigan.) Morrison also ruled that the plaintiffs did not have the standing to challenge the Transportation Limit, because Miller hadn’t successfully shown he was at “’threat of prosecution’” under that law.
Not so fast
The plaintiffs appealed, bringing the case to the Circuit Court. That Court’s verdict? Per the opinion from Judge Eric Clay, the court agrees “Lebamoff is ‘controlling’” in this case. But Clay argues that Morrison incorrectly believed Lebamoff to be “’dispositive.’” This would mean the earlier case does not necessarily disqualify challenges to similar shipping laws in other states. And, according to Clay’s opinion, because Morrison considered Lebamoff dispositive, she did not sufficiently evaluate the evidence: “The district court failed to consider plaintiffs’ evidence in this case concerning Ohio’s Direct Ship Restriction.”
The Circuit Court reversed Morrison’s summary judgment on the Direct Ship Restriction; it also reversed the decision on Miller’s ability to challenge the Transportation Limit, determining that the plaintiff did show that prosecution under that law was a “realistic possibility.”
What next?
The case will go back to the District Court to determine if Ohio’s laws “can be justified as a public health or safety measure or on some other legitimate non-protectionist ground … and whether their ‘predominant effect’ is ‘the protection of public health or safety,’ rather than ‘protectionism.’”
Unsurprisingly, opinion on this result differs. For NAWR executive director Tom Wark—who, as an expert witness, prepared a report for the plaintiffs in Block v. Canepa—the Circuit Court’s decision sends a significant signal for future legal disputes. “Courts must evaluate all the evidence presented, rather than just taking the word of the state and wholesalers that retailer interstate shipments will destroy the three-tier system and harm minors,” Wark told Wine Spectator via email, referencing most states’ three-tier system of alcohol distribution. “That’s the message the Sixth Circuit sent with this decision.”
But in the view of the Wine & Spirits Wholesalers of America (WSWA) trade organization, Ohio’s shipping laws are in the interest of the public good. “[We support] a state’s right to regulate the sale and distribution of alcohol within its borders as guaranteed by the 21st Amendment,” said the WSWA, in a statement to Wine Spectator. “Ohio’s strong state-based regulatory system not only maintains a level playing field for all licensed retailers and producers regardless of their size, but also protects the public health and safety of its residents. The Sixth Circuit’s decision to return the case to the District Court will allow for a complete consideration of the evidence demonstrating the impact of the law.”
A long struggle
The case remains highly significant for wine shipping within and, possibly, outside of Ohio. According to Chicago-based lawyer Sean O’Leary—a frequent participant in wine commerce cases—should this matter return to the Sixth Circuit and should that court decide Ohio’s Transportation limit is unconstitutional, it could create what is known as circuit split, when courts make contradictory decisions on similar cases. And that may increase the likelihood that the U.S. Supreme Court will decide to hear Block v. Canepa. A decision against the Transportation Limit would differ with a 2006 Fourth Circuit decision on a similar law in Virginia. And a Sixth Circuit ruling against the Direct Ship Restriction would break with that court’s own decision on Lebamoff.
It’s possible that the Sixth Circuit decision has already weakened the effectiveness of Lebamoff as a reference point for other cases. “No doubt, other Circuits relied on the Sixth Circuit’s decision in Lebamoff to rule in favor of shipping restrictions,” O’Leary explained. “So [its] credibility as precedent in wine shipping cases has been severely limited. Which is important because it was heavily relied upon in the Fourth and Sixth Circuit decisions that followed.”
If that is true, and if circuit split is indeed possible, this gives Block v. Canepa the potential to change the national landscape of shipping law battles. However, court decisions are unpredictable. Challenges to direct shipping restrictions still face many hurdles.
Where can you order wine from? Check out Wine Spectator’s comprehensive guide to state shipping laws.