Libertarian group challenges N.Y. rules on Internet wine advertising

Tuesday, February 8, 2000

Thomas Jefferson loved to cultivate grapes and make wine. But even he might not have viewed winemaking as an activity protected by the First Amendment. The Institute for Justice thinks it is, however, and has filed a First Amendment lawsuit on behalf of several wineries and wine enthusiasts.

The suit, filed in federal court in New York last week, also has an Internet twist that Jefferson could not have imagined. At issue is a law in New York — similar to laws in 30 other states — that bars shipment and advertisement of wine from out-of-state wineries to state residents. Owners of wineries in Virginia and California claim the law unconstitutionally bars them from marketing their products to New Yorkers. Wine consumers in New York also joined the suit.

The laws in New York and the other states have their roots in protectionist policies that favor wholesalers and retailers who are threatened by the prospect of direct shipments to consumers. But the Institute for Justice, a libertarian group that has litigated other “economic liberty” issues in the past, says the laws make no sense in the Internet age, when it would be simple and easy for consumers to buy wines online.

A New Yorker can buy a New York wine online under the law, but if the vineyard is in California, filling the order would be a criminal offense.

“It goes right to the heart of Internet commerce,” said William Mellor, president of the Institute. “Every winery that advertises on the Internet is an outlaw in the eyes of New York.”

In its recent decisions on commercial speech, Mellor points out, the U.S. Supreme Court has disapproved when states restrict the flow of accurate information about products — even in the highly regulated alcoholic beverage industry. States argue that the Constitution’s 21st Amendment, which repealed Prohibition, gave states broad authority to regulate the industry.

But in the 1996 decision 44 Liquormart v. Rhode Island, the Supreme Court disagreed. In striking down a state ban on liquor price advertising, the court said, “The Twenty-first Amendment cannot save Rhode Island’s price advertising ban because that Amendment does not qualify the First Amendment’s prohibition against laws abridging the freedom of speech.”

The same principle could be applied to the ban on advertising and sale of wine on the Internet, Mellor argues. “This is an absolute ban on speech,” Mellor said.

In pursuing the litigation, Mellor says the institute will emphasize that if New York’s law stands, the free flow of speech on the Internet could be threatened by whichever state enacts the most restrictive law.

Tony Mauro covers the Supreme Court for American Lawyer Media and is a legal correspondent for the First Amendment Center.