This post is by from Pinot Law
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The folks over at ShipCompliant have a great discussion about a very important (and encouraging) decision out of Massachusetts last week. The court (the District Court for the District of Massachusetts) came down on the side of fair distribution laws for out-of-state wineries. The Court essentially found that Massachusetts was favoring in-state wineries over out-of-state competitors, which is a no-no under the Constitution’s Commerce Clause.
One of the things that is being lost in the coverage, however, is that the case was won on summary judgment — that means the court looked at the facts in a light most favorable to the defendants (i.e. the wholesalers and the state of Massachusetts) and concluded that the challenging party (in this case consumers and out-of state distributors) had the law on their side. I am no litigator, but I do know that very few cases are won on summary judgment — it essentially means that the facts of the case demonstrated a clear violation of the law.
As noted by ShipCompliant, the case is a great read for an overview of wine shipping law. I also agre that the court does a great job of describing the three tier system:
The wine distribution system is shaped like an hourglass, in that there are a large number of producers (the top) and a large number of consumers (the bottom), but significantly fewer wholesalers (the middle). This structure has the effect of giving wholesalers greater bargaining power with both wineries and retailers in states where it is mandatory to have a wholesaler. Generally wholesalers prefer to carry a larger volume of a particular wine, rather than an equivalent volume of several wines, because it is more profitable for a wholesaler to warehouse, manage and sell a single wine. Many wineries produce both specialty wines in small quantities and higher volume wines.
There is one distinction in this analogy that I would draw: the comparison suggests that all those wine producers at the top of the hourglass will have their wine shipped to all those consumers at the bottom. But that is the problem with the wholesalers in the middle: they have neither the interest or the ability to ship that wine for smaller producers. Only some of that sand is making it to the bottom of the hourglass, and that’s an unfortunate loss for wineries and wine consumers.