Seventh Circuit Upholds Indiana Wine Law Requiring Initial In-person Transaction

On August 7, the Seventh Circuit Court of Appeals reversed a district court’s ruling and upheld the constitutionality of an Indiana statute that requires a consumer to make an initial in-person visit to a winery before receiving direct shipments from that winery. Baude v. Heath, No. 07-3323 (7th Cir. 8/7/08). The case attracted national attention because it is the first federal appeals court ruling on the validity of “face-to-face” requirements where a state allows limited direct shipping to consumers. It is one of a number of cases around the country in which wineries and wine hobbyists are contending that state wine laws discriminate against out-of-state wineries in violation of the commerce clause.

Some states do not allow any direct shipping of wine to consumers. In 2006, the Indiana General Assembly decided to allow limited direct-to-consumer shipping, but only after an initial face-to-face transaction at the winery, in order to deter underage drinking. The Seventh Circuit’s decision reinstates this requirement.

Ice Miller LLP represented the Wine and Spirits Wholesalers of Indiana, a defendant in the case. The wholesalers, along with the Indiana Alcohol and Tobacco Commission and several alcohol control groups, argued that without the face-to-face requirement, a minor could easily place an order with a winery online or over the phone and have the wine delivered to his or her doorstep – all without legitimate age verification or accountability for the persons selling and delivering the wine. The Court of Appeals, in a unanimous panel decision written by Chief Judge Easterbrook, agreed that keeping alcohol out of minors’ hands is a powerful state interest, and that removing the initial age verification requirement would make it easier for minors to get wine by phone or Internet and would result in increased sales to minors.

The Court of Appeals also affirmed the district court’s ruling striking down a separate part of the statute that allowed direct shipping only by those wineries that do not have wholesaler privileges.

A copy of the Seventh Circuit’s opinion can be found here. For further information, please contact Phil Whistler at (317) 236-2349.
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