Precedent Makes Texas Decision Interesting
Posted by Matthew Mann on January 16th, 2008I noticed with interest the Texas decision by U.S. District Court Judge Sidney Fitzwater to extend the Supreme Court decision in Granholm v. Heald beyond the limited scope of wineries to include retailers as well. It’s not the practical effect of the ruling that is interesting, as it contains as many problems for retailers as it solves. Also, just as with Granholm’s effect on wineries, this ruling does not require the state to allow retailers to ship direct to consumers. The state could level down and eliminate direct shipments for both in-state and out-of-state retailers, just as some states did with wineries.
What makes this a truly interesting decision in the evolving world of direct wine shipment litigation is that it establishes a legal precedent that will very likely be cited in every Granholm-related direct shipping case in the United States. While groundbreaking, Granholm was very limited in scope, applying only to wineries. It left open for interpretation whether the dormant Commerce Clause argument should rightfully be extended beyond wineries, to retailers and wholesalers, under a rationale that there were no significant differences in the activity of direct consumer shipments between those entities. Judge Fitzwater’s opinion will provide substantial ammunition to those who argue that it should be equally applicable.Â
While I am fascinated with the decision because of it’s precedent setting impact, from a practical standpoint this battle is a long way from over. First, the Judge’s opinion is problematic in that it also holds that Texas could require out-of-state retailers to purchase the wine from Texas wholesalers. Additionally, this decision could open the floodgates of litigation in many states challenging limitations on retailers shipping direct to consumer. Because of it’s precedent setting nature, the potentially vast application of this ruling, and the amount of money at stake, there is little doubt the decision will be appealed to the Circuit Court. With this decision, 2008 is off and running to a very interesting start. Stay tuned!
