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Home > Blogs > Uncorked > Archives > 2008 > September > 04 > Entry
‘Wine-at-home’ company sues Ohio, succeeds in blocking law that would have stopped sales parties
Back in June, when I wrote an entry entitled “Governor vetoes ‘wine-at-home’ legislation”, suffice to say I did not anticipate the storm that followed.
Well, that storm has shifted venues — it’s now playing out in a federal courtroom. Here’s a story I’m writing for tomorrow’s editions of the Dayton Daily News:
COLUMBUS — A California company that arranges “wine-at-home” promotional parties in Ohio and several other states has filed a lawsuit against the Ohio Division of Liquor Control in federal court and has succeeded in blocking, at least temporarily, a law that would have banned the parties.
The company, Napa-based 1-800-WineShop.com, claims the law violates the company’s First Amendment rights of free speech and assembly and is therefore unconstitutional. U.S. District Judge Michael Watson agreed with the company’s argument in granting its request for a temporary restraining order prohibiting the state from enforcing the law that would have greatly restricted the wine-at-home parties as of Sept. 1.
The law, Watson wrote, is “so sweeping that it violates at least the First Amendment.”
The lawsuit was filed in U.S. District Court in Columbus on Aug. 26. The restraining order was granted Aug. 29. It is scheduled to expire after 10 days, but can be extended while the case moves forward.
In 1-800-WineShop.com wine parties, a “wine consultant” comes to another person’s home and introduces invited guests to samples of five or six of the company’s wines, then gathers and forwards wine orders to the company in exchange for a sales commission. Gov. Ted Strickland used a line-item veto in late June to ensure that language restricting wine-at-home parties remained part of a large state budget bill. Strickland’s office issued a press release saying his action “is in the public interest” because the wine-at-home parties escape regulation and oversight by the state’s liquor-control department, taxation department and local law enforcement. He signaled a “willingness to work with affected companies” to make the changes in state law that would allow them to continue to operate.
But in its lawsuit, 1-800-WineShop.com noted that the law would essentially block its 250 “Independent Wine Consultants” in Ohio who earn commissions for promoting WineShop wines from doing business.
In his Aug. 29 order, Judge Watson agreed with the assertion by 1-800-WineShop.com that the new law is “far more extensive than necessary” and said that the state’s interests in regulating alcohol “either already are or could be protected by less drastic means.”
The judge also appeared to dismiss the state’s objections that the wine-at-home parties could lead to wine being shipped to underage drinkers, noting that WineShop’s existing state permit requires it to use shipping companies that verify the age of the recipient of the wine.
Here’s perhaps the key paragraph of the judge’s decision:
“The public interest generally is served by regulation of the sale of alcoholic beverages by the states. Nonetheless, in this instance, the State of Ohio has, at the urging of the regulated community, according to defendants’ counsel, enacted a statute so sweeping that it violates at least the First Amendment. The Court does not mean to suggest the State cannot regulate plaintiffs’ in-home wine-tasting events. Indeed, counsel for the defendants has alluded to the State’s ability to fashion a permit for such activities. But a complete ban on such events does not pass constitutional muster. In this case, the public interest is best served by upholding the requirements of the U.S. Constitution.”
Ohio Division of Liquor Control spokesman Matt Mullins referred questions to the Ohio Attorney General’s office, which represents the division in legal disputes. A spokeswoman for attorney general’s office said the state’s attorneys are “reviewing the decision and considering all of their options.”
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Comments
By Ron
September 5, 2008 9:18 PM | Link to this
I think “follow the money” applies here. When Gov. Strickland vetoed this, offering thin argument, word on the street was that it was payback to wholesalers for their considerable financial support and perhaps a sop to Ohio wineries. It’s great that someone is calling him on this, but disappointing that government funds are now going to be spent defending by proxy the wholesaler’s agenda.By Darrell
September 4, 2008 6:29 PM | Link to this
The previous poster got it right-it’s all about state revenue. No decisions are made about anything in this state without the revenue aspect having top priority. If the state of Ohio thought it could get away with regulating oxygen in the atmosphere as a means to collect a tax or a fee, they would pass a law in a second to do just that.By consultant
September 4, 2008 1:53 PM | Link to this
Actually, all ‘S’ permit holders (direct shipping permit) are already required to collect and submit to the state the applicable taxes (sales and excise) on wine shipped to Ohio.By Secret
September 4, 2008 1:41 PM | Link to this
It comes down to revenue. The state doesn’t get any sales tax from internet and mail order sales. The state makes a ton of money from liquor licenses and alcohol sales. They are worried they won’t get their cut if this continues.By April
September 4, 2008 1:05 PM | Link to this
I wish they got rid of all those stupid alcohol regulations with cross-border sales. I really like the wine I got at Williamsburg Winery while I was there but I can’t buy it in Ohio. The regulations don’t stop people from drinking. They can easily have someone purchase alcohol from a gas station. Why punish those that are of legal age and drink for the flavor/health benefits?By tony
September 4, 2008 12:49 PM | Link to this
First