New Jersey’s law barring wine shipments from retailers in other states is not going away anytime soon. On Aug. 22, federal district court judge Julien Xavier Neals upheld the ban, dismissing the case Jean-Paul Weg., LLC (doing business as the Wine Cellarage) and Lars Neubohn v. James Graziano and Matthew J. Platkin. (Graziano is director of the New Jersey Division of Alcoholic Beverage Control and Platkin is New Jersey’s attorney general.)
Under current law, New Jersey is one of the many states that permit direct-to-consumer wine shipments from out-of-state wineries, with restrictions, but prohibits wine shipments from out-of-state retailers.
Jean-Paul Weg., LLC v. Graziano began in 2019 when New York City-based fine wine retailer the Wine Cellarage filed a complaint against New Jersey’s out-of-state retailer ban. (Neubohn is the owner of both the Wine Cellarage and of Vindemia, Inc., which holds a license to operate a warehouse for alcoholic beverages in New York.) As with similar cases, the plaintiffs argued that New Jersey’s retailer ban violates the U.S. Constitution’s Commerce Clause, which forbids states from discriminating against interstate commerce, by barring out-of-state retailers while allowing in-state retailers to ship to consumers.
State regulators disagreed. And alcohol distributors Fedway Associates, Allied Beverage Group and Opici Family Distributing, along with New Jersey Liquor Store Alliance (NJLSA), all filed motions to join the case on the side of the defendants, making them “intervenor-defendants”.
Judge finds ban “legitimate” and “non-protectionist”
Judge Neals agreed with the state, dismissing the plaintiffs’ Commerce Clause claim “with prejudice.” In his summary judgment, he found that the 21st Amendment, which allows states to regulate the sale of alcohol, requires different analysis when determining if a law violates the Commerce Clause. What does that mean here? “The State of New Jersey, ‘has broad power to regulate liquor under section two of the 21st Amendment,’ which includes creating and enforcing a three-tier system [to regulate alcohol commerce],” Neals states in the opinion. “The New Jersey system, and the challenged provisions therein, are valid exercises of the state’s power under the 21st Amendment and are justified by the legitimate, non-protectionist ground of promoting public health and safety.” In short, Neals determined that the ban is constitutional because it is a necessary tool for New Jersey to successfully regulate alcohol within its borders.
Neals then references past cases to offer comparison and establish the legitimacy and necessity of New Jersey’s three-tier system, including the watershed case Granholm v. Heald. In Granholm, the U.S. Supreme Court ruled against Michigan and New York’s bans on sales by out-of-state wineries; in a 5-4 decision, the court contended that neither state could concretely justify their bans and, as a result, were unnecessarily inconveniencing out-of-state merchants.
What makes things different here? Neals argues that without the ban, there would be no “‘reasonable nondiscriminatory alternatives'” that New Jersey could use to successfully carry out its necessary alcohol regulations. The judge also argues that New Jersey’s laws are not protectionist, as the state requires the same licenses for in-state retailers and, hypothetically, for out-of-state retailers that have a physical presence in the Garden State (a requirement to do business there; New Jersey does not require retailers to be state residents, however).
So, what now? The plaintiffs in Jean-Paul Weg, LLC v. Graziano have not announced yet if they will appeal this decision to a higher court. In the meantime, there are still several other cases to keep an eye on across the country.
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