Texas Judge Calls Bans on Wine Retailer Shipping Unconstitutional

Consumers and Free Trade Win Out Against Protectionism in Sweeping
Repudiation of Anti-Consumer Laws
SACRAMENTO, Calif.--(Business Wire)--In a sweeping repudiation of anti-consumer and protectionist
restrictions on the shipment of wine, Judge Sidney Fitzwater of the
U.S. District Court of Northern Texas ruled yesterday that the state
of Texas may not prohibit consumers from having wine shipped to them
from out-of-state wine merchants if the state allows the shipment of
wine from in-state Texas wine merchants.

This critically important decision provides wine retailers with
the same protection against economic discrimination that wineries
obtained in the 2005 Supreme Court Case Granholm v. Heald. That
seminal case held that no state may discriminate against out-of-state
wine shippers for the purpose of protecting in-state competitors.
Yesterday's ruling completely rejected the claims by the State of
Texas, Texas wine wholesalers, as well as lawmakers and wholesalers in
other states that Granholm v. Heald did not apply to retailers.

"We know wine lovers and lovers of free trade will rejoice upon
reading this decision," said Tom Wark, executive director of the
Specialty Wine Retailers Association--the consumer and retailer
advocates who helped file the lawsuit. "This decision puts to rest the
plainly protectionist notion that retailers may be blatantly
discriminated against only for the sake of protecting wholesalers."

Kirkland & Ellis, LLP, recently named the top litigation firm in
America by American Lawyer magazine, served as retailers' counsel in
the Texas litigation, styled Siesta Village Market v. Perry. Kirkland
& Ellis Partner Tracy Genesen and Ken Starr, Of Counsel to the Firm,
oversaw the litigation that led to the far-reaching decision. Genesen
and Starr were also instrumental in the successful Granholm case.

The Siesta Village decision is set to have an important impact on
two important and nearly identical cases in New York and Michigan, as
well as in states considering wine shipping legislation this year,
Those states include Maine, Tennessee and Virginia.

"SWRA has plans to present this important decision to lawmakers
and alcohol regulators in a number of states where consumers have been
banned from having wine shipped to them from out-of-state retailers,"
said Wark. "Illinois is one state, for example, that recently banned
its residents from having wine shipped to them from out-of-state
retailers after wholesalers lobbied very hard to impose the
restriction--even though lawmakers were told that such a law would be
unconstitutional, which this decision confirms."

In an unexpected part of the opinion, Chief Judge Fitzwater gave
impetus to what could be a radical reformulation of the three-tier
system when he gave the state of Texas the authority to force out of
state retailers to purchase their wine from Texas wholesalers. This
surprising part of the decision suggests the creation of a national
wholesale market whereby wine retailers are allowed to purchase wines
from wholesalers in a variety of states and not just their own, as is
the current law in most states. This of course is not the only option
for states that will have to re-evaluate their retailer shipping laws
and is not the solution that SWRA believes is constitutional. States
concerned with consumer choice and access to wines should create a
permit system that allows out-of-state retailers to ship into the
state and have the shippers contribute to the local tax base through
remittance of state taxes--just like wineries are allowed to do in 36
states.

"This is an important ruling for those who favor free trade,
consumers rights, and those who want to see the American wine trade
flourish," Wark said. "Wine lovers should be very pleased that the
Court specifically prohibited a ban on consumers importing wine from
out-of-state retailers."

Specialty Wine Retailers Association
Tom Wark, Executive Director, 707-935-4424
twark@specialtywineretailers.org

Copyright Business Wire 2008