New Jersey Liquor Laws|May Be Unconstitutional

PHILADELPHIA (CN) - Wine enthusiasts can sue over New Jersey alcohol regulations they say are unconstitutional under the dormant Commerce Clause, the 3rd Circuit ruled.

Robert and Judy Freeman, who described themselves as "wine collectors" and "home winemakers," claimed that New Jersey's Alcoholic Beverage Law, known as the ABC law, has kept them from obtaining certain wines they would like to drink that are only available in out-of-state stores.

A New Jersey couple who say they cannot easily access Kosher wines and a California winery that claims New Jersey laws discriminate against it also sued. The court found that the Freemans satisfied all of the plaintiffs' standing to challenge certain provisions of the ABC law.

Wineries that are licensed in New Jersey can sell their own products to consumers at retail prices, while wineries without the license must funnel their wines through a structure of middlemen. New Jersey is one of many states that employs a three-tier system under which alcohol is sold by the supplier to a wholesaler to a retailer to a consumer.

There is also a one-gallon cap on importing wine into New Jersey, a ban on importing wine from states that bar New Jersey wine from crossing their borders, and a ban on shipping wines from wineries to New Jersey consumers.

Before the plaintiffs filed suit in 2003, New Jersey wineries did not have to comply with the shipping ban, but the state has since rescinded the privilege.

Three New Jersey wholesalers, Fedway Associates, R&R Marketing and Allied Beverage Group, intervened on behalf of the state officials that the plaintiffs sued to invalidate the laws.

A three-judge appeals panel did not find the defendants' arguments for dismissal persuasive. It ruled that many of the challenged liquor laws discriminate against out-of-state wineries and interstate commerce, but upheld the ban on shipping wine from any winery to New Jersey consumers. The court also revived New Jersey's fee schedule for retail and wholesale licenses, and remanded the case for a proper remedy.

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