21st Amendment Litigation 2013: Commerce Clause, Antitrust, and More Deborah A. Skakel, Esq. Dickstein Shapiro LLP Steve Gross Wine Institute Walter A. Marston, Jr., Esq. Marston & McNally, P.C. NABCA 20th Annual Legal Symposium on Alcohol Beverage Law & Regulation March 12, 2013

A very brief refresher on Granholm….  “Pure” Granholm Producer to consumer direct shipping Facially discriminatory statutes  Facially Neutral Statutes Gallonage caps On premise/In person requirement  Retail to Consumer (“Retail Direct”) Applicability of Granholm Second vs. Fifth Circuits 2

Residency Requirement Challenge  Prior Cases in Texas and Kansas  Missouri: SWS Litigation Plus Applicability of Granholm Amici include Missouri Beverage and State AGs “Related” litigation: Pernod v. Major Brands & Glazer’s Recent legislation: S365 (community of interest concept)  Indiana: SWS Litigation Plus SWS litigation leads to AG Opinion and ATC change of position Recent legislation: H1259 (increase duration from 5 to 6 years)  Tennessee AG Opinion No (6/16/2012) 3

Sales in Grocery & Convenience Stores  Maxwell’s Pic-Pac Kentucky Litigation Equal Protection, not Granholm/Commerce Clause  Legislative Initiatives Kentucky H310 (separate package store license; separate entrance for premises required; grandfathering) Tennessee S837/H610 (allows towns to hold referendums) Oklahoma (2012’s Initiative Petition No. 396 withdrawn; petition to be refiled in Fall 2013 for Fall 2014 General Election) Kansas, Colorado, New York, Maryland, and New Jersey Legislation 4

Developments in Third-Party Provider Area  California’s 2011 Industry Advisory: Status  Virginia Fulfillment Warehouse Regs  Legislative Initiatives North Dakota – S 2147 (allows use of fulfillment houses in wine direct shipping law) Maryland – H 1420 & S 990 (“prohibiting an order to be transmitted to the permit holder by a retailer, a wholesaler, or any other third party, including a marketplace site on the Internet in which sellers offer products to customers”) Nebraska – L 230 (limit sales to manufacturers (“person”) attempting to block some portal programs)  New York SLA 1/17/2013 Hearing  Amazon: Business model now used in 15 States and DC 5

Post and Hold/Quantity Discount  Summary of Cases Battipaglia (2d Cir. 1984) Costco (9th Cir. 2008) TFWS (4th Cir. 2009) District Court decisions in Massachusetts (1998) and Pennsylvania (1999)  Legislative Initiatives Connecticut – S749 (elimination of 10% minimum markup)  Interplay Between Quantity Discounts & Cooperative Buying Washington New York  Enforcement NY SLA December 2012 historic wholesaler license suspension 6

Unorthodox Use of Preemption Argument  Miller Coors v. Chesbay Dist. litigation: Short-lived, but results in legislation in Virginia  Recent SCOTUS preemption cases (non-21st Amendment): Court appears reluctant to expand Commerce Clause 7

On The Horizon  Developments re: craft brewers and artisan distillers New York’s first “Wine, Beer and Spirits Summit”: “Regulatory reforms” VA Winery Distribution Co.  Use of gallonage cap concept outside direct shipping (tax structure (NM), franchise law applicability (MI), and grocery store sale privilege (AR))  Further consolidation A-B In Bev merger, DOJ action, and proposed resolution  Direct shipment data: Lessons learned MD Comptroller December 2012 “Study on the Impact of Direct Wine Shipment” VA direct shipment data 8

9 VIRGINIA DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL DATA ON WINE IMPORTERS AND WINE SHIPPERS