The Sip Stops Here…but Not There, or There, or There: New Restrictions on Interstate Shipping of Wine

According to some retailers, UPS and FedEx are now limiting the interstate shipping of wine. This crackdown is not in response to any new legislation – the shipping companies are instead enforcing existing laws in many states. But First, a Primer on Shipping Alcohol Across State Lines The Twenty-first Amendment to the United States Constitution provides that the transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is prohibited. With the repeal of Prohibition, states were granted significant power over the distribution and sale of alcohol that is not present in laws related to shipping other products. This has led to wildly disparate treatment of the ability to ship alcohol across state lines. For instance, some states allow residents to order wine from any retailer in the US while others don’t allow any shipments at all. The Liquor Law Repeal and Enforcement Act (aka the Webb-Kenyon Act) prohibits shipments of alcoholic beverages between states in violation of any law of the receiving state. The Federal Alcohol Administration Act (FAA Act) requires a basic permit for wholesalers, importers, and manufacturers of alcoholic beverages. (Retailers are not required to obtain basic permits under the FAA Act.) Basic permits are…

Ninth Circuit revisits Actmedia: Heightened Scrutiny Applies to B&P Code Advertising Restrictions

Thirty years ago, the Ninth Circuit rejected a First Amendment challenge to a California statute which prohibits paid advertising of alcoholic beverages at retail outlets. In Actmedia Inc. v. Stroh (9th Cir. 1986) 830 F.2d 957, the court applied the four-pronged test of Central Hudson Gas & Electric Corp. v. Public Service Comm’n of New York (1980) 447 U.S. 557 to assess the constitutionality of a law that burdened commercial speech. That test asks: (1) whether the speech concerns a lawful activity and is not misleading; (2) whether the government has a substantial interest in regulating the speech; (3) whether the regulation serves to directly advance the asserted governmental interest; and (4) whether the regulation “is not more extensive than necessary.” The law at issue in Actmedia was Business & Professions Code, § 25503(h), which prohibits manufacturers and wholesalers, as well as their agents, from giving anything of value to a retailer in exchange for on-site advertising. Actmedia was a corporation which leased advertising space on shopping carts. It challenged the law as an impermissible restriction on commercial speech in violation of the First Amendment. Applying the Central Hudson factors, the Ninth Circuit concluded the law was constitutional. The advertising of alcoholic beverages concerned a lawful activity and was not misleading, but California had a…

2015 Grape Escape – Cancelled After Vendors Refuse to Participate in Event Sponsored by Retailer

We recently posted about how social media is advertising, and the care wine manufacturers need to take to ensure they do not run afoul of state tied-house laws. The impact of those laws is being felt locally here in Sacramento, where organizers of the “Grape Escape” – an annual showcasing of local food and wines – have canceled this year’s event which was to be held in early June. Articles about the cancellation indicate that only four wineries signed up to participate this year, down from 47 a year ago. The primary reason appears to be fears over potential citations from the ABC. Last year, eight participants were investigated and put on probation (but not fined) for mentioning the event’s retail sponsor, Save Mart, in their social media postings, or directing consumers to the retailer to purchase tickets. Because manufacturers may not give anything of value to a retailer without violating tied-house restrictions, and because advertising constitutes a thing of value, social media mentions of a retailer by a manufacturer (i.e. “advertising”) runs afoul of the law. Wine and food events such as the Grape Escape have a long and wonderful history. It’s a shame that retail sponsorship of such events can make vendors so nervous they choose not to participate, rather than develop specific guidelines or practices to ensure their promotion of the…

Beware the Use of “Volunteers” at your Winery

Over the past few months, as I’ve been mulling over topics for this wine law blog, several people have expressed their surprise at the news that a Bay Area winery was recently cited and fined for labor violations involving over 20 unpaid volunteers. The Department of Industrial Relations investigated when one of the workers was injured and, unsurprisingly, was not covered by workers’ compensation insurance. The fines assessed were so prohibitive – roughly $115,000 – that the winery was forced to shut its doors. It has come as a shock to many in the wine industry that the use of volunteers not only violates California labor laws, but can have such devastating consequences. The Bay Area case is a wake-up call. For those in the industry who have used volunteers in the past, you should re-think that practice. If you are a for-profit business (there are exceptions for non-profits, religious, and charitable organizations), you may not use unpaid volunteers without running afoul of California labor laws. California law defines the term “employ” very broadly to include “to suffer or permit to work.” Your volunteers may not be suffering, but they are performing work for you, and so are technically considered employees entitled to minimum wage, meal and rest breaks, and overtime pay. You as their employer are required to…