The court case between the Family Winemakers of California and the Jenkins centered on whether the exportation of grape wine should be through wholesalers or retailers. The other issue present was that the state of California lacked proper laws that would allow the sellers or buyers to conduct interstate trades. The directive made it hard for business owners to rip more profits from exporting their products and had to limit their benefits, as the competition was quite stiff. Hence, the Family Winemakers of California had to contest against the rule as a way of securing their future in the wine business. They spoke on behalf of the other wine and alcohol manufacturing companies in the state.
The law in question if the Enhancement Afforded State Alcohol Regulation, which placed a 30,000 gallonage cap to the wineries in Massachusetts (Blau, 2010). Massachusetts had a schizophrenic approach towards the alcohol regulation in its laws, a directive that other states had in place. However, the law tends to center on small-scale wineries instead of the whole industry players. In a way, it limits most of the small-scale producers to make better profits in the end, in favor of the large-scale producers. The law’s history dates back to the early centuries when the Commonwealth had a shortage of commercial wines in its grocery stores and package stores. It had to request conventional grape wines to deliver several packages through the traditional three-tier system.
The three-tier system of regulation was a common rule among the states as it provided a step-by-step process that wineries can use in their trade between two or more states (Blau, 2010). At the time of the case filing, Massachusetts allowed the orchard fruit and grape farm wines produced by the small, local operational farmers to be accessible to the retailers and consumers. As a bonus, it provided distribution channels to its wholesalers via the traditional three-tier system. The native farm winery had an exception to the tier system, and with time, it became popular in America until the late 20th century (Genesen, 2014). However, it made no sense when people viewed the rule in the perspective of alcohol regulation since alcohol sold outside the tier lacked the order present in the market.
The old system provided states with several levels of licensing that one could control and place oversight on. It was an efficient system that states could use in the collection of taxes through the single tier of licenses, and subject direct or in-person inspection of state regulators and auditors. The system provided verification license systems by the in-person purchaser, reducing the risk of having illegal sales of alcohol to minors (Kronenberg & Genesen, 2010). Finally, the tier system provided a proximate accountability system between the consumer community and retailer vendor, which would support the behaviors by retail vendors. At the same time, it deterred irresponsible retail vendor behaviors, which affect the production of local produce.
The main problem with the system and what made Family Winemakers to file a petition was why the native farm winery still had exceptions from the main three-tier system (Blau, 2010). The law’s decision to permit small-scale farm wineries to conduct self-distribution systems acts similarly to the common political compromise that harmonized the competing interests in agricultural promotion and alcohol regulation. Most of the states that have agricultural produce in any size, like Massachusetts, produced similar exemption. Its effect on the industry was felt in the late 20th century when smaller family farms could no longer operate profitably. Hence, the legislators saw the farm winery exceptions as a necessary tool that would encourage and support small farmers to generate income either through primary or supplementary crop. The profits would come from the sale and production of limited amounts of farm wine.
These laws were the reason Family Winemakers of California deemed it unnecessary to continue with the rule as they were suffering more than the small-scale farmers. The current playing field could support both parties regardless of the quantities one produced to the market. Apart from that, the discrimination violated the terms and conditions set by the Commerce Clauses present in the United States Constitution. Moreover, the Family Winemakers was not the first company to file such a complaint. In 2005, Granholm filed a complaint against the Herald, which brought about changes in the system (Blau, 2010). The states affected had to revise their farm winery exceptions. One of the state’s group leveled up to allow out-of-state wineries to receive similar privileges as their counterparts. Others chose to level down to block anyone who wants to sell or ship alcohol from outside states without using the three-tier system.
In 2007, the California wineries in conjunction with the other concerned wine consumers set to sue the Commonwealth as per the Massachusetts law, as it was unconstitutional and a burden towards the interstate commerce (Acord, 2010). The new law was discriminative towards the out of state wineries and burdened the interstate business owners. Another complaint raised was the numerous instances where the legislative record showed the lawmakers of Massachusetts made a clause in Section 19F that limits the wine producers in making large amounts of wine. The wine producers had to narrow down their operations to the set rules by the state lawmakers. Hence, the small-scale farmers had greater benefits from the clause.
The amendment of Section 19F would only make the playing field between large and small-scale farmers unfair in support of the small-scale farmers. The law benefited their produce as it was under or close to the set rules while the large-scale farmers had to look for alternatives to the sale of their produce. One can argue the case in a different perspective by looking at the protection Massachusetts wineries received through the exceptions. The Massachusetts farmers were small scale and adding the exemption to its laws helped them sell most of their produce within the state. Importers could not bring in their produce, as it did not favor the industry players in Massachusetts. However, the local courts would not support the decision, as it would cite the 2005 case between Granholm and Herald, which allowed states to provide exemptions as per its industry’s competitions and market adoption.
The tradition three-tier system allows producers to market their products across the states through set rules and regulations. Apart from that, its rules govern the industry and bring about order to the system such as the clause that aims to regulate all the industry players and exempt any that violates the system. The native system only seeks to benefit the small-scale producers by exempting them from the main competition. The industry should favor one party at the expense of another. It should let it play out as a way of providing its citizens a wide variety of products. Apart from that, the system tends to lower the overall quality produced by the small-scale producers. Having the whole industry to themselves, the quality of wine produced lowers as the farmers make little effort in improving its quality.
In conclusion, the case would only win in the Supreme Court if all wine producers across the country teamed up with the Family Winemakers in fighting against discrimination present in the system. The traditional three-tier system was quite efficient in running the whole industry and provide comprehensive clauses that would benefit its players.
References
Acord, A. E. (2010). Family Winemakers of California V. Jenkins: U.S. Court of Appeals, First Circuit. Retrieved from Genius.com: http://genius.com/Us-court-of-appeals-first-circuit-family-winemakers-of-california-v-jenkins-annotated
Blau, R. M. (2010). Does Size Matter? Family Winemakers of California v. Massachusetts. Retrieved from Gray-Robinson: http://www.gray-robinson.com/uploads/files/blau%20analysis%20of%20family%20winemakers%20of%20ca%20v-%20mass-%20(ist%20cir(1).pdf
Kronenberg, P., & Genesen, T. (2010, January 15). Correcting and Replacing Family Winemakers of California Hails Circuit Court Ruling That Massachusetts`s Wine Shipping Law is Discriminatory. Retrieved from Reuters.com: http://www.reuters.com/article/idUS175665+15-Jan-2010+BW20100115
Kronenberg, P., & Genesen, T. (2014, July 11). Family Winemakers of California Cheered by Passage of Direct Shipping Statute in Massachusetts. Retrieved from Reuters.com: http://www.reuters.com/article/ca-family-winemakers-idUSnBw115733a+100+BSW201407114
