Original Complaint in Swedenburg v. Kelly.
Re: challenge to New York statute affecting Internet alcohol sales.
Court: U.S. District Court, Southern District of N.Y., Case No. _____.
Date filed: February 3, 2000.
Source: Institute for Justice. This page was created by Tech Law Journal by converting a PDF version of the complaint into HTML.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

1. This is a civil rights action seeking declaratory and injunctive relief to vindicate economic liberty, consumer freedom, and freedom of speech. Two of the five plaintiffs are small wineries operating outside the State of New York that are prohibited under state law from selling or shipping wines directly to New York residents, or from advertising their products within the State of New York. The other three plaintiffs are New York consumers who would like to purchase wines from the plaintiff producers but are prevented from doing so by New York law. The statutory regime that separates willing producers from willing purchasers is discriminatory and is intended and has the effect of protecting certain economic interests from [begin page 2] competition from out-of-state enterprises. It therefore violates the fundamental rights of American citizens to free commerce, privileges and immunities, and freedom of speech.

2. This case is brought pursuant to 42 U.S.C. §§ 1983 and 1988, and 28 U.S.C. § 2201. Subject matter jurisdiction is based on 28 U.S.C. §§ 1331 and 1343(a)(3) and (4).

3. Venue is appropriate pursuant to 28 U.S.C. § 1391(b).

4. Plaintiff Juanita Swedenburg is a citizen of the United States, a resident of the Commonwealth of Virginia, and proprietor of Swedenburg Winery, a Virginia partnership. Swedenburg Winery has been in business since 1987.

5. Plaintiff David Lucas is a citizen of the United States, a resident of the State of California, and proprietor of The Lucas Winery, a California sole proprietorship. The Lucas Winery has been in business since 1978.

6. Plaintiff Patrick Fitzgerald is a citizen of the United States and resides in Elmira, New York.

7. Plaintiff Cortes DeRussy is a citizen of the United States and a resident of Bronxville, New York.

8. Plaintiff Robin Brooks is a citizen of the United States and a resident of New York, New York.

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9. Defendants Edward F. Kelly, Lawrence Gedda, and Joseph Zarriello are commissioners of the State Liquor Authority, Division of Alcoholic Beverage Control, State of New York. They are sued in their official capacities. The State Liquor Authority is the agency of the State of New York responsible for issuing all licenses and permits for the manufacture, distribution, and sale of alcoholic beverages and for ensuring compliance with the Alcoholic Beverage Control Law. (See N.Y. Alco. Bev. Cont. Law § 10.)

10. At all times alleged herein, defendants and their agents have acted under color of state law.

11. N.Y. Alco. Bev. Cont. Law § 102(1)(c) provides, inter alia, that "No alcoholic beverages shall be shipped into the state unless the same shall be consigned to a person duly licensed hereunder to traffic in alcoholic beverages. This prohibition shall apply to all shipments of alcoholic beverages into New York state and includes importation or distribution for commercial purposes, for personal use, or otherwise, and irrespective of whether such alcoholic beverages were purchased within or without the state. . . ." The provision makes an exception for certain alcoholic purchases for personal use made outside the United States and shipped by the purchaser to him or herself.

12. N.Y. Alco. Bev. Cont. Law § 102(1)(d) provides, inter alia, that "No common carrier or other person shall bring or carry into the state any alcoholic beverages, unless the same shall be consigned to a person duly licensed hereunder to traffic in alcoholic beverages. . . ." 13. N.Y. Alco. Bev. Cont. Law § 102(1)(a) states that "No person shall send or cause to be sent into the state any letter, postcard, circular, newspaper, pamphlet, order kit, order [begin page 4] form, invitation to order, price list, or publication of any kind containing an advertisement or a solicitation of any order for any alcoholic beverages, irrespective of whether the purchase is made or to be made within or without the state, or whether intended for commercial or personal use or otherwise, unless such person shall be duly licensed hereunder to traffic in alcoholic beverages.

14. N.Y. Alco. Bev. Cont. Law § 102(3-b) forbids retail licensees from purchasing or receiving alcoholic beverages except from duly licensed persons.

15. N.Y. Alco. Bev. Cont. Law § 130(1) provides that the illegal sale of alcohol is a misdemeanor punishable by prescribed fine or imprisonment.

16. N.Y. Alco. Bev. Cont. Law § 130(3) provides that other violations of the Alcoholic Beverage Control Law constitute a misdemeanor.

17. Licensed wineries in New York State are not subject to the restrictions of N.Y. Alco. Bev. Cont. Law §§ 102(a)-(c) (collectively, the "Direct Shipment and Advertising Ban").

18. Plaintiff wineries, although licensed to produce and sell wine in their own states, are not eligible for licensure in the State of New York. They are therefore subject to the Direct Shipment and Advertising Ban.

19. The Direct Shipment and Advertising Ban, combined with N.Y. Alco. Bev. Cont. Law § 102(3-b), create a monopoly by which licensed wholesalers have the exclusive authority under state law to import or distribute wines from out-of-state wineries for purchase by New York residents.

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20. Plaintiff wineries each produce a small amount of wine each year. Few wineries of such small size are represented by wine wholesalers by reason of economies of scale. Like most small wineries, plaintiff wineries sell the vast majority of their wine to customers who visit their wineries from around the country, and by direct shipment to their customers in their own states and around the country. Absent direct sale and shipment of wines to consumers, the plaintiff wineries would cease to operate as viable business enterprises.

21. The plaintiff wineries are not represented by wholesalers in New York. The operation of the Direct Shipment and Advertising Ban therefore has the effect of preventing plaintiff wineries of the opportunity to sell wines in the State of New York.

22. The State of New York has enforced the Direct Shipment and Advertising Ban through sting operations, fines, and other means.

23. The winery plaintiffs all have New York customers who would like to order their products. The winery plaintiffs would sell and ship products to New York customers but do not do so because of the Direct Shipment and Advertising Ban.

24. Licensed New York wineries may sell their wines directly to New York customers; they may offer tastings to the public; they may ship wine directly to New York customers; and they may ship wine to customers from other licensed New York wineries.

25. The winery plaintiffs would like to send brochures, wine lists, order forms, or other advertisements to New York customers but do not do so because of the Direct Shipment and Advertising Ban.

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26. Plaintiff David Lucas maintains a nationwide mailing list of customers, including New York customers. He also maintains an internet Website where he posts information about his winery and his wines. Through this mailing list, the Internet, and other means, plaintiff Lucas has advertised and otherwise provided information about his wines to residents of New York. He cannot lawfully send advertisements to New York customers because of the Direct Shipment and Advertising Ban.

27. Plaintiff Juanita Swedenburg includes a brochure, wine list, order form or other advertisement for her wines in packages of wine that she ships to customers. She has past and possible future customers in New York and would like to send those customers her brochure, wine lists, order form, or other advertisement, but she cannot because of the Direct Shipment and Advertising Ban.

28. Licensed New York wineries may send brochures, wine lists, order forms, and other advertisements directly to New York customers.

29. The consumer plaintiffs are wine enthusiasts who desire to purchase wine directly from out-of-state wineries and/or through Internet retailers. One or more of them have purchased wine via the Internet or direct mail.

30. Because the Direct Shipment and Advertising Ban prohibits common carriers from delivering wine shipments directly to consumers from non-licensed producers or retailers, New York residents including the consumer plaintiffs cannot visit out-of-state wineries, including plaintiff wineries, and ship the wines back to themselves.

31. In January 2000, the consumer plaintiffs each ordered wines from the one or more of the plaintiff wineries, supplying a copy of their drivers’ licenses to demonstrate that they [begin page 7] are legal adults, providing credit card information, and requesting direct delivery of the wines. Although the plaintiff wineries were prepared to sell the wine to the consumer plaintiffs, in each instance the orders were denied on the sole ground that the sale and shipment would violate the Direct Shipment and Advertising Ban. The orders and responses are attached as Exhibit A to this Complaint.

32. The allegations contained in paragraphs 1-31 are incorporated by reference as if fully set forth herein.

33. The interstate commerce clause, U.S. Const. art. 1, sec. 8, cl. 3, creates open national markets and prohibits discriminatory trade legislation among the states.

34. The Direct Shipment and Advertising Ban discriminates on its face against out-of-state wineries, and in favor of New York wineries, by prohibiting direct sales and shipments of wines to New York consumers from out-of-state wineries and by permitting such direct sales and shipments to New York consumers by licensed in-state wineries.

35. Defendants have no adequate justification for maintaining such discrimination.

36. A principal purpose of the Direct Shipment and Advertising Ban is economic protectionism, primarily or exclusively for the benefit of wholesalers. That purpose is not a valid justification for discriminatory trade barriers under the interstate commerce clause.

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37. The discriminatory Direct Shipment and Advertising Ban prevents the plaintiff wineries from selling and shipping wines directly to New York consumers, including the consumer plaintiffs; and prevents the consumer plaintiffs from obtaining desired wines from out-of-state producers, including plaintiff wineries.

38. Accordingly, the Direct Shipment and Advertising Ban violates the rights of all the plaintiffs to freedom of commerce as guaranteed by the interstate commerce clause.

39. The allegations contained in paragraphs 1-38 are incorporated by reference as if fully set forth herein.

40. The privileges and immunities clause embodied in U.S. Const. art. 4, sec. 2, cl. 1 states, "The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several states."

41. The freedom to pursue a livelihood is a fundamental right protected by the privileges and immunities guarantee.

42. The Direct Shipment and Advertising Ban prevents plaintiffs Swedenburg and Lucas from directly selling and shipping wines to New York consumers. Absent the prohibition, the winery plaintiffs would sell and ship wines to New York consumers.

43. Because nearly all the winery plaintiffs’ sales are directly to consumers, the Direct Shipment and Advertising Ban significantly impairs plaintiffs’ ability to pursue their chosen and legitimate livelihood.

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44. The opportunities available to plaintiffs Swedenburg and Lucas to sell and ship wine directly to New York consumers are severely disadvantageous relative to the opportunities available to similarly situated New York wineries, by virtue of the Direct Shipment and Advertising Ban.

45. No adequate justification exists to deny plaintiffs Swedenburg and Lucas the opportunities to directly ship and sell wine to New York consumers that are available to New York wineries.

46. Accordingly, the Direct Shipment and Advertising Ban violates the economic liberty of plaintiffs Swedenburg and Lucas under the privileges and immunities guarantee.

47. The allegations contained in paragraphs 1-46 are incorporated by reference as if fully set forth herein.

48. The First Amendment to the United States Constitution, applied to the states through the 14th Amendment, prohibits the states from making any law abridging freedom of speech.

49. The Direct Shipment and Advertising Ban, on its face, prohibits in the most sweeping terms truthful information and advertising about wine, including but not limited to commercial speech.

50. The Direct Shipment and Advertising Ban subjects to misdemeanor liability any person who advertises out-of-state wines in any manner whatsoever, including over the Internet. By its terms, the Direct Shipment and Advertising Ban even forbids speech inviting [begin page 10] New York residents to visit out-of-state wineries where they may lawfully taste and purchase the products.

51. Plaintiff Lucas has advertised and otherwise provided information about their wines to residents of New York through mailings, the Internet, and other means. Plaintiffs Lucas and Swedenburg desire to and would advertise and otherwise provide information about their wines to residents of New York through mailings, the Internet, and other means.

52. Consumer plaintiffs Fitzgerald, DeRussy, and Brooks have secured information, and desire to secure further information, including ordering information, about wines from out-of-state wineries and over the Internet.

53. The Direct Shipment and Advertising Ban exerts a chilling effect on protected speech, and on its face forbids certain protected speech. No adequate justification exists for this censorship of speech.

54. Accordingly, the Direct Shipment and Advertising Ban violates the right of the winery plaintiffs to produce, and of the consumer plaintiffs to receive, protected speech in violation of the First Amendment.

For the foregoing constitutional violations, the plaintiffs respectfully request that this honorable Court:

A. Declare that N.Y. Alco. and Bev. Cont. Law §§ 102(1)(a), (c), and (d) are unconstitutional, void, and of no effect;

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B. Preliminarily and permanently enjoin defendants from enforcing N.Y. Alco. and Bev. Cont. Law §§ 102(1)(a), (c), and (d);

C. Award reasonable attorney fees pursuant to 42 U.S.C. § 1988; and

D. Order such further relief as to the Court seems just and proper.