Calif. Curbs on Out-of-State Winery Challenged

A suit challenging California's alcohol beverage control rules that permit California wineries – but not out-of-state wineries – to sell direct to California retailers was cleared for trial by a Federal judge.

Blue Sky Vineyards, an Illinois winery, and The Wine Country, a California retailer, brought the lawsuit alleging the policy violates both the dormant Commerce Clause and the Privileges and Immunities Clause of the U.S. Constitution.

The California Department of Alcohol Beverage Control and California attorney general had moved to dismiss the case, arguing that the three-tier system is constitutionally valid. But the court rejected that argument because most of the cases cted had been summary judgments, not motions to dismiss.

The court said it can't decide whether to dismiss the suit without evidence the state law is nondiscriminatory and haas no "legitimate nonprotectionist" justification. "Such factual questions cannot be decided on the pleadings at this early stage of the case and dismissal under Rule 12(b)(6) is improper here," the court said, adding:

"The issue on a motion to dismiss for failure to state a claim is not whether the claimant will ultimately prevail" as is the case for summary judgment "but whether the claimant is entitled to offer evidence to support the claims asserted." The California DABC attorneys failed "to prove beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," and so the case can move forward, the judge ruled.