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Court Dismisses Empire’s Lawsuit Against NYSLA

A New York State Supreme Court dismissed a lawsuit launched by Empire Wine against the New York State Liquor Authority (“NYSLA”). In an 11-page ruling, Justice George Ceresia rejected Empire’s complaint that the statute upon which the NYSLA is relying is excessively vague, and denied Empire’s request for a preliminary injunction preventing the NYSLA from pursuing action. Judge Ceresia indicated that, “On its face, the Court is of the view that [NYSLA] possesses abundant statutory authority to commence and maintain a license revocation proceeding.”

The retailer originally filed suit against the NYSLA in September, shortly after the agency issued a letter to Empire stating the retailer violated a state regulation that allows the NYSLA to revoke, cancel, or suspend a liquor license due to “improper conduct” of the licensee. See Retailer Empire Wine Sues New York State Liquor Authority: Direct Shipping. In its letter, the NYSLA cited Empire for shipping wine directly to consumers in states that bar direct shipment of wine to consumers or require out-of-state retailers to obtain a license. In the suit filed against the NYSLA, Empire argued that New York had no jurisdiction over out-of-state wine sales, the charges brought against Empire violated the Constitution’s Commerce Clause, and that 9 NYCRR 53.1(n) was unconstitutionally vague because the regulation does not mention out-of-state shipping and does not provide licensees notice of what “improper conduct” the regulation governs. Additionally, Empire alleged that NYSLA is is “precluded from asserting jurisdiction and authority over the shipment of alcoholic beverages destined for distribution to and consumption by consumers outside the State of New York, even when the shipment originates in New York.” See Empire Wine & Spirits LLC v. New York State Liquor Authority. Effectively, Empire argued that the Constitution prescribes the federal government—and not individual states or their agencies—with the authority to regulate interstate commerce.

The court did not dismiss Empire’s case on the merits, and instead instructed the retailer to exhaust administrative remedies before commencing action in court. It is not unusual for a court to request that administrative remedies be exhausted, and a demand for such does not bar Empire from bringing suit should the retailer still be dissatisfied after its revocation hearing. A license revocation hearing before the NYSLA is scheduled for December 3rd.  According to outside sources, Empire seems determined to pursue suit agains the NYSLA and continue to ship wine directly to out-of-state consumers. See Empire Wine ‘Will Continue to Fight’ Liquor Authority

As more and more states open their borders to direct shipping of wine by wineries, the pathway for retailers remains less defined. New York is one of many states that currently prohibit retailers from directly shipping wine to consumers. The NYSLA’s chairman noted that the Authority will be pursuing similar cases against each retailer who also shipped wine directly to consumers in the 37 states that currently prohibit such (on behalf of retailers). Id. It seems that the battle may have only started for retailers.

For more information on New York State wine or alcohol law, or establishing a winery, brewery, or distillery in New York, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

Lindsey A. Zahn

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Lindsey is the founder and author of On Reserve: A Wine Law Blog. She is an alcohol beverage and food attorney and is admitted to the New York State Bar.

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