The Great Florida Grape Stomp
Beverly Causey is quite the connoisseur. In August of last year she telephoned Rochambeau Wines and Liquors in Dobbs Ferry, New York, proffered her American Express card number, and ordered a bottle of '91 Chateau Montelena zinfandel for $14.99 plus $11.50 shipping and handling. In September she followed up with another phone order to St. Helena Wine Merchants in California's Sonoma Valley. This time she spent a total of $25.75 for a mail-order delivery of '88 Culbertson Brut Reserve. The bottle of bubbly arrived on her porch the next day, via Federal Express.
During a four-month shopping spree, Causey spent $230.61, drove eight miles doing six hours of research on fine wines, and wound up with a tiny stockpile of thirteen bottles from some of America's most select boutique wineries. Yet the bottles have never been uncorked. Causey's swag resides not in her personal wine cellar but in a government property vault in Tallahassee. That's because Causey is a special agent for the state's Division of Alcoholic Beverages and Tobacco, and the fruits of her labors are now the prime physical evidence in a federal lawsuit brought by Florida liquor cops against out-of-state wine merchants.
Prohibition-era laws make it illegal for residents of Florida and most other states to pick up the phone (or log on to the Internet) and order a case of their favorite pinot noir from a producer or retailer in another part of the country. The reason for this, officials say, is that direct shipments of wine via FedEx or United Parcel Service circumvent the six-percent Florida sales tax normally paid by the purchaser, and a $2.25-per-gallon excise tax paid by in-state distributors. Last year Florida's wine excise tax, one of the highest in the nation, pumped $69.6 million into government coffers.
Defendants in the federal lawsuit -- seven New York and California wine clubs and direct-mail merchants -- say the Florida law hampers free trade. Wine consumers say it restricts freedom of choice. There are more than 2000 wine producers in the United States (900 in California alone) and many of their products are not available through licensed Florida wine distributors. In smaller cities and towns, the variety of wine sold in stores is often quite slim.
"I like to consume wine, and I like to buy it at a good price," says Miami lawyer and wine collector Hugh Culverhouse, Jr. "I like to have a lot of choice in the kind of wine I buy. The problem begins when you read Wine Spectator and you go down to Crown Liquors thinking, I sure would like to try that. Well, damn! It's not there. You go to some other stores, and they don't have it either."
Pete Downs, a spokesman for Kendall-Jackson Winery in Santa Rosa, California, explains that the number of U.S. wineries has exploded in recent years while the number of wine distributors has shrunk through business consolidation. As a result, small wineries with limited advertising resources find it nearly impossible to get noticed by big distributors. "The distributor takes the path of least resistance, which means going with popular labels that are already fairly well established," Downs says. "Without a way to market themselves in a state, the small producers turn to mail-order shipping."
Culverhouse, whose family owns tens of thousands of acres of citrus groves around Arcadia, says he's concerned about the possibility of a California backlash. On March 22, when Kentucky upgraded its laws to make mail-order wine imports a felony, Kendall-Jackson, one of the nation's top fifteen wine producers, announced it would stop doing any business in Kentucky. Fifty other West Coast vineyards have since followed suit. Culverhouse fired off a letter to Gov. Lawton Chiles warning that a boycott of Florida orange juice and grapefruit by California could be in the offing.
"I don't see that happening, but I wish it would," muses John S. Thomas, director of Gourmet Beverage Advocacy, a Temecula, California-based grassroots lobby for the oenophile crowd. "A citrus boycott would force Florida to change its silly laws, and we'd have free trade like our Constitution says we're supposed to. I call the current nonsense in Florida back-door Prohibition."
Thomas and others say wine shipments should be treated similarly to most other mail-order products: The out-of-state producer would add the appropriate taxes to the bill, then be liable for turning over the money to the government.
Critics claim that Florida's sting operation against the $750 million direct-delivery wine business is motivated less by public interest than by the influence of powerful wine distributors such as Miami-based Southern Wine and Spirits, Inc. And the defendants in the federal lawsuit are not alone in suggesting that the government and alcohol distributors are in bed together.
When Governor Chiles replied to Culverhouse's March 13 letter criticizing state wine regulation, the Florida he-coon urged the Miami lawyer to contact John Harris, director of the state Division of Alcoholic Beverages and Tobacco, for further assistance. This was an interesting suggestion: Eight days earlier, the governor's own chief inspector general, Harold Lewis, had penned a scathing report criticizing Harris for being too cozy with liquor distributors.
The report by Lewis details private meetings in Fort Lauderdale between Harris and 30 wine-and-spirits manufacturers in November 1995, describes an ongoing mutiny by Harris's 170 enforcement agents, and questions why Harris personally intervened in a recent departmental investigation of big distributors.
"The wine clubs that I represent would be absolutely delighted to pay sales and excise tax," says Robert Wright, a Miami attorney hired by New York's Zachy's Wine and Liquor, Inc., and the other defendants in the state action. "But those are bogus issues. What this is really about is a three-tiered monopoly made up of state-sanctioned producers, distributors, and retailers. You and I are paying for a lot of middle men."
Wright credits state prosecutors with brilliant legal maneuvering. By trying the case in federal court, Florida avoids the outside chance of a state judge overturning the existing wine laws. And by going after small wine clubs, he says, the state may be able to establish an inexpensive precedent it can use to intimidate larger mail-order shippers. The strategy seems to be working. Three of the seven defendants have given up and settled with the state.
But Wright has his own zippy legal stratagems lined up. This week, in a hearing in Tallahassee before U.S. District Judge William Stafford, he plans to unveil what looks like a smoking gun, albeit one of small caliber.
The original complaint filed by Attorney General Bob Butterworth states that officials are dutifully looking after the "health, safety, and welfare of the people of Florida." But scrawled on a page of one government exhibit --and out-of-state ad mailed by St. Helena Wine Merchants in California -- is a handwritten note: "Wayne: Is there any way to STOP this? Mel." An address on the exhibit shows that the flyer was sent to 1600 NW 163rd St. in North Dade, the location of Southern Wine and Spirits, Inc. Corporate records list Wayne E. Chaplin as president and chairman of the company. Mel Dick is the firm's senior vice president and president of its wine division.
Neither executive responded to requests for comment.
Ed Towey, a spokesman for the Florida Department of Business and Professional Regulation, says Wright's collusionary contentions are poppycock. While big distributors may have played a role in alerting the government to out-of-state wine shipments, they are not the driving force behind the crackdown, he contends.
"Whoever else may benefit by a lawsuit that we bring is secondary to the fact that we have a duty to enforce the beverage laws," Towey says. "Look, we recognize that we're dealing with regulation crafted in the Thirties that never contemplated the sort of technology and communications we have today. But there are ways to revolt without engaging in anarchy. These people are flagrantly violating the law. Meanwhile the state is being cheated out of money. These people could even be shipping to underage consumers, and we have no way of knowing."
Wright is trying to get the lawsuit dismissed on jurisdictional grounds. "The case is before a truly excellent judge," he says hopefully. "Does he drink wine? I don't know if he does or not. Good question.
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