Out-of-state winery owners and in-state consumers are challenging a New York State ban that prohibits non-New York wine makers from advertising their products in New York without distributors’ licenses (Secs. 102(1)(a), (c), and (d) of the N.Y. Alcoholic Beverage Control statute). Currently, New York prohibits out-of-state wineries from obtaining licenses to distribute alcohol in that state. Without distributors’ licenses, out-of-state wineries are subject to a "Direct Shipment and Advertising Ban" that prohibits them from shipping directly to New York wine consumers and from advertising their products in New York. Small out-of-state wineries that cannot afford to be represented by New York wine distributors are the most disadvantaged by New York’s law. For small wineries, direct sales and direct advertising are the only way they do business.

    The Institute for Justice (a libertarian public interest law firm) challenged New York’s ban by filing a suit, captioned Swedenburg v. Kelly, on Feb. 3, 2000 in the U.S. District Court for the Southern District of New York. The Swedenburg plaintiffs allege, among their other claims, that New York’s Direct Shipment and Advertising Ban violates the First Amendment by limiting the right of winery plaintiffs to produce, and consumer plaintiffs to receive, protected advertising about out-of-state wines.

    Specifically, the law prohibits truthful advertising about wine, and subjects to misdemeanor liability any person who advertises out-of-state wines in any manner whatsoever in New York, including advertising over the Internet. As Institute for Justice litigation director Clint Bolick explained, "under New York laws, every winery or retailer who advertises on the Internet is an outlaw."