Update on the Empire Wine Saga

In September, I wrote about Empire Wine & Spirits’ Article 78 lawsuit against the State Liquor Authority ("NYSLA") challenging the agency's initiation of proceedings against the Albany wine seller. On November 18, the Albany County Supreme Court dismissed that lawsuit without prejudice.[1] Let's review the court's eleven-page decision.

Empire’s petition and complaint alleged that:

  1. NYSLA’s actions violated the Commerce Clause and 21st Amendment of the United States Constitution;
  2. NYSLA’s actions were ultra vires; and
  3. the regulation that NYSLA relied on (9 NYCRR 53.1) is unconstitutionally vague.

The court made no findings regarding the merits of these claims, instead advising Empire to proceed with the revocation hearing before coming back to court. It found that Empire had abandoned its selective enforcement claim.

The Commerce Clause[2]

Essentially, Empire argues that by prosecuting direct shipment of wine to out-of-state consumers, NYSLA is interfering with interstate commerce. Article I, Section 8 of the U.S. Constitution vests Congress with the power “[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.” [U.S. Const., Art. I, Section 8 (emphasis added).] Empire asserted that, “[a]s a matter of law, any shipment of wine originating in the State of New York and destined for another state is in ‘interstate commerce’ and is not subject to regulation by [NY]SLA.” The court did not believe, however, that this claim was ripe for litigation because “facts must be developed at a hearing to establish the nature and extent of any alleged violation of sister state laws;[3] and any alleged infringement of the Commerce Clause.”

Ultra Vires

Ultra vires” is a Latin phrase meaning "beyond one’s authority." Empire asserted that NYSLA does not have the authority to regulate the shipment of wine to out-of-state customers, and, therefore, issuing a notice of pleading for Empire's alleged violation was ultra vires. While Empire objected to the effect of NYSLA’s action, which is prohibition of interstate wine shipments originating from New York, the court focused on NYSLA’s statutory authority “to revoke, cancel or suspend for cause” licenses issued under sections 17[4] and 118[5] of the ABC Law.

The court concluded that NYSLA “possesses abundant statutory authority to commence and maintain a license revocation proceeding.” It did not address the merits of the agency’s justification for the impending revocation proceeding. In other words, it expressed no opinion as to whether the agency has authority to regulate shipments to out-of-state customers.

Unconstitutional Vagueness

Due process requires “that laws give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly.” [Grayned v. City of Rockford, 408 U.S. 104, 108 (1972).][6] Thus, a law that is vague violates due process. Here, Empire claimed that the regulation relied on by NYSLA “is unconstitutionally vague because, among other things, it makes absolutely no mention of out-of-state shipping and fails to provide reasonable notice to licensees as to what ‘improper conduct’ the regulation purportedly proscribes.”[7] [Verified Petition and Complaint, ¶ 51.] That regulation provides that “[a]ny license or permit issued pursuant to the Alcoholic Beverage Control Law may be revoked, cancelled or suspended . . . [f]or improper conduct by the licensee or permittee.” [9 NYCRR 53.1(n).] As Empire pointed out, there is no definition of “improper conduct,” and out-of-state shipping is not mentioned.

Although the court did not issue a holding on the issue of vagueness, it stressed its view that the undefined term “improper conduct” in 9 NYCRR 53.1(n) is not unconstitutionally vague. Likening “improper conduct” to the ubiquitous “for cause,” which has been upheld in various contexts even in the absence of a definition, it reminded Empire that it can it can return to court if NYSLA does in fact impose a penalty. Courts have interpreted “for cause” to mean "for a cause to be enumerated when an adverse action is taken." It does not have to be defined with specificity in the contested law or regulation. In this case, “improper conduct” has been identified as out-of-state wine shipment, and the court will not address the merits of that cause until Empire has suffered an actual injury.


A common thread running through Empire’s claims is the question of ripeness. At every turn, the court says, “Wait and see how the hearing goes.” When a claim is ripe, it is ready for judicial review. Although the court did not address the finality requirement of Article 78, that requirement ensures that only ripe issues are litigated. As I explained in my original post, a government action is final when: (1) the agency’s position is definitive; (2) the position inflicts actual injury; and (3) no further agency action can remove or lessen the injury. [Essex County v. Zagata, 695 N.E.2d 232, 235 (1998).]. In this case, the only action the government has taken is to issue Empire a Notice of Pleading alleging that the seller had “improperly” shipped alcohol to out-of-state consumers, and initiating license revocation proceedings. It has not revoked Empire’s license or assessed a fine or any other penalty, so the seller has not suffered “actual injury,” and there is no adverse action to litigate.


A revocation hearing was scheduled for December 3 but has been derailed by Empire’s FOIL lawsuit. In that litigation, Empire seeks “documents and communications relating to [NY]SLA’s policies and procedures regarding interstate shipments of alcohol, the types of conduct prohibited under 9 NYCRR 53.1(n) as ‘improper conduct,’ and [NY]SLA’s investigation of Empire” in order to prepare for the hearing. Empire will have to wait for the results of its FOIL lawsuit and the revocation hearing before re-filing its Article 78 lawsuit—and, according to Capital, the seller will re-file if the agency rules against it.

If this case makes it to court again, the ruling could have far-reaching impact regardless of whether NYSLA’s action is upheld or invalidated. If a penalty is upheld, an emboldened NYSLA could pursue other retailers that ship outside the state. It might even revise its regulations to include an explicit prohibition of out-of-state shipping. Given Empire’s tenacity, I suspect that appeal would be taken, raising the profile of the case and drawing the attention of observers in other states. If Empire is vindicated, not only will other retailers be free to ship directly to out-of-state customers (as some are already doing), but we could see a gradual modernization of direct shipping laws across the country.

[1] A dismissal without prejudice means that the plaintiff can file the same suit again in the future when a defect in the case (here, that the lawsuit is premature) is cured. It is not a dismissal based on the merits of the case.  Note that Empire sued NYSLA again last week, this time seeking records under the state Freedom of Information Law (“FOIL”). 

[2] In addition to its Commerce Clause claim, Empire asserted that, “[c]onsistent with the Twenty-first Amendment, the ABC Law empowers [NY]SLA to regulate the sale and distribution of alcohol only within the State of New York.” [ 19.] The court did not address this claim at all.

[3] NYSLA’s notice of pleading alleged that Empire shipped wine directly to customers in sixteen states in violation of 9 NYCRR 53.1. The only alleged violation of another state’s law was peculiar: NYSLA asserted, without giving details, that Empire shipped wine to a customer in Ohio in violation of Alabama law.

[4] NYSLA has authority "[t]o revoke, cancel or suspend for cause any license or permit issued under this chapter and/or to impose a civil penalty for cause against any holder of a license or permit issued pursuant to this chapter." [N.Y. A.B.C. Law § 17(3).]

[5] "Any license or permit issued pursuant to this chapter may be revoked, cancelled, suspended and/or subjected to the  imposition of a civil penalty for cause." [N.Y. A.B.C. Law § 118(1).]

[6] Courts tend to give more deference to laws that carry civil rather than criminal penalties. [Hoffman Estates v. Flipside, 455 U.S. 489, 498-498 (1982).]

[7] Empire claims that the regulation is vague both on its face and as applied in this case.