Phx. Vintners, LLC v. Noble

• Decision Date: 02 August 2018
• Docket Number: S-17-0279
• Citation: 423 P.3d 309
• Parties: PHOENIX VINTNERS, LLC, d/b/a Traveling Vineyard, a Massachusetts Limited Liability Company, and Michaela Robinson, a Wyoming resident, Appellants (Plaintiffs), v. Dan NOBLE, in his official capacity as Director of the Wyoming Department of Revenue, Greg Cook, in his official capacity as Administrator for the Wyoming Department of Revenue Liquor Division, Thomas Montoya, in his official capacity as Chief of Enforcement for the Wyoming Department of Revenue Liquor Division, Kelly Hunt, in his official capacity as Senior Compliance Agent for the Wyoming Department of Revenue Liquor Division, and Jason Allen, in his official capacity as Compliance Agent for the Wyoming Department of Revenue Liquor Division, Appellees (Defendants).
• Court: Wyoming Supreme Court

423 P.3d 309

PHOENIX VINTNERS, LLC, d/b/a Traveling Vineyard, a Massachusetts Limited Liability Company, and Michaela Robinson, a Wyoming resident, Appellants (Plaintiffs),

v.Dan NOBLE, in his official capacity as Director of the Wyoming Department of Revenue, Greg Cook, in his official capacity as Administrator for the Wyoming Department of Revenue Liquor Division, Thomas Montoya, in his official capacity as Chief of Enforcement for the Wyoming Department of Revenue Liquor Division, Kelly Hunt, in his official capacity as Senior Compliance Agent for the Wyoming Department of Revenue Liquor Division, and Jason Allen, in his official capacity as Compliance Agent for the Wyoming Department of Revenue Liquor Division, Appellees (Defendants).

S-17-0279

Supreme Court of Wyoming.

August 2, 2018

Representing Appellants: Robert C. Jarosh and Shaina A. Case, Hirst Applegate, LLP, Cheyenne, Wyoming. Argument by Mr. Jarosh.

Representing Appellees: Peter K. Michael, Attorney General; Ryan T. Schelhaas, Deputy Attorney General; Karl D. Anderson, Senior Assistant Attorney General; Adam Leuschel, Assistant Attorney General. Argument by Mr. Leuschel.

Before DAVIS, C.J., and BURKE^* , FOX, KAUTZ and BOOMGAARDEN, JJ.

BURKE, Justice.

[¶1] The United States District Court for the District of Wyoming certified a question to this Court concerning the definition of "sell" or "sale" set forth at Wyo. Stat. Ann. § 12-1-101(a)(xvi). This question asks us to determine whether Appellants, Traveling Vineyard and Michaela Robinson, engaged in the "sale" of alcohol at in-home wine tasting events. We answer the certified question in the affirmative.

CERTIFIED QUESTION

[¶2] Does the statutory definition of "sell" or "sale" in Wyo. Stat. Ann. § 12-1-101(a)(xvi) apply to the conduct of Traveling Vineyard and its Independent Wine Guides?

FACTS

[¶3] The district court’s certification order sets forth the following facts pertinent to the certified question. Appellant, Phoenix Vintners, LLC, d/b/a Traveling Vineyard ("Traveling Vineyard"), is a Massachusetts Limited Liability Company with three federal and state licensed, bonded wineries. Within the State of Wyoming, Traveling Vineyard maintains three Direct Shipping permits, one for each of its wineries, and pays sales tax for each location under a single tax identification number. The individual Appellees are employees of the Wyoming Department of Revenue, Liquor Division (the "Division").

[¶4] Appellant, Michaela Robinson, is a Wyoming resident and one of Traveling Vineyard’s independent contractors, known as "Independent Wine Guides," who earns compensation for educating guests and promoting products at in-home wine tastings. Ms. Robinson holds a Class A Industry Representative License.

[¶5] Independent Wine Guides like Ms. Robinson offer social hosts the opportunity to hold educational, private, and invitation-only in-home wine tasting events for their friends, relatives, and neighbors at their personal residences to learn about Traveling Vineyard’s wines and accessories. These private residences are not licensed by the State of Wyoming to sell alcoholic beverages. The wine tasting events are free to attend and are hosted without obligation to purchase any of Traveling Vineyard’s products. Independent Wine Guides are marketing agents for Traveling Vineyard and their functions include finding interested social hosts; familiarizing themselves with Traveling Vineyard’s wines and products; attending the wine tasting events to answer questions regarding the nature, history, characteristics, and values of Traveling Vineyard’s wines and wine accessories; and promoting Traveling Vineyard’s wines and wine accessories by generating leads that Traveling Vineyard must then convert into sales.

[¶6] Prior to the wine tasting events, Independent Wine Guides order and pay for tasting materials, which include one bottle of each of five different wines from Traveling Vineyard via direct shipment. At the events, the social host pours and serves Traveling Vineyard’s wines to the attendees, free of charge. During the events, Independent Wine Guides discuss Traveling Vineyard’s products, educate attendees as to the qualities of Traveling Vineyard wines, and answer questions. At the conclusion of each event, attendees interested in hosting a future event, joining the Traveling Vineyard Wine Club, or purchasing wine are encouraged to contact Traveling Vineyard. Attendees may choose to fill out a "Survey & Interest Form," which is returned to Traveling Vineyard. The Survey & Interest Form asks for the following information: (a) the attendee’s contact information; (b) the product code, product name, unit price, and quantity of the products the attendee is interested in purchasing from Traveling Vineyard, along with the subtotal, shipping and handling, and sales tax for those products; and (c) the attendee’s credit card information and signature.

[¶7] The Survey & Interest Form advises the attendees they are not purchasing the products they’ve identified on the form and that they are making an "offer to purchase" the identified products, which may be accepted or rejected by Traveling Vineyard or its designee:

By completing this form you are not purchasing the products identified on the form, you are expressing your interest in the products. The information on this form, including your payment information, will be forwarded to a designated licensee who is authorized to sell the products in your state. The designated licensee will reject your offer to purchase or will accept the offer to purchase and fulfill the order. Any sale made by a designated licensee will be subject to applicable local and state laws and sales taxes, as well as shipping and handling charges.

The Independent Wine Guides do not have authority to take or accept wine purchase orders, and they have no inventory available for sale at any time. Traveling Vineyard compensates its Independent Wine Guides according to the success of the leads generated at the wine tasting events based on several factors, including how many people attended the event and how many attendees purchased products from Traveling Vineyard after the event.

[¶8] In 2016, the Division became concerned that Traveling Vineyard was violating Wyoming law and requested information from Traveling Vineyard regarding its business model. Traveling Vineyard provided a letter explaining its operations in Wyoming. The Division responded with a letter asserting that some aspects of Traveling Vineyard’s business model and some of its Independent Wine Guides’ activities were "in conflict with Wyoming State Statutes, Title 12, Alcoholic Beverage Control Laws and the Wyoming Liquor Division (WLD) Rules and policies." Representatives from Traveling Vineyard subsequently met with representatives of the Division to review and discuss the matter. That meeting, however, did not resolve the parties’ disagreements.

[¶9] In March 2017, Appellants filed a complaint in the federal District Court seeking a declaration that the Division improperly interpreted the definition of "sale" in Wyo. Stat. Ann. § 12-1-101(a)(xvi) and applied it to the activities of Traveling Vineyard and its Independent Wine Guides in violation of their commercial speech rights under the First Amendment to the United States Constitution. Appellees moved to dismiss the complaint and requested that the court abstain from exercising jurisdiction over issues that involve a novel and determinative question of state law. After a hearing, the court denied the motion to dismiss. The court agreed, however, that the issue raised by Appellants was an issue of state law and, pursuant to W.R.A.P. 11.01, it certified to this Court the question of whether the statutory definition of "sell" or "sale" applies to the conduct of Traveling Vineyard and its Independent Wine Guides. We agreed to answer the certified question.

STANDARD OF REVIEW

[¶10] The certified question presents an issue of statutory interpretation. We review questions of statutory interpretation de novo . Brock v. State ex rel. Wyoming Workforce Servs., Unemployment Ins. Div. , 2017 WY 47, ¶ 7, 394 P.3d 460, 462 (Wyo. 2017).

DISCUSSION

[¶11] Before we address the issue raised by the certified question, we note that the legislature has broad authority to regulate the sale of alcohol in Wyoming. "It is well settled, and it is conceded, that the state has the amplest powers to prohibit, regulate and control the traffic in and the sale and use of intoxicating liquors. See Sec. 10, Article 19 of our Constitution." Harrison v. Wyoming Liquor Comm’n , 63 Wyo. 13, 35, 177 P.2d 397, 404 (1947). The cited section of the Wyoming Constitution provides:

On and after the first day of March, 1935, the manufacture, sale and keeping for sale of malt, vinous or spirituous liquors, wine, ale, porter, beer or any intoxicating drink, mixture or preparation of like nature may be permitted in the State of Wyoming under such regulation as the legislature may prescribe.

As we have recognized, "[i]t has been long established that the legislature may control and regulate the sale of intoxicating liquors for the protection of the people." Albertson’s, Inc. v. City of Sheridan , 2001 WY 98, ¶ 16, 33 P.3d 161, 168 (Wyo. 2001).

[¶12] The breadth of the legislature’s authority to regulate alcohol is demonstrated by Wyo. Stat. Ann. § 12-5-405 (LexisNexis 2015), one of many statutes in Title 12 that invokes the definition of "sell" or "sale" at issue in this case. The statute provides: "Industry representatives shall not sell or attempt to sell any alcoholic liquor within Wyoming, except to the division." The term "industry representative" is defined in Wyo. Stat. Ann. § 12-1-101(a)(vi) to include "all wholesalers, manufacturers, rectifiers, distillers and breweries dealing in alcoholic liquor or malt beverage, and proscriptions upon their conduct shall include conduct by a subsidiary, affiliate, officer, director, employee, agent, broker or...