On Friday, Judge Paul Maloney of the U.S. District Court, Western District of Michigan, Southern Division, delivered an opinion on the winery case, which has been ongoing since the fall of 2020 when the Wineries of Old Mission Peninsula (WOMP) filed a lawsuit against Peninsula Municipality. WOMP claimed they were forced to file the lawsuit after a decade of unsuccessfully trying to change the Peninsula Township’s ordinances.
The lawsuit alleged that the restrictions imposed by the county’s winery ordinance, including the inability to host weddings and other gatherings, restrictions on dining options and hours of operation, and restrictions on the use of out-of-state grape juice, have cost wineries hundreds of thousands of dollars in over the years. In fact, as noted in Maloney’s opinion, WOMP notes that an expert source says the wineries have lost $200 million over the past five years.
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The wineries also claim that state laws, including those affecting the Michigan Liquor Control Commission (MLCC), are replacing the township ordinance in many cases.
Each party, WOMP as plaintiff and Peninsula Township as defendant, filed summary judgment motions containing first right of refusal and constitutional arguments. The court granted in part and denied in part each party’s summary judgment motion for preemption and WOMP’s summary judgment motion, while denying the municipality’s summary judgment motion in its entirety, citing precedent in each case.
Here is an overview of some of the issues covered in Maloney’s statement:
1. State Right of First refusal. WOMP argues that the Township Ordinance conflicts with many of the rights granted to them under the MLCC. Maloney’s statement said that while the regulation may add limitations or limitations to the rights granted by the MLCC, it must not contain an outright prohibition of what the MLCC allows.
2. Opening hours. The township ordinance states that guest activity hours must be no later than 9:30 p.m. each day. However, MLCC allows holders of certain licenses to work after 9:30 p.m.; However, they are not allowed to sell alcohol between 02:00 and 07:00 Monday to Saturday and between 02:00 and 12:00 on Sundays. However, because the ordinance merely provides a further limitation of a right granted under Michigan law, the court holds that the ordinance is not anticipated.
3. Boosted Music. The ordinance states that no amplified instrumental music is permitted. However, it is also noted that amplified voice and background music are allowed provided the noise level is not higher than normal conversation. Maloney’s opinion is that while the community cannot ban amplified music, it can regulate the level of amplification.
4. Use of the cellar kitchens for external catering. The ordinance states that Weingut-Schloss kitchens may be used for on-site catering, but not for off-site hospitality. However, Michigan law permits the use of winery-chateau kitchens for off-site catering (if they have a catering permit), with limited restrictions. Maloney’s Opinion notes that Michigan law prevents this, meaning off-site catering is allowed.
5. Special Use Permits (SUPs). The community claims that SUPs — a means for wineries to make changes outside of the ordinance — are contractual agreements between each winery and the community. However, Maloney’s Opinion notes that SUPs are not contractual agreements because in order to enter into a contract an exchange must be negotiated, and he notes that “it is unclear what the community received through the issuance of the SUPs”.
6. Foreign Trade. In its summary constitutional judgment, WOMP argues that several sections of the regulation violate the Dormant Commerce Clause because they discriminate against and unduly burden foreign trade. This includes how much of the produce and grapes/wines are produced at each winery and on the Old Mission Peninsula. For agricultural processors producing wine, the regulation requires that 85 percent of the juice used must come from grapes and fruit grown on the Old Mission Peninsula. However, the owner of Two Lads Winery testified that there are years when the Old Mission Peninsula’s supply of grapes cannot meet the demand to satisfy the tasting room, let alone produce as much wine as they could sell. Maloney’s Opinion finds that the Township Ordinance violates the Dormant Commerce Clause.
7. Trade Speech. WOMP argues that certain activities, such as hosting weddings and selling logo merchandise, fall under “commercial speech” and are unconstitutionally regulated by the township ordinance. Maloney agrees with the community that marriages and similar activities “do not constitute regulation of commercial speech under the First Amendment because marriages themselves are not speech designed to further a commercial transaction.” Therefore, certain parts of this section are granted, such as B. Selling logo merchandise, advertising food and non-food items for sale in the tasting room, and displaying merchandise, equipment, or signs outdoors.
8. Weddings. In her testimony, community zoning director Christina Deeren acknowledged that the community likely improperly restricted wineries from hosting weddings, family reunions, and similar gatherings. Thus, WOMP’s motion for summary judgment is granted in respect of the sections of the ordinance prohibiting the hosting of large gatherings such as weddings and setting the 9:30pm closing time. In addition, the municipality is prohibited from enforcing such restrictions on any of the wineries.
9. Previous Restraint and Other Activities. The term “prior restraint” describes official and court orders that block an expressive activity before it can take place. Municipal ordinance states that winery chateaus may not host wine and food seminars, cooking classes, community service meetings, and farming group meetings without prior approval from the zone director. According to Deeren, such activities must be related to agriculture, and she determines whether an activity meets those criteria. She has previously denied activities such as Yoga in the Vines and Painting in the Vines. However, Maloney’s report notes that there appear to be no definitive criteria for determining what constitutes an agriculture-related activity and therefore his report agrees with WOMP’s summary judgment on the subject.
10. Guest Activities. This term is used multiple times throughout the regulation, but WOMP argues that the term is vague. Maloney agrees, noting that “any subsection of 8.7.3(10) that uses the term ‘hospitality’ is unconstitutional and must be removed from township bylaws.”
All summary judgments of the municipality were rejected, including laches (undue delay in asserting a legal right or privilege; the last ordinance was issued almost 20 years ago and the oldest contested ordinance was issued more than 30 years ago), trade speech, prior restrictions , coercive speech, freedom of association/freedom of religion, trade clause and dormant trade clause, due process and administrative seizure.
In addition, WOMP argued in a summary judgment that its economist estimated that wineries had lost at least $200 million in profits over the past five years because of the township ordinances. However, Maloney’s Opinion notes that they have not presented evidence to support that number, and it is also procedurally inappropriate for the wineries to seek summary judgment in response to the community’s motion for summary judgment. “As such, neither party will receive summary judgment on the revenue clause claim,” he notes.
Read Judge Maloney’s full opinion here.
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