On Friday, Judge Paul Maloney of the U.S. District Court, Western District of Michigan, Southern Division, delivered an opinion on the winery lawsuit that’s been ongoing since the fall of 2020, when the Wineries of Old Mission Peninsula (WOMP) filed suit against Peninsula Township. WOMP alleged that after a decade of attempting to change the Peninsula Township ordinances with no success, they were forced to file the lawsuit.
The lawsuit claimed that restrictions imposed by the Township’s winery ordinance, including the inability to host weddings and other gatherings, limitations on food service and hours, and restrictions imposed on using out-of-state grape juice, have cost the wineries hundreds of thousands of dollars over the years. In fact, as stated in Maloney’s opinion, WOMP notes that an expert source says the wineries have lost $200 million during the last five years.
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The wineries also claim that state laws, including those involving the Michigan Liquor Control Commission (MLCC) supercede the Township ordinance in many cases.
Each party, WOMP as the plaintiffs and Peninsula Township as the defendent, filed summary judgment motions containing preemption and constitutional arguments. The Court granted in part and denied in part each party’s preemption summary judgment motion and WOMP’s constitutional summary judgment motion, while denying in its entirety the Township’s constitutional summary judgment motion, stating precedents in each case.
Here’s an outline of some of the issues covered in Maloney’s Opinion:
1. State Law Preemption. WOMP argues that the Township ordinance conflicts with many of the rights they’ve been granted under the MLCC. Maloney’s Opinion states that while the ordinance may add limitations or restrictions to the rights granted by the MLCC, it may not contain an absolute prohibition on what the MLCC permits.
2. Hours of Operation. The Township ordinance notes that hours of operation for guest activity uses shall be no later than 9:30 p.m. daily. MLCC, however, allows holders of certain licenses to operate later than 9:30 p.m.; however, they can’t sell alcohol between the hours of 2 a.m. and 7 a.m. Monday through Saturday, and 2 a.m. and noon on Sundays. However, because the ordinance merely places a further limitation on a right granted under Michigan law, the Court holds that the ordinance is not preempted.
3. Amplified Music. The ordinance notes that no amplified instrumental music is allowed. However, it also notes that amplified voice and background music is allowed, provided the noise level is no greater than normal conversation. Maloney’s Opinion holds that while the Township may not prohibit amplified music, they may regulate the level of amplification.
4. Use of Winery Kitchens for Off-Site Catering. The ordinance notes that winery-chateau kitchens may be used for on-site food service but not for off-site catering. Michigan law, however, permits the use of winery-chateau kitchens for off-site catering (if they have a catering permit), with limited restrictions. Maloney’s Opinion finds that this is preempted by Michigan law, meaning off-site catering will be allowed.
5. Special Use Permits (SUPs). The Township asserts that SUPs – a means for wineries to makes changes outside of the ordinance – are contractual agreements between each winery and the Township. Maloney’s Opinion, however, finds that SUPs are not contractual agreements, because in order to be a contract, there must be a bargained for exchange, and he notes that “it is unclear what the Township has received from issuing the SUPs.”
6. Out of State Commerce. In their constitutional summary judgment, WOMP argues that several sections of the ordinance violate the Dormant Commerce Clause because they discriminate against and place an excessive burden on out-of-state commerce. This involves how much of the produce and grapes/wine are produced at each winery and on the Old Mission Peninsula. For farm processing facilities to make wine, the ordinance requires that 85 percent of the juice they use must come from grapes and fruit grown on the Old Mission Peninsula. However, the owner of Two Lads Winery testified that there are years where the supply of Old Mission Peninsula grapes can’t meet the demand to keep the tasting room satisfied, let alone make as much wine as they could sell. Maloney’s Opinion finds that the Township ordinance violates the Dormant Commerce Clause.
7. Commercial Speech. WOMP argues that certain activities, like hosting weddings and selling logo merchandise, fall under “commercial speech” and are unconstitutionally regulated by the Township ordinance. Maloney’s Opinion agrees with the Township that weddings and similar activities do not “constitute a regulation of commercial speech under the First Amendment because weddings themselves are not speech intended to promote a commercial transaction.” Thus, certain parts of this section are granted, such as selling logo merchandise, advertising food and non-food items for sale in the tasting room, and outdoor displays of merchandise, equipment or signs.
8. Weddings. In her deposition, the Township’s Director of Zoning, Christina Deeren, conceded that the Township has likely been improperly restricting the wineries from hosting weddings, family reunions and similar gatherings. Thus, WOMP’s motion for summary judgment will be granted as to the sections of the ordinance that prohibit the hosting of large gatherings such as weddings, and which establish the 9:30 p.m. closing time. Also, the Township is prohibited from enforcing such restrictions on any of the wineries.
9. Prior Restraint and Other Activities. The term “prior restraint” describes administrative and judicial orders that block expressive activity before it can occur. The Township ordinance states that winery-chateaus cannot host wine and food seminars, cooking classes, meetings of non-profit groups, and meetings of agriculturally-related groups without prior approval from the director of zoning. According to Deeren, such activities must be agriculturally-related, and she determines whether an activity meets that criteria. She has previously denied activities such as “Yoga in the Vines” and “Painting in the Vines.” However, Maloney’s opinion notes that there does not appear to be any definitive criteria to determine what constitutes an agriculturally-related activity and thus, his Opinion grants WOMP’s summary judgment on this issue.
10. Guest Activities. This term is used numerous times throughout the ordinance, but WOMP argues that the term is vague. Maloney agrees, noting that “any subsection of 8.7.3(10) that uses the term ‘Guest Activity’ is unconstitutional and must be stricken from the Township Ordinances.”
All of the Township’s summary judgments were denied, including laches (undue delay in asserting a legal right or privilege; the most recent ordinance was enacted nearly 20 years ago, and the oldest challenged ordinance was enacted more than 30 years ago), commercial speech, prior restraints, compelling speech, freedom of association/freedom of religion, commerce clause and dormant commerce clause, due process and regulatory taking.
Also, in a summary judgment, WOMP argued that their economic expert has estimated that over the last five years, the wineries have lost at least $200 million in profits due to the Township ordinances. However, notes Maloney’s Opinion, they have provided no evidentiary support for this number, and it’s also procedurally improper for the wineries to seek summary judgment in a response to the Township’s motion for summary judgment. “As such, neither party will receive summary judgment as to the Takings Clause claim,” he notes.
Read Judge Maloney’s opinion in its entirety here.
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