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Chief Justice Ronald George apparently doesn’t like his Napa Valley wines being produced with grapes not grown in the Napa Valley. Neither, it seems, do most of his fellow justices. That came across on Monday as the state Supreme Court heard arguments in a wine-labeling case that pits the state and the Napa Valley Vintners Association against the Bronco Wine Co., the nation’s fourth-largest producer of bulk wines, such as the $1.99 “Two Buck Chuck.” Dozens of wineries and grape growers have signed on as amicus curiae in a battle over the economic soul of the state’s massive wine industry. Those on the state’s side say Bronco is actively deceiving consumers in a way that could drastically devalue California wines, while those backing Bronco say a loss could threaten geographic brand names that have been used by wineries of all sizes for decades. Bronco sells three labels — Napa Ridge, Napa Creek Winery and Rutherford Vintners — indicating they are made from grapes grown in California’s most famous wine region. But on closer inspection, the labels reveal that all three brands are made from grapes grown in other areas — Lodi, Stanislaus County and the state’s North Coast. The state and the vintners’ group contend that violates state Business and Professions Code Section 25241, which requires that wine sold for interstate or foreign commerce can use the word “Napa” or the valley’s viticultural regions, such as “Rutherford,” only if 75 percent of the grapes were grown in those areas. Bronco contends that the state law is pre-empted by federal regulations that permit the name use as long as there is an appellation — such as “Lodi” or “Stanislaus County” — that identifies the wine’s origin. On Monday, the Supreme Court, led by George, seemed uncomfortable with Bronco’s position. What “legitimate interest” would the federal government and Bronco have, George asked, in allowing deceptive labeling? “Why don’t they call it Lodi Ridge or Lodi Creek?” he asked. “Why do they keep that label if not for any other reason than to deceive?” George and Justice Joyce Kennard noted that California has regulated the wine industry since the mid-to-late 19th century, long before the federal government got into the act with 1935′s Federal Alcohol Administration Act. As long ago as 1866, Kennard said, the California Legislature took steps to regulate labeling after Congress ignored the issue. “Doesn’t that weaken your argument?” she asked Bronco lawyer Peter Brody, a partner in the Washington, D.C., office of Ropes & Gray. Brody conceded that the regulation at issue is the kind that comes from the states, but insisted, nonetheless, that the California rules cannot stand when they directly conflict with federal regulations. George argued that it appeared that Congress had acquiesced on the issue of pre-emption by not making a fuss over even more strongly worded state regulations adopted by Oregon in 1977. “It’s never been challenged,” Brody responded. “It’s never been tested.” “Congress hasn’t challenged it either, has it?” George shot back. The chief justice also took exception to Brody’s attempt to compare Bronco’s labeling to that of an imaginary Baltimore company producing London Fog raincoats. “Nobody thinks that a raincoat bearing the name London Fog is going to be a better jacket,” George said. But people hearing the name “Napa,” he continued, are expecting a better wine. Richard Mendelson, a partner at Napa’s Dickenson, Peatman & Fogarty who argued for the vintners’ association and for the state, had a much easier time with the court. Besides a few questions from Justice Janice Rogers Brown about federal pre-emption and Justice Ming Chin on a 1986 federal grandfather clause that Bronco says further insulates it from state regulations, Mendelson got mostly softballs. Kennard noted the long history of state regulation and pointed out that consumers at restaurants could easily be deceived by wine lists that feature names such as “Napa,” on a wine’s label, but don’t show the appellation, such as “Lodi.” George added that the court cannot assume that East Coast consumers or even the average Californian will know that Lodi is in the Central Valley near Stockton and not in the Napa Valley. In addition, he stated, if Bronco’s Rutherford Vintners sells for $8 a bottle, that could devalue Napa wines. Afterward, Pillsbury Winthrop partners James Seff, a wine lawyer, and Kevin Fong, an appellate specialist, said they thought the court, especially George and Kennard, felt the state’s regulations are not pre-empted by federal standards. “Justice Kennard was clearly interested in the fact that there’s been a long history of regulation of labeling [by the state],” Fong said. “And,” Seff added, “I think the chief is coming from the same place.” Both men, who represented several non-Napa wineries and the North Coast Winegrowers Association as amici curiae, said the state’s regulations must stand if there is to be any integrity in California’s wine industry. “If the wines aren’t as good as typical Napa Valley wines, that may diminish the reputation of Napa Valley,” Seff said. “Likewise, people selling against Napa might find themselves at a competitive disadvantage because Bronco has the Napa Valley imprimatur.” The case is Bronco Wine Co. v. Jolly, S11316.

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