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A Napa Valley wine should be made mostly from grapes harvested from a Napa Valley vine. So ruled the California Supreme Court on Aug. 5 in unanimously rejecting a bulk wine producer’s attempt to market wines under the Napa name, even though they were made from grapes grown in less illustrious wine regions of the state. The 65-page opinion exhaustively recounted the long history of wine legislation in California in holding that state labeling laws — aimed at protecting consumers from deceptive practices and safeguarding the integrity of the state’s wine industry — are not trumped by federal regulations. “California is recognized as a pre-eminent producer of wine, and the geographic source of its wines — reflecting the attributes of distinctive locales, particularly the Napa Valley — forms a very significant basis upon which consumers worldwide evaluate expected quality when making a purchase,” Chief Justice Ronald George wrote. “We do not find it surprising,” he continued, “that Congress, in its effort to provide minimum standards for wine labels, would not foreclose a state with particular expertise and interest from providing stricter protection for consumers in order to ensure the integrity of its wine industry.” The ruling was hailed by California wine-makers, who had worried that an opinion favoring Bronco Wine Co. — the country’s fourth-largest producer of bulk wines — could drastically devalue their world-renowned products. California produces more than 90 percent of the nation’s wine. “This decision,” says Pillsbury Winthrop partner James Seff, whose firm represented several wineries as amici, “is a great victory for the Napa Valley vintners, for our clients who are vintners not in Napa Valley who supported the Napa Valley position, and for consumers everywhere who actually want to drink what the label tells them they’re drinking.” CLOSE ENOUGH TO NAPA? Bronco, which sells “premium wines at affordable prices” — including the well-known $1.99 “Two Buck Chuck” — challenged a four-year-old California law that banned it from selling brands, namely Napa Ridge, Napa Creek Winery, and Rutherford Vintners, that were made with grapes from places such as Lodi and Stanislaus County. The state law mandates that wine sold for interstate or foreign commerce can use the word “Napa” or the names of the valley’s viticultural regions, such as “Rutherford,” only if at least 75 percent of the grapes were grown in those areas. Bronco argued that state law was pre-empted by federal regulations that permit using the name as long as there is an appellation, such as “Lodi” or “Stanislaus County,” that identifies the real origin of the grapes in the wine. Bronco has a lot invested in the wines. Bronco bought the three Napa brands from Napa Valley wineries over the past 11 years and recently opened a bottling plant — operated by Barrel Ten Quarter Circle Inc., a co-plaintiff in the case — capable of producing about 18 million 12-bottle cases per year, an output that the court noted “would be more than double the current annual production of Napa-grown wines.” The Aug. 5 ruling noted that California regulation of alcoholic beverages goes back as far as 1860, when legislators passed a statute penalizing sellers of “adulterated alcoholic or spirituous liquors, wines, cider, beer or other liquid used as a beverage.” The ruling points out that, decades before Congress enacted the Federal Alcohol Administration Act in 1935, California and several other states used their traditional police powers to protect the public and their wine industries. “[T]he protection of consumers from potentially misleading brand names and labels of food and beverages in general, and wine in particular,” Chief Justice George wrote, “is a subject that traditionally has been regulated by states.” BRONCO STILL RIDES The ruling remands the case back to the lower court to resolve Bronco’s remaining claims that the state statute violates the First Amendment, the commerce clause, and the takings clause of the U.S. Constitution. “I think you can view this as Round 2, and there will be a number of other rounds to come,” says Bronco’s lawyer, Peter Brody, a partner in the D.C. office of Ropes & Gray. Even so, Brody says he was disappointed by the ruling and believes California “overstepped” its bounds “when it attempted to eliminate from the interstate wine market long-established brand names that federal wine regulators had expressly approved for us.” “Bronco firmly believes that consumers who purchase its wines do so because they appreciate the award-winning quality and excellent value that the wines offer,” says Brody, “not because they are misled about the wine’s geographic origin.” Mike McKee ([email protected]) is a reporter with The Recorder , an ALM publication based in San Francisco.

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