Bronco "Napa" Label Case Raises Significant Legal Issues
July 9, 2004
Michael Brill Newman - San Francisco
Since the early 1990’s, Bronco Winery has sold several wines with geographic
brand names such as Napa Ridge, Napa Creek, and Rutherford Vineyards. The only
catch ─ very little of the wine was actually from the Napa or Rutherford region.
But, based on “grandfathered” labels, Bronco’s labels were lawful under federal
and California law.
In response to Bronco’s use of these brand names, the Napa Valley Vintners
Association (“NVVA”) lobbied the California legislature in 2000 to enact B&P
Code §25241, which requires that wines bearing a brand name including Napa, or a
viticultural area appellation within Napa County, be made entirely from Napa
grapes. Bronco successfully challenged §25241 in the Court of Appeal, asserting
federal law preempted the statute.
Under regulations adopted by the Bureau of Alcohol, Tobacco & Firearms
pursuant to federal law, any wine bearing the name of a viticultural area must
be made from grapes of which at least 85 percent are from the area. However,
names such as the brands Bronco sells are protected by a “grandfather clause.”
If a brand includes a viticultural area in the name, and the brand name was in
use prior to 1986, under certain conditions, the wine need not contain any
grapes from the named area.
Both the NVVA, as an “intervener,” and the Attorney General, petitioned the
California Supreme Court for review and the various parties argued their
positions before the court on May 24, 2004. The NVVA asserts that federal and
state regulation of alcohol beverages has coexisted for nearly a century and
that although the federal grandfather clause excuses noncompliance with
regulations, it does not prevent a state from taking remedial action when it
believes deception of consumers will result. Bronco continues to argue
“pre-emption.”
The court has until August 23, 2004 to render a decision. No matter which
side prevails, given the economics of the use of “Napa” on a wine label, the
loser will likely appeal to the U.S. Supreme Court. whatever the result, final
resolution of this case will establish a significant precedent for future
guidance when issues arise from overlapping federal and state alcohol beverage
laws.