Bronco Wine Co. v. Espinoza
| Citation | 104 Cal.App.4th 598,128 Cal.Rptr.2d 320 |
| Decision Date | 18 December 2002 |
| Docket Number | No. C037254.,C037254. |
| Court | California Court of Appeals |
| Parties | BRONCO WINE COMPANY et al., Petitioners, v. Manuel R. ESPINOZA, as Interim Director, etc., et al., Respondents; Napa Valley Vintners Association, Interveners. |
Bill Lockyer, Attorney General, David S. Chaney, Senior Assistant Attorney General, Damon M. Connolly, Miguel A. Neri, Supervising Deputy Attorneys General, Terry Senne, Deputy Attorney General, for Respondents.
Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Jerome B. Falk, Jr. and Steven L. Mayer, San Francisco; Ropes & Gray, Peter M. Brody and Kelly B. Kramer, Washington, Dist. of Columbia, for Petitioners.
Keker & Van Nest, John W. Keker, Henry C. Bunsow, James M. Emery, Ragesh K. Tangri, San Francisco, and Daniel Purcell, for Intervenor.
This proceeding arises out of an original petition for writ of mandamus filed in this court by stipulation of the parties.1 Petitioners, Bronco Wine Company and Barrel Ten Quarter Circle, Inc. (hereafter Bronco), seek a writ of mandate prohibiting respondents Department of Alcoholic Beverage Control and Manuel R. Espinoza, the Interim Director of that Department, from enforcing Business and Professions Code section 25241,2 with respect to wines bearing Bronco's federally approved labels. Intervenor Napa Valley Vintners Association (Intervenor) joins with respondents. We issued an alternative writ and pursuant to the parties' consent, granted a stay of enforcement of section 25241.
At issue are the brand names that appear on labels of Bronco wine. A brand name is distinguished from an appellation of origin, which states the origin of the grapes used in making the wine. Section 25241 proscribes the use of a brand name on "wine produced, bottled, labeled, offered for sale or sold in California ... on any label, packaging material, or advertising," that uses the word "Napa" or the name of any federally recognized sub-appellation located entirely within Napa County, or any "similar name ... that is likely to cause confusion as to the origin of the wine," unless the wine qualifies under federal law for the appellation of origin Napa County and the appellation of origin is specified on the label, packaging material, or advertising. Section 25241 thus ties the requirements for a brand name to the federal requirement for an appellation of origin, that a specified percentage of the grapes contained in the bottle must come from the viticultural area suggested by the appellation.
Section 25241 prohibits the use of the brand names Napa Ridge, Rutherford Vintners, and Napa Creek Winery on the Bronco labels because the grapes used in producing the wines did not come from Napa County although the labels on these wines include a correct appellation of origin below the brand name disclosing the place where the grapes used to produce the wine were grown.
Bronco challenges the constitutionality of section 25241 as applied to its federally approved wine labels, contending that, as to wine destined for sale in interstate and foreign commerce, the statute is preempted by federal law.3 The respondents do not challenge the validity of Bronco's federal labels, the certificates of label approval which grant Bronco the right to place the challenged brand names on its wine, or the federal regulations pursuant to which the labels were authorized.4 Rather, respondents claim the state and federal laws share the same purpose and therefore state law is not preempted because it does not stand as an obstacle to fulfillment of the purpose of the federal statute. Intervenor Napa Valley Vintners Association claims the federal scheme contemplates concurrent regulation which leaves the states free to impose greater restrictions in order to achieve a common end. We disagree with both claims.
The federal law sets forth a complete system for the regulation of the interstate sale of wine. It requires that such wine bear a federal label pursuant to a certificate of approval. The federal law governs the content of both appellations of origin and brand names on the label. It permits the concurrent state regulation of appellations of origin but not of brand names. Bronco's federal right to use its brand names in interstate commerce stems from compliance with a grandfather clause in this law which requires that its labels show the appellation of origin.
Accordingly, we shall conclude that, as applied to the labels on bottled wine destined for shipment into interstate and foreign commerce, section 25241 is preempted by federal regulations and federal certificates of label approval since section 25241 prohibits precisely that which the federal law permits. We further find that, because the application of section 25241 to interstate and foreign commerce is not severable from its intra state application, section 25241 is void in its entirety.
We will grant a peremptory writ of mandate directing respondents not to enforce Business and Professions Code section 25241.5
Except as noted, the relevant facts are not in dispute.
Bronco Wine Company is a winery specializing in, according to Bronco, "premium wines at affordable prices." Barrel Ten Quarter Circle, Inc. (Barrel Ten), is a separate company although ownership and management of the two companies overlap.
Some of Bronco's wine is bottled at its wineries in Ceres and Sonoma County; other Bronco wines are bottled under contract by petitioner Barrel Ten at a recently completed winery in Napa, California.
Bronco's wines are bottled under a variety of labels. All of their labels have been reviewed and approved by federal regulators and have been issued federal certificates of label approval permitting their use in interstate commerce. Bronco sells its wine under a number of brand names, including the brand names "Napa Ridge," "Rutherford Vintners" and "Napa Creek Winery." Each of the labels lists the source of the grapes by the appellation of origin set forth below the brand name.6
Bronco acquired these three brand names, and the labels on which they appeared, from predecessor owners. The brand name "Napa Creek Winery," introduced in 1981, was acquired by Bronco in 1993. "Rutherford Vintners," which originated in the early 1970s, was acquired by Bronco in 1994. "Napa Ridge," which Bronco acquired in January 2000 from Beringer Wine Estates, has been in trade since the early 1980s.
Bronco and its predecessors-in-interest have used these brand names with wines from a variety of appellation areas in California, both before and after Bronco's acquisition of the brands. Beringer, the prior owner of "Napa Ridge," obtained label approvals for use of "Napa Ridge," and used that brand name with wines made from grapes grown in the Central Coast, North Coast, and Lodi appellation areas, as well as from the Napa Valley appellation. The labels on these wines included a correct appellation of origin disclosing the place where the grapes used to produce the wine were grown.
Bronco invested significant sums of money when it acquired, promoted, and advertised the "Napa Ridge," "Rutherford Vintners" and "Napa Creek Winery" labels and brand names. Bronco's annual sales of wines under labels bearing these three brand names collectively amount to approximately 300,000 cases, representing annual gross revenues of approximately $17 million. Of this amount, approximately 28 percent are attributable to sales within California and approximately 72 percent are attributable to sales outside California.
Pursuant to an inquiry by Bronco, the Department of Alcoholic Beverage Control advised Bronco by letter, dated December 1, 2000, that it intended "to enforce Section 25241 pursuant to its terms ...." It further advised Bronco that if it continued to use its labels in violation of section 25241 "the Department may take disciplinary action against the license of Bronco Wine Company, up to and including revocation of [Bronco's] license."
On December 22, 2000, Bronco filed the present original petition for writ of mandate in this court prohibiting" enforcement of section 25241. Respondents and intervener filed briefs in opposition. We granted an alternative writ and issued a stay of enforcement pursuant to the consent of the parties.
Bronco contends that, as applied to wines sold in interstate and foreign commerce, section 25241 is preempted by federal law because it conflicts with federal regulations and federal certificates of label approval and therefore stands as a complete obstacle to the accomplishment of the federal statutory and regulatory scheme.
The respondents do not challenge the validity of Bronco's federal labels nor the regulations pursuant to which they were issued. They contend there is no conflict between the federal regulations and section 25241 because state and federal law share the same purpose and therefore state law does not stand as an obstacle to fulfillment of the purpose of the federal statute. Intervenor argues the federal scheme contemplates concurrent regulation which leaves the states free to impose greater restrictions in order to achieve a common end. We disagree with each of these claims.
We first consider the statutory and regulatory schemes.
Subdivision (b) of Section 25241 states the following prohibition:
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