Bronco Wine Company v. Jolly (2004) 33 Cal.4th 943

Horvitz & Levy LLP represented interveners, the Napa Valley Vintner’s Association (NVVA), in this California Supreme Court case involving an issue important to California’s wine industry: “Is Business and Professions Code section 25241, which prohibits the use of the word ‘Napa’ in a wine brand name unless at least 75 percent of the grapes from which the wine is made were grown in Napa Valley, preempted by federal regulations promulgated under the Federal Alcohol Administration Act?”

Under federal law, any wine bearing the name of a specific region must be made from grapes of which at least 75 percent are from the named region. However, if a brand name includes a region in the name, and the brand name was in use prior to 1986, it does not have to comply with the 75 percent requirement, and the wine may contain no grapes from the named region.

Bronco Wineries purchased three brand names containing the name Napa or a region within the Napa Valley (Rutherford) and used them on wines containing no grapes from the Napa Valley. Many of the grapes came from Lodi or Stanislaus County. Napa Chardonnay grapes may sell for over $2,000 per ton, while grapes from places such as Lodi may sell for only $200 to $300 per ton. A survey showed consumers who purchased the wines in question believed they were buying Napa wines.

In response, the California Legislature enacted Business and Professions Code section 25241, which requires that wines bearing a Napa label be made entirely from Napa grapes. Bronco Winery successfully challenged section 25241 in the Court of Appeal, asserting the statute was preempted by federal law.

Both the NVVA and the Attorney General petitioned the Supreme Court for review. The NVVA asserted that federal and state regulation of alcoholic beverages have coexisted for nearly a century and that the grandfather clause in the federal regulation excuses only noncompliance with federal regulations, but does not prevent states from taking remedial action where, as here, deception on the consuming public would result.

The Supreme Court agreed with the NVVA, finding the federal regulation established a minimum standard and that California, like other wine producing states, is free to supplement the federal regulations with state regulation to further Congress’s overriding purpose in the prevention of consumer deception relating to wine labeling. The Supreme Court reversed the judgment of the Court of Appeal and remanded the case to that court for further proceedings.

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