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CA, 94559
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Christopher J. Passarelli

About Us

Dickenson, Peatman & Fogarty provides a level of representation ordinarily associated with legal practices in major metropolitan centers. Our attorneys are routinely recognized in legal rankings and surveys as some of the best in their fields, and the firm is involved regularly with matters of local and national import. For over forty years Dickenson Peatman & Fogarty lawyers have practiced law with the get to know you culture that has engendered significant client loyalty

Rooted in the wine regions of Napa and Sonoma, Dickenson Peatman & Fogarty provides full service legal representation to all manner of businesses and individuals throughout California, the United States and abroad. The Firm's major practice areas include alcohol beverage law, business and corporate dealings, land use matters, labor and employment, civil litigation, cannabis law, intellectual property, real property transactions, as well as estate planning and probate. With offices in the major wine valleys of Napa and Sonoma, the firm is intimately familiar with, and has extensive experience, in both the wine and hospitality industries.

The attorneys at Dickenson Peatman & Fogarty take their involvement and contribution to their communities as seriously as they do the practice of law. Our attorneys (and our staff) have a long tradition of community involvement and have served in leadership roles in social, cultural, educational, financial and political institutions.

Dickenson Peatman & Fogarty offers clients exceptional services and sophisticated expertise while taking a genial and courteous approach to client relationships.

Practice Areas

Dickenson Peatman & Fogarty's attorneys practice in nine distinct practice areas, covering nearly the entire spectrum of civil matters. For more information about the Firm's experience in any practice area, click on the links below.

News Archive

Napa County Winery Permitting in State of Flux
11 September, 2019

Ongoing Revisions to County Permitting Policies Require Winery Attention

The Napa County Board of Supervisors has undertaken a series of major regulatory moves involving winery and vineyard permitting over the course of the past year. Critics of the various regulatory changes abound on all sides of the issues, with the board navigating a difficult path between wine industry, agricultural, environmental and anti-growth interests.

First, on Dec. 4, 2018, the board adopted Resolution No. 2018-164, generally referred to as the “Compliance Policy.” Among other items, the resolution created a March 29, 2018 deadline for applications to cure existing permitting nonconformance; a process to request a “status determination” of existing rights; and a mandatory winery production volume and grape source reporting program. As expected, this Compliance Policy has generated a greater than normal workload for the county, slowing the processing times for most use permit related applications. The Compliance Policy dictates that future applicants with operations exceeding their use permit limits will need to document compliance with existing use permit limitations for one year before any modification to their permit can be considered.

Second, the board passed the Water Quality and Tree Protection Ordinance (No. 1438) on April 9, 2019. A reaction to the narrow defeat of “Measure C” on the June 2018 ballot, the ordinance increased tree and vegetation retention and preservation requirements, tree mitigation ratios, established setbacks from municipal water supply reservoirs and wetlands, and provides for new stream setbacks for smaller order streams. New projects will need to address the additional limitations created by those rules. It remains to be seen how much impact the new rules will have on prospective development.

Third, with the pendulum swinging back towards permit holders and future applicants, the board at its April 23, 2019, meeting adopted Resolution No. 2019-53 to clarify the applicability of the county’s road and street standards. While in the past all use permit modifications triggered the need to comply with the most current driveway fire safe access standards, those standards have seen multiple updates making even relatively new wineries seeking a minor permit modification incur significant costs to upgrade access to the latest 22-foot width requirements. The policy change clarified that only a major modification to a use permit triggered the need for such roadway updates. This small but significant change makes requesting a minor modification to a use permit much more palatable to many applicants, since it avoids the sometime significant costs of constructing driveway improvements that were previously required for even minor operational changes or small remodeling projects.

And fourth, on May 21, 2019, as a continuation of the swing towards addressing project applicant concerns, the board debated and then directed the planning director to study changes to the use permit application and modification process, with an eye towards making permitting for small wineries easier, as well as clarifying what types of permit modifications fall within the minor and major modification categories. The development of new or revised rules in that regard is ongoing, and will continue to be evaluated by the board throughout the remainder of the year.

The true impact or benefit of these rule changes is not entirely clear at this point. But we can see the beginnings of the impacts of the Compliance Policy. Initial reporting in the North Bay Business Journal indicated that the Compliance Policy had generated significantly fewer applications than anticipated – 54 applications, including 33 for use permits and 21 for status determinations. The first key piece of the Compliance Policy – applications to update or conform activities to permit limits – are slowly working through the county’s planning process. The Compliance Policy provided an incentive that those that applied prior to the deadline could continue with their current operations while their applications are processed.

The second key Compliance Policy option – status determinations – have also been working their way through the County’s review process. Modern Napa county Use Permits are lengthy documents, containing a litany of generally-boilerplate standard conditions of approval, which are tailored to each permit as appropriate. Historic permits vary significantly however, with lesser detail than their modern brethren. This variation between older and newer use permits was one of the policy rationales for including this option as part of the Compliance Policy, as a winery owner may not be fully aware of how the county currently interprets its use permit. To allow for wineries to take advantage of this process, the Compliance Policy provided a tolling of the deadline to submit an application for winery owners who applied for a status determination prior to the March 29, 2018 application deadline.

This resulted in an extension of time to file a use permit modification, with the Compliance Policy’s benefits of continuing current operations. Once the owner receives the county’s interpretation of its permit, it can then determine what if any use permit modification for which it might want to apply. As those status determinations are issued, additional applications for modifications of use permits are certain to be submitted. While the status determinations have not been released publicly, we have seen the county consistently opine that the operations approved by a use permit include only those anticipated in the applications for those permits, and additionally limited by the specific conditions in the permit approval documentations.

The last component of the Compliance Policy is the mandatory wine volume and grape source reporting requirement, which as with the other deadlines has seen its stated beginning date of July 1, 2019 come and go with no such program being actually implemented. However, this mandatory reporting program is being developed by the county and when ultimately adopted will require submission of documentation setting forth the volume of wine produced and the source of grapes used in that production at each Napa winery. The mandatory volume and grape source reporting policy is slated to trigger an inspection and full evaluation of all permit compliance if that reporting shows a violation of either limit. The promise of such an inspection may have encouraged voluntary applications to cure existing issues, especially if the recent larger than average harvests caused a production limit exceedance. However, that policy has yet to actually be implemented, and it remains to be seen when it will be put into practice.

In sum, there have been a number of developments that have put the focus on winery permitting in Napa county over the last year. The landscape is likely to change further as additional permitting process changes are evaluated and debated, and the mandatory reporting process goes into effect. Napa county wineries need to stay alert: operating conditions are subject to sudden change.


2  With  some  limited  exceptions  for  wineries  not  in  Agricultural  Preserve  or  Agricultural  Watershed  zoning  districts,  or  not subject to the 75% Napa County grape source rule,  which  do  not  need  to  provide  grape source data.  Volume reporting requirements still apply to all wineries however.

Joshua S. Devore
Of Counsel
Josh has extensive experience solving complex problems.  His work spans securities offerings, land use and environmental permitting; technical issues from internet privacy and website policies to smoke taint in wine grapes. From ordinary to complex litigation, his experience has crossed multiple industries from finance to technology to wine and has included enforcement actions and class actions. Today, much of his work is focused on the wine industry, but it still spans a wide range of litigation issues from CEQA petitions, winery use permits, cannabis, securities and compliance.


Making Sure Your Wine, Beer or Spirits Club Complies with State and Federal Law
15 August, 2019

The California Department of Alcoholic Beverage Control (“ABC”) recently issued a new Industry Advisory regarding subscription services. In the alcohol beverage industry, we often see subscription services in the form of automatic renewal wine clubs, beer-of-the-month clubs, and/or spirits clubs, where customers sign up to receive future shipments of a licensee’s offering of wine, beer, or spirits products, where permitted by applicable laws. Often times, subscription services continue until the customer cancels the agreement.

Licensees wishing to offer automatic renewal “club” plans or subscription services to their customers must comply with federal law and California’s Automatic Renewal Law (ARL).  Since a violation of these laws may subject licensees to monetary penalties, suspension or revocation of a license, and/or injunctive relief, we have summarized below the legal requirements under both federal and California state law for automatic renewal or subscription plans so that licensees can ensure that their subscription plans are compliant.

Federal Requirements

The Federal Trade Commission refers to automatic renewal plans and subscription services as “Continuity Plans,” a form of “negative option marketing” under federal regulations. Section 4 of the federal Restore Online Shoppers’ Confidence Act (“ROSCA”) imposes the following specific requirements on Continuity Plans that are on the internet:

  • The licensee must “clearly and conspicuously disclose all material terms” before obtaining customer’s billing information;
  • The customer must provide informed consent before the licensee charges the customer; and
  • The licensee must provide “simple mechanisms” for cancelling recurring charges.

California Requirements

California also imposes requirements on those licensees offering internet and/or non-internet Continuity Plans, which California’s Automatic Purchase Renewal Law (“ARL”) refers to as Automatic Renewal plans.  In fact, California’s ARL is often viewed as the broadest and strictest in the country.  For example, California’s ARL not only includes subscription agreements that automatically renew, but also includes any “free trial” offer that converts to an automatic payment, unless terminated by the consumer.

While the requirements of California’s ARL are very detailed, below is a brief summary of the five basic requirements for any Automatic Renewal plan under California law:

  1. Clear and Conspicuous Automatic Renewal Offer Terms. A licensee must present the following Automatic Renewal Offer Terms to a customer before enrolling the customer in an Automatic Renewal: (i) Subscription will continue until the consumer cancels; (ii) Cancellation policy ; (iii) Reoccurring charges occur, whether a third party will be making the charge, whether the amount of the periodic charge may change, and if the offer also includes a free gift or trial, an explanation of the price that will be charged after the trial ends;  (iv) Length of the automatic renewal term or that the service is continuous; and (v) Any minimum purchase obligations. The Automatic Renewal Offer Terms need to be presented to customers in a clear and conspicuous way that clearly draws attention to the language above.
  2. Obtain Affirmative Consent before Charging Customer. A licensee must obtain affirmative consent to the Automatic Renewal Offer Terms from a customer, through for example requiring a box to be checked or a signature, prior to charging the customer.
  3. Consumer Acknowledgment.  A licensee must provide an “acknowledgment” to the consumer of the Automatic Renewal Offer Terms, cancellation policy, and information on how to cancel, that can be that can be easily saved by the consumer.
  4. Easy-to-Use Cancellation Mechanism. There must be an easy-to-use cancellation mechanism, such as a toll-free number, email address or postal address.
  5. Means for Online Cancellation.  Where enrollment was completed online, a licensee must provide a way for consumers to terminate the Automatic Renewal exclusively online. If the means of cancellation is provided by email, it must be a formatted email that can be sent to the licensee without additional information.

ABC’s Advisory on Club Renewals can be found here:


For more information regarding automatic renewal plans or club structures, please contact Bahaneh Hobel or Patrick Murphy.

Uncertain Immigration Climate – What Can Employers Do?
30 July, 2019

Since the 2016 election there has been speculation of wide-spread immigration actions by the United States Immigration and Customs Enforcement (“ICE”).  Repeated announcements from the President for “round-ups”, recent mis-match letters from the Social Security Administration (“SSA”) and court action concerning the census citizenship have many in the community on edge.

While it is difficult to predict what will happen, employers should be prepared in the event ICE raids or audits their workforce.  Employers are in a difficult spot – caught between federal and state law.  They must not knowingly employ an individual who is not authorized to work in the United States, but they also must not discriminate against an individual because of the individual’s immigration status, citizenship or national origin.  And for many, the legal reality is overshadowed by the human reality that many long term employees with family and ties to the community may be undocumented and at risk.

In light of announced raids, employers should review current legal authority concerning what they can and cannot do should ICE arrive at the worksite.  A Federal Court temporarily blocked as unconstitutional portions of AB 450, California’s 2017 expansive immigration law.  Most relevant for employers is that California cannot penalize them if they refuse to allow ICE or other enforcement agencies access to employee records or into nonpublic areas without a judicial warrant or subpoena.  Employers may choose to voluntarily allow such access, but they are also not required to provide it.

Employers should communicate to their public facing staff what they want to happen should a federal agency, such as ICE arrive on the premises.  At the very least personnel should know who to contact and should be instructed to ask the agency personnel to wait in a particular area until the designated individual can be reached.

In preparation for any request to see employee records, either with notice or without, employers should conduct an audit of their Form I-9 records.  A Form I-9 (Employment Eligibility Verification form) must be completed for all employees upon hire.  The form is very specific. An audit by ICE will involve whether the form was completed properly by the employer and employee.  ICE may fine employers for technical violations and if it appears that wide spread fraud surrounds the forms the employer can be subject to more substantial penalties and criminal charges. For detailed information about how to properly compete an I-9, the United States Citizenship and Immigration Services has a helpful manual, which you can find here.

While SSA Acting Commissioner Nancy Berryhill recently announced to Congress that no action will be taken against employers who did nothing in response to SSA’s March 2019 no-match letters, the President’s recent statements that he will direct federal agencies to work together to share information about the location of individuals who may be in the United States unlawfully, raises serious concerns that there may be additional scrutiny of employer records.  For employers it is time to make sure your records are in order.

If you have any questions about your specific situation, contact Jennifer Douglas or Lisa Sennott.

TTB Efforts to Streamline COLA Application Process: New “Conditionally Approved” COLA Status
28 June, 2019

The U.S. Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau (“TTB”) recently announced upcoming changes to the Certificate of Label Approval (“COLA”) application review process.  Specifically, TTB will be adding a new “Conditionally Approved” status allowing applicants to fix minor errors in their COLA applications without having to go to the back of the line.

Currently, when a TTB specialist believes a COLA application requires changes (even a minor change such as the application containing a spelling of the brand name that is slightly different from the actual label), the application goes back into the queue and needs to wait for further review and approval.

In an effort to streamline the label approval process, TTB specialists will soon be able to propose changes to the brand name, fanciful name, appellation, or grape varietal fields of COLA applications, and designate the application as “Conditionally Approved.”  Applicants will be notified by email of the change in status and have 7 days to review the proposed changes.  If the applicant agrees with the proposed changes, it can accept those changes through COLAs Online, at which point the application’s status will automatically change to “Approved.”  Alternatively, if the applicant disagrees with the proposed changes, it can decline those changes, at which point the application’s status will automatically change to “Needs Correction.”  If the applicant declines the corrections because it believes the original entries were correct or otherwise wishes to provide the specialist with additional information, the applicant may provide an explanation in the “Notes to Specialist” field on COLAs Online.  Failure by the applicant to accept or decline the proposed changes will result in the application being designated as “Needs Correction,” and the any revised applications will go to the back of the queue.

This new status is only intended for situations where the application would have been approved, but for the fact that the information in one or more of the above referenced fields is inconsistent with the submitted label.  Where there is some other additional deficiency in the application, such as a lack of a Health Warning Statement, the specialist will return the application for correction without making any proposed changes, and the application goes back into the queue.

TTB’ has not stated when this change to COLAs Online will be implemented, but is holding a TTB webinar on Tuesday, June 25 from 2-3pm Eastern to discuss the new Conditionally Approved status and other recent COLAs Online enhancements.

By Brian Noack (Law Clerk) and John Trinidad (Attorney)

U.S. Trademark Office Issues Cannabis Registration Guidance
14 May, 2019

On May 2, 2019 the USPTO released its Examination Guide 1-19, Examination of Marks for Cannabis and Cannabis-Related Goods and Services after Enactment of the 2018 Farm Bill (here: , which aims to clarify the procedure for examining marks for cannabis and cannabis-derived goods and for services involving cannabis and cannabis production following the 2018 Farm Bill. The Guide discusses federal trademark office examination of applications for trademarks and services marks for which the claimed goods include cannabis or cannabis-derived goods such as cannabidiol (“CBD”).

The guide explains that CBD is a constituent of cannabis encompassed within the definition of marijuana under the Controlled Substances Act (CSA), 21 U.S.C. §802(16) and that the USPTO therefore refuses registration when an application identifies goods encompassing CBD or other extracts of marijuana, which are unlawful under federal law and do not support valid use of the applied-for mark in interstate commerce.

However the big news is that, pursuant to the terms of the 2018 Farm Bill which removes hemp (defined as cannabis containing no more than 0.3% THC on a dry-weight basis under Section 297A) from the CSA, the USPTO will no longer refuse registration for applications filed on or after December 20, 2018 for goods derived from “hemp” if the application identification of goods specified that they contain less than 0.3% THC, thus limiting the scope of the resulting registration to goods which are compliant with federal law. For applications filed before December 20, 2018, registration will be refused due to unlawful use or lack of bona fide intent to use in lawful commerce under the CSA (such applications not having valid basis to support r registration as of the filing date because the goods violated federal law). Those applications claiming lawful hemp-derived goods containing less than 0.3% THC will be given the option to amend the filing date to December 20, 2018 and filing basis to overcome a CSA refusal.

The Guide points out that CBD or hemp-derived products used in food or dietary supplements is regulated under the Federal Food Drug and Cosmetic Act (FDCA) and registration of marks for foods, beverages, dietary supplements, or pet treats containing CBD will still be refused as unlawful under the FDCA, even if derived from hemp, as such goods may not be introduced lawfully into interstate commerce. 21 U.S.C. §331(ll). Applications covering services involving cannabis or cannabis production must likewise be compliant with the CSA and 2018 Farm Bill, i.e., the services must involve hemp containing less than 0.3% THC and the application filing date and basis must be amended accordingly. Applicants are advised that USPTO Examining Attorneys are authorized to issue informational inquiries regarding applicants’ authorization to produce hemp, and applicants may be required to provide additional statements of record regarding compliance with the 2018 Farm Bill.

For more information regarding IP protection for cannabis and alcohol beverage products, contact Chris

Federal Government Shutdown and COLAs
10 January, 2019

The current federal government shutdown has put a halt to TTB’s regular operations and that has had a ripple effect on the alcohol beverage industry.  Wine producers and importers must obtain a Certificate of Label Approval (COLA) for wines they sell in interstate commerce.  While the online system for submitting COLA applications is still operational, TTB is not reviewing or approving those submissions during the shutdown period.   This may result in a delay in the ability to introduce new wines in the market.

Thankfully, there are a number  of permissible label revisions that do not trigger a need for a new COLA.  For example, if you have a COLA for your 2017 rosé and the only change in the label for your 2018 rosé is the updated vintage date, you’re in luck:  no need for a new COLA.

We recommend that wineries and importers familiarize themselves with this list of allowable revisions.  So long as your planned label changes fall within one of those categories, the temporary pause in COLA application review will not affect your ability to bottle and release that wine.

For more information regarding federal labeling regulations and COLAs, please contact John Trinidad

Winery Websites and ADA Compliance
14 November, 2018

The recent news of lawsuits filed against New York wineries has caused industry members to ask if they face any litigation risk if their websites are not accessible to people with disabilities under the Americans with Disabilities Act (“ADA”).  The answer is “maybe.”  There is considerable ambiguity in the law as to which companies are required to make their websites ADA-compliant and what actually constitutes ADA compliance.

This blog post provides a brief overview of the New York litigation and the current status of federal law governing websites and the ADA.  Wineries should check in with their information technology vendors to determine what, if any, accessibility features are currently part of their websites, not only to avoid potential claims, but also to make sure their businesses are open to all consumers.

What’s the New York case all about?

The lead plaintiff in these actions is legally blind and uses screen-reading software to access website content.  That software only functions correctly if the website incorporates certain screen-reading compatible features, such as alternatives text for images and videos.  Plaintiff claims that the ADA requires the winery to make certain information on their websites accessible to visually impaired persons, including:  e-commerce features, wine club membership instructions, ability to book or make reservations, hours of operation, and location of the winery.  Plaintiff ultimately claims that Defendant’s failure to remedy such accessibility barriers is a discriminatory practice against blind and visually impaired people, in violation of the ADA and certain New York laws.  Plaintiffs are seeking injunctive relief on their ADA claim and an order requiring the wineries to take “all the steps necessary” to make their websites compliant with the ADA.

This type of case is not unique to the wine industry.  Over the past two years, there have been a slew of cases filed against businesses for allegedly violating the ADA by not making their websites accessible to people with disabilities.

What is the ADA?

The ADA is a federal civil rights law that prohibits discrimination based on disability.  Under Title III of the ADA, any place of “public accommodation,” such as businesses generally open to the public, must provide individuals with disabilities full and equal enjoyment of goods, services, facilities, and accommodations.  Places of public accommodation include shops and facilities serving food or drink.

States have also adopted their own laws that require businesses to provide access to persons with disabilities.  For example, New York State’s Civil Rights Law and California’s Unruh Civil Rights Act set forth those states’ accessibility requirements.  Local governments may have their own regulations, too.  Plaintiffs in the New York winery lawsuits have claimed that the wineries are also in violation of the New York City Human Rights Law because they operate a physical location in the city.  Note – this blog post focuses solely on the ADA requirements, and compliance with state and local laws regarding accessibility are beyond the scope of this article.

Do winery websites need to be ADA compliant? 

Here’s where things get confusing.  Courts have been all over the board on which businesses must make their websites ADA compatible.

 In general, websites that service places of public accommodation are required to make their websites accessible to visually impaired persons.  In the wine industry context, this means that, wineries that have tasting rooms, or that allow for tours, tastings, and on-site purchases, likely need to make their website accessible to the visually impaired under the ADA.

Wineries that have no physical location of their own for customers to visit, taste, or purchase wine are less at risk from an ADA claim.  The Ninth Circuit Court of Appeals has held that a website that is not tied to a place of public accommodation or that is attached to a place that does not qualify as a public accommodation is not subject to the ADA. (eg. Weyer v. Twentieth Century Fox Film Corp., 198 F.3d 1104 (9th Cir. 2000)). That being said, there are cases in which courts have concluded that a stand-alone website service without a physical location can itself be considered a place of public accommodation, and subject to ADA requirements.  Moreover, in 2014, the DOJ entered into several settlements agreements with online-only vendors, requiring each time, compliance with the WCAG (see below).  In other words, not having a physical location may not be enough.

How do I make my website ADA-compliant? 

Ready for even more confusion?  Currently, there are no federal guidelines for how to make a website ADA compliant.  The Department of Justice (“DOJ”) had contemplated adopting a new rule to outlinehow private companies’ websites can comply with the ADA.  But in 2017, the department decided to halt its proposed rulemaking activity on this front.

Although the DOJ failed to issue guidance on website accessibility requirements, the World Wide Web Consortium, an international standards organization, has published coding standards for accessibility, the Web Content Accessibility Guidelines, often referred to as WCAG 2.0 AA.

While there is nothing in federal law that states that implementation of WCAG 2.0 AA automatically means a website is ADA compliant, the complaints filed against the New York wineries all seek relief that would require the wineries to comply with WCAG 2.0 AA.  Moreover, the DOJ has previously argued in ADA enforcement actions that companies can comply by making their websites and mobile apps conform to WCAG 2.0 AA standards.

 Action Items for Wineries

Given the fluid state of the law surrounding the application of the ADA to websites, there is no clear answer as to which businesses must make their websites ADA-compatible, or even what is required for a website to be considered ADA-compatible under federal law.

Wineries should check in with their IT vendors and professionals to determine if their websites, apps, and mobile sites have implemented accessibility features per the WCAG 2.0 AA, and if not, assess if the cost of doing so would cause hardship to the company.  Implementing such features may not only help stave off legal actions, but would also signal that your winery is accessible to all consumers.

 For more information about these issues, please contact John Trinidad or Louise Mercier.


UPDATE (11/13/2018):  The Wine Institute recently circulated additional information regarding the ADA and winery websites.

A Bridge too Far for Granholm? Florida Importer Challenges California Three-Tier System
24 October, 2018

A Florida-based wine  importer is hoping to shake up the California three-tier system.  If successful, any importer or wholesaler in the U.S. may be permitted to sell directly to California retailers.

Earlier this year, Orion Wine Imports, LLC filed a lawsuit against the director of the California Department of Alcoholic Beverage Control arguing that licensed wine importers and wholesalers in California and in other states must be given the same right to sell and deliver wine directly to California-licensed retailers.  Orion Wine Imports, LLC v. Applesmith, Case No. 2:18-cv-01721-KJM-DB (E.D. Cal.).  Orion argues that, under the U.S. Supreme Court’s decision in Granholm v. Heald, state laws that discriminate against out-of-state importers and wholesalers are unconstitutional.

This argument may sound familiar.  In Granholm, the Court invalidated state direct-to-consumer shipping laws that discriminated against out-of-state producers.  Since then, a number of lawsuits have been filed arguing that the Granholm holding should also apply to laws that discriminate against out-of-state retailers.  As we reported a few weeks ago, the Supreme Court will be hearing a case that may answer that question.

Defendant in the Orion case is likely to argue that applying Granholm to the wholesale tier is a bridge too far.  Plaintiff’s are looking to invalidate long-standing provisions of the state’s three-tier licensing structure. The challenged statutes, adopted by the California legislature in 1953 as part of the state’s post-Prohibition codification of the Alcoholic Beverage Control Act, are core to the establishment of the state’s three-tier system.

Orion is also facing opposition from its fellow wholesalers.  Two industry trade associations, California Beer and Beverage Distributors and the Wine and Spirits Wholesalers of California, have filed an amicus brief in support of defendant’s position.

The court has scheduled a December 21, 2018 hearing in Sacramento on defendant’s motion to dismiss.

For more information regarding the three-tier system, please contact John Trinidad.

New Law on Winery Social Media Ads for Certain Retailer-Hosted Events
28 September, 2018

Governor Brown recently signed into law AB2452, a bill that grants wineries broader privileges in the use of social media to promote certain events held at retailer premises, such as winemaker dinners.  The bill was introduced by Assembly member Cecilia Aguilar Curry, co-authored by State Senator Bill Dodd, and sponsored by the Napa Valley Vintners.

The new law amends three tied-house exceptions in the California ABC Act that govern the organization and promotion of certain events held at on- and off-premise retailers that involve supplier-side licensees (ABC Act Sections 25503.4, 25503.56, and 25503.57).   Those laws restricted how the participating supplier could advertise and promote those events.  For example, the advertisement could only list the name and address of the retailer and expressly prohibited pictures or illustrations of the retailer’s premises.

The new bill allows suppliers (including wineries) to now include the following in their advertisements of those permitted retailer-hosted events:

 ADDITIONAL RETAILER INFORMATION – The supplier’s advertisement for the event can now include an expanded range of information about the host retailer (including the retailer’s website address and “other electronic media”) so long as such information is “relatively inconspicuous in relation to the advertisement as a whole.”

 PICTURES & ILLUSTRATIONS – The new bill allows participating suppliers to include “pictures, illustrations, and depictions of the retailer’s premises, personnel, and customers” in the event advertisements.  Videos, however, are expressly prohibited.

 REPOSTING OF SOCIAL MEDIA POSTS –   Participating suppliers are now allowed to repost social media posts that advertise the event, including posts by the host retailer, provided that the reposted advertisement complies with all other content restrictions in the ABC Act.

Wineries and  other suppliers should note that these expanded advertising privileges only allows them to advertise in connection with specific events governed by ABC Act Sections 25503.4 (wine-related events, including winemaker dinners), 25503.56 (instructional tasting event at off-sale retailer premises under a Type 86 license), and 25503.57 (instructional events at on-sale retailer premises).  It is not a blanket permission to begin photographing and posting about retailers on supplier social media accounts.

The new law goes into effect on January 1, 2019.

If you have any questions about the new law, tied-house issues, or winery use of social media, please contact John Trinidad.

DISCLOSURE:  DPF represents Napa Valley Vintners on a variety of matters, and advised on the proposed legislation. 

Updated Groundwater Basin Priorities May Bring Regulation to North Bay Wine Counties
26 July, 2018

The 2014 Sustainable Groundwater Management Act (SGMA) requires every groundwater basin in California ranked medium and high priority to be managed by one of more Groundwater Sustainability Agencies (GSAs) pursuant to an adopted Groundwater Sustainability Plan (GSP) or alternative plan.  The California Department of Water Resources (DWR) issued the initial groundwater basin prioritization in 2014.  In May 2018, DWR released draft updated basin priorities using revised basin boundaries, revised methodologies, and updated datasets and information, including well location, groundwater production, salinity intrusion and cropping information.  For the first time, the basin prioritization will consider whether groundwater production could adversely impact local habitats and local streamflows.

DWR will accept public comments on the draft 2018 SGMA Basin Prioritization Process and Results report through July 18, 2018.  DWR anticipates adopting the final prioritization in mid-October.  A useful web mapping program shows the 2018 draft prioritization, proposed changes from the 2014 to 2018 prioritization, and information specific to each basin.

DWR proposes upgrading 14 basins from low to medium or high priority, which would require election of GSAs within two years and adoption of GMPs within five years of final adoption of the revised priorities.  Five of the 14 basins include winegrape growing regions dependent on groundwater:

  • Alexander Valley, Alexander Area Subbasin in Sonoma County, which includes much of the Alexander Valley AVA and portions of the Chalk Hill AVA;
  • Santa Rosa Valley, Healdsburg Area Subbasin in Sonoma County, which includes portions of the Dry Creek Valley and Russian River Valley AVAs;
  • Wilson Grove Formation Highlands Basin in Sonoma County, which includes portions of the Green Valley, Russian River Valley, and Sonoma Coast AVAs;
  • Napa-Sonoma Valley, Napa-Sonoma Lowlands Subbasin in Napa County, which includes a portion of the Carneros AVA; and
  • Upper Lake Valley Basin in Lake County, which includes a portion of the Clear Lake AVA at the north end of Clear Lake.

Growers in these five basins are likely to experience very different compliance obligations if current SMGA compliance efforts for 2014-ranked basins in those counties are any guide.  Lake County has proposed that its existing groundwater management plan serve as an alternative to preparing new GSPs for the ranked medium priority basins in the County.  Napa County has proposed that no GSP is required for the one medium priority basin within the County pursuant to an analysis that the basin has operated within its sustainable yield.  In Sonoma County, the County, cities and other local agencies have formed new GSAs for each of the three medium priority basins within the County, and are evaluating costly fees to fund groundwater studies and preparation of GSPs.

DP&F will continue to track and report on SGMA developments affecting the wine industry and other clients.

For more information on this and other water issues, please contact Peter J. Kiel.

TTB Extends Alternate Procedure For Excise Taxes Credits through 2019
17 May, 2018

Today TTB announced in Industry Circular 2018-1A that it is extending until December 31, 2019 the ”Alternate Procedure” under which wine producers can tax pay wine stored at bonded tax wine cellars (“BWC”) without having to physically transfer their wine back from the BWC in bond.  This update to TTB’s prior procedure is a welcome extension to the previous deadline of June 30, 2018 that had many in the industry scrambling.

For background—effective January 1, 2018—the federal Tax Cuts and Jobs Act (Public Law 115-97) (“The Act”) changed various provisions of the Internal Revenue Code related to alcohol beverages.  Included in these changes were new tax credits[i] for wine (“New Credits”) that will be in place through 2019.  The New Credits are available for all domestically produced wines removed from the producer’s own bonded premises in 2018 or 2019 regardless of when the wine was produced.  During this time, the small producer tax credit is suspended, as are the provisions that allow for the transfer of such credits.

While the New Credits are welcome news for the industry, a number of issues arose in implementing them that led to a good deal of confusion and stress. One of the main problems was that the Act did not provide a mechanism (similar to what had previously existed) for a producing winery to transfer the New Credits to other facilities to be used on its behalf.  Under the Act, a winery can only receive the benefit of the New Credits for wines it produces if it tax pays and removes those wines from its own bonded premises.   Any wines that are removed from a BWC or other bonded premises—for example, where a winery may be storing its wines—are not eligible for the New Credits. A winery therefore would have to engage in an absurd exercise to be able to claim the New Credits on wines in storage at a BWC- the winery would have to physically transfer the wines back to its premises before tax paying the wines.  Clearly, this was not ideal.

In light of the above, TTB issued Industry Circular 2018-1 setting forth an Alternate Procedure that allows wine producers to do a paper “transfer” of wines in bond at a BWC “back” to the producing winery’s own premises, tax pay the wine, and then apply the New Credits without physically returning the wine to the winery’s own bonded premises.  However, the Alternate Procedure was only available until June 30, 2018, leaving wine producers and warehouses scrambling to meet the deadline.

By extending the Alternate Procedure until December 31, 2019 (when the New Credits are set to expire), TTB has provided the industry with some flexibility and time to deal with implementation and application of the New Credits. This extension will allow producers to take advantage of the New Credits, as intended, on wines they produced but may have stored elsewhere, without having to engage in a shell game of sorts, physically transferring product back and forth between bonds or rushing to meet a looming deadline.  TTB also expanded the reach of the Industry Circular to apply to wines stored at other bonded wineries.

While this is good news for the industry, there are still issues with the Act that remain outstanding.  For example, wine producers still cannot transfer the New Credits to BWCs as they could with the small producer credits.  Wineries that want to take advantage of the New Credits must tax determine and tax pay the wines themselves from their own premises.

What does this mean in practice?  It means that wineries that typically don’t pay excise taxes directly to TTB (because they are paid by the BWC) are suddenly responsible for doing so.  And while wineries have always had to report movements in bond on TTB Form 5120.17, they will now have to report when the wines are tax paid.  Further, the Alternate Procedure does not change the fact that the New Credits are only available on wines produced by the winery itself, and cannot be used for wines custom crushed for the winery by another winery.

Finally, the Alternate Procedure is not available for any wines that have previously been tax paid by a BWC on behalf of a winery in 2018.  Unfortunately, any such wines will be subject to the full standard tax rates and cannot retroactively take advantage of the New Credits or the Alternate Procedure.

For any questions on the excise tax changes discussed above, please contact Bahaneh Hobel.

[i] For new tax credits, see 26 U.S.C. 5041(c)(8).

ICE Inspections – What Employers Need to Know After AB 450
07 February, 2018

With the recent news regarding ICE raids on 7-11’s across the country, rumors of raids targeted at Northern California businesses and California’s Attorney General announcing plans to prosecute employers for violation of new laws passed through AB 450, employers should have a plan in place in the event of a raid. As January 1 AB 450 created new laws governing employers’ obligations related to immigration enforcement efforts. Below is some guidance for employers to use in navigating these tricky situations as well as an overview of the new laws stemming from AB 450.

Tips for Handling Immigration Agency Inspections:

  • Do not allow agents to enter any non-public area, or provide access to records, without a valid warrant, or for records a valid “Notice of Inspection.”

Public areas: generally parking lots, lobbies, waiting areas, or other places the public enters or is permitted to enter.

Non-public areas: offices, back of house areas, areas marked “private” or “no trespassing,” and areas where the public is not permitted to enter due to company policy.

  • When requesting a warrant, communicate with the agent in a public area and away from employees.

(Make sure the warrant is valid and signed by a Judge. Warrants from the Department of Homeland Security are not valid.)

  • If you receive a “Notice of Inspection,” notify employees promptly (within 72 hours).
  • Do not unnecessarily re-verify employment.
  • Consider implementing a plan with the procedure to follow in the event of an inspection.
  • Train employees – especially front-of-house workers, or those that greet visitors – on the new law and what to do in the event of an inspection. Employees should be advised to tell inspection agents that they are not authorized to allow entry and the name of the person who is.

Tips for Communicating with Employees about Inspections:

  • Ensure you are abiding by the required notice procedure and content of Labor Code §90.2, described below.
  • You may advise employees that they do not have to talk to immigration enforcement agents, and they do not have to provide any documents.
  • Advise employees to call an immigration attorney, Legal Aid, or another resource.
  • Avoid getting admissions from employees regarding whether they are legally authorized to work unless you are required by law to re-verify their status.

AB 450 created obligations of an employer as it relates to (1) an immigration agency inspection, (2) notice to employees regarding an inspection, and (3) re-verifying employment. Violation of these new laws carries fines for employers that vary from $2,000-$10,000.

Obligations Upon Immigration Agency Inspection:

(Gov. Code §§7285.1, 7285.2, 7285.3)

  • Employers cannot provide voluntary consent to ICE agents to enter non-public areas without a warrant.
  • Employers can and should take an ICE agent to a non-public area where employees are not present in order to verify if there is a warrant.
  • Employers cannot provide voluntary consent to an ICE agent to access, review or obtain employee records without a subpoena or warrant.

Employers may challenge the validity of the warrant or subpoena.

  • Employers may provide I-9’s or other forms if a Notice of Inspection has been provided to the employer, without requiring a subpoena or warrant.

Employee Notice Regarding Inspection:

(Labor Code §90.2)

  • Provide notice within 72 hours of receipt of any Notice of Inspection. The notice must contain (1) the name of the agency conducting the inspection, (2) the date the notice was received, (3) the nature of the inspection (to the extent known), and (4) a copy of the Notice of Inspection. The Labor Commissioner will have a template available by July 1.
  • Provide a copy of the Notice of Inspection to employees that request it.
  • Provide a notice of the results of the inspection to all affected employees within 72 hours of receipt of the results, along with written notice of the obligations of both the employer and employee. This notice must contain (1) description of the identified deficiencies as stated in the inspection results, (2) the time period to correct the deficiencies, (3) the time and date of any meeting with the employer to correct the deficiencies, and (4) notice that the employee has a right to representation during any meeting scheduled.

“Affected employee” is one that is identified in the results from the immigration agency who may lack work authorization, or whose work authorization contains deficiencies.

Verifying Employment:

(Labor Code §1019.2)

  • Employer is not permitted to re-verify the employment eligibility of a current employee at a time or manner not required by Section 1324a(b) of Title 8 of the US Code. Essentially, this means that employers can only re-verify employment for current employees at the time the work authorization expires.

For assistance with this and other employment related issues, please contact Jennifer Douglas or Valerie Perdue. To reach us by phone call our offices at 707-261-7000 or 707-524-7000.

Dickenson Peatman & Fogarty Launches Cannabis Practice Group
03 August, 2017

SANTA ROSA– Dickenson Peatman & Fogarty (“DP&F”)  announces the official launch of its Cannabis practice group.  This group offers a specialized, full-service approach to serving the business needs of clients navigating California’s increasingly complex cannabis industry.  

 DP&F has a 50-year history of representing businesses in regulated industries, including the alcohol beverage industry.  For the past few years, the firm has been advising clients regarding compliance with state and local cannabis regulations and on the potential for creating geographic indications for regions in which cannabis is cultivated.  DP&F’s broad experience in advising clients on legal strategies where land use, intellectual property, business, employment and regulatory issues intersect gives its attorneys a sophisticated, integrated framework to address the complex regulatory framework impacting new entrants to and existing operators in the cannabis industry.

Erin Carlstrom, Senior Counsel, will lead the DP&F Cannabis practice group based out of its Santa Rosa office.  Carlstrom worked in cannabis compliance and land use at her previous firm, specializing in government relations and permitting.  She has ushered statewide clients through major projects, from incorporation to operations, and has been responsible for obtaining entitlements all over California.  She served on the Santa Rosa City Council from 2012-2016 where she served as Vice Mayor, and twice chaired the Cannabis Subcommittee, positioning Santa Rosa as one of the state’s most progressive jurisdictions for cannabis regulations. She obtained her Juris Doctorate from Pepperdine University and her undergraduate degree from Yale University. Carlstrom lives in Santa Rosa with her son, Adlai.

“Every day, DP&F attorneys serve clients who operate in highly regulated industries.  We are experts in the alcohol beverage industry and given the breadth and depth of our practice, we are set up to serve the cannabis industry seamlessly.  We are thrilled to have Erin, an attorney with significant and successful practical experience, spearheading our efforts to provide effective and thoughtful advice in this area,” says Carol Kingery Ritter, one of DP&F’s managing partners.  

For more information about the DP&F Cannabis practice, please contact Erin Carlstrom at or visit our website

TTB Pumps the Brakes on Cannabis Infused Alcohol
05 May, 2017

Despite a slew of news reports on Cannabis-wine/beer/spirits over the past year, recent actions by the Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) have brought into question whether CBD-infused alcoholic beverages can be legally produced in the United States, even in states that have legalized cannabis for adult use.

Last fall, a Colorado brewery, Dad & Dudes Breweria, announced that it had secured TTB formula approval for a CBD-infused beer to be marketed as General Washington’s Secret Stash, and that it planned to distribute the beer nationwide.  But in December, after the Drug Enforcement Agency concluded that marijuana extracts that contain cannabinoids are considered a Schedule I drug,   TTB asked the Breweria to surrender the formula.  The parties have since entered into negotiations as to next steps and the Breweria has agreed to (at least temporarily) stop producing the CBD-infused beer.

California newspapers have recently reported on in-state breweries and wineries that are making CBD-infused products.  Given TTB’s treatment of Dad & Dudes Breweria, however, it is clear that the federal government believes that any such product requires a TTB-approved formula. Moreover, given recent statements by the U.S. Attorney General, it seems unlikely that the current administration would permit TTB to grant formulas for the production of a product that involves the infusion of a Schedule I drug.  Producers engaged in making CBD-infused alcohol products absent a formula may be putting their federal licensing at risk until such time, at least, as the DEA changes its mind about the classification of marijuana extracts.

We reported on Oregon Liquor Control Commission’s guidance on marijuana-infused alcohol earlier this year.  For more information regarding alcohol beverage production and ABC/TTB issues, please contact John Trinidad at

Recent Uptick in Tied House Enforcement Actions by State and Federal Agencies
30 March, 2017

Clients often ask us about enforcement of the various alcohol beverage regulations and tied house laws that apply to industry members.  “Tied-house” laws generally prohibit supplier-side licensees (including producers and wholesalers) from giving, directly or indirectly, any premium, gift, or “thing of value” to retail licensees, unless a specific exception applies.

Over the past year, we have seen an increase in enforcement actions by the California Department of Alcoholic Beverage Control (“ABC”) and the federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”) in connection with state and federal tied house laws.  These actions serve as important reminders that the agencies are both monitoring the activities of industry members and taking action to ensure that the rules and regulations are complied with.

Last month, ABC announced a $400,000 settlement with Anheuser-Busch, LLC wholesalers for the wholesaler’s engagement in marketing practices prohibited under California’s tied house laws.  Approximately 34 retail licensees were also sanctioned.  The settlement and related sanctions arise from an investigation by ABC’s Trade Enforcement Unit that found that the wholesaler paid for, or at least partially financed, refrigeration units, television sets and draught systems on behalf of various Southern California retailers.  ABC’s settlement with Anheuser-Busch, LLC is the largest monetary penalty in ABC history.

As we highlighted in a blog post last year, TTB has issued guidance regarding the extent to which “category management” practices by wholesalers are permissible under federal tied house laws.  In that ruling, TTB stated unequivocally that any “category management” services provided by wholesalers to retailers beyond the development of a shelf plan or schematic constitute tied house violations if the services result in the exclusion of competitor products.  While this ruling was not surprising considering the language of the regulation that allows wholesalers to provide retailers with shelf plans, suppliers and retailers had long been engaging in practices aimed at optimizing the promotion of a particular “category” of products for years that exceeded the scope of this regulation.  Read more about TTB’s ruling here.

We have also seen an increase in ABC’s investigation of supplier-side events occurring at retail premises.

Considering this increase in focus and enforcement of trade practice issues by both ABC and TTB, supplier-side licensees should seek legal counsel prior to planning events at retail premises or engaging in any other marketing activities that involve a retail licensee.

For more information, contact one of the attorneys in our alcohol beverage departmentBahaneh HobelJohn Trinidad, and Katy Stambaugh

Important 2017 Employment Changes
01 February, 2017

State Minimum Wage: $10.50 per hour for employers with 26 or more employees.  $10.00 per hour for those with 25 or less employees.  Cities throughout the state have higher minimum wages.  Consult local ordinances if employees regularly work in cities outside Sonoma or Napa Counties.  Note, exempt employees for employers with 26 or more employees must make at least $43,680. (For smaller employers it remains $41,600.) Exempt employees must back at least twice the minimum wage on an annualized basis based on full time employment (2080 hours).

IRS Mileage Rate: The mileage reimbursement rate for cars, vans, pickups or panel trucks is 53.5 cents per mile.  This is down from 54 cents per mile for 2016.

New I-9 Form:  As of January 22, 2017 employers must use the new I-9 form to document that employees are authorized to work in the United States. The new form can be found here.

Legalization of Marijuana:  Although California has now legalized recreational use of marijuana, employers may continue to prohibit marijuana use, possession or impairment on the job. Employers can also continue to test for marijuana in pre-employment screening tests, subject to existing privacy rights disclosures.

Gender Neutral Bathrooms:  By March 1, 2017 all business establishments, places of public accommodation or state or local government agencies must designate single-user toilet facilities as “all-gender”. A single-user toilet facility is a toilet facility with no more than one water closet or urinal with a locking mechanism controlled by the user.  There is no requirement in the law that the bathroom be available to the general public.

Piece-Rate: If you pay any workers by piece-rate make sure your payroll practices are compliant with respect to calculating and reflecting rest/recovery breaks  and other non-productive time and pay. Do not solely rely on your payroll service to do this properly. Verify that it is being done correctly.  It is extremely complicated.

Federal Exempt Salary Increase:  The new Department of Labor overtime exemption rule is on hold through court action.  It is uncertain whether it will eventually be implemented, revised or squashed.  If implemented the new minimum salary threshold for exempt employees would be $46,467 (higher than the current California requirement).

FEHA Policies: Check your discrimination, harassment and prevention policies and training practices to make sure they are compliant with new Department of Fair Employment and Housing regulations.

For more information on these or any other employment laws impacting your business contact Jennifer Douglas Phillips.

DP&F Presenting at CEB’s Wine Law Forum
05 October, 2016

DP&F Alcohol Beverage Partner Bahaneh Hobel and Of Counsel Richard Mendelson will be presenting at CEB’s Wine Law Forum in Santa Barbara, CA on November 3-4, 2016.  The Forum, sponsored by the International Wine Law Association, will address Events, Festivals & Social Media, Direct-To-Consumer Sales and Franchise Laws and the Balancing of Local Concerns and Industry Growth.  Additional information and on-line registration can be found at CEB.

Forum Schedule

Brexit! What happens to my EU Trademark Registration?
28 June, 2016

As of this writing, CNN is reporting that there is no possibility that the “remain” proponents will prevail in UK’s Brexit vote. By now we all know that “Brexit” refers to Britain’s vote to exit membership in the EU. And now it appears the Brexit will occur.

In a February 2016 report, Wine Institute United Kingdom Trade Director John McLaren stated: “The United Kingdom has always been a receptive market for California wines, and a quarter of all U.S. wine exports by volume come to this country. Value increases are now out-stripping volume growth, with U.S. wine export value to the UK rising by 28% last year.” Historically, the UK has been a strong consumption market for wine, with no significant domestic production, and an active importer for wine from throughout the world. Thus, many wine brands are active in the UK market.

An EU trademark registration has always been incredibly appealing for wine producers, covering the 28 EU member states for a single filing fee, including major export markets such as the UK, Ireland, Germany and the Nordic member states. So the question is, if I have an EU trademark registration and the UK leaves the EU, what will happen to my protection in the UK? The short answer: we don’t know.

There are no established provisions in place as to how your EU trademark registration will protect you in the UK once the UK leaves the EU. We do know that there is a two year process during which the UK and the EU will negotiate to “unwind” the UK membership in the EU. The general belief is that during this time the UK will enact basic “grandfather” provisions by which EU trademark registrants can convert their EU trademark registrations into UK trademark registrations with priority rights consistent with those established in the EU trademark registrations. However, this is not a certainty, and even if it occurs what is unclear is what will happen when there may be conflicts between EU trademark registrations and UK trademarks. Also unclear is whether EU trademark applications filed after June 23, 2016 will extend any protections to Britain, and whether trademark applications which were pending at the time of the Brexit vote will have any effect in the UK. The worst part, however, appears to be that we will not have any clear answers to these questions for at least the next two years.

In the mean time, what is an EU trademark registrant to do? In all likelihood, as previously stated, there will be provisions established to extend the EU registration protection back into the UK. However, as we were told by one UK trademark attorney: “some clients have been filing UK double-ups for new marks”; meaning, anticipating the possibility of a Brexit and the uncertainty that it would create, parties have been filing UK applications simultaneous with EU applications, even though the UK was still a member of the EU at the time of filing. If you believe in insurance and have a vested interest for your brand in the UK market this is a logical approach given the uncertainty which trademark owners face.

At the very least, now that the Brexit is official, going forward any winery wanting prospective protection in the UK should not rely on an EU trademark application for such protection and should file directly in the UK instead of, or in addition to, filing in the EU.

If you would like to discuss potential strategies related to protection of your trademark in the UK following the Brexit, please contact us.

Posted By:
Scott Gerien

Small Producer Tax Credit Pitfalls: The K Vintners Case
13 August, 2015

When is a small producer not a small producer? That was the question answered by a federal district court in a case that centered on a winery's ability to claim a small producer tax credit for wine produced at another winery (K Vintners v. U.S., Case No. 12-cv-05128-TOR (E.D. Wa. Jan 21, 2015)).

Background on the Small Producer Tax Credit.

Under federal law, domestic wineries producing 250,000 gallons of wine or less per year ("small producers") are entitled to a tax credit of up to $0.90 per gallon for the first 100,000 gallons of non-sparkling wine removed from bond and "produced at qualified facilities" and a reduced credit thereafter (26 U.S.C. Sec. 5041(c)). This is popularly referred to as the "small producer tax credit" what I'll refer to as the SPTC.

There are two methods by which a small producer can take advantage of the SPTC for wine that was produced at its own facility. First, the winery can claim the SPTC on wine that it removes from its own bond by reporting the removal on its tax return, claiming the SPTC, and paying the net tax. Alternatively, the producer can transfer wine it produced at its own facility in bond to a bonded warehouse, and transfer the SPTC to the bonded warehouse for eligible wine. In this scenario, the warehouse reports the removal on its tax return, claims the winery's SPTC as transferee, and pays the net tax.

The SPTC can also apply to wines that were not made at small producer's bonded winery, but only if that wine is transferred in bond from the producing winery to the small producer's facility and removed from bond by the small producer so long as the small producer actually produces some wine at its facility that year.

Modified graphic submitted by U.S. in K Vintners Case

Modified graphic submitted by U.S. in K Vintners Case

The K Vintners Case: SPTC does not apply to wine produced at another winery on behalf of a small producer and transferred directly to a bonded cellar is not eligible for SPTC.

But what happens when the small producer has wine made at a different facility, and instead of transferring that wine to its own bonded premises, decides to have the wine transferred directly to a bonded warehouse? Is that wine eligible for the SPTC?

That was the issue that one Washington winery, K Vintners, faced a few years back. From 2005-2008, K Vintners produced wine each year at its bonded facility and also purchased bulk wine from two other wineries, Hogue Cellars and Wahluke Slope Vineyards. Hogue and Wahluke fermented, blended, and bottled wine for K Vintners (referred to hereafter as the "Hogue/Wahluke Wine"), then transferred the bottled wine directly to Tiger Mountain, a bonded cellar contracted by K Vintners. K Vintners then sold the wine its own tradenames. Pursuant to the K Vintners-Tiger Mountain contract, Tiger Mountain paid claimed K-Vintners' SPTC on the wine transferred from Hogue/Wahluke and paid the net excise taxes on those wines when removed from bond, and K Vintners reimbursed the bonded cellar for any excise taxes it incurred.

TTB conducted an audit in 2007 and determined that the SPTC could not apply to the Hogue/Wahluke Wine because the wine in question was not produced at K Vintner's bonded facility. TTB ordered Tiger Mountain to pay $327,496.83 in unpaid taxes and an additional $126,580.05 in late-payment penalties. TTB acknowledged that if the Hogue/Wahluke Wines had been shipped in bond from the producing wineries to K Vintner's bonded premises, and then removed from bond by K Vintners, then K Vintners could have claimed the credit on its own behalf (provided that K Vintners produced some wine at its own facility in each of those years).

K Vintners and Tiger Mountain paid the amount under protest, raised administrative claims that were subsequently denied by TTB, and eventually filed suit to seek a refund of these tax payments. K Vintners argued, in part, that the wine was eligible for the SPTC because even though it was made at the Hogue/Wahluke facilities, K Vintners had significant control and oversight through its contractual arrangement with those wineries that in essence, K Vintners "produced" he wine, and therefore the wine was eligible for the SPTC.

The federal district court in the Eastern District of Washington sided with TTB, concluded that such wines were produced at the winery where they went through fermentation (Hogue/Wahluke) and therefore were not eligible for the SPTC when removed from Tiger Mountain's bond. The end result: K Vintners would not see any refund of the nearly half million dollars worth of unexpected taxes and penalties it incurred as a result of its misapplication of the small producer tax credit.

Can a small producer claim the SPTC for wine produced at a winery that produces more than 250K gallons of wine?

One curious comment in the court's decision (mere dicta, for those of you with legal experience) is worth exploring in more detail. The court took a close look at the regulatory language authorizing the SPTC, and noted that the SPTC was only available for "wine produced at qualified facilities in the United States. Under the court's interpretation, this means that a small producer could only claim the SPTC on wine it purchased from another winery if that winery was also "qualified" as a small producer. This directly contradicted statements in TTB's court filings in which TTB stated that K Vintners could have applied the small producer tax credit to the Hogue/Wahluke Wine if the wine had been directly transferred in bond to, and subsequently removed from bond by, K Vintners.

We reached out to TTB to determine if, in light of this language in the court's decision, TTB would be making any changes to its interpretation or enforcement of the small producer tax credit. TTB affirmed that it still interprets 26 USC Sec 5041(c)(1) to allow an eligible small producer to purchase wine from another winery - whether or not that selling winery is itself eligible as a "small producer" and that wine may still be eligible for the SPTC, so long as the small producer meets all other conditions for eligibility. Note , however, that one of those conditions is that allowance of the SPTC would not "benefit a person who would otherwise fail to qualify for use of the SPTC.

This article does not constitute legal advice. Please contact an attorney if you have any questions about the application of the small producer tax credit.

Impact Napa: Wine
30 July, 2014

The Business Journal’s seventh annual Impact Napa conference this year, on August 28th, will focus on the valley’s top industry — WINE. The highlight of this conference will be Richard Mendelson’s interview of Napa Valley’s grand dame, Margrit Mondavi. Richard Mendelson is Of Counsel at Dickenson, Peatman & Fogarty.  Margrit Mondavi is Vice President of Cultural Affairs at Robert Mondavi Winery and a pioneer of the modern-day California wine industry. Following the interview a panel is set to address the latest developments in Napa Valley tourism and business approaches by the next generation of wine industry leaders.

Dickenson, Peatman & Fogarty is a proud sponsor of this event.

Please click the following link for complete information: Impact Napa: Wine

Trends in Wine Package Design
30 June, 2014

Practical Winery & Vineyard recently published an article written by Dickenson, Peatman & Fogarty attorney Katja Loeffelholz. Katja’s article “What’s trending, how to capture it” discusses how technological advancements have permitted an evolution in wine labels, bottle shapes, closures and packaging designs.

One wine bottle can contain several protectable elements. Word mark, logos/images, taglines/slogans, color, configurations, label design, trade dress, product features and design patents are all protectable elements of wine packaging. Protecting these different element can build brand equity.

PWV Feb 2014

Katja is a registered attorney with the United States Patent and Trademark Office.

To learn more about protecting all aspects of intellectual property in your wine label and packaging please contact Katja Loeffelholz at

Wine Industry Forum - Friday, August 23, 2013. If you are in the Wine Industry you Can't Miss this Forum
31 July, 2013

Networking Seminars in association with Dickenson Peatman & Fogarty, are pleased to announce our 4th Annual Wine Industry Forum on Friday, August 23, 2013 at

The Vintners Inn located at 4350 Barnes Road, Santa Rosa, CA 95403.  This forum has been updated for 2013 to address recent legislative and regulatory changes, business agreements, branding strategies and the latest issues that will affect your wine business in the future.  Earn 7 CPE/6 CLE Credits   


  • Creating, Protecting & Building Equity in your Wine Brand
  • Employment & Labor Law for the Wine Industry - 2013 Update
  • Hot Topics in Compliance & Licensing
  • Business Topics: Wine Industry Agreements & Affordable Care Act  
  • Vineyard & Winery Land Use Update
  • Networking Reception Sponsored by Sonoma County Vintners     

wine forum brochure

Please see brochure for complete details

Download Conference Brochure  




CPE/CLE CREDITS:  Networking Seminars Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website:

Networking Seminars is an approved CLE Sponsor by the State Bar of California until December 31, 2014.  We offer Continuing Legal Education (CLE) Credits in other States for those who request upon registration or at the seminar.

SCV Workshop Set for January 17: Navigating New Winery Sweepstakes & Consumer Contest Legislation
21 January, 2013

Presented by SCV Affiliate Dickenson, Peatman & Fogarty

Governor Brown recently signed 2012 Senate Bill 778 into law creating two new Business and Professions Code Sections; 25600.1 and 25600.2 authorizing consumer contests and sweepstakes to be conducted by authorized California Department of Alcoholic Beverage Control licensees. These statutes became effective January 1, 2013. 
Join us and gain an understanding into how this law affects your wine brand.

This workshop is designed for winery owners, marketing directors and compliance personnel and will cover:

1. The two new major marketing concepts created
2. Who is authorized to conduct these marketing activities
3. Restrictions on consumer participants
4. Restrictions of retailer involvement
5. Consequences if violations of these provisions occur

Date: Thursday, January 17, 2013
Time:Registration at 8:30 AM; Program at 9:00AM
Location:SCV Offices, 3637 Westwind Blvd., Santa Rosa, CA
RSVP: Email

Richard Mendelson
is an attorney (of counsel) with Dickenson, Peatman & Fogarty and an internationally-recognized expert on vineyard and wine law and related land use, intellectual property, business and administrative law issues. Over the past two decades, Richard has handled legal matters involving almost every aspect of the wine business, including liquor licensing, environmental challenges to vineyard development, grape purchase agreements, winery use permits, representation of winery clients before the California Department of Alcoholic Beverage Control and federal Alcohol & Tobacco Tax and Trade Bureau, state and federal label approvals, distributor appointments and terminations, and import-export contracts
Michael Mann is an alcohol beverage regulatory consultant with Dickenson, Peatman & Fogarty and a member of their Alcohol Beverage Law Practice Group.  Michael was previously employed by the California Department of Alcoholic Beverage Control for over two decades. He retired as the District Administrator in charge of the Department’s Santa Rosa Office. In that capacity, Michael was responsible for five Northern California Counties, which included Napa, Sonoma, Lake, Marin and Mendocino Counties. This geographical area accounts for over 50% of the state’s wine manufacturing and wholesaling industry. In years past, Michael was also the District Administrator in charge of the Department’s San Francisco Office. He was then responsible for both San Francisco and San Mateo Counties, dealing mainly with the retail industry.  
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Dickenson, Peatman & Fogarty provides a level of representation ordinarily associated with legal practices in major metropolitan centers. Our attorneys are routinely recognized in legal rankings and surveys as some of the best in their fields, and the firm is involved regularly with matters of local and national import. For over forty years Dickenson, Peatman & Fogarty lawyers have practiced law with the "get to know you" culture that has engendered significant client loyalty. The Firm's major practice areas include alcohol beverage law, business and corporate dealings, land use matters, labor and employment, civil litigation, intellectual property, real property transactions, as well as estate planning and probate. With offices in Napa and Sonoma counties, the firm is well positioned to serve clients in both the wine and hospitality industries. Dickenson, Peatman & Fogarty50 Old Courthouse Square, Suite 200, Santa Rosa, CA 95404 www.dpf-law.com707/524-7000

Wine Industry Lawsuits: How to Avoid Them
21 January, 2013

No one expects to have to go to court when they start a business deal or venture, or when they plant a vineyard or purchase real estate, but in today’s world no industry is free from lawsuits, particularly not the wine industry. Disputes over grape purchase agreements (duration, termination, quality standards, etc.), vineyard development agreements (quality of vines, planting and maintenance, and sufficiency of site evaluation and preparation, etc.), wine storage agreements (condition of wine, losses, damage to wine, etc.), custom crush agreements (compensation, quality control, etc.), real property matters (title, ownership, boundaries, easements, etc.), and even employment relationships (statutory requirements, executive agreements, workplace safety, etc.) can rise to the level of a lawsuit involving the smallest or largest members of the wine community and costing from tens of thousands to hundreds of thousands of dollars. All too often, however, it is not until the fighting begins that the parties and their attorneys look back and see where the dispute could have been avoided or at least how the parties could have better protected themselves before the dispute arose.

Simple measures are usually the most effective. For example, many people don’t review their written agreements until a dispute arises, and then they often find that the paperwork does not read like they recalled it read, or they find that the agreement is ambiguous on a matter that was not an issue until circumstances changed. Instead of shelving your paperwork once it’s signed, there is tremendous value in periodically reviewing written agreements to confirm that they match your understanding of a deal, as well as to confirm that the agreement is being correctly followed. Such a review can, but need not, involve the assistance of counsel. At the very least, such reviews help keep everyone on track while they are still getting along, and when things are not on track, the parties can usually make mid-course corrections in the paperwork or their conduct (or both) without much debate or fanfare because there is no dispute pending. Once a dispute arises, however, such corrective measures are more difficult to achieve.

It is even more important to take such a proactive approach in cases that do not involve written agreements because differences in recollection often cloud the dispute resolution process once a legal battle has begun.

Likewise, where property issues are involved, it is better to find out about your state of title before you are in a dispute with a neighbor. Such early knowledge not only presents the opportunity to find a solution with your neighbor while everyone still gets along (or at least has not been antagonized by the existence of dispute), but it also allows you to get properly informed as to what you should or should not do to protect your property rights in the absence of a negotiated solution since many of the legal rules involved with property disputes are counter-intuitive to non attorneys.

In short, sometimes you need to look back to move forward in the safest way.

For more information or assistance on litigation matters, and how to prevent them, contact Paul Carey at

Title Name Email Phone
Managing Director J. Scott Gerien 707-252-7122
Managing Director Carol Kingery Ritter 707-252-7122
Director David Balter 707-252-7122
Director Paul G. Carey 707-252-7122
Director Bahaneh Hobel 707-252-7122
Director Thomas S. Adams 707-252-7122
Director Jennifer D. Phillips 707-524-7000