SAN FRANCISCO (CN) — A California winemaker cannot dodge a class action claiming it used deceptive labels to give consumers a false impression that its pinot noir was made in a renowned Oregon wine region, a federal judge ruled Wednesday.
Prior to November 2018, Napa County, California-based winemaker Copper Cane labeled its vintage 2016 Elouan pinot noir with references to the “coastal hills” of Oregon, calling it an “ideal region to grow” wine grapes. Its vintage 2017 bottles also referred to the Oregon “coast” and included a map of the state with leaves denoting the locations of three prominent winemaking areas — the Willamette, Umpqua and Rogue Valleys.
In 2018, a federal regulator ordered Copper Cane to change those labels after concluding they were misleading. To claim that a wine comes from a particular state, the U.S. Alcohol and Tobacco Tax Trade Bureau requires at least 75% of the wine be derived from fruit grown in that state. The bureau also mandates that at least 85% of grapes be grown in the winemaking region advertised on wine labels.
Copper Cane’s vice president of operations told the Associated Press in November 2018 that grapes for its pinot noirs are grown in the Oregon wine region and trucked in dry ice to California.
Although it was forced to change its labels, many Elouan bottles with the original labels are still sold in stores.
In June last year, Los Angeles County resident Barry Kay sued Copper Cane for false advertising, unjust enrichment and breach of warranty. New Orleans resident Bryan Dodge Jr. was later added as a plaintiff in an amended complaint.
The plaintiffs say they never would have purchased bottles of Elouan or paid a higher price for them had they known the wine was processed and bottled in California and that it did not meet Oregon's standards for claiming it came from state's prominent tri-valley wine region.
Copper Cane asked U.S. District Judge Richard Seeborg to dismiss the lawsuit, arguing that a federal regulator’s approval of its new labels in 2018 make it immune from lawsuits under California’s safe harbor doctrine.
In a 14-page ruling issued Wednesday, Judge Seeborg rejected that argument. He concluded that more evidence must be analyzed at a later stage of the litigation to determine if the U.S. Alcohol and Tobacco Tax Trade Bureau’s approval process is rigorous enough to carry the force of federal law and bind third parties like consumers.
“Copper Cane offers no evidence that the [Alcohol and Tobacco Tax Trade Bureau] specifically reviewed for falsity its particular labels,” Seeborg wrote.
Copper Cane also argued that the case should be dismissed because its labels were not misleading. The company noted how the backside of labels clearly state “vinted and bottled” above the words “Napa, CA.”
But the judge pointed out that the crucial word “in” is missing between “vinted and bottled” and the location where the Elouan pinto noir is processed and packaged.
“Whether the graphic design of the two lines of text are sufficiently clear such that no reasonable consumer would be deceived is thus a question of fact not properly resolved at this juncture,” Seeborg wrote.
The judge also refused to dismiss claims of unjust enrichment and breach of warranty, finding the “myriad general references to Oregon and its coasts" on labels "could lead a consumer to believe the wine originated in Oregon.” Those alleged misrepresentations support claims for unjust enrichment and breach of warranty, the judge concluded.
Additionally, the judge advanced a claim for injunctive relief, based on plaintiffs’ assertions that they would buy the allegedly mislabeled wine in the future if the labels were accurate.
“Plaintiffs seek a truthful label, not necessarily a genuine Oregon wine,” Seeborg wrote.
However, the judge dismissed New Orleans resident Bryan Dodge as a plaintiff, finding he failed to show he has standing to sue Copper Cane for violations of California law. The plaintiffs said Dodge has standing because Copper Cane’s “misleading advertising and labeling decisions” were made at its offices in California, but those facts were not included in the complaint. The judge gave the plaintiffs permission to file an amended complaint to address those shortcomings.
Attorneys for Copper Cane and the plaintiffs did not immediately return emails requesting comment Thursday morning.
Copper Cane is represented by J. Matthew Donohue of Holland & Knight LLP in Portland, Oregon.
The plaintiffs are represented by Caroline White of the Murray Law Firm in New Orleans.
In 2018, the Oregon Liquor Control Commission decided to revoke Copper Cane’s license to sell wine in Oregon for allegedly violating the state’s labeling laws. Copper Cane requested a hearing before an administrative law judge to challenge that decision. As of February 2020, Copper Cane was still selling wine in Oregon pending the outcome of its legal challenge and a hearing had not yet been held or scheduled, according to Oregon Live.
Copper Cane and the Oregon Liquor Control Commission did not immediately respond to requests for information Thursday on the status of Copper Cane’s license to sell wine in Oregon.
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