Law of the Vine: The practice of wine law

Daily Record and the Kansas City Daily News-Press, Dec 6, 2005 by Correy E. Stephenson

(This article originally ran in Lawyers Weekly USA, Boston, MA, another Dolan Media publication.)

Across the country, a handful of lawyers are drinking on the job.

But it's not what you think.

As the wine industry in the United States has grown - in 2004, it accounted for more than $23 billion in retail sales, up from just $10.9 billion in 1991 - so has the need for wine lawyers.

Since Prohibition was abolished in 1933, states have dealt with alcoholic beverages on an individualized, piecemeal basis. The result is a tangled patchwork of federal and state regulations. Combine that with a complex alcoholic licensing scheme, environmental and land use laws, and all of the other issues a business faces, and you've got an idea of the breadth of wine law.

Richard P. Mendelson, who worked in the wine industry in France before he went to law school, began his legal career with a primarily administrative and regulatory practice, helping his clients with their labeling and licensing needs. Over the last 20 years, his work has broadened to include land use and environmental law as well as intellectual property.

Whatever the industry needs, I do, Mendelson told Lawyers Weekly USA. I'm an advocate of the wine industry and the place of wine in American society.

Mendelson practices with Dickenson, Peatman & Fogarty in Napa, the heart of the California wine industry, and even has his own wine brand that includes a Mendelson pinot noir and dessert wines.

Outside of Napa Valley, however, wine lawyers often take a different approach.

Christopher R. Hermann, chair of the wine law group at Stoel Rives in Portland, described himself as an intake lawyer.

With about 40 lawyers in Seattle, Portland, San Francisco and Sacramento, his group distributes work from wineries to the appropriate experts, from employment law to intellectual property.

Growing up with German parents who loved the wine culture, Hermann was raised with an interest in the industry, and when he began practicing in Oregon in the mid-1980s he formed personal connections with some of the businesspeople. He's been representing them ever since.

The breadth of issues in this industry, as well as the pleasures of drinking wine, make for a very exciting combination, Hermann said.

Wine in Class

Mendelson recently began teaching the first ever Wine Law class at Boalt Hall School of Law in Berkeley, Calif.

The course begins with how the effects of Prohibition and the 21st Amendment are still felt in the industry today, and continues by covering just about every area of law. That includes administrative and regulatory work associated with licensing, the intellectual property issues of brand name protection and appellations of origin, as well as the contractual and commercial issues of running a business.

While debating the issue of appellations of origin, the class tasted and compared pinot noirs from various regions.

We don't drink wine in every class, Mendelson laughed, describing the tasting as a learning experience.

One of the hotly debated theories about appellations of origin is the old world notion that the land determines the character of the grape and hence, the final taste, he explained.

In legal terms, that can become a complicated IP issue.

A winery in Central Valley bought the rights to use the names Napa Ridge and Napa Creek, but Mendelson sued on behalf of the state's beverage regulators in an attempt to enforce a California law requiring that the grapes be grown in the location the wine label indicates. Bronco Wine Co. v. Jolly, 129 Cal.App.4th 988 (2005).)

The misuse of geographic descriptions devalues the name, Mendelson said.

The California Supreme Court upheld the state law for the second time, but the company is considering an appeal to the U.S. Supreme Court.

Wine and the Internet

Last term, the Supreme Court practiced a little wine law itself when it decided that a state may not prevent wineries from beyond its borders from shipping directly to customers. (Granholm v. Heald, 125 S.Ct. 1885 (2005).)

It's really an evolving 21st Amendment jurisprudence, Mendelson explained. There's been a battle within the winery section of the industry and particularly the smaller wineries who want the ability to sell direct to consumers just like you can sell any widget.

For the last several decades, a three-tier system has regulated beverage law, according to Wine Institute counsel Wendell Lee.

A winery sells to a wholesaler, which in turns sells to a retailer, who then sells to the individual consumer.

Generally, a business can't operate on more than one level, said Lee, who has worked for the California-based trade organization for 25 years.

Some states, however, have abolished the three-tier system.

The advent of Internet shopping and the growing American wine industry pushed the issue to the Supreme Court.

However, despite the favorable decision, Mendelson said the industry has not changed overnight.

The Court didn't dictate the remedy - it simply held that states can't discriminate by allowing in-state wineries to sell directly to consumers and not allow out-of-state wineries to do so, he said.