“Oregon” wine bottled in California might be confusing

Kay v. Copper Cane, LLC, — F.Supp.3d —-, 2021 WL
2953241, No. 20-cv-04068-RS (N.D. Cal. Jul. 14, 2021)

Plaintiffs challenged the labels on a line of CC’s pinot
noirs, alleging deception about the wine’s appellation of origin in Oregon
generally and three valleys in Oregon specifically, as well as the grapes’
purported coastal roots.

The Alcohol and Tobacco Tax and Trade Bureau prohibits
labeling likely to mislead a consumer and must approve all labels prior to use.
It also has the authority to create appellations of origin for wine grapes and
American viticultural areas. The TTB recognizes Oregon as an appellation of
origin and the Willamette Valley, Umpqua Valley, and Rogue Valley as separate
AVAs.

The labels describe the wine at issue here as an “Oregon
Pinot Noir.” The 2016 label references the “coastal hills” of Oregon as an
“ideal region to grow” this type of wine. The 2017 label also references the
“coast” and includes a map of Oregon with leaves denoting the locations of the
Willamette, Umpqua, and Rogue Valleys. It contains the phrase “Purely Oregon,
Always Coastal.” Marketing materials related to the 2016 version designate the
same three valleys as “Regions of Origin,” and describes them as “premiere
growing regions along Oregon’s coast.” The boxes in which both vintages were
shipped refer to the “Oregon Coast” and the three valleys.

Both back labels contain, however, two lines of text
referencing California. On both labels, the first line provides: “VINTED &
BOTTLED BY ELOUAN.” Below, the 2016 provides: “NAPA, CA • CONTAINS SULFITES.”;
the 2017 reads “ACAMPO, CA • CONTAINS SULFITES.” Id.

In 2018, the federal government forced Copper Cane to alter
the labels after determining that they were misleading. The new label omits any
overt reference to any of the Oregon AVA valleys and replaces “Purely Oregon,
Always Coastal.” with “Purely Elouan, Always Coastal.” It also clarifies that
the wine is “[m]ade in California in the signature Copper Cane style[.]”

Plaintiffs brought the usual California statutory claims.
First, the court dismissed the claim of a Louisiana citizen who purchased a
2017 bottle in New Orleans; applying California law would violate the
presumption against extraterritorial application even though CC is based in California.

The court then refused to hold that California’s safe harbor
doctrine precluded the claims claims because the labels at issue were
previously approved by the TTB. “Safe harbor” is a common law doctrine
insulating defendants from civil liability when the “[l]egislature has
permitted [the challenged] conduct or considered a situation and concluded no
action should lie.” Courts disagree about whether a COLA issued by the TTB
carries the force of federal law to create a safe harbor, and the court here determined
that, following the reasoning of the Supreme Court case Mead Johnson about
deference to agency action, the COLA hadn’t been shown to justify application
of the safe harbor rule.

Compared to the “rigorous” approval process for
prescription-drug labels, the TTB process “hinges on self reporting” and
reflects only the representations made to it by the distributor, not an
endorsement of those claims. There’s no notice-and-comment rulemaking before
processing COLAs and no reason to think they bind parties other than the
government and the beverage distributor. CC argued that the TTB reviewed its
labels three times, but didn’t show that they specifically reviewed for
falsity, and “[t]he quantity of reviews does not guarantee the quality of
review.”

Next, CC argued that the labels expressly disclosed that the
wine was bottled in California. This couldn’t be resolved at the pleading
stage, and the reference to California on the back-left corner of the label
didn’t even use the word “in” to link “VINTED & BOTTLED” with “NAPA, CA •
CONTAINS SULFITES.” “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.”

CC then contended that references to Oregon or its coast
were too unspecific to mislead.  “This
argument ignores the widely understood fact that the location where a wine is
produced has special significance.” Thus, “a geographic reference on a wine
label is understood to be an assertion about the origin of the product.”

Plaintiffs also had standing to seek injunctive relief.
“Discovering via litigation the true nature of an allegedly mislabeled product
is not analogous to gaining external information that contextualizes the label
in a way that avoids deception.” Plus, plaintiffs never alleged that they were
opposed to purchasing wine grown in Oregon but finished in California.

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