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California Supreme Court Turns Down Bronco's Appeal on Labeling Law

Long-running case over the use of Napa brand names may come to an end unless the U.S. Supreme Court agrees to hear it

Daniel Sogg

Posted: Thursday, August 25, 2005

Mass-market producer Bronco Wine Co. has come down to one final, long-odds throw in its five-year legal battle with California authorities and the Napa Valley Vintners, a marketing organization of 270 wineries.

Yesterday, the Supreme Court of California denied, without comment, Bronco's request for appeal, leaving one remaining legal recourse: an appeal to the U.S. Supreme Court, which accepts roughly 100 cases out of about 8,000 petitions a year. If the company decides against that option or if the U.S. Supreme Court declines the petition, that would leave the state and the Napa vintners victorious in their effort to prevent Bronco from using the Napa name on wines that are made with few or no Napa grapes.

Neither Bronco CEO Fred Franzia nor his Washington, D.C.-based attorney, Peter Brody, returned calls seeking comment about their plans.

The case, Bronco v. Jolly, addresses three brands owned by Bronco: Napa Ridge, Napa Creek and Rutherford Vintners, which primarily have been made with grapes from California's Central Valley, a vast region where Franzia owns about 40,000 acres of vineyards. (Bronco recently released $4-a-bottle Napa wines under the Napa Creek label.) According to legal documents, Ceres, Calif.-based Bronco makes about $17 million a year from sales of these brands.

Under normal circumstances, U.S. regulations require that at least 75 percent of the grapes in a wine with a geographic brand name must come from the referenced region. But a federal grandfather clause exempts brands, such as Bronco's, that existed prior to July 1986.

In September 2000, California passed a law to end that exemption for any wines bearing the name of Napa or any of its subappellations. Bronco challenged the law in federal court on four constitutional grounds: that a state law cannot preempt the federal grandfather clause; that the law violates the Commerce Clause; that it curtails Bronco's First Amendment right to free speech; and that it violates due process by taking away the value of Bronco's brands without compensation.

In December 2002, California's Third District Court of Appeal in Sacramento ruled in Bronco's favor, striking down the law on the issue of federal preemption, though it did not rule on the other three challenges. But the Supreme Court of California was openly skeptical, indeed almost dismissive, of the Bronco case when it heard oral arguments in May 2004. The judges' ruled unanimously, 7 to 0, in August 2004 to reverse the lower court's ruling, uphold the state law and remand the remaining three issues back to the appeals court. In January 2005, Bronco petitioned the U.S. Supreme Court to hear the preemption issue, but that request was denied without comment in March.

After nearly five years of plodding progress, the pace accelerated when, in May, the appeals court ruled against Bronco on each of its three remaining challenges.

Bronco has previously expressed its intent to exhaust all legal options. So now that the Supreme Court of California has refused the case, Bronco has 90 days to submit a petition for appeal with the U.S. Supreme Court.

According to attorneys familiar with the appellate process, the fact that the U.S. Supreme Court already denied a request for hearing doesn't diminish the case's current prospects. The Supreme Court rarely accepts cases with issues yet to be resolved in lower courts, so the March decision may reflect procedural considerations rather than a judgment on the merits.

But after five years and well over $1 million in legal fees, the Napa Valley Vintners feel like kids on the night before Christmas. "We're almost at the end, and it's amazing," said Linda Reiff, executive director of the organization. "We've had a string of victories, and now there's just one final step before this law can take effect. We feel that ultimate victory is in reach, and we're thrilled."

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