A Primer on Beer Tastings: Know Your Options

There are a couple of different ways a brewer can get their beer out to a wider audience outside of their brewery. One of course is through distribution to retailers. Another, that has the benefit of getting a lot of people to try your product for the first time, and with built-in goodwill, is to conduct tastings. Be sure you are aware of the regulations governing tastings before you get started to avoid any potential adverse consequences to your license. On-premises tastings: You can hold tastings on your own licensed premises either with or without charge, but not on any portion of your premises that are licensed with a retail license. You may only offer tastings of beer produced or bottled by or for your brewery. Off-premises tastings at nonprofit events: Your beer manufacturer’s license allows you to conduct tastings of your beer off of your licensed premises only for events sponsored by a nonprofit organization. The event must be one attended only by persons affiliated with that nonprofit (each of whom may bring up to three guests to the tasting), and you may not sell or solicit sales of your beer “in that portion of the premises where the beer tasting is being conducted.” (B&P Code § 23357.3(a); CCR 53.5.) You may however, distribute…

Ninth Circuit Affirms Summary Judgment for BNSF Railway Company in FEHA Case

BNSF Railway Company recently obtained a decisive victory in the Ninth Circuit Court of Appeals, with the Court affirming a grant of summary judgment in its favor on an employee’s FEHA claim. The case, Alamillo v. BNSF Railway Co., was decided August 25, 2017, and underscores the importance of the three-step burden-shifting analysis for employment discrimination cases set forth by the Supreme Court in McDonnel Douglas Corp. v. Green.  In Alamillo, not only was the plaintiff unable to establish a prima facie case of discrimination, the court found that even if he had been able to do so he had presented no evidence that the employer’s stated non-discriminatory reasons for its employment actions were pretextual.   The case is interesting because Alamillo, an “extra board” or on-call locomotive engineer, was subjected to discipline for missing calls to work before he obtained a diagnosis of obstructive sleep apnea, which he then claimed explained his failure to hear and answer his employer’s calls to his cell phone. The district court granted summary judgment to BNSF, concluding that BNSF could not have discriminated against Alamillo based on his disability at a time when Alamillo had no diagnosis. The Ninth Circuit agreed, pointing out that the FEHA prohibits employers from taking adverse employment actions against an employee because of…

Ninth Circuit revisits Actmedia: Heightened Scrutiny Applies to B&P Code Advertising Restrictions

Thirty years ago, the Ninth Circuit rejected a First Amendment challenge to a California statute which prohibits paid advertising of alcoholic beverages at retail outlets. In Actmedia Inc. v. Stroh (9th Cir. 1986) 830 F.2d 957, the court applied the four-pronged test of Central Hudson Gas & Electric Corp. v. Public Service Comm’n of New York (1980) 447 U.S. 557 to assess the constitutionality of a law that burdened commercial speech. That test asks: (1) whether the speech concerns a lawful activity and is not misleading; (2) whether the government has a substantial interest in regulating the speech; (3) whether the regulation serves to directly advance the asserted governmental interest; and (4) whether the regulation “is not more extensive than necessary.” The law at issue in Actmedia was Business & Professions Code, § 25503(h), which prohibits manufacturers and wholesalers, as well as their agents, from giving anything of value to a retailer in exchange for on-site advertising. Actmedia was a corporation which leased advertising space on shopping carts. It challenged the law as an impermissible restriction on commercial speech in violation of the First Amendment. Applying the Central Hudson factors, the Ninth Circuit concluded the law was constitutional. The advertising of alcoholic beverages concerned a lawful activity and was not misleading, but California had a…

Non-Compete Agreements in California

With the proliferation of wineries in California, it’s not uncommon for an owner to find one of its winemakers deciding to leave and set up shop on their own. Is there anything you can do up front to prevent them from taking the craft they’ve honed at your winery elsewhere? The short answer is, in most cases, no. But as with almost everything in the law, there are some exceptions you should know. California public policy strongly favors free and open competition in the marketplace. Business and Professions Code section 16600 states clearly that contractual restraints on competition or trade are void, except as otherwise provided. California courts interpreting this statute emphasize that it protects the right of Californians to pursue any business, occupation, or lawful employment of their choosing. Contract provisions which attempt to place restrictions on a person’s ability to work for a competitor, or open a competing enterprise, are generally unenforceable. That said, you should be aware of the “as otherwise provided” part of the Code. The primary exceptions to the prohibition on non-compete agreements apply to “owners” of a business and arise in the following contexts. First, if you are selling all of your ownership interest, or all of most of the operating assets together with the goodwill of the business, you can agree…

One Small Step: Easing Restrictions on Advertising in Social Media

On October 1, Governor Brown signed into law AB 780, which updates Business and Professions Code provisions concerning restrictions on manufacturers’ ability to identify or list on-sale or off-sale retail locations where their products are sold. The new law goes into effect January 1, 2016. In an earlier post, “Social Media is Advertising: Know the Basics”, I warned that under then-current law, posting where your product is sold generally ran afoul of restrictions on “giving something of value” to retailers, but was allowed in response to a direct consumer inquiry, and so long as you listed more than one unaffiliated retailer. With the passage of AB 780, wine manufacturers will no longer need to wait for a direct consumer inquiry to post the names and contact information of retailers who sell their product, so long as the listing is made, produced, or paid for exclusively by the manufacturer, includes two or more unaffiliated retailers, and does not contain any mention of retail price. AB 780 should not be taken as an indication of the demise or weakening of California’s tied-house restrictions. AB 780 explicitly sets forth the Legislature’s finding that tied-house restrictions are both “necessary and proper… to prevent suppliers from dominating local markets through vertical integration, and to prevent excessive sales of alcoholic beverages produced by overly aggressive marketing techniques.” Nevertheless, AB 780 is a…

TTB Update: Return of Wine to Bonded Premises

The TTB is catching up on some regulatory house-keeping. Effective October 15, 2015, TTB regulations governing the return of taxpaid wine to bonded premises will be amended to conform to provisions of the Taxpayer Relief Act of 1997, and the Internal Revenue Service Restructuring and Reform Act of 1998. The Internal Revenue Code provides that if wine is removed from bonded premises, and subsequently returned, any tax paid on the wine returned to bond shall be refunded or credited (without interest) to the proprietor of the bonded premises. If tax has not yet been paid, then any prior tax liability is relieved. Whereas it used to be that wine returned to bond had to be “unmerchantable,” that is no longer the case under the Taxpayer Relief Act of 1997. The TTB is now amending its regulations to conform to that Act, by removing the word “unmerchantable” from provisions relating to the return of wine to bond. It also used to be that wine returned to bond had to be produced in the United States. That is no longer the case, under the Internal Revenue Service Restructuring and Reform Act of 1998. Wine returned to bond must only have first been removed from a bonded wine cellar. TTB regulations pertaining to the return of wine to…

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Post-Judgment Interest Following Appeal: When a “Reversal” is Really a Modification

Most practitioners are generally aware that interest on a judgment runs from the date of entry, and continues to accrue even pending an appeal. The accrual of interest at the standard rate of 10% per annum (7% for public entities) can be a significant consideration in evaluating the potential costs and benefits of an appeal. If you are successful in obtaining an outright reversal of the judgment, all is good: post-judgment interest goes the way of the judgment. However, if the matter is reversed and remanded for further proceedings, or reversed with directions, what happens to post-judgment interest is entirely dependent upon the “substance and effect” of the appellate court’s disposition. A disposition which effects a true reversal of the judgment will result in interest running from the date of entry of any new judgment following remand, whereas a disposition which effects only a “modification” of the original judgment leaves interest accruing from the date of the original judgment. Knowing which is which is critical, and educating the trial court prior to entry of any new judgment can save the parties the expense and delay that would be occasioned by a second appeal on this issue. A true reversal is one which requires the trial court to conduct further fact-finding to resolve the matter at…

2015 Grape Escape – Cancelled After Vendors Refuse to Participate in Event Sponsored by Retailer

We recently posted about how social media is advertising, and the care wine manufacturers need to take to ensure they do not run afoul of state tied-house laws. The impact of those laws is being felt locally here in Sacramento, where organizers of the “Grape Escape” – an annual showcasing of local food and wines – have canceled this year’s event which was to be held in early June. Articles about the cancellation indicate that only four wineries signed up to participate this year, down from 47 a year ago. The primary reason appears to be fears over potential citations from the ABC. Last year, eight participants were investigated and put on probation (but not fined) for mentioning the event’s retail sponsor, Save Mart, in their social media postings, or directing consumers to the retailer to purchase tickets. Because manufacturers may not give anything of value to a retailer without violating tied-house restrictions, and because advertising constitutes a thing of value, social media mentions of a retailer by a manufacturer (i.e. “advertising”) runs afoul of the law. Wine and food events such as the Grape Escape have a long and wonderful history. It’s a shame that retail sponsorship of such events can make vendors so nervous they choose not to participate, rather than develop specific guidelines or practices to ensure their promotion of the…

Going Green: Labeling Organic Wine

Labeling of wine is subject to regulation by the TTB, and requires a certificate of label approval (COLA). Basic information that must be included on all labels include the brand name, class or type of wine, alcohol content, appellation, the bottler’s name and address, contents by volume, a sulfite declaration, and the government health warning. Previously, Uncorked ran a post about font and sizing requirements, accessible here. If you want include “organic” claims on your label, you must satisfy USDA organic regulations for production and handling of your wine. Those requirements are beyond the scope of this post, but suffice it to say they are extensive. And, the type of “organic” claims you can make on your label are dependent upon a few key factors. To label your wine “Organic” and to use the USDA Organic seal on your label, your wine-making operations must be overseen by a third-party accredited certifying agent (ACA) to ensure compliance with organic production and handling requirements. The yeast used in your wine, and all agricultural ingredients (i.e., grapes) must be certified organic, with the exception of those ingredients on the National List of Allowed and Prohibited Substances, information about which can be found here. Non-agricultural ingredients must be on the National List, and are limited to a certain percentage…

Certified Farmers’ Market Permits: Wine Tastings Included

California winegrowers holding a Type 02 license have been able to sell their wine at farmers’ markets under a special permit (Certified Farmers’ Market Sales Permit) for some time. For a relatively nominal fee, now $50, a licensed winegrower may sell wine at a certified farmers’ market so long as the wine is (a) “produced entirely from grapes or other agricultural products grown by the winegrower” and (b) bottled by the winegrower. The permit is good for an entire year, but the winegrower may only sell wine one day a week at any given farmers’ market. A separate license is required for each certified farmers’ market at which the winegrower’s product is to be sold, but there is no limit on the number of licenses that may be held. Annual sales for wine sold under all certified farmers’ market sales permits held by any one winegrower are limited to 5,000 gallons, and are to be reported to the ABC. As of July 2014, the ABC also allows instructional tasting events to be held at certified farmers’ markets under this license, “subject to the authorization and managerial control” of the particular farmers’ market operator. Restrictions on instructional tasting events are as follows: (1) the event area must be separated from the rest of the market by…