Ethics Legal Education Opportunity from the Cal Bar, November 9th in Yountville

The State Bar of California

Agribusiness Committee

Of the

Business Law Section in conjunction with:

 

LaRiviere, Grubman & Payne, LLP

 

and

 

Dickenson, Peatman & Fogarty

 

proudly presents the 
2012 Winery & Vineyard Tour

 

Hotel Bardessono

6526 Yount Street 
Yountville, California

 

FRIDAY, NOVEMBER 9th

10:00 AM to 3:00 PM

 

Featuring:

GOT ETHICS?: The Perils of Hidden Data in your Legal Practice

2.0 units of Continuing Legal Education, including 1.0 unit of Ethics credit sponsored by LaRiviere, Grubman& Payne, LLP

Join us for the fifth annual Winery Tour and CLE of the Business Law Section’s Agribusiness Committee! This year’s event will feature complimentary wine and three-course food pairing, hosted at the luxurious Hotel Bardessono, courtesy of our friends at Hill Family Estate.  Attendees will enjoy wine education and an exclusive tour and viticulture lesson at the onsite vineyard, followed by optional winery tour of the Laird Family Winery facility just a few miles away.

LGP attorneys and featured speakers Matthew Bogosian and John Nielsen will present “Got Ethics?: The Perils of Hidden Data in Your Legal Practice” for 2 hours of CLE, with one unit of Ethics credit.

This program is $40.00for BLS members, $60.00 for non-BLS members, and includes lunch. Space is limited to the first 30 registrants.

RSVP to Chris Passarelli (cpassarelli@lgpatlaw.com or 831-915-8861) by Monday, November 5th, 2012. Make your check payable to LaRiviere, Grubman& Payne, LLP., and mail to the address below.

Christopher J. Passarelli
LaRiviere, Grubman & Payne, LLP
P.O. Box 3140
Monterey, California 93942
Phone: (831) 915-8861
Fax: (831) 649-8835
cpassarelli@lgpatlaw.com

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Wineries and Vineyards Need Not be Frightened by Bioterrorism Act Rules and Requirements

Is your winery or tasting room registered under the Bioterrorism Act?  If so, did you know that this year you are required to renew your registration?  If not, are you sure you’re not required to register?  Despite its sinister-sounding name, the Bioterrorism Act is nothing to fear.  Let’s review some of the basics:

1.         What is the Bioterrorism Act?  According to Federal Register Interim Final Rule - 68 FR 58893, the purpose of Bioterrorism Act registration is to enable the FDA to act quickly in responding to a threatened or actual terrorist attack on the U.S. food supply by giving FDA information about facilities that manufacture/process, pack, or hold food for consumption in the United States.  Additionally, in the event of an outbreak of foodborne illness, such information will help FDA and other authorities determine the source and cause of the event, and quickly notify the facilities that might be affected by the outbreak.

2.            Who is required to register?  In general, any facility engaged in manufacturing, processing, packing, or holding food for consumption in the United States is required to register.  Note that “food” includes alcoholic beverages.  Therefore, wineries, custom crush facilities and warehouse facilities that meet the definition will need to register. 

3.            Who is exempt from registration?  Since the rules are pretty broad and complex, we’re just going to focus on the likely exemptions for winery and vineyard related businesses here. 

               A.            Farms don’t have to register unless they are also production facilities.  This exempts many grape growers from the registration requirements.     

               B.            Tasting rooms don’t have to register if they sell food products directly to consumers as their primary function.  The FDA definition of “consumers” does not include other businesses.  In order to calculate the “primary function” of a business, the test is whether the dollar value in sales of food products sold directly to consumers exceeds the value of sales to all other buyers, see: http://www.fda.gov/Food/FoodDefense/Bioterrorism/FoodFacilityRegistration/ucm081637.htm#IIId.  In other words, if you’re selling most of your wine directly to consumers out of your tasting room then you are considered a “retail food establishment” and don’t need to register.  However, if your tasting room is on-site at the winery, the facility will need to register, since it will be considered a “mixed-use” facility.    

4.            When do I need to register?  If you are required to register you should have done so already.  The registration requirements have been in place since 2003.  Registration is a fairly straightforward process and can be completed online:  http://www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/RegistrationofFoodFacilities/OnlineRegistration/ucm125055.htm


If you are already registered, it’s time to re-register!  Registration renewal is required under 21 U.S.C. § 350d(a)(3).  Specifically, during the period beginning on October 1 and ending on December 31 of each even-numbered year, each registrant must renew their registration.

5.            How do I register?  You can mail in the questionnaire, or submit it online.  Information on how and when to register can be found at: http://www.fda.gov/Food/FoodSafety/FSMA/ucm314178.htm?source=govdelivery.  While you may have read that renewal registrations were not yet open, the FDA site has recently begun accepting renewals. 

For assistance with the registration process or with other questions related to winery or grower issues, please contact Caroline Boller at cboller@dpf-law.com      

Insight into TTB's Approach to AVAs: The Inwood Valley AVA

Since the establishment of the Augusta AVA in 1980, ATF, and now TTB, has varied its approach to executing its legislatively delegated task of establishing American Viticultural Areas (AVAs).  In early 2011, TTB amended the AVA rules entirely.  With the recognition of the Inwood Valley AVA, effective as of October 15, 2012, we gain insight into TTB’s process and priorities when reviewing petitions to form new AVAs.

As originally conceived and petitioned to TTB, the Inwood Valley AVA was to be a 32,647 acre viticultural area with 60 acres of vines planted in 4 vineyards.  TTB pushed an amendment prior to publishing the Notice of Proposed Rulemaking (NPRM), which reduced the acreage to 28,298 acres and used distinctive soil types to reform the boundaries.  TTB sought to remove areas not containing viticultural activities from the AVA.  TTB received four comments to the NPRM- 3 supported the formation of the new AVA and 1 opposed the name “Inwood Valley” on the ground that labels with the “Inwood” name would be unable to add the word “Valley” to a future label without satisfying the 85% grape source requirement.  Because no existing labels would be impacted by forming the AVA, TTB dismissed the objection. 

After the comment period closed, TTB received a comment from a vineyard owner just outside the proposed AVA boundary who wanted to be included.  TTB found that a “slight modification to the boundary to include the vineyard at issue is consistent with the distinguishing features evidence submitted….” As a result, Inwood Valley AVA, as established, is a 28,441 acre viticultural area with 62.5 acres planted to wine grape vines or 0.2% of the AVA planted for viticulture.  Although in response to a supportive comment to the NPRM, TTB noted that “Whether or not, and to what extent, there is any economic benefit from the approval of a viticultural area is not a factor that TTB considers in determining whether or not to approve a petition for a viticultural area,” it seems clear that TTB does consider whether the formation of an AVA will disenfranchise wine industry participants.  The Federal Register excerpt for the establishment of the Inwood Valley AVA may be found at the following link:

http://www.gpo.gov/fdsys/pkg/FR-2012-09-13/pdf/2012-22595.pdf

For more information or assistance on petitions for establishment of AVAs contact Carol Kingery Ritter at ckritter@dpf-law.com

Gov. Brown Makes Wine Sweepstakes and Contests Legal in California

Governor Brown signed Senate Bill (SB) 778 into law creating two new Business and Professions (B&P) Code Sections (25600.1 and 25600.2) authorizing consumer contests and sweepstakes conducted by authorized California Department of Alcoholic Beverage Control (ABC) licensees. These statutes become effective January 1, 2013.

SB 778 contains significant restrictions, examples of which are described below. However, it does not contain the restrictive monetary provisions imposed by B&P section 25600 and ABC Rule 106 for “free goods” or “things of value” provided to the consumer. The most significant aspect of the new statutes is the absence of such monetary limits for prizes provided to the consumer in connection with these new marketing tools.

SB 778 addresses two major marketing concepts: contests (a game of skill) and sweepstakes (a game of chance), defined as follows:

B&P Section 25600.1 defines a contest as a game, contest, puzzle, or similar activity that holds out or offers to participants the opportunity to receive or compete for gifts, prizes, gratuities, or other things of value as determined by skill, knowledge, or ability rather than upon random selection.

B&P Section 25600.2 defines a sweepstakes as a procedure, activity, or event for the distribution of anything of value by lot, chance, or random selection where the odds for winning a prize are equal for each entry.

As for restrictions, one key restriction is that which identifies what industry members may participate in, or conduct contests and sweepstakes (referred to as “authorized licensees”).

Sections 25600.1 and 25600.2 both define “authorized licensees” as a  winegrower, beer and wine importer general, beer manufacturer, out-of-state beer manufacturer certificate holder, distilled spirits manufacturer, distilled spirits manufacturer's agent, distilled spirits importer general, distilled spirits general rectifier, rectifier, out-of-state distilled spirits shipper's certificate holder, brandy manufacturer, and brandy importer.

These authorized licensees may conduct these marketing activities regardless of whether the licensee holds any additional license in conjunction with those defined here.  It is imperative that one qualifies as an authorized licensee before entering the consumer contest or sweepstakes arena.

Note that an authorized licensee does not include a beer and wine wholesaler, a beer and wine importer general, or a distilled spirits importer general that only holds a wholesaler's or retailer's license as an additional license.

B&P Section 25600.1 restrictions (see below link to statute for additional restrictions and means of contest entry) include:

• Entry into or participation in a contest shall be limited to persons 21 years of age or older.
• Skill, knowledge, or ability does not include the consumption or use of alcoholic beverages.
• Entry or extra chances in a contest shall not be made available via the purchase of an alcoholic beverage.
• No contest shall involve consumption of alcoholic beverages by a participant.
• A contest may not be conducted for the benefit of any permanent retail licensee.  
• A contest shall not provide for the instant or immediate awarding of a prize or prizes. 
• Instant or immediate notification to the consumer that he or she is a winner is permissible.
• Except for providing a means of entry, a contest authorized by this section shall not be conducted at the premises of a retail licensee or the premises of a winegrower or beer manufacturer operating under a duplicate license for a branch office.
• Alcoholic beverages or anything redeemable for alcoholic beverages shall not be awarded as a contest prize. This shall not prohibit a contest in which the prize is cash or cash equivalent or the awarding of cash or cash equivalent.
• A retail licensee shall not serve as the agent of an authorized licensee by collecting or forwarding entries or awarding prizes to, or redeeming prizes for, a contest winner.
• A licensee that is not an authorized licensee shall not directly or indirectly underwrite, share in, or contribute to, the costs of an authorized contest, or serve as the agent of an authorized licensee to collect or forward entries or to furnish any prize to a contest winner.

Section 25600.2 restrictions (see below link to statute for additional restrictions and means of sweepstakes entry) include:

• No entry fee may be charged to participate in a sweepstakes.
• Entry or extra chances in a sweepstakes shall not be made available via the purchase of an alcoholic beverage.
• Entry into or participation in a sweepstakes shall be limited to persons 21 years of age or older and shall be open to all residents of California.
• No sweepstakes shall involve consumption of alcoholic beverages by a participant.  
• A sweepstakes may not be conducted for the benefit of any permanent retail license.

Under both statutes, an authorized licensee that violates any provision of sections 25600.1 or 25600.2 in addition to any other penalty imposed may be prohibited by the department from offering a contest or sweepstakes to California residents for a period of 12 months.

FINAL NOTE:  Now that these new tools are legal we envision many authorized licensees participating by offering consumer contests and sweepstakes as part of their marketing programs. With that said, be sure you understand the new privileges being given and the many limitations associated with them. We think it is safe to say that ABC as well as your competitors in the industry will be watching closely.  As in all cases if you are unsure of how to proceed seek guidance.  For more information contact Mike Mann at mmann@dpf-law.com