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DICKENSON, PEATMAN & FOGARTY

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Address

1455 First Street, Suite 301
Napa
CA, 94559
United States
Phone
(707) 252-7122
Fax
(707) 255-6876
Primary
Christopher J. Passarelli

About Us

Dickenson, Peatman & Fogarty provides a level of representation ordinarily associated with legal practices in major metropolitan centers. Our attorneys are routinely recognized in legal rankings and surveys as some of the best in their fields, and the firm is involved regularly with matters of local and national import. For over forty years Dickenson Peatman & Fogarty lawyers have practiced law with the get to know you culture that has engendered significant client loyalty

Rooted in the wine regions of Napa and Sonoma, Dickenson Peatman & Fogarty provides full service legal representation to all manner of businesses and individuals throughout California, the United States and abroad. The Firm's major practice areas include alcohol beverage law, business and corporate dealings, land use matters, labor and employment, civil litigation, cannabis law, intellectual property, real property transactions, as well as estate planning and probate. With offices in the major wine valleys of Napa and Sonoma, the firm is intimately familiar with, and has extensive experience, in both the wine and hospitality industries.

The attorneys at Dickenson Peatman & Fogarty take their involvement and contribution to their communities as seriously as they do the practice of law. Our attorneys (and our staff) have a long tradition of community involvement and have served in leadership roles in social, cultural, educational, financial and political institutions.

Dickenson Peatman & Fogarty offers clients exceptional services and sophisticated expertise while taking a genial and courteous approach to client relationships.

Practice Areas


Dickenson Peatman & Fogarty's attorneys practice in nine distinct practice areas, covering nearly the entire spectrum of civil matters. For more information about the Firm's experience in any practice area, click on the links below.


News Archive


Updated Groundwater Basin Priorities May Bring Regulation to North Bay Wine Counties
26 July, 2018

The 2014 Sustainable Groundwater Management Act (SGMA) requires every groundwater basin in California ranked medium and high priority to be managed by one of more Groundwater Sustainability Agencies (GSAs) pursuant to an adopted Groundwater Sustainability Plan (GSP) or alternative plan.  The California Department of Water Resources (DWR) issued the initial groundwater basin prioritization in 2014.  In May 2018, DWR released draft updated basin priorities using revised basin boundaries, revised methodologies, and updated datasets and information, including well location, groundwater production, salinity intrusion and cropping information.  For the first time, the basin prioritization will consider whether groundwater production could adversely impact local habitats and local streamflows.

DWR will accept public comments on the draft 2018 SGMA Basin Prioritization Process and Results report through July 18, 2018.  DWR anticipates adopting the final prioritization in mid-October.  A useful web mapping program shows the 2018 draft prioritization, proposed changes from the 2014 to 2018 prioritization, and information specific to each basin.

DWR proposes upgrading 14 basins from low to medium or high priority, which would require election of GSAs within two years and adoption of GMPs within five years of final adoption of the revised priorities.  Five of the 14 basins include winegrape growing regions dependent on groundwater:

  • Alexander Valley, Alexander Area Subbasin in Sonoma County, which includes much of the Alexander Valley AVA and portions of the Chalk Hill AVA;
  • Santa Rosa Valley, Healdsburg Area Subbasin in Sonoma County, which includes portions of the Dry Creek Valley and Russian River Valley AVAs;
  • Wilson Grove Formation Highlands Basin in Sonoma County, which includes portions of the Green Valley, Russian River Valley, and Sonoma Coast AVAs;
  • Napa-Sonoma Valley, Napa-Sonoma Lowlands Subbasin in Napa County, which includes a portion of the Carneros AVA; and
  • Upper Lake Valley Basin in Lake County, which includes a portion of the Clear Lake AVA at the north end of Clear Lake.

Growers in these five basins are likely to experience very different compliance obligations if current SMGA compliance efforts for 2014-ranked basins in those counties are any guide.  Lake County has proposed that its existing groundwater management plan serve as an alternative to preparing new GSPs for the ranked medium priority basins in the County.  Napa County has proposed that no GSP is required for the one medium priority basin within the County pursuant to an analysis that the basin has operated within its sustainable yield.  In Sonoma County, the County, cities and other local agencies have formed new GSAs for each of the three medium priority basins within the County, and are evaluating costly fees to fund groundwater studies and preparation of GSPs.

DP&F will continue to track and report on SGMA developments affecting the wine industry and other clients.

For more information on this and other water issues, please contact Peter J. Kiel.


TTB Extends Alternate Procedure For Excise Taxes Credits through 2019
17 May, 2018

Today TTB announced in Industry Circular 2018-1A that it is extending until December 31, 2019 the ”Alternate Procedure” under which wine producers can tax pay wine stored at bonded tax wine cellars (“BWC”) without having to physically transfer their wine back from the BWC in bond.  This update to TTB’s prior procedure is a welcome extension to the previous deadline of June 30, 2018 that had many in the industry scrambling.

For background—effective January 1, 2018—the federal Tax Cuts and Jobs Act (Public Law 115-97) (“The Act”) changed various provisions of the Internal Revenue Code related to alcohol beverages.  Included in these changes were new tax credits[i] for wine (“New Credits”) that will be in place through 2019.  The New Credits are available for all domestically produced wines removed from the producer’s own bonded premises in 2018 or 2019 regardless of when the wine was produced.  During this time, the small producer tax credit is suspended, as are the provisions that allow for the transfer of such credits.

While the New Credits are welcome news for the industry, a number of issues arose in implementing them that led to a good deal of confusion and stress. One of the main problems was that the Act did not provide a mechanism (similar to what had previously existed) for a producing winery to transfer the New Credits to other facilities to be used on its behalf.  Under the Act, a winery can only receive the benefit of the New Credits for wines it produces if it tax pays and removes those wines from its own bonded premises.   Any wines that are removed from a BWC or other bonded premises—for example, where a winery may be storing its wines—are not eligible for the New Credits. A winery therefore would have to engage in an absurd exercise to be able to claim the New Credits on wines in storage at a BWC- the winery would have to physically transfer the wines back to its premises before tax paying the wines.  Clearly, this was not ideal.

In light of the above, TTB issued Industry Circular 2018-1 setting forth an Alternate Procedure that allows wine producers to do a paper “transfer” of wines in bond at a BWC “back” to the producing winery’s own premises, tax pay the wine, and then apply the New Credits without physically returning the wine to the winery’s own bonded premises.  However, the Alternate Procedure was only available until June 30, 2018, leaving wine producers and warehouses scrambling to meet the deadline.

By extending the Alternate Procedure until December 31, 2019 (when the New Credits are set to expire), TTB has provided the industry with some flexibility and time to deal with implementation and application of the New Credits. This extension will allow producers to take advantage of the New Credits, as intended, on wines they produced but may have stored elsewhere, without having to engage in a shell game of sorts, physically transferring product back and forth between bonds or rushing to meet a looming deadline.  TTB also expanded the reach of the Industry Circular to apply to wines stored at other bonded wineries.

While this is good news for the industry, there are still issues with the Act that remain outstanding.  For example, wine producers still cannot transfer the New Credits to BWCs as they could with the small producer credits.  Wineries that want to take advantage of the New Credits must tax determine and tax pay the wines themselves from their own premises.

What does this mean in practice?  It means that wineries that typically don’t pay excise taxes directly to TTB (because they are paid by the BWC) are suddenly responsible for doing so.  And while wineries have always had to report movements in bond on TTB Form 5120.17, they will now have to report when the wines are tax paid.  Further, the Alternate Procedure does not change the fact that the New Credits are only available on wines produced by the winery itself, and cannot be used for wines custom crushed for the winery by another winery.

Finally, the Alternate Procedure is not available for any wines that have previously been tax paid by a BWC on behalf of a winery in 2018.  Unfortunately, any such wines will be subject to the full standard tax rates and cannot retroactively take advantage of the New Credits or the Alternate Procedure.

For any questions on the excise tax changes discussed above, please contact Bahaneh Hobel.

[i] For new tax credits, see 26 U.S.C. 5041(c)(8).


ICE Inspections – What Employers Need to Know After AB 450
07 February, 2018

With the recent news regarding ICE raids on 7-11’s across the country, rumors of raids targeted at Northern California businesses and California’s Attorney General announcing plans to prosecute employers for violation of new laws passed through AB 450, employers should have a plan in place in the event of a raid. As January 1 AB 450 created new laws governing employers’ obligations related to immigration enforcement efforts. Below is some guidance for employers to use in navigating these tricky situations as well as an overview of the new laws stemming from AB 450.

Tips for Handling Immigration Agency Inspections:

  • Do not allow agents to enter any non-public area, or provide access to records, without a valid warrant, or for records a valid “Notice of Inspection.”

Public areas: generally parking lots, lobbies, waiting areas, or other places the public enters or is permitted to enter.

Non-public areas: offices, back of house areas, areas marked “private” or “no trespassing,” and areas where the public is not permitted to enter due to company policy.

  • When requesting a warrant, communicate with the agent in a public area and away from employees.

(Make sure the warrant is valid and signed by a Judge. Warrants from the Department of Homeland Security are not valid.)

  • If you receive a “Notice of Inspection,” notify employees promptly (within 72 hours).
  • Do not unnecessarily re-verify employment.
  • Consider implementing a plan with the procedure to follow in the event of an inspection.
  • Train employees – especially front-of-house workers, or those that greet visitors – on the new law and what to do in the event of an inspection. Employees should be advised to tell inspection agents that they are not authorized to allow entry and the name of the person who is.

Tips for Communicating with Employees about Inspections:

  • Ensure you are abiding by the required notice procedure and content of Labor Code §90.2, described below.
  • You may advise employees that they do not have to talk to immigration enforcement agents, and they do not have to provide any documents.
  • Advise employees to call an immigration attorney, Legal Aid, or another resource.
  • Avoid getting admissions from employees regarding whether they are legally authorized to work unless you are required by law to re-verify their status.

AB 450 created obligations of an employer as it relates to (1) an immigration agency inspection, (2) notice to employees regarding an inspection, and (3) re-verifying employment. Violation of these new laws carries fines for employers that vary from $2,000-$10,000.

Obligations Upon Immigration Agency Inspection:

(Gov. Code §§7285.1, 7285.2, 7285.3)

  • Employers cannot provide voluntary consent to ICE agents to enter non-public areas without a warrant.
  • Employers can and should take an ICE agent to a non-public area where employees are not present in order to verify if there is a warrant.
  • Employers cannot provide voluntary consent to an ICE agent to access, review or obtain employee records without a subpoena or warrant.

Employers may challenge the validity of the warrant or subpoena.

  • Employers may provide I-9’s or other forms if a Notice of Inspection has been provided to the employer, without requiring a subpoena or warrant.

Employee Notice Regarding Inspection:

(Labor Code §90.2)

  • Provide notice within 72 hours of receipt of any Notice of Inspection. The notice must contain (1) the name of the agency conducting the inspection, (2) the date the notice was received, (3) the nature of the inspection (to the extent known), and (4) a copy of the Notice of Inspection. The Labor Commissioner will have a template available by July 1.
  • Provide a copy of the Notice of Inspection to employees that request it.
  • Provide a notice of the results of the inspection to all affected employees within 72 hours of receipt of the results, along with written notice of the obligations of both the employer and employee. This notice must contain (1) description of the identified deficiencies as stated in the inspection results, (2) the time period to correct the deficiencies, (3) the time and date of any meeting with the employer to correct the deficiencies, and (4) notice that the employee has a right to representation during any meeting scheduled.

“Affected employee” is one that is identified in the results from the immigration agency who may lack work authorization, or whose work authorization contains deficiencies.

Verifying Employment:

(Labor Code §1019.2)

  • Employer is not permitted to re-verify the employment eligibility of a current employee at a time or manner not required by Section 1324a(b) of Title 8 of the US Code. Essentially, this means that employers can only re-verify employment for current employees at the time the work authorization expires.

For assistance with this and other employment related issues, please contact Jennifer Douglas or Valerie Perdue. To reach us by phone call our offices at 707-261-7000 or 707-524-7000.


Dickenson Peatman & Fogarty Launches Cannabis Practice Group
03 August, 2017

SANTA ROSA– Dickenson Peatman & Fogarty (“DP&F”)  announces the official launch of its Cannabis practice group.  This group offers a specialized, full-service approach to serving the business needs of clients navigating California’s increasingly complex cannabis industry.  

 DP&F has a 50-year history of representing businesses in regulated industries, including the alcohol beverage industry.  For the past few years, the firm has been advising clients regarding compliance with state and local cannabis regulations and on the potential for creating geographic indications for regions in which cannabis is cultivated.  DP&F’s broad experience in advising clients on legal strategies where land use, intellectual property, business, employment and regulatory issues intersect gives its attorneys a sophisticated, integrated framework to address the complex regulatory framework impacting new entrants to and existing operators in the cannabis industry.

Erin Carlstrom, Senior Counsel, will lead the DP&F Cannabis practice group based out of its Santa Rosa office.  Carlstrom worked in cannabis compliance and land use at her previous firm, specializing in government relations and permitting.  She has ushered statewide clients through major projects, from incorporation to operations, and has been responsible for obtaining entitlements all over California.  She served on the Santa Rosa City Council from 2012-2016 where she served as Vice Mayor, and twice chaired the Cannabis Subcommittee, positioning Santa Rosa as one of the state’s most progressive jurisdictions for cannabis regulations. She obtained her Juris Doctorate from Pepperdine University and her undergraduate degree from Yale University. Carlstrom lives in Santa Rosa with her son, Adlai.

“Every day, DP&F attorneys serve clients who operate in highly regulated industries.  We are experts in the alcohol beverage industry and given the breadth and depth of our practice, we are set up to serve the cannabis industry seamlessly.  We are thrilled to have Erin, an attorney with significant and successful practical experience, spearheading our efforts to provide effective and thoughtful advice in this area,” says Carol Kingery Ritter, one of DP&F’s managing partners.  

For more information about the DP&F Cannabis practice, please contact Erin Carlstrom at ecarlstrom@dpf-law.com or visit our website www.dpf-law.com.


TTB Pumps the Brakes on Cannabis Infused Alcohol
05 May, 2017

Despite a slew of news reports on Cannabis-wine/beer/spirits over the past year, recent actions by the Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) have brought into question whether CBD-infused alcoholic beverages can be legally produced in the United States, even in states that have legalized cannabis for adult use.

Last fall, a Colorado brewery, Dad & Dudes Breweria, announced that it had secured TTB formula approval for a CBD-infused beer to be marketed as General Washington’s Secret Stash, and that it planned to distribute the beer nationwide.  But in December, after the Drug Enforcement Agency concluded that marijuana extracts that contain cannabinoids are considered a Schedule I drug,   TTB asked the Breweria to surrender the formula.  The parties have since entered into negotiations as to next steps and the Breweria has agreed to (at least temporarily) stop producing the CBD-infused beer.

California newspapers have recently reported on in-state breweries and wineries that are making CBD-infused products.  Given TTB’s treatment of Dad & Dudes Breweria, however, it is clear that the federal government believes that any such product requires a TTB-approved formula. Moreover, given recent statements by the U.S. Attorney General, it seems unlikely that the current administration would permit TTB to grant formulas for the production of a product that involves the infusion of a Schedule I drug.  Producers engaged in making CBD-infused alcohol products absent a formula may be putting their federal licensing at risk until such time, at least, as the DEA changes its mind about the classification of marijuana extracts.

We reported on Oregon Liquor Control Commission’s guidance on marijuana-infused alcohol earlier this year.  For more information regarding alcohol beverage production and ABC/TTB issues, please contact John Trinidad at jtrinidad@dpf-law.com.


Recent Uptick in Tied House Enforcement Actions by State and Federal Agencies
30 March, 2017

Clients often ask us about enforcement of the various alcohol beverage regulations and tied house laws that apply to industry members.  “Tied-house” laws generally prohibit supplier-side licensees (including producers and wholesalers) from giving, directly or indirectly, any premium, gift, or “thing of value” to retail licensees, unless a specific exception applies.

Over the past year, we have seen an increase in enforcement actions by the California Department of Alcoholic Beverage Control (“ABC”) and the federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”) in connection with state and federal tied house laws.  These actions serve as important reminders that the agencies are both monitoring the activities of industry members and taking action to ensure that the rules and regulations are complied with.

Last month, ABC announced a $400,000 settlement with Anheuser-Busch, LLC wholesalers for the wholesaler’s engagement in marketing practices prohibited under California’s tied house laws.  Approximately 34 retail licensees were also sanctioned.  The settlement and related sanctions arise from an investigation by ABC’s Trade Enforcement Unit that found that the wholesaler paid for, or at least partially financed, refrigeration units, television sets and draught systems on behalf of various Southern California retailers.  ABC’s settlement with Anheuser-Busch, LLC is the largest monetary penalty in ABC history.

As we highlighted in a blog post last year, TTB has issued guidance regarding the extent to which “category management” practices by wholesalers are permissible under federal tied house laws.  In that ruling, TTB stated unequivocally that any “category management” services provided by wholesalers to retailers beyond the development of a shelf plan or schematic constitute tied house violations if the services result in the exclusion of competitor products.  While this ruling was not surprising considering the language of the regulation that allows wholesalers to provide retailers with shelf plans, suppliers and retailers had long been engaging in practices aimed at optimizing the promotion of a particular “category” of products for years that exceeded the scope of this regulation.  Read more about TTB’s ruling here.

We have also seen an increase in ABC’s investigation of supplier-side events occurring at retail premises.

Considering this increase in focus and enforcement of trade practice issues by both ABC and TTB, supplier-side licensees should seek legal counsel prior to planning events at retail premises or engaging in any other marketing activities that involve a retail licensee.

For more information, contact one of the attorneys in our alcohol beverage departmentBahaneh HobelJohn Trinidad, and Katy Stambaugh


Important 2017 Employment Changes
01 February, 2017

State Minimum Wage: $10.50 per hour for employers with 26 or more employees.  $10.00 per hour for those with 25 or less employees.  Cities throughout the state have higher minimum wages.  Consult local ordinances if employees regularly work in cities outside Sonoma or Napa Counties.  Note, exempt employees for employers with 26 or more employees must make at least $43,680. (For smaller employers it remains $41,600.) Exempt employees must back at least twice the minimum wage on an annualized basis based on full time employment (2080 hours).

IRS Mileage Rate: The mileage reimbursement rate for cars, vans, pickups or panel trucks is 53.5 cents per mile.  This is down from 54 cents per mile for 2016.

New I-9 Form:  As of January 22, 2017 employers must use the new I-9 form to document that employees are authorized to work in the United States. The new form can be found here.

Legalization of Marijuana:  Although California has now legalized recreational use of marijuana, employers may continue to prohibit marijuana use, possession or impairment on the job. Employers can also continue to test for marijuana in pre-employment screening tests, subject to existing privacy rights disclosures.

Gender Neutral Bathrooms:  By March 1, 2017 all business establishments, places of public accommodation or state or local government agencies must designate single-user toilet facilities as “all-gender”. A single-user toilet facility is a toilet facility with no more than one water closet or urinal with a locking mechanism controlled by the user.  There is no requirement in the law that the bathroom be available to the general public.

Piece-Rate: If you pay any workers by piece-rate make sure your payroll practices are compliant with respect to calculating and reflecting rest/recovery breaks  and other non-productive time and pay. Do not solely rely on your payroll service to do this properly. Verify that it is being done correctly.  It is extremely complicated.

Federal Exempt Salary Increase:  The new Department of Labor overtime exemption rule is on hold through court action.  It is uncertain whether it will eventually be implemented, revised or squashed.  If implemented the new minimum salary threshold for exempt employees would be $46,467 (higher than the current California requirement).

FEHA Policies: Check your discrimination, harassment and prevention policies and training practices to make sure they are compliant with new Department of Fair Employment and Housing regulations.

For more information on these or any other employment laws impacting your business contact Jennifer Douglas Phillips.


DP&F Presenting at CEB’s Wine Law Forum
05 October, 2016

DP&F Alcohol Beverage Partner Bahaneh Hobel and Of Counsel Richard Mendelson will be presenting at CEB’s Wine Law Forum in Santa Barbara, CA on November 3-4, 2016.  The Forum, sponsored by the International Wine Law Association, will address Events, Festivals & Social Media, Direct-To-Consumer Sales and Franchise Laws and the Balancing of Local Concerns and Industry Growth.  Additional information and on-line registration can be found at CEB.

Forum Schedule


Brexit! What happens to my EU Trademark Registration?
28 June, 2016

As of this writing, CNN is reporting that there is no possibility that the “remain” proponents will prevail in UK’s Brexit vote. By now we all know that “Brexit” refers to Britain’s vote to exit membership in the EU. And now it appears the Brexit will occur.

In a February 2016 report, Wine Institute United Kingdom Trade Director John McLaren stated: “The United Kingdom has always been a receptive market for California wines, and a quarter of all U.S. wine exports by volume come to this country. Value increases are now out-stripping volume growth, with U.S. wine export value to the UK rising by 28% last year.” Historically, the UK has been a strong consumption market for wine, with no significant domestic production, and an active importer for wine from throughout the world. Thus, many wine brands are active in the UK market.

An EU trademark registration has always been incredibly appealing for wine producers, covering the 28 EU member states for a single filing fee, including major export markets such as the UK, Ireland, Germany and the Nordic member states. So the question is, if I have an EU trademark registration and the UK leaves the EU, what will happen to my protection in the UK? The short answer: we don’t know.

There are no established provisions in place as to how your EU trademark registration will protect you in the UK once the UK leaves the EU. We do know that there is a two year process during which the UK and the EU will negotiate to “unwind” the UK membership in the EU. The general belief is that during this time the UK will enact basic “grandfather” provisions by which EU trademark registrants can convert their EU trademark registrations into UK trademark registrations with priority rights consistent with those established in the EU trademark registrations. However, this is not a certainty, and even if it occurs what is unclear is what will happen when there may be conflicts between EU trademark registrations and UK trademarks. Also unclear is whether EU trademark applications filed after June 23, 2016 will extend any protections to Britain, and whether trademark applications which were pending at the time of the Brexit vote will have any effect in the UK. The worst part, however, appears to be that we will not have any clear answers to these questions for at least the next two years.

In the mean time, what is an EU trademark registrant to do? In all likelihood, as previously stated, there will be provisions established to extend the EU registration protection back into the UK. However, as we were told by one UK trademark attorney: “some clients have been filing UK double-ups for new marks”; meaning, anticipating the possibility of a Brexit and the uncertainty that it would create, parties have been filing UK applications simultaneous with EU applications, even though the UK was still a member of the EU at the time of filing. If you believe in insurance and have a vested interest for your brand in the UK market this is a logical approach given the uncertainty which trademark owners face.

At the very least, now that the Brexit is official, going forward any winery wanting prospective protection in the UK should not rely on an EU trademark application for such protection and should file directly in the UK instead of, or in addition to, filing in the EU.

If you would like to discuss potential strategies related to protection of your trademark in the UK following the Brexit, please contact us.

Posted By:
Scott Gerien

Small Producer Tax Credit Pitfalls: The K Vintners Case
13 August, 2015

When is a small producer not a small producer? That was the question answered by a federal district court in a case that centered on a winery's ability to claim a small producer tax credit for wine produced at another winery (K Vintners v. U.S., Case No. 12-cv-05128-TOR (E.D. Wa. Jan 21, 2015)).

Background on the Small Producer Tax Credit.

Under federal law, domestic wineries producing 250,000 gallons of wine or less per year ("small producers") are entitled to a tax credit of up to $0.90 per gallon for the first 100,000 gallons of non-sparkling wine removed from bond and "produced at qualified facilities" and a reduced credit thereafter (26 U.S.C. Sec. 5041(c)). This is popularly referred to as the "small producer tax credit" what I'll refer to as the SPTC.

There are two methods by which a small producer can take advantage of the SPTC for wine that was produced at its own facility. First, the winery can claim the SPTC on wine that it removes from its own bond by reporting the removal on its tax return, claiming the SPTC, and paying the net tax. Alternatively, the producer can transfer wine it produced at its own facility in bond to a bonded warehouse, and transfer the SPTC to the bonded warehouse for eligible wine. In this scenario, the warehouse reports the removal on its tax return, claims the winery's SPTC as transferee, and pays the net tax.

The SPTC can also apply to wines that were not made at small producer's bonded winery, but only if that wine is transferred in bond from the producing winery to the small producer's facility and removed from bond by the small producer so long as the small producer actually produces some wine at its facility that year.

Modified graphic submitted by U.S. in K Vintners Case

Modified graphic submitted by U.S. in K Vintners Case

The K Vintners Case: SPTC does not apply to wine produced at another winery on behalf of a small producer and transferred directly to a bonded cellar is not eligible for SPTC.

But what happens when the small producer has wine made at a different facility, and instead of transferring that wine to its own bonded premises, decides to have the wine transferred directly to a bonded warehouse? Is that wine eligible for the SPTC?

That was the issue that one Washington winery, K Vintners, faced a few years back. From 2005-2008, K Vintners produced wine each year at its bonded facility and also purchased bulk wine from two other wineries, Hogue Cellars and Wahluke Slope Vineyards. Hogue and Wahluke fermented, blended, and bottled wine for K Vintners (referred to hereafter as the "Hogue/Wahluke Wine"), then transferred the bottled wine directly to Tiger Mountain, a bonded cellar contracted by K Vintners. K Vintners then sold the wine its own tradenames. Pursuant to the K Vintners-Tiger Mountain contract, Tiger Mountain paid claimed K-Vintners' SPTC on the wine transferred from Hogue/Wahluke and paid the net excise taxes on those wines when removed from bond, and K Vintners reimbursed the bonded cellar for any excise taxes it incurred.

TTB conducted an audit in 2007 and determined that the SPTC could not apply to the Hogue/Wahluke Wine because the wine in question was not produced at K Vintner's bonded facility. TTB ordered Tiger Mountain to pay $327,496.83 in unpaid taxes and an additional $126,580.05 in late-payment penalties. TTB acknowledged that if the Hogue/Wahluke Wines had been shipped in bond from the producing wineries to K Vintner's bonded premises, and then removed from bond by K Vintners, then K Vintners could have claimed the credit on its own behalf (provided that K Vintners produced some wine at its own facility in each of those years).

K Vintners and Tiger Mountain paid the amount under protest, raised administrative claims that were subsequently denied by TTB, and eventually filed suit to seek a refund of these tax payments. K Vintners argued, in part, that the wine was eligible for the SPTC because even though it was made at the Hogue/Wahluke facilities, K Vintners had significant control and oversight through its contractual arrangement with those wineries that in essence, K Vintners "produced" he wine, and therefore the wine was eligible for the SPTC.

The federal district court in the Eastern District of Washington sided with TTB, concluded that such wines were produced at the winery where they went through fermentation (Hogue/Wahluke) and therefore were not eligible for the SPTC when removed from Tiger Mountain's bond. The end result: K Vintners would not see any refund of the nearly half million dollars worth of unexpected taxes and penalties it incurred as a result of its misapplication of the small producer tax credit.

Can a small producer claim the SPTC for wine produced at a winery that produces more than 250K gallons of wine?

One curious comment in the court's decision (mere dicta, for those of you with legal experience) is worth exploring in more detail. The court took a close look at the regulatory language authorizing the SPTC, and noted that the SPTC was only available for "wine produced at qualified facilities in the United States. Under the court's interpretation, this means that a small producer could only claim the SPTC on wine it purchased from another winery if that winery was also "qualified" as a small producer. This directly contradicted statements in TTB's court filings in which TTB stated that K Vintners could have applied the small producer tax credit to the Hogue/Wahluke Wine if the wine had been directly transferred in bond to, and subsequently removed from bond by, K Vintners.

We reached out to TTB to determine if, in light of this language in the court's decision, TTB would be making any changes to its interpretation or enforcement of the small producer tax credit. TTB affirmed that it still interprets 26 USC Sec 5041(c)(1) to allow an eligible small producer to purchase wine from another winery - whether or not that selling winery is itself eligible as a "small producer" and that wine may still be eligible for the SPTC, so long as the small producer meets all other conditions for eligibility. Note , however, that one of those conditions is that allowance of the SPTC would not "benefit a person who would otherwise fail to qualify for use of the SPTC.

This article does not constitute legal advice. Please contact an attorney if you have any questions about the application of the small producer tax credit.


Impact Napa: Wine
30 July, 2014

The Business Journal’s seventh annual Impact Napa conference this year, on August 28th, will focus on the valley’s top industry — WINE. The highlight of this conference will be Richard Mendelson’s interview of Napa Valley’s grand dame, Margrit Mondavi. Richard Mendelson is Of Counsel at Dickenson, Peatman & Fogarty.  Margrit Mondavi is Vice President of Cultural Affairs at Robert Mondavi Winery and a pioneer of the modern-day California wine industry. Following the interview a panel is set to address the latest developments in Napa Valley tourism and business approaches by the next generation of wine industry leaders.

Dickenson, Peatman & Fogarty is a proud sponsor of this event.

Please click the following link for complete information: Impact Napa: Wine


Trends in Wine Package Design
30 June, 2014

Practical Winery & Vineyard recently published an article written by Dickenson, Peatman & Fogarty attorney Katja Loeffelholz. Katja’s article “What’s trending, how to capture it” discusses how technological advancements have permitted an evolution in wine labels, bottle shapes, closures and packaging designs.

One wine bottle can contain several protectable elements. Word mark, logos/images, taglines/slogans, color, configurations, label design, trade dress, product features and design patents are all protectable elements of wine packaging. Protecting these different element can build brand equity.

PWV Feb 2014

Katja is a registered attorney with the United States Patent and Trademark Office.

To learn more about protecting all aspects of intellectual property in your wine label and packaging please contact Katja Loeffelholz at kl@dpf-law.com.


Wine Industry Forum - Friday, August 23, 2013. If you are in the Wine Industry you Can't Miss this Forum
31 July, 2013

Networking Seminars in association with Dickenson Peatman & Fogarty, are pleased to announce our 4th Annual Wine Industry Forum on Friday, August 23, 2013 at

The Vintners Inn located at 4350 Barnes Road, Santa Rosa, CA 95403.  This forum has been updated for 2013 to address recent legislative and regulatory changes, business agreements, branding strategies and the latest issues that will affect your wine business in the future.  Earn 7 CPE/6 CLE Credits   

CONFERENCE OVERVIEW: 

  • Creating, Protecting & Building Equity in your Wine Brand
  • Employment & Labor Law for the Wine Industry - 2013 Update
  • Hot Topics in Compliance & Licensing
  • Business Topics: Wine Industry Agreements & Affordable Care Act  
  • Vineyard & Winery Land Use Update
  • Networking Reception Sponsored by Sonoma County Vintners     

wine forum brochure

Please see brochure for complete details

Download Conference Brochure  

CLICK HERE FOR MORE INFORMATION   

 

REGISTER NOW - SPACE IS LIMITED  

CPE/CLE CREDITS:  Networking Seminars Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org.

Networking Seminars is an approved CLE Sponsor by the State Bar of California until December 31, 2014.  We offer Continuing Legal Education (CLE) Credits in other States for those who request upon registration or at the seminar.


SCV Workshop Set for January 17: Navigating New Winery Sweepstakes & Consumer Contest Legislation
21 January, 2013

Presented by SCV Affiliate Dickenson, Peatman & Fogarty

Governor Brown recently signed 2012 Senate Bill 778 into law creating two new Business and Professions Code Sections; 25600.1 and 25600.2 authorizing consumer contests and sweepstakes to be conducted by authorized California Department of Alcoholic Beverage Control licensees. These statutes became effective January 1, 2013. 
Join us and gain an understanding into how this law affects your wine brand.

This workshop is designed for winery owners, marketing directors and compliance personnel and will cover:

1. The two new major marketing concepts created
2. Who is authorized to conduct these marketing activities
3. Restrictions on consumer participants
4. Restrictions of retailer involvement
5. Consequences if violations of these provisions occur

Date: Thursday, January 17, 2013
Time:Registration at 8:30 AM; Program at 9:00AM
Location:SCV Offices, 3637 Westwind Blvd., Santa Rosa, CA
RSVP: Email Kelley@sonomawine.com

Presenters:
Richard Mendelson
is an attorney (of counsel) with Dickenson, Peatman & Fogarty and an internationally-recognized expert on vineyard and wine law and related land use, intellectual property, business and administrative law issues. Over the past two decades, Richard has handled legal matters involving almost every aspect of the wine business, including liquor licensing, environmental challenges to vineyard development, grape purchase agreements, winery use permits, representation of winery clients before the California Department of Alcoholic Beverage Control and federal Alcohol & Tobacco Tax and Trade Bureau, state and federal label approvals, distributor appointments and terminations, and import-export contracts
 
Michael Mann is an alcohol beverage regulatory consultant with Dickenson, Peatman & Fogarty and a member of their Alcohol Beverage Law Practice Group.  Michael was previously employed by the California Department of Alcoholic Beverage Control for over two decades. He retired as the District Administrator in charge of the Department’s Santa Rosa Office. In that capacity, Michael was responsible for five Northern California Counties, which included Napa, Sonoma, Lake, Marin and Mendocino Counties. This geographical area accounts for over 50% of the state’s wine manufacturing and wholesaling industry. In years past, Michael was also the District Administrator in charge of the Department’s San Francisco Office. He was then responsible for both San Francisco and San Mateo Counties, dealing mainly with the retail industry.  
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This SCV Workshop is sponsored by Affiliate Member

DPFlogo_1-5 2

Dickenson, Peatman & Fogarty provides a level of representation ordinarily associated with legal practices in major metropolitan centers. Our attorneys are routinely recognized in legal rankings and surveys as some of the best in their fields, and the firm is involved regularly with matters of local and national import. For over forty years Dickenson, Peatman & Fogarty lawyers have practiced law with the "get to know you" culture that has engendered significant client loyalty. The Firm's major practice areas include alcohol beverage law, business and corporate dealings, land use matters, labor and employment, civil litigation, intellectual property, real property transactions, as well as estate planning and probate. With offices in Napa and Sonoma counties, the firm is well positioned to serve clients in both the wine and hospitality industries. Dickenson, Peatman & Fogarty50 Old Courthouse Square, Suite 200, Santa Rosa, CA 95404 www.dpf-law.com707/524-7000


Wine Industry Lawsuits: How to Avoid Them
21 January, 2013

No one expects to have to go to court when they start a business deal or venture, or when they plant a vineyard or purchase real estate, but in today’s world no industry is free from lawsuits, particularly not the wine industry. Disputes over grape purchase agreements (duration, termination, quality standards, etc.), vineyard development agreements (quality of vines, planting and maintenance, and sufficiency of site evaluation and preparation, etc.), wine storage agreements (condition of wine, losses, damage to wine, etc.), custom crush agreements (compensation, quality control, etc.), real property matters (title, ownership, boundaries, easements, etc.), and even employment relationships (statutory requirements, executive agreements, workplace safety, etc.) can rise to the level of a lawsuit involving the smallest or largest members of the wine community and costing from tens of thousands to hundreds of thousands of dollars. All too often, however, it is not until the fighting begins that the parties and their attorneys look back and see where the dispute could have been avoided or at least how the parties could have better protected themselves before the dispute arose.

Simple measures are usually the most effective. For example, many people don’t review their written agreements until a dispute arises, and then they often find that the paperwork does not read like they recalled it read, or they find that the agreement is ambiguous on a matter that was not an issue until circumstances changed. Instead of shelving your paperwork once it’s signed, there is tremendous value in periodically reviewing written agreements to confirm that they match your understanding of a deal, as well as to confirm that the agreement is being correctly followed. Such a review can, but need not, involve the assistance of counsel. At the very least, such reviews help keep everyone on track while they are still getting along, and when things are not on track, the parties can usually make mid-course corrections in the paperwork or their conduct (or both) without much debate or fanfare because there is no dispute pending. Once a dispute arises, however, such corrective measures are more difficult to achieve.

It is even more important to take such a proactive approach in cases that do not involve written agreements because differences in recollection often cloud the dispute resolution process once a legal battle has begun.

Likewise, where property issues are involved, it is better to find out about your state of title before you are in a dispute with a neighbor. Such early knowledge not only presents the opportunity to find a solution with your neighbor while everyone still gets along (or at least has not been antagonized by the existence of dispute), but it also allows you to get properly informed as to what you should or should not do to protect your property rights in the absence of a negotiated solution since many of the legal rules involved with property disputes are counter-intuitive to non attorneys.

In short, sometimes you need to look back to move forward in the safest way.

For more information or assistance on litigation matters, and how to prevent them, contact Paul Carey at pcarey@dpf-law.com

Title Name Email Phone
Director J. Scott Gerien sgerien@dpf-law.com 707-252-7122
Managing Director Gregory J. Walsh gwalsh@dpf-law.com 707-524-7000
Managing Director Carol Kingery Ritter ckritter@dpf-law.com 707-252-7122
Director David Balter dbalter@dpf-law.com 707-252-7122
Director Paul G. Carey pcarey@dpf-law.com 707-252-7122
Director Bahaneh Hobel bhobel@dpf-law.com 707-252-7122
Director Thomas S. Adams tadams@dpf-law.com 707-252-7122
Director Scott Greenwood-Meinert scottgm@dpf-law.com 707-252-7122
Director Jennifer D. Phillips jphillips@dpf-law.com 707-524-7000