California wineries can breath a sigh of relief after the California Legislature addressed some of the critical shortcomings in California’s Paid Sick Leave Law only a few weeks before it was to go into effect.

The original Paid Sick Leave Law (codified in Labor Code Section 246) provided that employees shall accrue paid sick leave at a rate not less than one hour for every thirty hours worked. To determine the amount of pay, employers were required to divide the total pay within the last 90 days by the total hours worked.

One of the critical flaws of the original Paid Sick Leave Law – readily apparent to anyone in the hospitality business – is that many employees have fluctuating pay rates. For example, a server paid mostly from tips or a sales employee paid based on a draw and commission structure wouldn’t fit the rigid 90 day calculation.

Fortunately, Assembly Bill 304, recently signed by Governor Brown, amended the Paid Sick Leave Law to provide greater flexibility for employers.

First, the amended law permits employers to offer one hour of paid sick leave for every thirty hours worked or offer three paid sick leave days per year up front.

Second, and perhaps most crucial to the hospitality and wine industries, the amended law provides greater flexibility in calculating pay rates for paid sick leave. Specifically, Labor Code Section 246(k) was amended to provide that the amount of pay can be the same regular rate used for overtime pay or the same rate used for other forms of paid leave, such as vacation. As a result, employers have greater flexibility in calculating pay rates for paid sick leave for employees with fluctuating pay rates, such as servers and sales employees.

As tax day approaches for individuals in the U.S., it is always fun to think about the integral part that tax has played in forming our nation’s identity and its laws, particularly where alcohol has been involved.

The first source of income tax for our new Republic was an excise tax on distilled spirits levied in 1791. These taxes under the Washington presidency, as called for by Alexander Hamilton, paid off our nation’s debt in the Revolutionary War. However, the tax caused some uproar (I’m looking at you, Pennsylvania) and the Treasury Department found itself in the middle of the Whiskey Rebellion, an event that would come to stand as the first true test of our Federal government’s legitimacy. During the events of the Whiskey Rebellion, Washington sent militia troops into Pennsylvania with instructions to protect the judicial courts, assist the civil magistrates in executing the laws, and aid them in suppressing the disturbers of peace. These instructions would later be cited as one piece of historical evidence behind the Supreme Court’s ruling that military tribunals could not sentence civilians to prison in Hawaii in 1945. See Duncan v. Kahanamoku, 327 U.S. 304, 321 (1946). The events of the Whiskey Rebellion also contributed to the formation of political parties in the United States, a process already underway. The whiskey tax was repealed after Thomas Jefferson’s Republican Party, which opposed Hamilton’s Federalist Party, came to power in 1801.

Later, the U.S. Treasury collected taxes and issued stamps for alcohol and tobacco products in order to finance the Civil War. And during the early part of the twentieth century, the Treasury Department used agents like Eliot Ness to enforce the Eighteenth Amendment (while certain moon shiners who escaped the law began stock car racing). The Alcohol and Tobacco Tax and Trade Bureau (or “TTB”) is the bureau that collects excise taxes on alcohol, tobacco, firearms, and ammunition today. TTB was created in January of 2003, when the Bureau of Alcohol, Tobacco and Firearms was reorganized under the provisions of the Homeland Security Act of 2002. Although the levying and filing of taxes can seem mundane, like most things, when alcohol is mixed in, the results have been tumultuous in U.S. history.

Sources:

http://www.ttb.gov/about/history.shtml

Duncan v. Kahanamoku, 327 U.S. 304, 321 (1946).

http://www.mountvernon.org/research-collections/digital-encyclopedia/article/whiskey-rebellion/

http://www.ttb.gov/public_info/whisky_rebellion.shtml

In evaluating a new name or label for your wine, it is important to keep in mind that in the USPTO’s opinion, all alcoholic beverages are related. One of the main purposes of the Lanham Act (the U.S. Trademark Laws), is to protect a brand’s distinctiveness by prohibiting the use of other marks that are so similar they are likely to cause confusion among customers. In deciding whether there is a strong likelihood of confusion (which could lead to the refusal to register a proposed trademark or worse, liability for trademark infringement), one of the key factors that is considered is the relatedness of the products offered under the similar marks. Last month, the Trademark Trials and Appeals Board (“TTAB”) refused registration of the mark “Masquerade” for sparkling wine, finding that it was confusingly similar to the registered mark “Mascarade” for “mixed beverage containing alcohol and fruit juice.” (See In re 8 Vini, Inc., Serial No. 85857391 (January 16, 2015).) The TTAB has recently issued similar holdings in cases concerning proposed trademarks for beer that were similar to existing registered marks for wine as well. (See, e.g., The Bruery, LLC, Serial No. 85656671 (September 24, 2014).) In the latter, the TTAB noted that it believed it was not uncommon for craft/microbreweries to also produce wine in issuing its decision.

As these recent cases make clear, it is not enough that the marks are not identical (or that you are using a correct, as opposed to misspelled, word) if you want to avoid an adverse ruling from the TTAB. A trademark attorney can assist you in evaluating the likelihood that your proposed new name or label will face challenges, and in filing the appropriate disclaimers to avoid refusal, while still assuring protection of your brand.

Often, wine novices are told to select a wine based on the appeal of the design of a wine’s label. But, beyond font, color, and the brand (producer), what particular language should consumers look for when selecting a bottle?

Vintage Date: A vintage date on the label means 95% of the wine is made from grapes grown in that year.

Alcohol Content: Alcohol content is the percentage of alcohol by volume. By law, wines must have a minimum of 7% and a maximum of 14% alcohol. Ports must be between 18 to 20% alcohol and Sherries must be between 17 to 20% alcohol.

Reserve: “Reserve” has no legal meaning, so wineries may use this term to indicate a special bottling or limited production.

Champagne: Sparkling wines are produced worldwide, but laws usually reserve the term “Champagne” exclusively for sparkling wines from the Champagne region in France. The United States bans the use of the word “Champagne” from all new wines produced in the United States.

Estate Bottled or Grown, Produced, and Bottled By: This means that 100% of the wine came from grapes grown on land controlled by that winery. In one operation, the winery crushes and ferments the grapes, finishes, ages, processes, and bottles the wine.

Made and Bottled By: This means that a minimum of 10% of the wine in the bottle was fermented at the winery.

Holiday Cheer

September 26, 2014 | Leave a Comment

As the holidays approach, so too does the season for office parties. Oftentimes, alcohol will also be present at office parties, which can present some issues for companies who want to thank their employees (and their families) for another year of hard work, but also need to protect themselves from a liability standpoint. There are several options which can allow for cheerfully boozy yet safe celebration for all.

Have your event off-site. Using an offsite venue may reduce the likelihood of overconsumption as it will be the sites staff’s responsibility to monitor and handle those who may have had too much. Offsite venues will also be responsible for obtaining the proper licensing materials, taking that responsibility out of your hands as an employer.

Don’t host an Open Bar. Limit the amount of alcohol any guest may have by providing a limited number of drink tickets, or providing an open bar for a short period of time.

Make it optional. Making the party optional can protect employers from potential wage and overage claims. Also, this can serve to limit your business’s liability for the acts of any employee who may get too merry, by carving out that the event was not within the scope of employment. It may also be best to avoid making the event out to be an extension of your business, such as handing out bonuses or making speeches related to business success of the past year. Keeping it light and informal will not only potentially be more enjoyable for attendees, but it will maintain a sharp distinction between the event and the workplace, protecting against vicarious liability claims.

Provide safe rides home. Many employers are now offering cab vouchers or arranging for shuttles to and from office parties, to keep their employees and others on the road safe.

Holiday parties are a time to celebrate the year gone past and to show appreciation to employees. Alcohol can safely be a part of that celebration with some minor precautions. Cheers to the upcoming holidays.

Until recently, California enology and viticulture students under the age of 21 had to use their imagination when it came to wine and beer tasting. But earlier this summer, on July 28, Governor Jerry Brown signed into law what has become known as the “Sip and Spit” law, which allows students in accredited wine-making or beer-making courses to taste wine and beer, so long as they spit it out after tasting.

At UC Davis, one of the nation’s top viticulture and enology programs, wine production classes have gone without the ability to sample the beverage as it evolves. The university, and others with similar programs, have been forced to hold off on offering tasting classes until the student’s final semester, when he or she is likely to be at the legal drinking age of 21.

Now, students can experience firsthand the evolution of flavors in a wine as it goes from vine to table. Proponents of the law hope that by removing the legal obstacle which may deter some aspiring young vintners, the already robust and high volume levels of wine production in California will continue to grow, and to attract a younger, hipper audience.

With schools across the nation starting their fall sessions, the first potential crop of students to enjoy the limited exception the law provides is no doubt excited for the opportunity to explore this new aspect of their education.

In our last post, we considered the problems faced by Brandywine as they set about trying to get off the ground as a new alcohol producer in California. The licenses allowing them to do all that they wanted to do were challenging to obtain, because the California Department of Alcoholic Beverage Control (the ABC) was concerned that they were trying to get around certain restrictions on serving brandy in a distillery tasting room. However, even convincing the ABC that Brandywine would meet the requirements for serving brandy in their tasting room was not the end of the issue for the ABC. In addition to doing all the right things, Brandywine had to show that it was going to do them in the right places – an interesting challenge when the facility is not even fully designed yet.

To understand why this matters, we’ll have to return to the previous post, where we talked about the different types of licenses the ABC issues: some for serving, some for selling, some for producing, and others besides. A licensee needs to be able to show the ABC not only that they are doing all the things required by each license, but also that certain things are physically separated from one another: tasting and sales is one instance; storage is another. When applying for a new license, the ABC will want to be able to see that your facility is set up in such a way that, once operations start, you will be able to comply with these physical constraints.

When Brandywine submitted their application, their facility was little more than a gleam in an architect’s eye. The ABC recognized that it was a new business with a new building, but was not content with Brandywine’s assurances that they would be able to adapt the space once it was completed. But where the agency and the client saw an impasse, we found an opportunity. By facilitating communication between our client and the ABC, a process emerged allowing the ABC to make suggestions which would design regulatory compliance right into the plans for the new building.

Working with regulatory agencies can be an enormous challenge for some businesses. By recognizing and taking advantage of the opportunity to make one a partner rather than an adversary means goodwill now, and long-term savings throughout the life of the business.

It’s tough out there for any new business. Even in the best of economies, you have to deal with the formalities required by state and federal governments, filings, fees, and – let’s face it – lawyers. But some types of businesses have it especially bad, and high on that list is the new alcohol producer. Draconian Prohibition-era laws make it especially difficult for them to get off the ground, as one of our clients recently found.

The California Department of Alcoholic Beverage Control (fondly, the ABC) issues many different types of licenses – some to serve alcohol, some to sell on-site or off-site, others to produce. Our client, we’ll call them “Brandywine,” wanted to do all of those things: to create a business location where they would distill brandy and other liquors, with a tasting room where visitors could sample the wares, and a shop where they could purchase bottles to take home. Each one of these requires a different license, and the ABC looks very carefully at applications that ask for everything but the kitchen sink.

The special problem with Brandywine’s application was a peculiar inconsistency in California’s laws: brandy is licensed separately, and with different privileges from other liquors. Specifically, a general liquor production license carries with it a privilege to have a tasting room, while a brandy production license does not. Why? No one really knows – not even the ABC. But that didn’t stop their local office from grilling us on what – EXACTLY – Brandywine had planned for their business. Would they be producing liquor other than brandy? Yes. Immediately when they opened, or sometime in the unknown future? Immediately. It took some convincing, but then that’s what we are here for. Having a positive working relationship with regulatory agencies is one of the values we offer our clients, and it showed when the ABC was willing to issue the licenses before the build-out of Brandywine’s facility had even started.

From a certain perspective, the ABC’s insistence makes sense: they want to be sure that no one applies for a general liquor production license just so that they can have a tasting room for the brandy which is unavailable under their brandy license. That would just be sidestepping California law and ABC regulations. But from another, it is an overzealous application of irrational rules. It’s the very last thing a business owner wants to deal with when still figuring out branding, marketing, supply chain logistics, and everything else necessary to start a business. Knowing you have someone on your side who can solve the problem and make the regulators smile while they sign off on your licenses can make the difference between sleepless nights and sweet dreams.

So you’re a small winery about to launch your website, and you’re hoping that online sales will benefit both your brand and your bottom line. As you prepare to venture into the peril-ridden realm of the internet, you wonder: how can I be sure that minors don’t buy my wine online?

The short answer is: You can never be sure, because no matter how thorough and sophisticated a system you devise to verify age, teenage ingenuity will inevitably find a way to circumvent it.

Nevertheless, you do have certain minimum obligations with respect to age verification. At present, there is no “law,” as such, regarding age verification on winery websites, but the Federal Trade Commission and various alcoholic beverage industry groups have issued guidelines and recommendations regarding how alcohol manufacturers should guard against the exposure of minors to their marketing.  The best practice for manufacturers is thus to adhere to their industries’ codes of conduct. The Wine Institute’s Code, adopted in June 2011, provides as follows regarding age verification:

“A member should employ an age affirmation mechanism on the homepage that restricts access only to viewers who affirm their legal drinking age before access to any area of the site. Any linkage to a member website page that bypasses its home page should include an age affirmation mechanism.

Member websites should employ a third party age verification mechanism that will verify the legal drinking age of online purchasers of wine at the point of purchase.”

To accomplish the first objective, wineries use language of their choosing, typically coupled with an “enter” button or a click-box.  To accomplish the second objective, wineries must require each purchaser to provide his/her date of birth and then use a third-party age verification system to confirm (in theory, at least) that the purchaser is an adult.

Alcoholic beverage manufacturers have so far resisted stricter advertising regulation from the government by adhering to these best practices.  Earlier this year, however, the FTC requested data from several major alcoholic beverage manufacturers regarding their digital advertising practices, and these practices are presently under review.  New and more formal regulation may be in store.  Watch this space.

Laundry Day

December 31, 2012 | Leave a Comment

All work and no play would make Parravano Witten a very dull law firm.  So to celebrate the holidays and to end 2012 in grand style, our attorneys gathered together for laundry –the French Laundry, that is.

Thanks to both stunning good fortune and a friend’s gracious intervention, we snagged a last-minute reservation at chef Thomas Keller’s foodie Mecca in Yountville.  The French Laundry is legendary, as is its esteemed chef-owner, whose cuisine and chef mentorship program have palpably influenced the American restaurant industry.  In most such cases, one’s expectations are inevitably disappointed: the hype has built for so long that no real restaurant, staffed by imperfect humans armed with earthly ingredients, could live up to it.

That is not true of the Laundry, which manages to exceed even the highest expectations.  The food defies superlatives.  A rich but somehow still delicate sunchoke velouté, accented with red ribbon sorrel, pomegranate and spice foam, is liquefied sunshine.  Butter-poached Island Creek Oysters, nestled in a bed of pearl tapioca and white sturgeon caviar, melt away in the mouth like sea foam on sand.  A series of equally luscious courses follow, each building harmoniously upon the other in a crescendo of flavors.

But this is a wine (law) blog, so we imagine that most readers are currently thinking something like: “Yes, yes.  That sounds delicious.  But what were your DRINKING?”  Our kind friends who assisted with our reservation also collaborated with the Laundry’s wine director to select our pairings for the evening:

Without entering too far into the controversial world of tasting notes, we will venture only that the Egly-Ouriet Extra Brut champagne paired exquisitely with the sunchoke velouté—it, too, tasted of sunshine as well as lemon zest, tart green apple, and French toast—and that the 1985 Comte Lafon Volnay and 2004 Robert Chevillon Nuits-Saint-Georges, equally glorious but entirely distinct from one another in nose and flavor profile, illustrated the extraordinary breadth of red Burgundy.  In sum: Wow.

The same could be said of our evening overall.  Good food, good wine, and good company coincide rarely, but on this Laundry Day, we enjoyed the best of all three.

We drank toasts to our team that night, but as this post will appear on New Year’s Eve, we offer another:  Here’s to our clients.  For those of you reading this post, thank you for choosing to work with us, and for putting your trust in us, and best wishes for 2013.