Stag duel continues: Ste Michelle files amended stag complaint against Treasury Wine

CORRECTION: In a previous version of this article, Wine Industry Insight stated that Federal District Court Judge Richard Seeborg had combined the cases. That was incorrect.

Judge Seeborg adjudged both cases as related but did not consolidate them, thus allowing the Treasury’s request for declaratory relief to remain open. 

To the non-lawyer, this may seem like a difference without a distinction, but has significant implications for  judicial rules on how cases should be treated. We regret this error.

---

 

Just a week after the dueling stags agreed to mediation, Ste Michelle Wine Estates (SMWE) has filed an amended complaint against Treasury Wine Estates (TWE).

 

TWE previously countersued in that initial action, seeking declaratory relief. (“Stag versus Stag” lawsuits.)

 

On Nov. 10, Federal District Court Judge Richard Seeborg related, but did not consolidate both cases after the two stags agreed to the mediation. He dismissed Ste Michelle’s original complaint but allowed Treasury’s request to continue and left  the door open for SWME to refile — which they did yesterday, Nov. 17.

 

In that decision, Seeborg said that

“The fatal flaw in plaintiffs’ [SMWE] complaint, as currently pleaded is that they have not alleged facts showing any use in commerce of the name, imagery, and descriptions to which they object.

“TWE undisputedly sought at least three Certificates of Label Approval (“COLAs”) issued by the United States Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau in recent months, and the labels shown in those COLAs are the foundation of plaintiffs’s claims.

“Equally, undisputed however, and subject to judicial notice, is the fact that TWE subsequently has surrendered those COLAs.”

Curing the fatal flaw

The amended complaint seeks to cure that fatal flaw. In doing so, the amended complaint objects to Treasury’s currently approved Certificate of Label Approval for a “Stag” brand, minus to any reference to Stag’s Leap Winery, its location or winemaker. Any use of the word stag constitutes a violation according to SMWE.

 

The following from a Ste Michelle Wine Estates spokesman following Wine Industry Insight’s previous, Nov. 11,  article:

 “There is no doubt the judge recognized Treasury’s use of The Stag brand is an issue.  Yesterday’s [Nov. 10, 2016] Order made clear it was merely procedural and did not decide the merits of the litigation or approve of The Stag. 

“Indeed, the Order expressly provides Stag’s Leap Wine Cellars the opportunity to pursue the case.  The main defense Treasury raised was essentially a delaying tactic:  the Court should not yet hear the case because Treasury claims it is not yet using The Stag in commerce. 

“Treasury is apparently taking the position it will voluntarily keep the brand off the market until the case is resolved.  We look forward to demonstrating in court that Treasury is trying to improperly capitalize on the prestige and reputation of the Stags Leap name.”

Ste Michelle gets support from Stags Leap District Winegrowers:

Ste Michelle is not the only stag concerned about Treasury’s brand. This letter from the Stags Leap District Winegrowers to Treasury Wine. Among other things, that letters says that:

“[We} are disappointed that Treasury would create a brand made from wine outside of Stags Leap District which is clearly intended to capitalize on the prestige and reputation of the Stags Leap District appellation.

“Not only does this diminish the value of the appellation, but it also allows Treasury to unfairly compete against the members of the Association by selling a lower-priced wine made from less-expensive grapes while still capitalizing on the Stags Leap District famed luxury name and association with the appellation. This is misleading to consumers.”

Collateral damage?

Ironically, a Ste Michelle victory on that issue would raise serious issues for four small U.S. wineries who have been using stag in their names for several years.

 

The full amended complaint filed yesterday is available here for premium Wine Executive News subscribers

Comments and the short deadline

Wine Industry Insight reached out this morning  to both companies or comment.

 

Because the amended complaint was filed yesterday and was not available on the federal courts PACER online system until today, the deadline for writing this piece and seeking comment was very tight. We received comment from a Treasury spokesperson and will include Ste Michelle’s when received.

Treasury spokesperson responds

The following was received via email and is printed in its entirety save for one explanatory notation [in brackets]:

“SWLC [Stag’s Leap Wine Cellars] and SMWE have been unashamedly hypocritical in making this complaint against TWE for something we are not even doing, but that they themselves have done – namely, using the Stags Leap name in connection with wine sourced from an AVA outside the Napa Valley. For example, for more than 40 years SLWC and SMWE have used the Stags Leap name on Hawk Crest wines sourced from the North Coast AVA.  There are in fact, several other wine brands that have used the word ‘stag’ in their brand name for wine sourced from both inside and outside of Napa Valley, including the Silver Stag wine brand that sources wines from Coombsville in Napa. SLWC and SMWE have, however, failed to file complaints against these other wine brands. This is a classic case of double standards.
 
“It is of grave concern to TWE that there are views being formed on the complaint based on inaccurate and misleading information, which we understand is being circulated by SLWC and SMWE – we believe this case is really about SLWC and SMWE attempting to suppress lawful competition in the market, and solicit support from other winemakers in the Stags Leap district to pressure TWE to abandon its lawful activities.
 
“We are not making any link between The Stag brand and Stags’ Leap Winery or the Stags Leap District – this was made very clear to SLWC and SMWE before they filed their lawsuit. Imagery of the stag has long been associated with the historic St Huberts winery in Victoria, Australia, and we are taking an Australian proposition to the US, with locally sourced wine. It is SLWC and SMWE who are desperately attempting to make the link to the Stags Leap District through their publicity efforts.
 
“TWE maintains its position – we strongly deny the accusations made by SLWC and SMWE relating to the use of the Stag brand name in the US, and we are confident in this position. At no point has TWE sought to damage its relationship with the SLWA or other producers in the district, but we will continue to defend our lawful right to market and sell St Huberts The Stag in the US.”

Previous Wine Industry Insight coverage:

• Federal judge combines “Stag versus Stag” lawsuits, dismisses Ste. Michelle versus Treasury Wine complaint, controversy heads for mediation
• Ste. Michelle Vs Treasury Wine: Corporate Stags Behaving Badly Or A Brilliantly Executed Sucker Punch?