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Beverage Trade Network

Federal judge dismisses Ste. Michelle versus Treasury Wine complaint, controversy heads for mediation

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.


 

Treasury Wine Estates (TWE)  and Ste. Michelle Wine Estates (SMWE) have agreed to take their “dueling stags” disputes to private mediation. As part of that process, the federal court has granted TWE’s motion to dismiss charges brought against it by SMWE.

 

As previously reported by Wine Industry Insight, Ste. Michelle sued TWE in early October on a alleging trademark infringement and unfair competition among other charges. TWE filed a countersuit seeking a court declaration that their marketing efforts did not infringe SMWE trademarks. On Oct. 25, both cases were “related” by the court (in a sense, combined)  with the original SMWE lawsuit.

Ste. Michelle’s “fatal flaw”

Federal District Court Judge Richard Seeborg yesterday approved TWE’s motion to dismiss the case saying 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.”

The full text of the judge’s decision can be accessed at this link by premium Wine Executive News subscribers.

Mediation set to resolve existing controversy

While Ste. Michelle’s current complaint has been dismissed, the judge noted that a genuine controversy still exists between the two companies.

“There is little doubt that the parties have a present and existing controversy that may properly be addressed through claims for injunctive and/or declaratory relief in this action and/or through declaratory relief in the related action filed by TWE.

“In this action, however, plaintiffs’s current claims are not viable as presently set out. Accordingly, the motion to dismiss is granted, with leave to amend.”

A November 8, stipulation notes that the two dueling stags have agreed to private “Alternative Dispute Resolution” and begin mediation within 30 days.

Wine Industry Insight reached out to both companies for comment, but has not received any yet.