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Long-simmering wine industry grudge match heads for federal court hearing

 

PLEASE NOTE: All links to legal filings are for premium subscribers to Wine Executive News.

 

Also please note: This article may be updated when new information is available short of a new article.


 

Years of bad blood between two prominent wine industry players is headed for a courtroom battle on June 25 in U.S. District Court for the Northern District of California, San Francisco Division.

 

PJames

Philip J. K. James, LinkedIn profile photo.

pMabray

Paul Mabray, LinkedIn profile photo.

Quick summary

Penrose Hill CEO Philip James and Emetry CEO Paul Mabray have a long antagonistic history and have publicly sniped at each other since at least 2007 with each finding fault with the other and their respective company ventures and business acumen.

 

In the current court filings — and in his Medium article — Mabray took James to task over what he considered Penrose Hill’s lack of transparency (among other things) and also raised a 2007 issue concerning James’s company Snooth and its dealings with Cellar Tracker.

 

Likewise in the filings, James has taken his own shots at Mabray’s companies Inertia Beverage Group and VinTank.

 

That simmering enmity erupted into open warfare because of an online article and a Tweet.

 

The Article

Screen Shot 2020-06-08 at 6.36.32 AM

 

 

 

 

 

The TweetScreen Shot 2020-06-08 at 1.54.28 PM

 

 

NOTE: Mabray’s full article can be found at the Internet Archive at this link. If the archive image fails, a backup graphic is here. Click it to enlarge.


 

Background

On Feb. 14, 2020,  Philip James filed a complaint on behalf of himself and his company, seeking damages and an injunction against Paul Mabray for a December 2017 online blog post/article in Medium and a subsequent Tweet (see below) which, according to the complaint:

”…falsely imputes fraud and dishonesty to Plaintiffs and falsely imputes upon Plaintiffs a lack of fitness and lack of competence in the wine industry. The blog post and defamatory statements contained therein have substantially damaged and continue to damage and disparage Plaintiffs’ business reputation.”

Screen Shot 2020-06-02 at 12.39.57 PM

The existence of the lawsuit was initially reported by WineBusiness.Com. The link in that article was subsequently taken down by Medium after a complaint. Neither James nor his attorney replied to our query about the source of the take-down request.

Mabray’s response filing on March 26, denied the allegations and in 19 “affirmative defense” sections said (among other things)  his words were protected speech, either true or valid opinion/commentary, not actionable because James was a public figure.

 

In addition, Mabray argued that the case was filed too late because California’s one-year statute of limitations on libel had passed.

 

Mabray’s response denying the Penrose allegations also took the opportunity to slip in a number of “zingers” including:

 

“To the extent the allegation in paragraph 35 that Penrose Hill “creates real wine brands” implies that all or even most of the brands created by Penrose Hill correspond to brands anchored by a single winery and that exist outside the context of the wine club through which they are offered, Mabray denies such allegation. Mabray further denies that Penrose Hill “does not misrepresent or obfuscate the nature, quality, or source of its wines”.”

The Anti-SLAPP Hearing

The hearing scheduled for June 25 is to consider Mabray’s request to have James’s complaint dismissed as a Strategic Lawsuit Against Public Participation (SLAPP) that is intended to curtail his freedom of expression.

 

This explanation from the Marin County Bar Association notes that:

To win an anti-SLAPP motion: “[F]irst, the defendant must make a prima facie showing that the plaintiff’s ‘cause of action . . . aris[es] from an act by the defendant ‘in furtherance of the [defendant’s] right of petition or free speech . . . in connection with a public issue.

This includes statements made before or in connection with a legislative, executive, judicial or other official proceeding; or statements made in a public forum or in furtherance of the exercise of free speech.

 

This basically means that a defendant must present a case for protected speech suppression that is so strong that it must be accepted as correct unless proven otherwise. This shifts the burden of proof to the plaintiff.

 

In this particular case, that means that if Mabray can make a prima facie case that Penrose/James filed its lawsuit intending to silence Mabray, then the complaint could be dismissed without a trial on the defamation issues.

Key points bearing on the SLAPP issue include:

  • Is the topic a matter of public interest? Penrose/James says this is a matter between two private parties. Mabray says the issue is one of broader consumer interest.

 

  • Was the Penrose/James lawsuit filed on time? Penrose/James says yes because the link to the Medium article was “republished” in the Tweet which was within California’s statute of limitations. Mabray contends that a link is not a “republication” and that the Medium publication was too old to litigate.

 

  • Is Philip James a “public” figure? Penrose/James says no. Mabray says yes.

Also bearing on this is the judge’s assessment, based on the evidence so far, of how likely Mabray would be to prevail if the case were to go to trial. Key in that decision will be the credibility of Mabray’s defense filings and Penrose/James’s counter-arguments outlined below.

Point, Counterpoint

Text below is unedited and excerpted from pages 7 and 8 of the Penrose/James complaint. Maybray’s responses in green come mainly from his answer to the complaint and from his anti-SLAPP motion.

These points are very brief highlights to keep this long article from being even longer. The involved details, specifics and in-depth discussions are found in the filings, linked below.

 

  • Maybray statements from the Medium blog post bold and in this color.
  • Penrose Hill/James responses in black.
  • Maybray comments in green and excerpted from his response or anti-SLAPP document filed on April 16, 2020 or other filings as noted. Note: <Angle brackets> used in one section by WII to clarify litigant party reference.

a. Statements concerning Philip James:

The title: “Fakers Not Makers and The Return of Philip James”

 

“The title, and Blog Post in its totality falsely imputes dishonestly to Philip James as well as to Penrose Hill.”

 

“Following this introduction, the 2017 Commentary turned its focus to Plaintiffs. After describing some of James’ past activities and prior companies, he went on to describe – and criticize – James’ latest collection of wine companies, including Penrose Hill. The 2017 Commentary ended with an open question:

“So with all these new cadre of fakers v. makers what should we believe out from Philip James and his new collection of companies? That he is a good actor returning to wine after two failed attempts to help the industry become better? A maker of companies to help the consumer? Or a faker, returning again to prey on the market conditions and the ignorance of the consumer? Regardless of his intentions the key is that we all remain diligent in helping educate consumers on the difference between the fakers and the makers.”

 

“Let’s not forget [Philip James’] egregious act of scraping Eric LeVine’s data from Cellartracker.com”

 

“This statement is false as Philip James did not do this. A company that Philip James was CEO of, worked with Cellartracker and had written permission from the owner to display the content.”

 

According to the Declaration of Eric LeVine filed on April 16, 2020

I believe that this statement in the <Mabray> 2017 Commentary is fair and accurate.

“I am also aware that the <Penrose Hill/James> Complaint in this action alleges that “[t]his statement is false as Philip James did not do this. A company that Philip James was CEO of, worked with CellarTracker and had written permission from the owner to display the content.”

“I believe that these allegations in the <Penrose Hill/James> Complaint are misleading and substantially inaccurate.”

 

“Many of us inside the wine industry were not surprised that it was yet another hoax from Philip James. Fool me once, shame on you. Fool me twice, shame on me.”

 

“This statement implies that Mr. James had previously perpetrated a hoax, which is demonstrably false. This, incorrectly labeled, “second hoax” was in fact a campaign for the clean water charity, Wine to Water, a registered non-profit, who’s founder was named a CNN Hero in 2013.

“The campaign was the co-winner for the Community Relations category of the 2014 Platinum PR Awards. It was also named as one of the “10 Best Cause Marketing Campaigns” of the year. Mr. James and Penrose Hill have continued to support Wine to Water, having donated a total of over $50,000 in support of projects around the world, including recently, the Bahamas.”

 

“Plaintiffs’ Complaint also takes issue with the part of the 2017 Commentary in which Mabray describes James’ 2014 publicity stunt involving a “Miracle Machine” billed as being able to turn water into wine. As it turned out, the real object was to drum up support for a charity called Wine to Water.

“Plaintiffs take issue with Mabray’s description of this incident on the grounds that it “implie[d] that Mr. James had previously perpetrated a hoax,” but read in context of the entire Commentary, it was clear that “yet another hoax” was a non-literal reference to the matters previously discussed in the 2017 Commentary.”

 

“That he is a good actor returning to wine after two failed attempts to help the industry become better? A maker of companies to help the consumer? Or a faker, returning again to prey on the market conditions and ignorance of the consumer?”

 

“This statement expressly and falsely imputes to Philip James dishonesty and lack of fitness and lack of competence in the wine industry. Mr. James has had no “failed attempts” in the industry. One of the companies he founded was acquired, another is still active and has had aggregate sales of over $100 million, and a third is still active and has over 1 million registered users.”

 

No specific response offered

Statements concerning Penrose Hill and its brands:

“just shells on top of the one theme — taking plonk and repacking it”

 

“This statement is demonstrably false and imputes fraud to Penrose Hill. Plonk is a non-specific and derogatory term for cheap, low-quality wine. This statement implies that Penrose Hill is taking bad wine and repackaging it.”

“The quality of the product can be evinced by studying the 1,000+ awards that have come from globally recognized, third party wine competitions. Penrose Hill wines have been awarded top marks across categories and competed against some of the biggest wineries on earth.”

“To say that the wine is fraudulent, or even of sub-par quality is roundly refuted by these award bodies. The winemaking staff at Penrose Hill understands what “quality” means and craft wines in their winemaking laboratory for diverse palates, not just for industry gatekeepers serving traditional wine business interests.”

 

“As Mabray made clear in the 2017 Commentary, his view was that these companies are selling unsophisticated consumers mediocre wine – “plonk,” as he called it – under “labels that have no meaning except to obfuscate where the wine is really made from the customer.”

“As he went on to explain, fundamentally, his concern was about transparency: “it is not their business models that are insulting, it is the illusion that they have access to unique pricing and juice that equals the great and family owned brands at huge savings.”

 

[Penrose Hill, and its custom wine label brand are] like the pioneer of custom wine labels, Windsor Vineyards (but without the quality vineyards, contracts and production facility)”

 

“This statement is patently false, as Penrose Hill sources wine from ‘quality vineyards’, has ‘contracts’ for the grapes and wine it sources and has a ‘production facility’, as well as operates its own wine laboratory, stores excess wine in its own tanks at the winery, and employees a team of veteran winemakers.”

 

No specific response offered

b. Additional defamatory statements that fu

rther impute dishonesty to Philip James and Penrose Hill:

“just shells on top of the one theme — taking plonk and repacking it”

“creating false brands to fool unsophisticated consumers”

“it is the illusion that they have access to unique pricing and juice that equals the great and family owned brands at huge savings. It is their attempts to misrepresent authenticity. It is their endless generation of wine labels that have no meaning except to obfuscate where the wine really is made from the consumer.”

“substituting plonk in the place of artisanal wine.”

 

“The Defamatory Statements are demonstrably false and impute dishonesty and fraud to Penrose Hill and Philip James.

“Further, when read within the context of the full Blog Post, the Defamatory Statements, and indeed the entire Blog Post, clearly falsely imputes fraud and dishonesty to Plaintiffs and falsely imputes upon Plaintiffs a lack of fitness and lack of competence in the wine industry.”

 

No specific responses offered.



Links to full 2020 legal filings – available to Wine Executive News premium subscribers

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FEBRUARY

  • Penrose Hill/James Complaint

  • Penrose Hill/James Complaint-Exhibit A, low-resolution image of Mabray artlcle from Medium

  • Penrose Hill/James Complaint-Exhibit B, low-resolution image of Mabray tweet

MARCH

  • Maybray answer to complaint

APRIL

  • Maybray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Maybray proposed order to strike Penrose/James complaint under California anti-SLAPP law

  • Maybray declaration to motion to strike Penrose/James complaint under California anti-SLAPP law

  • Eric LeVine declaration to support Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Exhibit to Cellar Tracker founder Eric LeVine declaration to support Mabray motion to strike Penrose/James complaint under California anti-SLAPP law – Philip James apology to Cellar Tracker

  • Mabray request for judicial notice of information in support pf Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Exhibit 1 – Mabray request for judicial notice of information in support of Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Exhibit 2 – Mabray request for judicial notice of information in support of Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Exhibit 3 – Mabray request for judicial notice of information in support of Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Exhibit 4 – Mabray request for judicial notice of information in support of Mabray motion to strike Penrose/James complaint under California anti-SLAPP law (129 pages of screen captures and other info)

  • Penrose Hill/James opposition to Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Declaration of Philip James in opposition to Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Declaration of software litigation consultant Isaac Pflaum in opposition to Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Declaration of Penrose Hill winemaker Ross Dawkins in opposition to Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

  • Declaration of Penrose Hill Head of Compliance Kristin Carlton in opposition to Mabray motion to strike Penrose/James complaint under California anti-SLAPP law

MAY

  • Mabray Brief In Support Of His Motions For Judgment On The Pleadings And To Strike Plaintiffs’ Complaint Under California’s Anti-SLAPP Statute

  • Mabray Declaration In Support Of His Motions For Judgment On The Pleadings And To Strike Plaintiffs’ Complaint Under California’s Anti-SLAPP Statute