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Charles v. Sutter Home Winery, Inc.

California Court of Appeals, Second District, Fourth Division

May 9, 2018

DORIS CHARLES et al., Plaintiffs and Appellants,
v.
SUTTER HOME WINERY, INC., et al., Defendants and Respondents.

          APPEAL from a judgment of the Superior Court of Los Angeles County No. BC576061 John Shepard Wiley, Jr., Judge. Affirmed.

          Kabateck Brown Kellner, Brian S. Kabateck and Drew R. Ferrandini; Esner, Chang & Boyer and Stuart B. Esner for Plaintiffs and Appellants.

          Jones Day, Frederick McKnight, Charles H. Moellenberg, Jr., and Kerry C. Fowler for Defendants and Respondents Sutter Home Winery, Inc.; Rebel Wine Co., LLC; Don Sebastiani & Sons International Wine Negociants, Corp.; Jean-Claude Boisset Wines, USA, Inc.; and Raymond Vineyard and Cellar, Inc.

          Farella Braun Martel, R. Christopher Locke and C. Brandon Wisoff for Defendants and Respondents Treasury Wine Estates Americas Company; Treasury Wine Estates Holding, Inc.; Beringer Vineyards; The Wine Group, Inc.; The Wine Group, LLC; Golden State Vintners; Varni Brothers Corporation; Fetzer Vineyards; and Bronco Wine Company.

          O'Melveny & Myers, Dawn Sestito and Guianna Henriquez for Defendant and Respondent Trader Joe's Company.

          Nixon Peabody and Bruce E. Copeland for Defendant and Respondent Constellation Brands U.S. Operations, Inc.

          Morrison & Foerster LLP and James M. Schurz for Defendant and Respondent California Natural Products.

          Larson O'Brien, Robert C. O'Brien, Steven E. Bledsoe and Steven A. Haskins for Defendant and Respondent F. Korbel & Bros.

          Maranga Morgenstern, Ninos Saroukhanioff and Robert A. Morgenstern for Defendants and Respondents Megan Mason, Randy Mason and Oakville Winery Management Corp.

          Winston & Strawn, Erin R. Ranahan and Drew A. Robertson for Defendants and Respondents Sonoma Wine Co., LLC; and Winery Exchange, Inc.

          EPSTEIN, P. J.

         Plaintiffs appeal from the judgment of dismissal based on the sustaining of a demurrer to their putative class action complaint under the California Safe Drinking Water and Toxic Enforcement Act of 1986. (Health & Saf. Code, § 25249.5 et seq. (Proposition 65 or the Act).) This appeal challenges the Proposition 65 warning provided by defendants for wines that contain purportedly unsafe levels of inorganic arsenic, a chemical identified by the State of California as a carcinogen and reproductive toxicant (listed chemical).

         It is undisputed that defendants provided the so-called “safe harbor” warning for alcoholic beverages: “WARNING: Drinking Distilled Spirits, Beer, Coolers, Wine and Other Alcoholic Beverages May Increase Cancer Risk, and, During Pregnancy, Can Cause Birth Defects.” (Cal. Code Regs., tit. 27, § 25603.3, subd. (e)(1);[1] see Ingredient Communication Council, Inc. v. Lungren (1992) 2 Cal.App.4th 1480, 1485 [describing “safe harbor” warnings].) Plaintiffs do not take issue with the adequacy of the safe harbor warning for alcoholic beverages as applied to the health risks posed by alcohol. Instead, their concern is with the lack of reference in that warning to inorganic arsenic, a listed chemical, and the increased health risks associated with that toxic substance. Plaintiffs contend defendants were required to provide an additional warning for inorganic arsenic, patterned after section 25603.2, which they claim is stronger than the alcoholic beverage warning. As pertinent, it reads: “WARNING: This product contains... chemical[s] known to the State of California to cause cancer [and birth defects, or other reproductive harm].”

         In sustaining the demurrer, the trial court reasoned that disclosure of chemical ingredients in alcoholic beverages is not a requirement of the Act, and compliance with Proposition 65 is established as a matter of law where, as here, it is undisputed that the safe harbor warning for alcoholic beverages was provided to consumers of defendants' wines. (§ 25603.3, subd. (e)(1).) We conclude the demurrer was properly sustained on this and other grounds, including res judicata. The drafting of safe harbor warnings is a regulatory function assigned to the lead agency, the Office of Environmental Health Hazard Assessment (OEHHA), and “[a]ny dissatisfaction with the adequacy of such a warning is a matter for consideration by OEHHA and the Legislature, rather than the court.” (Environmental Law Foundation v. Wykle Research, Inc. (2005) 134 Cal.App.4th 60, 68, fn. 8 (Environmental Law Foundation).)

         FACTUAL AND PROCEDURAL BACKGROUND

         Acting in their personal and representative capacities, plaintiffs Doris Charles, Alvin Jones, Jason Peltier, and Jennifer Peltier sued the defendant manufacturers, distributors, and retailers of “arsenic-contaminated wines.” The defendants are: Sutter Home Winery, Inc.; Rebel Wine Co., LLC; Don Sebastiani & Sons International Wine Negociants, Corp.; Jean-Claude Boisset Wines, USA, Inc.; Raymond Vineyard and Cellar, Inc.; Treasury Wine Estates Americas Company; Treasury Wine Estates Holding, Inc.; Beringer Vineyards; The Wine Group, Inc.; The Wine Group, LLC; Golden State Vintners; Varni Brothers Corporation; Fetzer Vineyards; Bronco Wine Company; Trader Joe's Company; Constellation Brands U.S. Operations, Inc.; California Natural Products (named as Constellation Wines, U.S. and Simply Naked Winery); F. Korbel & Bros.; Megan Mason and Randy Mason; Oakville Winery Management Corp.; Sonoma Wine Co., LLC; and Winery Exchange, Inc.

         Many of the defendants were parties to the consent judgment in a previous Proposition 65 class action lawsuit, Bonilla v. Anheuser-Busch (Super. Ct. L.A. County, 2014, No. BC537188) (Bonilla).[2] Because res judicata is an issue on appeal, we begin with discussion of the Bonilla case.

         The Bonilla Case

         In Bonilla, plaintiffs John Bonilla, Rafael Delgado, Jr., Jesse Garrett, and Rachel Padilla filed a Proposition 65 class action complaint on behalf of themselves and all similarly situated California consumers of alcoholic beverage products manufactured, distributed, and sold by defendants Anheuser-Busch, LLC, Bacardi U.S.A., Inc., Constellation Brands, Inc., Diageo North America, Inc., Hangar 24 Craft Brewery, LLC, Heineken USA Incorporated, and others. Theircomplaint alleged the defendants failed to warn consumers that their alcoholic beverage products contained “chemicals” known to the state to cause cancer and reproductive harm.

         OEHHA provides a safe harbor warning that the alcoholic beverage industry may provide in order to comply with the Act: “WARNING: Drinking Distilled Spirits, Beer, Coolers, Wine and Other Alcoholic Beverages May Increase Cancer Risk, and, During Pregnancy, Can Cause Birth Defects.” (§ 25603.3, subd. (e)(1).) This warning is central to the 2014 consent judgment in the Bonilla case that was signed by many defendants in this case as “opt in defendants.” The Bonilla defendants and opt-in defendants (jointly, the Releasees) stipulated to the following terms:

         • The Releasees agreed to provide the safe harbor warning for alcoholic beverages. (§ 25603.3, sub. (e)(1).)

         • Acting in the public interest, the Bonilla plaintiffs agreed that the consent judgment would constitute a full, final, and binding resolution “of any violation of Proposition 65 that has been or could have been asserted in the public interest against the Releasees arising out of exposure to the Covered Products.”

         • The Bonilla consent judgment defined “Covered Products” to mean “alcohol beverage products that expose consumers in the State of California to chemicals listed by the State of California pursuant to California Health & Safety Code [section] 25249.8, including ‘alcoholic beverages, when associated with alcohol abuse[, ]' ‘ethyl alcohol in alcoholic beverages, ' and ‘ethanol in alcoholic beverages....'”

         This Action

         Plaintiffs initiated this action in March 2015, several months after the Bonilla consent judgment was entered. The parties do not dispute that Proposition 65 applies to the wines at issue in this case, and defendants do not seek an exemption from the warning requirement.

         The Original Complaint.

         The original complaint alleges that by failing to warn consumers of excessive levels of inorganic arsenic in their wines, defendants are “poisoning wine consumers in direct violation of California law.” However, there is no allegation of personal injury or physical harm resulting from the consumption of inorganic arsenic in the subject wines.

         Proposition 65 is mentioned only once in the original complaint, as the basis of the Unfair Competition Law claim. (Bus. & Prof. Code, § 17200 et seq. (UCL).) That claim alleges the failure to provide a Proposition 65 warning for exposure to inorganic arsenic constitutes misleading and deceptive advertising. This theory is the basis of the statutory claims for violation of the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq. (CLRA)) and False Advertising Law (Bus. & Prof. Code, § 17500 (FAL)), as well as claims for unjust enrichment, breach of the implied warranty of merchantability, and negligent misrepresentation.

         The complaint seeks injunctive relief and restitution of the purchase price paid for the arsenic-tainted wines from January 1, 2011 to the present. It reserves the right to amend the CLRA claim to seek monetary damages after notice is provided under Civil Code section 1782.

         Operative First Amended Complaint.

         On the same date the original complaint was filed, plaintiffs mailed a 60-day Notice of Violation of Proposition 65 to defendants and the requisite government agencies. (See Health & Saf. Code, § 25249.7, subd. (d)(1).) This notice was based on defendants' alleged failure to warn consumers of exposure to excessive levels of inorganic arsenic in the subject wines. Inorganic arsenic compounds is listed as a carcinogen, and arsenic (inorganic oxides) is listed as a reproductive toxicant on ...


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