WineLaw.ca
Host Liability Issues for the Wine Industry
- Friday, 12 December 2008 10:34
- Written by Mark Hicken
The holiday season is upon us. While most of the season generally revolves around a spirited (pardon the pun) and responsible celebration involving wine and other liquor, the issue of legal liability for alcohol service always crops up at this time of year as businesses of all kinds become aware that good times can turn into a problem if someone ends up injuring themselves or others following a seasonal party at which they have consumed alcohol.
I have received a number of inquiries about this issue in the past few weeks so here is a quick (non-comprehensive) summary of the applicable law as well as a few ideas for limiting your liability.
There is one set of rules that I will call "commercial host liability" for restaurants, bars etc... most situations where a business is making money serving drinks. This would definitely include wineries or agencies in situations where they are either charging for wine, running a tasting room/event, or selling or promoting wine as an adjunct to an event. On the commercial host side, the rules are pretty strict in that the business has a fairly high duty of care toward a patron who has had too much to drink and they can be found liable if they don't do enough to prevent that person from injuring either themselves or someone else. All wineries and agencies should have staff trained to recognize liability and alcohol service issues for these types of events. You can read more on commercial host liability in the Supreme Court of Canada decision of Stewart v. Pettie (2005) which is the leading decision in this area.
On the other side, there are a set of rules for "social host liability" which basically apply to private parties. A more recent (2006) Supreme Court of Canada decision, Childs v. Desmoreaux, has found that, for the most part, social hosts do not have a duty of care to their guests and those guests are responsible for their own behaviour. If you are interested, you can read about this decision in this article or here.
U.S. Wine Shipping Restrictions Struck Down (Again)
- Thursday, 20 November 2008 09:13
- Written by Mark Hicken
Wine shipping restrictions contained in Massachusetts state law have been struck down by a U.S. court as being discriminatory and unconstitutional in the case of Family Winemakers of California v. Jenkins. The restrictions at issue were complex but effectively prevented 95% of wineries from shipping direct to consumers in Massachusetts. The restrictions prevented wineries from shipping if they produced more than a set annual case volume or if they had wholesaler representation in Massachusetts. The court applied the reasoning in the earlier U.S. Supreme Court decision in Granholm v. Heald. Similar challenges are pending in other U.S. states that have enacted shipping restrictions.
The U.S. courts' reasoning is interesting because similar arguments could be used in Canada, particularly against the imposition of liquor board markups as between shipments of wine between wine producing provinces such as Ontario and B.C. The basis of the legal arguments in Canada would be slightly different due to the fact that the U.S. and Canadian constitutions are different but the nature of the discrimination is similar.
Okanagan Water Law for Wineries
- Wednesday, 19 November 2008 13:56
- Written by Mark Hicken
It's already a major issue for wineries in California. I know that faculty at UC Davis are now considering water needs and ability to survive drought as an important factor when selecting rootstocks for new vineyard plantings. Here in water-abundant Canada, this has historically not been a major concern. But an article in Wine Business Monthly Online shines a light on similar Canadian concerns in its review of the Okanagan Sustainable Water Strategy and the implications for wineries in the region. The article points out that winery use of water is a tiny percentage of overall usage and that conversion to drip irrigation is making industry use of the resource even more efficient.
The legal implications of water usage are still generally a backburner issue. However, occasionally, as the article points out, the Province can use its powers under environmental laws to cut off water supplies to users as happened for some Okanagan wineries in 2003 during a drought. In addition, water concerns can block development, whether residential or otherwise (including wineries), if the development threatens to change water usage or conservation patterns.
Shipping Laws on Wine within Canada
- Wednesday, 05 November 2008 17:00
- Written by Mark Hicken
This article provides a summary of the shipping laws regarding wine (and other liquor) within Canada. This article is updated frequently. However, the laws in this area are changing rapidly so please contact me (or your own lawyer) in order to ensure that you have the lastest information. If you are interested in wine shipping issues related to bringing wine from a foreign country to Canada, please see this article: Bringing Wine to Canada After a Trip.
The shipping of any alcohol from one province into another province was previously prohibited by a federal law (which stems from the prohibition era) called the Importation of Intoxicating Liquors Act (Canada). However, on June 28, 2012 that law was amended by Bill C-311. While the general prohibition remains in place, the Bill created a national personal use exemption for wine only and subject to applicable provincial laws.
The following chart summarizes my views on the ability of consumers to receive "direct to consumer" shipments of wine under the laws in the various provinces. See the FreeMyGrapes site for more detailed analysis and other interpretations of the law.
| DTC from Winery Workable? | DTC from Retailer Workable? | Quantity Limits | Comments | |
| BC | Yes | No | Amount for personal consumption if 100% Cdn wine from winery. | Imported wine subject to 9 liter cumulative quantity limit and only for "in-person" importation (no shipment). |
| AB | Yes | Yes | Amount for personal consumption. | I am aware that CALJ and AGLC have been making statements that Alberta is not open for shipment, only for "in-person transport". In my view, this is not a reasonable interpretation of Alberta law. |
| SK | No | No | 9 liters. | Use of words "personally bring" may exclude shipment. |
| MB | Yes | Yes | Amount for personal consumption. | |
| ON | Yes | Yes | Amount for personal consumption. | LCBO has issued "policy statement" that disagrees with this. See FreeMyGrapes analysis for details. |
| QC | No | No | None. | Provincial law restricts transport of wine not purchased from liquor board within Quebec. Amendments have been introduced which enable new regulations dealing with interprovincial shipping but none have been issued yet. |
| PEI | Yes | Yes | 9 liters. | it is my view that the only reasonable interpretation of the word "import" in the amended legislation includes both in person transport and direct shipment. The PEI liquor board is stating that it is not open for shipment, only for "in-person transport". In my view, this is not a reasonable interpretation of PEI law. |
| NB | No | No | One bottle of unspecified size. | Permits shipment from another liquor board but unreasonably low quantity limit makes it unworkable. |
| NS | Yes? | No? | Current laws restrict transport of wine within NS but Govt has introduced legislative changes that are stated to copy BC's approach on 100% Cdn wine only. | |
| NF | No | No | 1.14 liters. | Unreasonably low quantity limit. Use of word "bringing" may exclude shipment. |
Winery Ownership Legal Disputes in the News
- Wednesday, 08 October 2008 08:49
- Written by Mark Hicken
A couple of prominent California wineries have been in the news recently regarding ownership disputes between "winemaker owners" and their partners. The first dispute relates to Pax Wine Cellars in Sonoma where the namesake winemaker, Pax Mahle, has been fired and is locked in a dispute with the majority owner . The second dispute relates to Napa flagship winery, Joseph Phelps, where a former employee (the winemaker) and the estate of the late Tom Shelton who was the CEO (and widely known throughout the industry) are also fighting over the value of minority ownership shares with the majority owners .
While these disputes are no doubt unique and while some disagreements are inevitable, these types of lawsuits do show the value of ownership and succession planning. Wineries are not unique to these issues - many, many businesses (particularly family owned ones) do not pay sufficient attention to succession planning until either a dispute arises or one of the key people leaves or passes away. Does your winery have a succession plan for key personnel? If not, you should contact your legal and financial advisors for assistance in implementing one.