Regulating Social Media in the Workplace
The proliferation of social media creates new and difficult situations for employers. Many employers wonder to what extent they can regulate their employee’s social media activities or legally take an employment action based on an employee’s off-duty conduct.
For better or worse, most of us carry smart phones with the capacity to text, email, comment, and upload photos and videos instantaneously. Platforms like Facebook, Twitter, Instagram and YouTube allow us to easily share our personal, and potentially controversial, opinions publicly. In addition, our viewpoints or activities can easily be disseminated by others. Take, for example, an employee is recorded saying something offensive outside of work and the video is published on someone else’s social media account.
Navigating these situations is not simple. While the First Amendment’s right to free speech generally does not apply to actions taken by private employers, there are other privacy laws in California that do. For example, the California Constitution, at Article I, Section 1, gives every citizen a right to privacy, and California Labor Code Section 980 prohibits employers from asking employees for their social media log-ins and passwords or asking them to access their social media accounts on demand. However, depending on the circumstances, once an employee publishes on social media, the right to privacy may be considered waived.
California law, found at Labor Code Section 96(k), protects employees’ rights to engage in lawful off-duty conduct, and provides remedies when employment is adversely affected in violation of these laws. However, off-duty conduct that harms or potentially harms the employer’s business interests or involves a crime may be a valid basis for an employment decision. Since these are tricky situations, the individual facts must be considered and an employer may want to consult with legal counsel before taking action.
We recommend employers adopt a standard policy to handle these situations. Below are some guidelines to keep in mind when adopting a social media policy.
What Employers Can Regulate
Employers can restrict an employee’s social media behavior in the following ways:
- Use of personal social media during work time or on the employer’s equipment (company computers, phones)
- Use of the employer’s name, logos, brand names, slogans or trademarks and appearing to speak on behalf of the employer
- Communications about confidential or proprietary employer information including non-public information that may be valuable to competitors, such as client lists, product information, and pricing
- Posts about co-workers, supervisors, or the employer, competitors or suppliers that are vulgar, obscene, threatening, harassing, libelous, or discriminatory based on a protected class (but be careful about regulating negative posts made in the context of discussing terms and conditions of employment protected by the National Labor Relations Act, discussed below)
- If the employee chooses to identify themselves as an employee of the employer on any social media network, you can require them to state in clear terms that the views expressed on the social media network are theirs alone and that they do not necessarily reflect the views of the company
- Unlawful conduct, even when it occurs off-duty
What Employers Can’t Regulate
Employers should not prohibit or restrict the following:
- An employee’s communications about wages, hours, or other terms and conditions of their employment as these may be protected under the National Labor Relations Act
- Disclosure of facts related to sexual harassment in the workplace, as these may be protected depending on the circumstances
- An employee’s communications about their political beliefs, political associations or affiliations, engaging or participating in politics, and/or becoming candidates for public office
Before taking any adverse action against an employee based on a social media post or other off-duty conduct, employers should consider the following:
- Does the activity negatively affect the employer’s business? How?
- Does the activity violate the employer’s social media policy?
- Is the employer enforcing the policy uniformly? For example, have other employees posted similar content or about similar topics without being disciplined?
- Can the employer legally take action, or is the activity in question protected under the law? Consult legal counsel if you have any doubts.
- How did the employer learn of the posting or conduct? Did they learn in a way that could be considered an invasion of privacy?
- How will taking action affect employee morale?
- How will the action be perceived by the employer’s customers, community and the public if it is publicized?
Taking action based on an employee’s off-duty conduct or social media activity can be challenging for employers, and there are many factors to consider. Employers should think about the legal risks involved and adopt a legally compliant policy. As always, we recommend employers work with legal counsel when handling these sensitive issues.
For questions about this or other employment matters contact DP&F’s Employment Team, Jennifer Douglas, Marissa Buck or Sarah Hirschfeld-Sussman.
New Alcohol Beverage Regulations Give Licensees Expanded Rights and Privileges in the New Year
Beginning on January 1, 2016, new provisions of the California ABC Act will go into effect that will, among other things, provide industry members with additional rights and privileges related to marketing, events and promotions, and will also create a new Craft Distiller License. A summary of a few of these important new statutory provisions is included below.
Retailer and Non-Retailer Sponsorships of Non-Profit Events (Section 23355.3):
- This new statutory section was largely drafted in response to accusations filed by the ABC against certain wineries related to their participation in a nonprofit event, the “Save Mart Grape Escape”. As the name suggests, although this was a nonprofit event, Save Mart, a licensed retailer, was also a sponsor of the nonprofit event. The ABC had alleged in its accusations that participating supplier-side licensees that referenced the event by name on their websites or social media feeds were giving a thing of value to Save Mart in violation of California’s tied house rules. Section 23355.3 resolves this issue by providing an exception to the tied house rules that not only allows both retail and nonretail licensees to sponsor non-profit events but allows participating nonretail licensees to reference retail licensees, subject to the restrictions contained in the statute.
- Section 23355.3 permits sponsorships of nonprofit organizations (not other organizations) that are conducting and receiving benefit from the subject event. Note that nonprofits are still required to obtain any required temporary licenses from ABC to conduct their event.
- A nonretail/supplier side licensee may advertise or communicate its sponsorship of or participation in the nonprofit event in social media and elsewhere, which advertising can include identification of both retail and nonretail licensees that are sponsoring or participating in the event and can include posting, re-posting, forwarding or sharing social media and/or other advertisements or communications made by other nonretail or retail licensees (subject to the restrictions below) . For purposes of this provision “social media” is specifically defined as “a service, platform, application, or site where users communicate and share media, such as pictures, videos, music, and blogs, with other users.” Note that Section 23355.3 does not usurp other applicable industry or legal standards that govern when and where the advertisement of alcohol is acceptable and typical precautions to ensure responsible advertising practices should be taken.
- Any advertisement or communication by a nonretail licensee that includes identifying a retail licensee (including reposting, forwarding, sharing social media posts by others) cannot include the retail price of any alcoholic beverage or otherwise promote the retail licensee beyond its sponsorship or participation in the event.
- It should be noted that donations of alcoholic beverages to nonprofits by supplier side licensees are only permitted to the extent they are otherwise allowed under Section 25503.9, which only permits certain supplier side licensees to make certain types of donations to nonprofits. And except as otherwise may be permitted in specific circumstances under the ABC Act, retailers are not permitted to give or sell alcoholic beverages to the nonprofit.
- Nonretail/supplier-side licensees should be careful not to provide other things of value to retail licensees, except as permitted above. Specifically, nonretail licensees should not pay or reimburse any retail licensee, directly or indirectly, for any advertising services (whether by social media or otherwise) or cover any costs of a retail licensee sponsoring or participating in the event.
- Retail licensees are also subject to rules and restriction under the new statute and should not accept any payment or reimbursement, directly or indirectly, for any advertising services offered by a nonretail licensee and should not offer or provide nonretail licensees any advertising, sale, or promotional benefit in connection with the sponsorship or participation.
Sponsorships of Certain Live Entertainment Marketing Companies in Napa (Section 25503.40)
- Section 25503.40 creates a new exception to the tied-house rules that allows certain alcohol beverage licensees to purchase sponsorships and advertising time and space from certain live entertainment marketing companies related to live artistic, musical, sports, food, beverage, culinary, lifestyle, or other cultural entertainment events promoted by a live entertainment company in Napa County, such as Bottlerock. The events are to be held at entertainment facilities, parks, fairgrounds, auditoriums, arenas, or other areas or venues that are designed for, or set up to be, and lawfully permitted to be used for live artistic, musical, sports, food, beverage, culinary, lifestyle, or other cultural entertainment events. The conditions and restrictions related to such sponsorships are set forth below.
- Only the following types of licensees are permitted to sponsor events under 25503.40: Beer Manufacturer (Type 01 or Type 23), Out-of-State Beer Manufacturer’s Certificate (Type 26), Winegrower (Type 02), Winegrower’s Agent (Type 27) , Distilled Spirits Manufacturer (Type 04 and likely new Type 74 craft distilled spirits manufacturer), Distilled Spirits Manufacturer’s Agent (Type 05), Rectifier (Type 07, 08 or 24) or Importer that does not hold a wholesale or retail license (Type 09 (but only if hold one of the other licenses listed), 10, 11, 12 (but only if hold one of other licenses listed) or 13).
- The above licensees may sponsor events promoted by a live entertainment company and may purchase advertising space and time from or on behalf of a live entertainment marketing company. For purposes of Section 25503.40, a live entertainment marketing company must be a entertainment marketing company that is a) a wholly owned subsidiary of a live entertainment company b) not publicly traded, c) has its principal place of business in the County of Napa, and d) which may own interests, directly or indirectly, in retail licenses or winegrower licenses.
- Sponsorships must be pursuant to a written contract and may only be purchased by permitted licensees in connection with live artistic, musical, sports, food, beverage, culinary, lifestyle, or other cultural entertainment events that take place at entertainment facilities, parks, fairgrounds, auditoriums, arenas, or other areas or venues that are designed for, or set up to be, and lawfully permitted to be used for live artistic, musical, sports, food, beverage, culinary, lifestyle, or other cultural entertainment events located within the County of Napa. Expected attendance of the event must be at least 5,000 people per day and the live entertainment company promoting the event is required to represent to the retail licensee that will hold the license for the event, such as the concessionaire, that the live entertainment company promoting the event, including the subject event, has not exceeded the permissible limit of three events in the County of Napa for the year in which the event is being held.
- An on-sale licensee (such as a concessionaire) selling alcoholic beverages at the event must serve at least one other brand of beer, distilled spirits, and wine (one per category) distributed by a competing wholesaler in addition to any brand manufactured or distributed by the sponsoring or advertising licensees.
- Participating licensees are not permitted to give, or lend anything of value to an on-sale retail licensee, except as expressly authorized by 25503.40 or any other provision of the ABC Act.
- Note that while Section 25503.40 does not itself provide licensees the right to be present at the events (either pouring their products and/or educating the consumers in their tents), because the premises will be licensed as an on-sale retail premises, Sections 25503.4, 25503.55 and 25503.57 of the ABC Act would allow limited education and tastings by certain wine, beer and spirits licensees at the event, subject to the terms and conditions of those sections and approval by the event organizers.
Listing of Retailers in Supplier Advertising and Marketing (Section 25500.1)
- The recent revisions to Section 25500.1 of the ABC Act have revised the tied-house exception in that section to provide supplier side licensees with new ways to refer to retailers in their advertising and marketing. These changes were driven by new marketing and advertising practices on the internet and social media but apply to all marketing and advertising practices. Previously, listings of retailers were only permitted in response to consumer inquiries and were further limited by statute.
- Supplier-side industry members (such as manufacturers or wholesalers) may list the following information in their advertising or marketing (include social media posts), so long as the remaining requirements listed below are also satisfied: Names, addresses, telephone numbers, email addresses, or Internet Web site addresses, or other electronic media, of two or more unaffiliated on-sale or off-sale retailers selling the beer, wine, or distilled spirits produced, distributed, or imported by the supplier-side industry member. The listing must include information about two or more unaffiliated retailers and must be the only reference to the on-sale or off-sale retailers in the direct communication with the consumer.
- The listing cannot contain the retail price of the product.
- The listing is made, or produced, or paid for, exclusively by supplier-side industry member.
- For more information about the changes to Section 25500.1, refer to our prior blog post on this issue.
New Craft Distiller License & Expanded Tasting Privileges for Distilled Spirits Manufacturers
- Various provisions of the ABC Act have been amended to create the new Type 74 craft distiller license for distillers that manufacture up to 100,000 gallons of distilled spirits per fiscal year (July 1 through June 30). The new legislation has also provided Type 04 distilled spirits manufacturers, and craft distillers, expanded rights and privileges with respect to consumer tastings.
- The new Type 74 craft distiller license may be issued to a person who has facilities and equipment for, and is engaged in, the commercial manufacture of distilled spirits. The fees for the craft distiller shall be the same as those of a Type 04 distilled spirits manufacturer. It should be noted that the craft distiller will be required to report its production to the ABC on an annual basis, and if the production amounts go above the maximum requirements described below such that the craft distiller no longer qualifies to hold a craft distiller’s license, the ABC will automatically renew the license as a Type 04 distilled spirits manufacturer’s license (Type-04).
- The production, sale, distribution and tasting privileges of the new Type 74 Craft Distiller’s license include the right to:
- Manufacture up to 100,000 gallons of distilled spirits per fiscal year (July 1 through June 30) (excluding brandy that the craft distiller manufactures or has manufactured for them). In its advisory, ABC noted that “gallon” is defined in Section 23031 as “that liquid measure containing 231 cubic inches” and that the amount to be reported is the actual liquid volume manufactured not proof gallons. ABC also clarified that measurement of gallons for this purposes is the volume of distilled spirits (excluding waste product) drawn off the still.
- Package, rectify, mix, flavor, color, label, and export only those distilled spirits manufactured by the licensee. This means that the holder of a craft distiller license is not permitted to package, rectify, mix, label, flavor, color or export any spirits manufactured by any other licensees. However, ABC has confirmed that this provision does not prohibit the use of grain neutral spirits manufactured by another distiller in the manufacture of distilled spirits by a craft distiller licensee, since that requires actual re-distillation of grain neutral spirits. ABC has also noted that this prohibition against rectification of other products also means that the holder of a rectifier’s license (Type 07 or Type 24) cannot also hold a craft distiller’s license.
- Only sell distilled spirits that are manufactured and packaged by the craft distiller solely to a wholesaler, manufacturer, winegrowers, manufacturer’s agent, or rectifier that holds a license authorizing the sale of distilled spirits or to persons that take delivery of those distilled spirits within this state for delivery or use without the state.
- Sell up to 2.25 liters (in any combination of prepackaged containers) per day per consumer of distilled spirits manufactured by the craft distiller at its premises to a consumer attending an instructional tasting on the licensed premises pursuant to Section 23363.1.
- Sell all beers, wines, brandies, or distilled spirits to consumers for consumption on the premises in a bona fide eating place as defined in Section 23038, which is located on the licensed premises or on premises owned by the licensee that are contiguous to the licensed premises and which is operated by and for the licensee, provided that any alcoholic beverages not manufactured or produced by the licensee must be purchased from a licensed wholesaler.
- During private events only, sell or serve beer, wines, and distilled spirits, regardless of source, to guests during private events or private functions not open to the general public. All alcoholic beverages sold at the premises that are not manufactured or produced and bottled by or for the licensed craft distiller must be purchased only from a licensed wholesaler. ABC has noted that “private events” and “private functions” do not include events, activities, or functions that are open to the public, whether by purchase of a ticket or otherwise. As an example, the ABC has stated that it would not consider a cocktail-making class that anyone could attend to be a “private event or private function”.
- Craft distillers (unlike type 04 distilled spirits manufacturers) have also been provided with a tied house exception that allows a craft distiller to hold ownership interests in up to two (2) on-sale licenses (such as restaurants, hotels or bars). Other than the products made by or for the craft distiller, all other alcoholic beverages at such on-sale retailers must be purchased from a California wholesaler. Further, the interested craft distiller’s products cannot exceed more than 15% of the total distilled spirits by brand offered for sale by the on-sale licensee. This exception shall continue to apply, even if the distiller no longer qualifies as a craft distiller, so long as the distiller qualified as a craft distiller at the time it first obtained the interest in the on-sale retailers.
- As noted above, the recently enacted legislation amending Section 23363.1 provided both craft distillers and distilled spirits manufacturers expanded privileges with regard to direct to consumer tastings from their licenses premises. Type 04 and Type 74 licensees may now provide one and one-half ounces tastings of distilled spirits per individual per day from their premises with or without charge and can also serve these tastes in the form of a cocktail or mixed drink.
Beer Tastings at Farmers Markets
- Previously, under Section 23399.45, beer manufacturers were permitted to sell limited amounts of bottled beer at certified farmers markets so long as they held a Type 84 certified farmers market beer sales permit. An amendment to Section 23399.45 will now the holder of a type 84 certified farmers’ market beer sales permit to conduct instructional tasting events for consumers at certified farmers markets as well. These privileges are automatically extended to Type 84 permit holders as of January 1, 2016 so no additional permit is required for existing permit holders.
- The holder of a certified farmers market beer sales permit is authorized to conduct an instructional tasting event for consumers at locations specified in Section 23399.45 at a certified farmers market.
- The tasting is limited to 8 ounces per person per day and may be provided as provided as one 8 ounce tasting or various smaller tastings.
- The instructional tasting event area must be separated from the remainder of the market by a wall, rope, cable, cord, chain, fence, or other permanent or temporary barrier.
- Only one Type 84 license holder may conduct an instructional tasting event during the a farmers market.
- The licensee shall not permit any consumer to leave the instructional tasting area with an open container of beer.
Please note that the information provided above is just an overview of the requirements of the new legislation. Careful review of each statute in its entirety should be undertaken before any actions are taken in reliance on these new provisions.
We will be posting details on other new legislation in the coming days and weeks, but for questions on any of the new legislation discussed above and how it may affect your business, please contact Bahaneh Hobel.
New Law Amends California Tied-House Law
Governor Jerry Brown has signed AB 780, a law which helps clarify the rules that permit an alcohol beverage producer, importer, or wholesaler (collectively, a “supplier”) to list or mention on- and off- premise retailers in supplier-sponsored advertising, including supplier websites and social media channels. As described in more detail below, the new law is fairly limited, and does not give suppliers carte blanche to begin mentioning retailers in their social media posts.
State alcohol beverage law prohibits suppliers from providing retailers with “things of value.” These “tied-house” restrictions are generally aimed at preventing undue influence by suppliers over retailers. The ABC Act, however, also contains numerous exceptions to tied-house laws. For example, ABC Act Sections 25500.1 and 25502.1 allow suppliers to list certain information such as the address, phone number, email address and website address of two or more unaffiliated retailers so long as the listing (1) is made in response to a direct consumer inquiry, (2) does not contain the product’s retail price, and (3) is made by, produced by, or paid for exclusively by the supplier.
AB 780 amends these tied-house exceptions that pertain to on- and off-premise retailer listings. Here are a few key things that AB 780 will do when it goes into effect on January 1, 2016.
- Creates one set of rules for producer’s listing of on- and off- premise retailers . Previously, the ABC Act had two different rules that governed supplier listings of retailers: on-premise retailer listings were governed by ABC Act Sec. 25500.1, and off-premise retailer listings were governed by Sec 25502.1. AB 780 repeals 25502.1 and consolidates rules governing on- and off- premise retailer listings into Section 25500.1, meaning that there is now one set of rules that governs retailer listings.
- Impact. Under current law, a supplier listing of on-premise retailers could include the “names, addresses, telephone numbers, email addresses, or Internet Web site addresses, or other electronic media” of those retailers. The law governing listings of off-premise retailers did not include the “other electronic media” language. Thus, current law could be interpreted to prohibit a supplier from including the Twitter handle of an off-premise retailer in a listing because the handle may be considered “other electronic media” of the retailer. Once AB 780 goes into effect, the listing of on- and off-premise retailers’ “other electronic media” is allowed so long as the other requirements of Sec 25500.1 are met.
- Deletes language requiring customer inquiry for retailer listing. Under the ABC Act, any listing of a retailer could only be made “in response to a direct inquiry from a consumer.” AB 780 eliminates this requirement.
- Impact. The current law could be interpreted as prohibiting a producer from issuing a social media post (such as a tweet) listing two or more twitter handles of on-premise retailers unless it was in direct response (and potentially in a direct message not viewable by the general public) to a consumer inquiry. AB 780 would allow such a post, whether or not it was in direct response to a consumer, provided that all other requirements are met.
- Continues to restrict the type of listing allowed. Once amended. Section 25500.1 will continue to prohibit any supplier sponsored listing from referring to only one retailer or listing the retail price of the product. In addition, the listings must be made, produced, or paid for exclusively by the supplier.
- Impact. Suppliers should familiarize themselves with the limitations contained in Section 25500.1.
- Does not change rules governing events at retailer locations. AB 780 does not alter the sections of the ABC Act that govern the promotion of producer events at retailer locations, such as ABC Act Sec. 25503.4 (regarding winegrower instructional events).
- Impact. Suppliers wishing to promote upcoming events at on-premise retailer must continue to follow the applicable rules for events, which may be more restrictive than the amended Sec. 25500.1. For example, under ABC Act 25503.4, a winemaker instructional event held at a retailer cannot include laudatory statements about the retailer, nor can they include pictures of the retailer.
Finally, suppliers should keep in mind that the adoption of AB 780 does not repeal state tied-house laws and that it is still generally impermissible for a producer to provide a “thing of value” (such as free advertising) to a retailer, absent an explicit exception in the ABC Act. AB 780 simply clarifies one exception to the state’s tied-house laws by declaring that certain listings of retailers are not considered “things of value.”
For more information or assistance on alcohol beverage advertising, social media, and tied house laws, contact John Trinidad ([email protected]).
This post is made available for general informational purposes only and none of the information provided should be considered to constitute legal advice.
Regulatory Hurdles for DTC, Social Media, and Third Party Sales Channels
During last week’s Unified Wine & Grape Symposium, DP&F attorney John Trinidad moderated a panel discussion titled, “Regulatory Hurdles for DTC, Social Media, and Third Party Sales Channels.” Trinidad led off the session with a presentation describing how the Internet has “disrupted” the wine industry’s traditional sales and marketing models. You can access Trinidad’s PowerPoint presentation by clicking on the image below:
Trinidad noted that the promise of e-commerce has become significantly more important for small wineries given the increase in the number of suppliers and continued consolidation of the wholesale tier. As noted by a respondent to a Gomberg, Fredrikson & Associates study:
“It is tougher than ever int he 3-tier channel. We have a hard time getting distributor attention as tehy have way too many brands, not enough people and we are just too small to matter.”
While wineries now have a significantly increased opportunity to reach consumers directly without having to find national distribution or share their revenues with intermediary tiers, a number of hurdles still remain. These include production caps, on site requirements, and other impediments to direct-to-consumer shipping. Additional issues arise due to regulatory uncertainty regarding how state alcohol beverage agencies will treat “new players” in the wine sales model, including third party providers. In short, e-commerce and the increased ability to ship directly to consumers offers a number of opportunities for wineries, but also raises a number of unresolved regulatory questions.
Similarly, social media provides wineries with the opportunity to interact and build relationships with consumers, but may still wonder how federal and state regulations apply to “new media.” Government agencies concerned with transparency and consumer have, by in large, ported their advertising restriction and applied it broadly to social media. This includes tied house laws, which prevent wineries from providing things of value (including free advertising) to retailers. Trinidad noted that regulatory uncertainty is likely to continue as new Internet-based business models appear and blur the line between e-commerce and social media.
Finally, Trinidad provided attendees with an update on the Empire Wine / NYSLA dispute. As noted in prior blog posts, NYSLA has accused Empire Wine, a New York based retailer, of shipping wine to states where retail direct to consumer shipping is prohibited, even though those states have not pursued any disciplinary action against Empire. NYSLA believes this action is grounds for suspension, revocation, or cancellation of Empire’s New York State License. If NYSLA prevails, a California winery that illegally ships wine to a consumer in, say, Utah, may be putting their NY Direct Shipper’s license at risk.
California Tied House Laws and Social Media
According to a recent article in the Sacramento Bee, the California Department of Alcoholic Beverage Control (“ABC”) recently accused a California winery of violating tied house laws by sending the following tweet: “Two days till @SaveMart Grape Escape in Downtown #Sacramento!” SaveMart Supermarkets holds a California alcohol beverage retailer license, and the ABC considered the tweet free advertisement given by a supplier to a retailer in violation of California tied house laws.
Tied-house laws are federal and state laws that attempt to prohibit brewers, distillers, winegrowers and other alcohol beverage suppliers from exerting undue influence over retailers. In theory, such laws minimize the potential for unfair business practices in the industry and protect against social ills such as over-consumption. Certain tied house laws bar suppliers from providing anything of value (such as a free advertisements) to alcohol beverage retailers. Both federal and state regulators have treated winery websites and social media pages and accounts as advertising platforms, so mentioning retailers on such channels can give rise to tied-house claims.
Federal and state tied-house regulations share the same intent, but their provisions differ greatly.
A. Federal Tied-house Laws
Under federal tied-house law, it is unlawful for an alcohol beverage manufacturer or supplier to “induce” directly or indirectly, any alcohol beverage retailer (such as a bottle store, bar or restaurant) to purchase any products from that supplier to the “exclusion,” in whole or in part, of other suppliers’ products. Inducements include, but are not limited to, furnishing, giving, renting, lending, or selling to the retailer anything of value (subject to various exceptions).
A violation of federal law only occurs if the inducement leads to “exclusion.” Exclusion occurs when a supplier directly or indirectly places retailer independence at risk because of a connection between the supplier and retailer or by any other means of control over the retailer; and where such practice by the supplier-side licensee results in the retailer purchasing less than it would have of a competitor’s product.
B. California State Tied-house Laws
Under California law, no alcohol beverage manufacturer or supplier may “[f]urnish, give, or lend any money or other thing of value, directly or indirectly, to” an on- or off-premise alcohol beverage retailer. Unlike federal law, there is no need for there to be actual exclusion for a violation to arise. Nor does the supplier’s intent play any role in evaluating if a tied house violation has occurred.
Although an advertisement placed by a supplier for a retailer is a “thing of value,” there are certain exceptions to California tied house laws. For example, supplier advertisements of instructional tasting events held on a retailer’s premise do not violate state tied house law, so long as they adhere to certain restrictions. See ABC Ac Sec. 25503.4. Such ads cannot contain the retail price of the wines, any “laudatory references” to the retailer, or any picture or illustrations of the retailer’s premises, and any mention of the retailer must be “relatively inconspicuous in relation to the advertisement as a whole.”
It should be noted, however, that not all states have tied house exception, and before posting information related to a retailer outside of California, wineries should review the tied house provisions of the retailer’s home state.
Parker, Bloggers, and Fair Use
By John Trinidad
Lawyers for The Wine Advocate, the publication made famous by Robert Parker, recently fired off a letter to wine writer Tyler Coleman, demanding that he “immediately remove content on [his blog] www.drvino.com that was copied from eRobertParker.com,” claiming that Coleman’s use of this material “blatantly infringes upon [The Wine Advocate’s] copyright protected content.” Under federal copyright law, Coleman’s use of that material may be protected by the “fair use” doctrine.
The recent kerfuffle between Parker and Coleman arose from a post on Parker’s website criticizing a tasting led by New York Times wine writer Eric Asimov and the San Francisco Chronicle’s Jon Bonné. In follow-up comments also posted to eRobertParker.com, Wine Advocate’s editor, Lisa Perrotti-Brown, added her critique of the tasting and the wines presented. Only paid subscribers can access the article and comment section. Coleman subsequently wrote a blog post quoting from the article and Perrotti-Brown’s comments, defending Asimov and Bonné panel topic, and criticizing the tone of the Wine Advocate post.
Even assuming that Parker’s content on his website is his copyright protected property, Coleman’s use of excerpts from the eRobertParker.com site may not constitute infringement. The federal Copyright Act protects against unauthorized copying of a copyright-protected work, but does not grant the copyright owner exclusive use of that work. Use of another person’s copyright protected work “for purposes such as criticism, comment, news reporting, teaching …, scholarship, or research, is not an infringement of copyright.” This is often referred to as the “fair use doctrine.” Courts weigh four factors in considering whether an alleged infringing act qualifies as fair use:
1. The purpose and character of the alleged infringing use;
2. The nature of the copyrighted work;
3. The amount of the work used in relation to the overall work; and
4. The effect of the alleged infringing use on the market or value of the copyrighted work.
Congress and federal courts have recognized that “[c]riticism is an important and proper exercise of fair use.” If a copyright holder were allowed to raise infringement claims against any writer that quoted and then criticized its work, copyright law would have a corrosive and chilling effect on free expression. In other words, copyright protection “must yield to the right of persons to engage in full and free public discourse of ideas and issues protect by the First Amendment.” Maxtone-Graham v. Burtchaell, 631 F.Supp. 1432, 1435 (SDNY 1986). Thus, works that criticize or comment deserve protection against copyright infringement claims.
Without walking through all four fair use factors, it appears that Coleman’s use of excerpts from eRobertParker.com for comment and criticism falls squarely within the types of work that Congress intended to protect under the fair use doctrine.
John Trinidad ([email protected]).
Disruptive Technologies: The Internet and Wine
Dickenson, Peatman & Fogarty attorney John Trinidad recently gave a presentation at the University of California-Berkeley School of Law on the impact of the Internet on the regulations that govern the wine industry. You can download a copy of Mr. Trinidad’s presentation here.
During his presentation, Mr. Trinidad provided an overview of how the spread of e-commerce influenced the Supreme Court’s landmark decision in Granholm v. Heald; discussed third party marketing, California’s guidelines thereto, and New York’s recent hearings on Internet marketing; and also summarized the U.S. Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau’s social media guidelines. He also discussed the blending of social media and mobile commerce.
For more information on third party marketing, internet marketing, or wine law in general, please contact John Trinidad at [email protected].
New TTB Guidelines on Social Media and Alcohol Beverage Advertising
Social Networks (incl. Facebook)
Applies to “fan pages for alcohol beverage products or companies and any content regarding alcohol beverage products posted to the pages by the industry member.”
Mandatory statements must be included on any “member fan page,” and should not be “hidden or buried.” TTB “strongly recommends” these statements be included in a conspicuous location, such as the profile section of the fan page (such as the “About” section on a Facebook fan page).
Video Sharing Sites
Applies to “[v]ideos about alcohol beverages that are posted to video sharing sites by industry members.”
Mandatory statements should be included in “profile” section of individual videos or on the “channel” information if the industry member maintains a channel.
Applies to any blog maintained by an industry member that “discusses issues related to the company, its products, or the industry in general….” Also applies to “anything posted by the industry member on the blog”
Mandatory statements must be included.
Microblogs (incl. Tumblr, Twitter)
Applies to any written statement “calculated to induce sales in interstate or foreign commerce.”
Mandatory statements must be included and TTB recommends including these statements on the profile page.
Applies to apps for mobile or other handheld devices “related to alcohol beverages.” Such apps are considered “consumer specialty advertisement,” similar to ash trays, matches, cork screws, etc. Thus, only mandatory statement is the company name or brand name of the product.