It looks like E&J Gallo's headaches over the Red Bicyclette Pinot Noir scandal are far from over. On the heels of a Feb. 17 ruling in a French court that found Gallo's suppliers guilty of selling it millions of bottles of phony Pinot Noir, a Los Angeles law firm has filed a class-action suit against the global wine giant and its Red Bicyclette partners.
Claiming fraud and false advertising, the firm Kingsley & Kingsley filed the lawsuit in Los Angeles Superior Court on behalf of consumer Mark Zeller and against Gallo, French wine merchant Ducasse and the large Languedoc cooperative Sieur d'Arques.
The suit claims that the "Defendants, by labeling, marketing, promoting, distributing, and selling the falsely labeled wine, either knew or in the exercise of reasonable care, should have known that their conduct was misleading and deceptive."
The equivalent of 18 million bottles of Red Bicyclette Pinot Noir were routinely cut with cheaper Merlot and Syrah over several vintages. Much of it was sold in the United States. The Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB) is also looking into the case, the latest in a series of increasingly aggressive investigations into allegedly mislabeled import wines from France and Italy. "We're definitely aware of the issue," said Tom Houge, congressional liaison for the agency. "It is absolutely something we watch."
Gallo vice president Susan Hensley said the company does not comment on pending legal matters, but in a statement added, "We continue to believe that we have operated in good faith to provide a high-value experience to our consumers. It's important to know that our contract with our French supplier guaranteed to us that the wine we purchased would be Pinot Noir. There is no way to chemically test wine to establish its varietal composition with certainty."
The case dates back to 2006 as demand for inexpensive Pinot Noir was growing. Gallo had been working with Limoux-based Sieur d'Arques on various Red Bicyclette wines but the co-op did not have enough Pinot to meet demand, so it turned to Ducasse to help buy the varietal from other growers and producers.
In a 2008 audit by the French fraud agency, officials found several inconsistencies. Ducasse had sold 53,889 hectoliters of Pinot Noir when the entire region only produces around 53,000 hectoliters a year. In addition, the wine had been sold for 58 euros per hectoliter, much less than the typical bulk-wine market price of 97 euros per hectoliter for Vin de Pays d'Oc Pinot Noir.
In January, all the suspects except two executives from Sieur d'Arques pled guilty. Prosecutors told the court that the scam produced 7 million euros in profit.
Kingsley & Kingsley specializes in class-action, personal injury and employment law and is soliciting clients to join the suit. "If consumers do not know that the region or varietals in question are what the label says, especially in the lower end of the wine trade, then labels will cease to have any meaning," attorney Eric Kingsley said. "This lawsuit and potentially others like it are important to deter unscrupulous conduct and ensure that companies spend the time necessary to verify what they sell to the public."
The suit seeks an unspecified sum as restitution and damages against Gallo and its Red Bicyclette partners.
David Cable — Santa Barbara — March 8, 2010 2:10pm ET
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