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Lawsuit Roils Nickel & Nickel and Far Niente

Son of founder Gil Nickel sues board of directors at prominent Napa wineries

Augustus Weed
Posted: January 24, 2011

The wine industry is no stranger to family squabbles and legal battles. The latest involves one of Napa’s well-known wine-producing families, the Nickels. Jeremy Nickel, son of late Far Niente founder Gil Nickel, has filed a lawsuit against three members of the board of directors of his family’s wine companies, claiming that they misused company funds and gave themselves substantial raises at the expense of company shareholders. He is seeking damages of at least $50 million.

CEO Dirk Hampson, president Larry Maguire and CFO Laura Harwood were named in the case. The suit also lists the four companies associated with the Nickel family including Nickel & Nickel Vineyards, Far Niente winery, Far Niente Vineyards and Dolce.

Gil Nickel, an Oklahoma native, produced his first wine in 1979. That same year he purchased and restored the Far Niente winery in Oakville, which was abandoned during Prohibition, focusing on producing Chardonnay and Cabernet. He founded a second label, Dolce, in 1989. When single-vineyard wines became popular, he and his partners developed the Nickel & Nickel winery. He died of cancer in 2003.

Jeremy Nickel is a shareholder who owns a 35 percent interest in the wineries, but he is not actively involved in operations. He works at his family’s other business, Greenleaf Nursery, a wholesale plant nursery in Oklahoma, where Nickel is a resident. He also owns a nine-acre property in Oakville with a small vineyard that his father left him. He released the first vintages of his own Napa Cabernet label, the Vineyard House, in 2010.

The suit, filed last August in Napa County Superior Court, accuses the three defendants of breaching their fiduciary duties, among other wrongdoings. Nickel alleges that Hampson, Maguire and Harwood gave themselves salary increases, annual bonuses and other perks worth hundreds of thousands of dollars without a formal board of directors’ resolution or shareholder approval. He also alleges that they failed to cut unnecessary costs during the recession.

The wineries’ management dismissed Nickel’s suit, calling it meritless. “He is acting alone, contrary to the interests and without support of the other four owners—Beth Nickel, Erik Nickel, Dirk Hampson and Larry Maguire,” said Mary Grace, director of communications and marketing at the wineries. When Gil Nickel passed away in 2003, his wife Beth and his partners Hampson and Maguire continued to run the wineries. Nephew Erik Nickel is also a part owner.

Jeremy Nickel’s attorney, James Rose, said that one of the key issues of the case is that Nickel has been asking to see the ledgers and payroll records of the wineries but the board of directors have resisted. “[Nickel] was not able to see the general ledger,” said Rose. “[We’re] just asking the court for an accounting.” Rose also said that the companies have made significant profits but the executives have refused to issue dividends to the shareholders, including Jeremy.

According to Rose, Nickel has also requested to be made a member of the board of directors at all of the wineries, something he has been pursuing for years. “There has been great resistance against [making him a member],” said Rose. In October, Nickel was appointed as a director at Far Niente winery but not at any of the other companies.

Nickel originally filed the case in federal court in December of 2009 but that case was later dismissed for lack of jurisdiction. At the time, Rose told Wine Spectator that the two parties were “in the process of resolving their differences.” But Nickel refiled the suit in state court when a settlement could not be reached. “We had hit some issues that weren’t getting resolved,” said Rose.

His stepmother, Beth, and cousin Erik were not named in the case. “Erik and I have full confidence in our co-owners, Dirk Hampson and Larry Maguire, and the wineries’ CFO, Laura Harwood,” said Beth Nickel in a statement. “Dirk and Larry built the wineries with Gil from the early 1980s, and together with Laura, they’ve carried out Gil’s vision of world-class winemaking.” The owners have appointed Scott Snowden as an independent member of the board of directors to investigate Jeremy’s allegations. Snowden is an attorney and works at an alternative dispute resolution provider, JAMS. He’s also a proprietor of Snowden Vineyards in Napa Valley.

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