French firm Sabaté, one of the world's largest cork manufacturers, and four U.S. wineries have decided to settle a suit alleging that the company's popular Altec cork-composite stopper tainted thousands of cases of wines. But Sabaté's legal problems aren't over, as it still faces another suit and complaints from other clients.
The four wineries -- Carneros Creek in Napa Valley, Parducci Wine Cellars in Mendocino County, Sapphire Hill in Sonoma County and Van Duzer in Oregon's Willamette Valley -- all filed individual suits against Sabaté in late 2001 and early 2002. Last year, Napa County Superior Court consolidated the four suits, which addressed similar legal and technical issues.
The producers claimed that Altec stoppers contaminated thousands of cases of their wines with the chemical compound trichloroanisole. TCA mutes fruit character and, in higher concentrations, imparts the mustiness known as "cork taint," but poses no health hazards. The wineries argued that the Altec marketing materials had stated that Altec corks had no taint, so they sued Sabaté alleging, among other things, fraud, breach of contract, breach of express warranty and deceptive business practices.
Notice of the settlement was faxed to the Napa court on Jan. 29, five days before the case was set to go to trial. None of the attorneys or litigants would discuss the settlement terms due to a confidentiality agreement. Sabaté USA president François Sabaté also declined to comment.
The documents filed in Napa County Superior Court do not specify the wineries' aggregate request for damages. In an interview conducted for an unrelated article before the settlement was reached, Carneros Creek owner Francis Mahoney claimed that Altec ruined about 15,000 cases from the 1998 and 1999 vintages. With an average wholesale value of about $120 per case, the wines could have been worth around $1.8 million to the estate. And Van Duzer's suit, as reported by Wine Spectator in 2001, claimed that Altec tainted 1,200 cases of 1999 Chardonnay with a retail value of more than $240,000.
The monetary value of the wines constitutes only a portion of the damages cited by the four U.S. plaintiffs, who claimed in court documents that their problems with the Altec stoppers harmed their reputations, cost them shelf space in stores and affected their ability to conduct business because of diminished revenues.
Altec is a blend of cork particles, a polymer and a binding agent; it costs about 10 cents per stopper. More than 4 billion Altec stoppers have been sold since the product was created in 1995, according to Sabaté's Web site.
Sabaté's early marketing materials claimed that Altec gave consumers "what they really want without risk of cork taint" and provided "prevention of cork taint," according to court documents filed by the wineries.
But results of lab tests submitted by Parducci, for example, indicated that every one of 73 Altec-sealed bottles in a particular batch tested positive for TCA. People's perception levels of TCA vary -- very sensitive individuals can notice it at less than two parts per trillion -- but the wines in that group contained, on average, 5.7 parts per trillion, a level that Parducci believed could affect the aroma or taste of the wines.
Proving that a wine has TCA taint is a relatively simple matter. However, isolating the cause of the contamination can be difficult. TCA -- which results from an interaction of mold, chlorine and phenols (organic compounds found in all plants) -- can originate in a variety of sources, including cellars, empty bottles, barrels, cardboard shipping cases and wooden pallets.
In Wine Spectator's original Oct. 31, 2001 article on the Altec-taint allegations made by other wineries, such as Bogle and Zellerbach/McNab Ridge, François Sabaté said those problems were due to isolated production batches and that the company had improved quality control measures to prevent such occurrences in the future.
In its response to the four wineries' suit, Sabaté instead argued that the TCA levels found in the wines were not problematic, as they "are within the range that distributors, retailers and consumers routinely accept in the market … ." In addition, they said, the TCA taint may not be due to the Altec stoppers.
The complaint filed by Sapphire Hill on Feb. 26, 2002, argued that other possible sources of TCA contamination were unlikely in their case. Sapphire Hill had bottled some of its 1999 Zinfandel with Altec stoppers, but later found that the wines were tainted. A comparison sample blended from barrels of 1999 Zinfandel not used in the Altec bottling tested free of taint.
The settlement of the case in Napa Superior Court will not end Sabaté's legal difficulties. Ontario producer Château des Charmes filed a suit requesting $4 million in damages. That case has gone to the U.S. Court of Appeals for the 9th Circuit, and oral arguments should begin by August, according to the winery's lawyer Ben Zuffranieri Jr.
The case is being appealed because the U.S. District Court for the Northern District of California, which is in San Francisco, dismissed the case on March 12, 2002, on jurisdictional grounds. Invoices sent by Sabaté to Château des Charmes -- received subsequent to the signing of their contract, said Zuffranieri -- contained two statements specifying that any disputes arising from the contract would be "the sole jurisdiction of the Court of Commerce of Perpignan [in France]."
Judge Maxine Chesney ruled that those clauses were valid and that the French court therefore had jurisdiction. But Zuffranieri believes that decision could be overruled on appeal. "We're very hopeful that the [appeals] court will interpret the law the way we interpret it," said Zuffranieri. "I suspect that Sabaté thinks they'll get more favorable treatment in France."
In addition, other wineries that have used Altec have reached or are still trying to reach settlements with Sabaté. Representatives of McNab Ridge Winery, founded by John Parducci in the former Zellerbach winery in Mendocino, confirmed that their attorneys are still negotiating with Sabaté. In Wine Spectator's Oct. 31, 2001 article, John Parducci claimed that the Altec stoppers had tainted 1,500 cases of his 1997 Mendotage, the winery's first vintage.
A September 2000 e-mail to Wine Spectator from Eric Mercier, the current managing director of Sabaté USA, included a list of 10 California estates that "could be used as references" on Altec. Calls put out to those 10 producers this month found that nine of them no longer use Altec. Speaking on condition of anonymity, one winemaker said they had reached an out-of-court settlement with Sabaté, but were bound by a confidentiality agreement.
Another of those nine producers said his company is currently trying to negotiate compensation with Sabaté for about 4,500 cases, valued at $400,000, allegedly tainted by Altec. "It seems that their success ruined them," said the vintner, who was at first pleased with the stoppers. "I suspect that the QC [quality control] checks that they were doing initially were abandoned to get the product out [to meet the soaring demand]."
Five of those nine estates attributed their decisions to stop using Altec to TCA problems. Others cited reasons such as concern about image. Scott McLeod, winemaker at Niebaum-Coppola in Rutherford, used Altec for about three-and-a-half years. He stopped in 2001, mostly due to bad press surrounding the product and a sense that other types of closures had improved.
But McLeod found Altec to be generally excellent for wines consumed soon after bottling, and said he received complaints on fewer than 1/10,000 of those bottles. He said Altec has a tighter seal than natural cork, and therefore better preserves youthful freshness. Due to the outstanding seal, Niebaum-Coppola could ship the Altec-closed bottles neck up. (Cork-sealed bottles need to be transported neck down or on their side, otherwise the corks dry out and the seal can fail). McLeod believes that shipping neck up allowed very little TCA from Altec to migrate into the wine.
During the last several years, Sabaté 's claims about Altec in its marketing materials and on its Web site have grown more conservative. Whereas once Sabaté advertised "no taint," its Web site now claims only that "the resulting molded closures are uniformly consistent with lower TCA risk than what was considered acceptable in natural corks."
The company currently offer three types of Altec stoppers: Altec Original and Altec Evolution are said on the Web site to contain no more than 3 parts per trillion of releasable TCA, whereas the company claims that Altec Reference will have no more than 1.5 parts per trillion releasable TCA.