According to the BATF, the labels and advertisements for a number of R.H. Phillips wines released in 1996 could have misled wine drinkers into believing that the wines were from the Dunnigan Hills American Viticultural Area, when in fact the wines fell under the general California designation.
The wines in question had split labels that featured the R.H. Phillips name and the Dunnigan Hills AVA, where the winery is located, on a top label. A lower label featured the varietal and the broad California designation. John Giguiere, CEO of R.H. Phillips, said that the BATF had initially approved the labels, but then determined in 1996, after an annual audit of the winery, that the split label violated BATF law.
When labeled with a specific AVA, at least 85 percent of a wine must be made from that AVAs grapes, according to BATF regulations. In the case of split labels, the BATF ruled that if an approved AVA appears anywhere on the front face of a bottle, that AVA takes precedence over any less-specific appellation.
Split labels similar to the R.H. Phillips examples have been used by other California wineries. BATF spokeswoman Marty McKee said that other label disputes were pending but would not indicate which wineries were involved.
As a result of the BATF decision, in 1996 R.H. Phillips had to relabel 24,000 cases of wine and alter all associated advertising materials at a cost of about $75,000. In 1999, the BATF contacted R.H. Phillips again and said "it was time for our penalty phase," according to Giguiere. The winery was given the option of accepting an $85,000 fine or a three-day bond suspension during which the winery could not ship, sell or process any wine. R.H. Phillips was allowed to observe the suspension over the July 4 holiday weekend, during which the winery normally ceases most operations.
McKee said the long delay between the initial audit and the bond suspension was not uncommon. AVA labeling violations go through a long review process before penalties are determined, she said, and the BATF staff is shorthanded.