The opinion of the court was delivered by: ROBINSON, JR.
Before the Court are Plaintiffs' Motion for a Preliminary Injunction, Plaintiffs' Motion for a Permanent Injunction and Declaratory Relief, Defendants' Motion for Summary Judgment, and all Oppositions thereto. Pursuant to this Court's Order dated January 26, 1981, Plaintiffs' Motions were consolidated, and a hearing on all motions was held on February 11, 1981. This action arises under the first amendment to the United States Constitution, the Federal Alcohol Administration Act (FAAA), 27 U.S.C. § 201 et seq., the Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq., and the Declaratory Judgment Act (DCA), 28 U.S.C. §§ 2201-2202.
Plaintiffs have developed a product that it wants to call "Taylor California Cellars Light Chablis of California" (hereinafter referred to as "light chablis"). This chablis has 30% fewer calories than their regular chablis. It is also lower in alcohol content (the light chablis is 8.7% alcohol; the regular chablis is 11.25% alcohol). Before Plaintiff can market the light chablis, they must obtain Defendants' approval of their label.
Plaintiffs submitted several labels to Defendants for their approval, which stated, essentially, that
(a) the name of the wine is Taylor California Light Chablis of California;
(b) that the wine has 30% fewer calories than their regular chablis; and
(c) the specific caloric and alcoholic content of the wine.
It is uncontested that the light chablis has 30% fewer calories than Plaintiffs' regular chablis, that the specific information pertaining to alcoholic and caloric content is accurate, and that the wine meets all of Defendants' definitions pertaining to the word "light." Nevertheless, Defendants have refused to approve any of Plaintiffs' proposed labels.
Defendants contend that the use of the word "light" in conjunction with information pertaining to caloric content is misleading, and that their refusal to approve the proposed labels is neither arbitrary nor capricious.
In sum, Defendants assert that (a) the FAAA gives the agency broad discretion in fashioning a regulatory scheme which will provide adequate information to the consumer and preclude deception; (b) the regulations promulgated pursuant to the FAA provides that "light" wine defines a class of wines containing less than 14% alcohol, and prohibits marketing that in any way qualifies this definition; (c) that the word "light" means less calories for beer because of substantial marketing by the major breweries, but does not contain the same meaning for wines; (d) if such a change in the definition of the word "light" is to be made for wines, it should be made through formal rulemaking proceedings, not through the unilateral actions of one wine maker;
(e) because of the marketing of light beer by major breweries, Plaintiffs' labels would effectively change the meaning of "light" as applied to wines; (f) Plaintiffs' labels would be misleading because they would change consumers' perceptions about the meaning of the word "light" as it pertains to "wine," while any wine maker can call a wine light, regardless of its caloric content, so long as it has less than 14% alcohol; and (g) approving Plaintiffs' labels would give Plaintiff an unfair competitive advantage over other wine makers.
The FAAA gives the Defendants broad discretion to fashion a regulatory scheme designed to preclude deception. 27 U.S.C. § 205(e). The regulations promulgated thereunder are, for the most part, consistent with the statutory objective. 27 C.F.R. at Part 4. The regulations applicable to the instant case provide, in pertinent part:
§ 4.21 The standards of identity
Standards of identity for the several classes and types of wine set forth in this ...