August 9-15, 2006

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Charles Krug Winery

Vineyard woes: One would never know from the stately entrance to the Charles Krug Winery that a labor dispute is brewing beyond the juniper.

Fields of Contention

Krug's vineyard changes yield legal complaints, boycott

By Patricia Lynn Henley

When is an employee not an employee? That tricky question is at the heart of a conflict between the United Farm Workers union and the Charles Krug Winery. Krug asserts it was within its legal rights to fire its crew of more than 30 veteran field workers this spring and turn all of its vineyard operations over to an outside management company. However, the Agricultural Labor Relations Board (ALRB) is investigating the situation for labor-law violations, and the UFW is calling for a boycott of all Krug-Mondavi wine labels.

Located in St. Helena, the winery has been owned and operated by three generations of the Peter Mondavi family. At issue is whether a company whose employees voted in favor of union representation back in 1975 can simply fire those employees and subcontract out all the work done by them, thereby eliminating the need to negotiate with the union. The UFW filed a claim with the ARLB in June; Krug hired the land manager effective July 1, and fired its vineyard workers on July 7; on July 11, the ALRB issued its own formal complaint alleging that Krug had potentially engaged in unfair labor practices by bargaining in bad faith.

"Once the union is in there, there are certain things that an employer is required to do. He is required to bargain with the employees over the terms and conditions of work," says Freddie Capuyan, regional director of the ALRB office in Salinas, which covers Napa County. "Krug is asserting that this land manager is now the employer and not Krug. The board's position is that those employees are Krug's employees."

Tom Fosse, CFO at Krug, says the decision to hire a land manager was made because the winery replanted most of its vineyards in the last few years, making them more efficient but also requiring the use of modern technology to maintain them. It was not an economic decision--the company doesn't expect to save money--but a practical one.

"The land manager has the labor, the equipment and the expertise to manage a [modern] vineyard, more so than we do," Fosse explains. "It's fair to say that at least 50 percent of the wineries in the Napa Valley already use land managers for that reason."

In February, Fosse says, he offered to negotiate with the union over the decision to switch to a land manager, even though the winery was not legally required to do so. Although the company waited 2 1/2 months, the union did not respond, Fosse says. "They were given the option to bargain, and they didn't."

In its formal written response to the ALRB complaint, the winery alleges that the UFW submitted false claims to the state of California, bargained in bad faith and waived its right to negotiate the decision to subcontract out all vineyard operations. Fosse says his company questioned the basis for the ALRB complaint and was told an amended version will be issued in the next few weeks.

Capuyan says the UFW has filed other charges--failure to bargain over other issues and failure to provide information relevant to contract negotiations--which are being investigated while ALRB staff continue to get the facts on the initial issue.

"A consolidated, amended complaint may be issued depending on the investigation," Capuyan says.

Then the ALRB will schedule a hearing before an administrative law judge; both parties will have 30 days to appeal any decision. If that happens, the matter would be reviewed by the full ALRB and the board's decision could be appealed in California's appellate courts.

Meanwhile, Krug's farmworkers have been without jobs since July 7. "Some of them have worked there for three decades or more," says UFW spokesman Marc Grossman. However, Fosse notes that Krug offered the workers a severance package, which was turned down by the UFW.

In addition to taking legal action, the UFW is asking consumers to boycott all Krug-Mondavi wines. Union members have been handing out leaflets at stores. In particular, they're targeting Longs Drug stores, which is a major distributor of the boycotted wines, include the Charles Krug Napa Valley, Charles Krug Family Reserve and C.K. Mondavi labels.

"Thousands of messages have gone to Longs," Grossman says. "We're also talking with other retailers and with distributors who distribute wine around North America. Some of them are very sympathetic."

Fosse agrees the union has the legal right to call for a boycott, but says that if consumers "knew what the real facts were, they would realize our company bargained in good faith."

The workers have a right to a union; that's not negotiable, Grossman says. He's hopeful like-minded folks will support the boycott by refusing to buy the wines, asking retailers not to stock them and contacting the winery directly to express their disapproval of the situation.

"Charles Krug is a very well-known label, very prestigious," Grossman adds. "At the very least the boycott has the effect of giving that label a black eye in the minds of thousands of consumers."

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