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Mendocino Wine Co. and Dolan Settle Lawsuit

Winery founders agree to out-of-court settlement

by Jane Firstenfeld
Alternative text
Tim Thornhill (left) and his brother Tom.

Ukiah, Calif.—After four years of legal wrangling, the 150,000-case Mendocino Wine Co. (MWC) owned by the Thornhill family settled its lawsuit with co-founder and former minority partner Paul Dolan. No money will exchange hands, except for the attorneys involved on either side of the contentious suit that began with Dolan’s ouster in early 2012.

This week, MWC CEO/owner Tom Thornhill, stated in a release: All legal issues with Paul Dolan have been resolved. “We are pleased and satisfied with the way these issues have been settled.”

“In agreeing to the settlement, MWC will make no financial compensation to Paul Dolan. Paul Dolan has relinquished his minority ownership in Mendocino Wine Company, and confirmed Mendocino Wine Company’s longstanding ownership of all right, title, and interest in and to the Paul Dolan brands and all related trademarks and intellectual property,” Thornhill stated. “MWC will continue to exercise full control over all aspects of our Paul Dolan brands.”

Speaking with Wines & Vines this morning, Thornhill said, “The brand and its trademark were owned entirely by the LLC. He had signed off on the use of his name before we obtained the trademark.”

MWC spokesman Paul Wagner provided a timeline for Wines & Vines, detailing the origins of the dispute, and explaining why Dolan does not legally own the brand bearing his name. “The Paul Dolan brand was developed while Dolan was a minority owner of MWC. When the company was formed, MWC agreed to launch the namesake brand. When they learned that Dolan was raising money for outside ventures, they called a ‘time out.’ 

The issues came to light early in 2012, when Dolan was escorted out of the winery by Mendocino County sheriff’s officers, as reported in this article

In March 2012, Wines & Vines spoke to Tom Thornhill and Paul Dolan, who spoke about the dispute and their future plans

In the recent settlement, MWC has dropped all pending litigation related to Paul Dolan’s “termination for cause,” in which the company alleged breach of fiduciary duties and fraud. Dolan’s countersuits related to valuation of the company and ownership of the trademark were dismissed with prejudice in the ultimate settlement, meaning they cannot be revisited.

In an official statement this week, Thornhill said, “We are delighted that our family can continue to move forward and focus our efforts on doing what we love: growing some of the best grapes and making some of the best wines in Mendocino County.”

Dolan speaks
Dolan, a former president of Fetzer Vineyards and champion of sustainable, organic and Biodynamic business and winemaking practices, told Wines & Vines, “The only ones getting money out of this are the lawyers.” After pouring funds into the battle, he said, his budget was running short.

Alternative text
Paul Dolan

“I was trying to go at it from a rational point of view. I gave many years and a lot of effort” to developing MWC, which is based at the historic Parducci Winery in Ukiah.

“I had a 30% share, and ended with nothing,” he said. “They have my name and the brands."

Dolan added, “With MWC, I had the opportunity to transform and grow a great old business and brand that was in serious decline— 25% a year—to a growth of 10%-15% annually and converted the winery to a sustainable leader.

“We converted the vineyard to organic and Biodynamic, became carbon neutral and invested in alternative energy and great people. I hope they can maintain the legacy. I loved my brand, Paul Dolan, and will miss it.”

Dolan remains active in the grape and wine business. His family grows Biodynamic grapes in the Ukiah area, including two new ranches. He’s partnered with his son Heath Dolan at the new Red custom processing plant in Healdsburg, which he said will start operations as soon as grapes start coming in for the 2014 crush.

A partner in Truett-Hurst, the publicly listed Healdsburg winery best known for its aggressively innovative packaging, “We’re trying to contribute through product design,” Dolan said. He’s recently become a board member of the Demeter Society, which certifies Biodynamic products.

New look for Dolan brand
MWC, meanwhile, has launched a new package design for the Paul Dolan brand.

“The vision of Paul Dolan Vineyards is to make wines that are in harmony with the earth, and therefore reflect a distinct sense of place,” said Chase Thornhill, MWC senior brand manager.

“CCL in Sonoma printed the labels, using a creative embossing die and foils to create three distinct facets for each of the three crescent shapes on the label; the result has characteristics of a cut and polished stone,” according to a MWC statement.

“The three crescents that make up the logo represent the holistic ideal of the brand, and proposed a unique challenge. Get it wrong and they look flat and boring. Get it right and they can almost catch your eye like a diamond,” according to CCL manager Stephan Finke. The label medallion maintains a resemblance to the previous design, which featured a triad of cow horns, a symbol of Biodynamic growing.

(Editor's Note: This article was updated to correct the year the dispute began as well as some elements of the legal case.)




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