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Kendall-Jackson Winery12/3/1999
As amended January 3, 2000. Petition for rehearing denied. There is no change in judgment.
KENDALL-JACKSON WINERY, LTD.,
PETITIONER,
V.
THE SUPERIOR COURT OF STANISLAUS COUNTY,
RESPONDENT;
E. & J. GALLO WINERY,
REAL PARTY IN INTEREST.
(Super. Ct. No. 153296)
Ropers, Majeski, Kohn & Bentley, Daniel E. Alberti, Mark G. Bonino and Kathryn C. Curry for Petitioner. No appearance for Respondent. Blecher & Collins, Maxwell M. Blecher, Steven J. Cannata; Damrell, Nelson, Schrimp, Pallios & Ladine, Roger M. Schrimp; Orrick, Herrington & Sutcliffe, George A. Yuhas and Laurie Chambers for Real Party in Interest.
The opinion of the court was delivered by: Thaxter, Acting P.J.
CERTIFIED FOR PUBLICATION
OPINION
ORIGINAL PROCEEDING; application for a peremptory or alternative writ of mandate. Hugh Rose III, Judge.
The doctrine of unclean hands does not deny relief to a plaintiff guilty of any past misconduct; only misconduct directly related to the matter in which he seeks relief triggers the defense. (11 Witkin, Summary of Cal. Law (9th ed. 1990) Equity, ยง 10, p. 686.) The trial court found that Kendall-Jackson Winery, Ltd. (Kendall-Jackson), the defendant in a malicious prosecution action, had no relevant evidence that the plaintiff, E. & J. Gallo Winery (Gallo), acted with unclean hands in relation to its claim and ordered summary adjudication for the plaintiff on Kendall-Jackson's unclean hands defense. The novel issue presented is this: When "unclean hands" is raised as an affirmative defense to a malicious prosecution claim, is the relevant misconduct limited to that which affected the defendant's decision to file and pursue the prior lawsuit? We hold it is not; misconduct in the particular transaction or connected to the subject matter of the litigation that affects the equitable relations between the litigants is sufficient to trigger the defense.
We issue a writ of mandate directing the trial court to vacate its order granting summary adjudication for real party in interest on petitioner's unclean hands affirmative defense and to enter a new order denying the motion.
FACTS and PROCEDURAL HISTORY
Kendall-Jackson has a reputation for producing high quality, mid- priced varietal wines. In 1994, Kendall-Jackson was selling over $100 million worth of Vintner's Reserve wine a year, and its chardonnay was the number one selling chardonnay in the United States. (Kendall- Jackson Winery v. E. & J. Gallo Winery (9th Cir. 1998) 150 F.3d 1042, 1045.) Gallo is the largest wine producer in the world. But, unlike Kendall-Jackson, Gallo has a reputation for producing lower-priced, non- premium wines. (Ibid.)
During the 1990's, the market for non-premium wines declined rapidly. Gallo researched how best to enter the premium wine market. Much of its research was directed at the success of the market leader-Kendall-Jackson Vintner's Reserve. Gallo learned that consumers associate the name "Gallo" with "jug wine" and that a colorful grape leaf design attracts consumers. In accord with these results, Gallo introduced in the fall of 1995 a line of premium wine, Turning Leaf, that featured a leaf motif and did not use the Gallo name. (Kendall- Jackson Winery v. E. & J. Gallo Winery, supra, 150 F.3d at p. 1045.)
In April 1996, Kendall-Jackson sued Gallo for damages and injunctive relief on causes of action for trademark infringement, trade dress violations and unfair business practices. Kendall-Jackson alle
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