JOSEPH PHELPS VINEYARDS MUST PAY $24 MILION TO CEO, WINEMAKER – JOSEPH AND BILL PHELPS SHAMEFUL BEHAVIOR FORCES THEM TO PAY MORE THAN $24 MILLION TO TOM SHELTON, CRAIG WILLIAMS

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The late Tom Shelton, CEO of Phelps Vineyard and Craig Williams, Phelps award-winning winemaker win a major legal victory over Phelps Vineyards for $24 million

BY PAT MURPHY
Sentinel Editor & Publisher
Copyright © 2008

As part of a binding arbitration, a judge has sided with former Joseph Phelps Vineyards CEO Thomas Shelton and renowned Napa Valley winemaker Craig Williams in their request to be fairly compensated for their 40 percent stake in the famed Napa Valley winery.

Today attorneys from the San Francisco office of the national law firm of Goodwin Procter filed a motion in San Francisco Superior Court to enforce the judgment against Joseph Phelps Vineyards, which has refused to accept or make payments on the binding judgment against them.

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Bill Phelps and father Joseph Phelps should be ashamed of their behavior
and pay $24 million as ordered by judge to Shelton and Williams

In a binding judgment issued Sept. 9, retired Judge William Bettinelli ruled that Mr. Shelton is entitled to a total of $12,264,000 in damages and Mr. Williams is owed $11,856,000, according to the ruling.

Judge Bettinelli also found that Joseph Phelps Vineyards violated California labor law in the treatment of Mr. Williams and Mr. Shelton.

Both men were longtime employees of the winery and were essential to its success as one of the top quality producers of wine in Napa Valley until their resignations in May 2008. During a 32-year career with Joseph Phelps Vineyards, Mr. Williams helped develop wines that won top honors at tastings around the world. Mr. Shelton helped turn the financially ailing winery around in the 1990s, developing new markets and a long term strategy for the Phelps brand.

Both men received an equity stake in the winery in 1999. But the Phelps family had sought to devalue their shares and tried to block their sale to a third party. The dispute went to arbitration in 2007. Ultimately, the Phelps family filed fraud and breach of contract claims against Mr. Shelton and Mr. William, all of which were rejected by Judge Bettinelli.

“The truth is that Tom Shelton and Craig Williams dedicated their lives to Joseph Phelps Vineyards,” said Forrest Hainline of the law firm of Goodwin Procter LLP, their attorney who won the judgment for them. “They deserve much of the credit for building the winery into the multi-million dollar enterprise it is today. This is a great victory for Shelton and Williams, but it is also a disappointing story of greed and vindictiveness by the Phelps family, which chose to pursue its baseless legal claims against Mr. Shelton as he was dying from a brain tumor.”

Mr. Shelton died July 26, 2008, leaving behind a wife and five children. He did not live to see the victory that he won against Joe Phelps and his son Bill Phelps.

During his 16-year career with Joseph Phelps Vineyards, Mr. Shelton served as the public representative of the winery. He was also a member of the board of directors of the Napa Valley Vintners, a trade association that helped promote the region’s wineries and their access to direct markets. He was an internationally renowned advocate for Phelps Vineyards as well as the Napa Valley wine industry.

Along with interest, Mr. Shelton and Mr. Williams also are owed attorney fees, according to Judge Bettinelli’s ruling. Despite the arbitration’s binding effect, the Phelps family has contested the binding ruling against it.

“Everyone in Napa knows what Tom Shelton and Craig Williams did for the Phelps brand and the Phelps family,” said Hainline. “It is time for the Phelps family to do the right thing, honor their agreements and acknowledge how these two men made monumental contributions to enhance the status and reputation of Joseph Phelps Vineyards and their work was what made the winery successful.”

It’s nice to see justice come to both Shelton’s family and to winemaker Craig Williams. They gave their lives to making Phelps Vineyards what it is today. Unfortunately, in the case of Tom Shelton, he didn’t live to see his victory in court. But it’s nice to know that his wonderful family will not have to worry financially now that the law firm of Goodwin Procter and its top-notch partners Forrest Hainline and Patrick Thompson and their associate Robert Bader won this stunning victory for both Shelton’s family and winemaker Craig Williams

Joe and Bill Phelps should be ashamed of the way they treated these two loyal and hard-working staffers who spent their entire lives making the winery what it is today. If it weren’t for the work of Shelton and Williams, Phelps probably wouldn’t even exist, let alone produce the top quality wine that is known for today.

Ironically, in a positive way, this victory also come a week before a memorial and celebration of the life of Tom Shelton will be held to help realize his last dream, to build a bike path in the Napa Valley. The event will be held from 11:30 a.m. to 3 p.m. Saturday, Oct. 11 at Charles Krug winery. Find out more and help donate to the bike path, click here.

Shelton is survived by his wife, Laurie; five children, Jessica, Bryan, Jonathon, Trevor and Camille; his father and stepmother, John and Odell Shelton; and his sister, Melinda Colgan.

See Related: BUSINESS

See Related: DINING

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PAT MURPHY
Sentinel Editor & Publisher
In his youth, Pat Murphy worked as a General Assignment reporter for the Richmond Independent, the Berkeley Daily Gazette, and the San Francisco Chronicle. He served as Managing Editor of the St. Albans (Vermont) Daily Messenger at age 21. Murphy also launched ValPak couponing in San Francisco, as the company’s first San Francisco franchise owner. He walked the bricks, developing ad strategy for a broad range of restaurants and merchants. Pat knows what works and what doesn’t work. His writing skill has been employed by marketing agencies, including Don Solem & Associates. He has covered San Francisco governance for the past twelve years. Pat scribes an offbeat opinion column of the human family. Email Pat Murphy at SanFranciscoSentinel@yahoo.com.

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