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Angel’s Envy Rye Case, Not Going Away

ae

Those three little words, above (CRAFTED BY HAND), are causing a ruckus for Angel’s Envy Rye, in Judge Aspen’s court in Chicago.

In the great whiskey wars commencing in 2014, Maker’s Mark had a great day, here, in May. By contrast, Angel’s Envy had a much less propitious day early this week. A federal judge in Illinois dismissed a small part of the class action fraud case against Angel’s Envy, but let big parts go forward. My friends at the Locke Lord law firm, who recently and successfully wrapped up the similar case, against Templeton, explained:

The decision to allow the Angel’s Envy case to proceed past a motion to dismiss is consistent with similar decisions in the cases against Tito’s Handmade Vodka and WhistlePig Rye Whiskey, and signals that the courts are willing to consider consumer-fraud claims against spirits companies that supposedly sell unattributed mass-distilled products while holding themselves out to the market as smaller scale, craft brands. As a result of these rulings, the case will proceed into discovery, which has the potential to be lengthy and expensive.

In my view, the most interesting parts of the 17 page opinion and order are as follows.

1. The potential damages may exceed $5 million, as the brand but not the plaintiffs contend. “Louisville has plausibly shown that more than $5,000,000 is at stake in this case.” Also, the “plaintiffs adequately allege that the whiskey they received was worth less than what they were promised.”

2. Even though Maker’s Mark recently won a fairly similar case, the court said:

the Angel’s Envy brand is much smaller than the Maker’s Mark brand. As a result, a consumer could reasonably believe the phrase “hand crafted” on the finished whiskey label meant it was not mass-produced. Additionally, Aliano alleges that the context of “hand crafted” on the label implies that Louisville controls the entire process of making the finished whiskey at its facilities in Bardstown, Kentucky, when most of the process occurs at MGP’s facilities in Indiana. … In light of the more robust facts alleged in this case, we are not persuaded by the reasoning in Salters.

 3. TTB label approvals do not provide a safe harbor. The court said:

While the label itself was approved by TTB, it is not clear what statements on it were actually reviewed and approved. The relevant regulations require the phrase [bottled by, but] no regulation states whether the phrase “hand crafted” can be added before this phrase. Here Louisville [added it and the] regulations do not specifically authorize this addition. … [O]n the complaint before us, we cannot determine whether TTB actually reviewed and authorized every statement on the label.

It is not entirely clear whether consumers care what is and is not “hand crafted.” It is not clear whether TTB cares much about this particular issue. It is not even clear whether the plaintiff really cares, deep down. But now we know Judge Aspen cares, and perhaps we will someday, in the not too distant future, get a handle on what the law makes of this term.

Blue Moon Asserts it is Plenty Craft Enough

blastAt long last, MillerCoors filed its response, in the Blue Moon case, on July 13. The company makes some good arguments, and to my ear, these seem best:

  1. MillerCoors is expressly authorized by state and federal law to use the Blue Moon Brewing Company trade name.
    1. The safe harbor doctrine applies where either state or federal law has blessed the conduct at issue. (Here, MC nemesis, A-B, did the former a huge favor in the form of winning the Lime-A-Rita case just in time.) The company is careful to point out that the laws and regulations, not necessarily the label approvals, create the safe harbor.
    2. Should a court find liability under these circumstances, where a registered trade name is used instead of the parent company name, it would dramatically change the way that many corporations operate, effectively standing corporate America on its head. Trade names are used in many industries, and many brands have surprising corporate relationships. Just to name a few: Jiffy Lube is owned by Shell Oil Company, Haagen-Dazs is owned by Nestle in the U.S., Taco Bell and Kentucky Fried Chicken are owned by Yum! Corporation and Ben & Jerry’s ice cream is owned by Unilever.
  2. The company’s trade name and trademark registrations put Plaintiff on notice of its ownership and use of Blue Moon Brewing Company.
  3. There is no definition of “craft beer,” much less a legal one. Plaintiff relies on ever changing guidelines promulgated by the Brewers’ Association (“BA”), a trade group that has zero rulemaking authority, which defines an “American Craft Brewer,” but not the term “craft beer.” A trade association’s arbitrary definition of “craft brewer” does not give the trade association the power to abscond or control the use of the word “craft” or “crafted” by all beer industry participants.

The case goes on from here. In related news, at the time of my first post related to this brand and controversy, I was able to see and comment upon the plaintiff’s side only. Above, I am happy to have a chance to show the other side. Outside the court papers, the company’s response has been:

MillerCoors is tremendously proud of Blue Moon and has always embraced our ownership and support of this wonderful brand. The class action filed against MillerCoors in California is without merit and contradicted by Blue Moon Brewing Company’s 20-year history of brewing creative beers of the highest quality. There are countless definitions of “craft,” none of which are legal definitions. We choose to judge beer by the quality, skill and passion that goes into brewing it. Back in 1995, Keith Villa, Blue Moon’s founder and head brewmaster had to work extremely hard to convince people to try his cloudy, Belgian-style beer. Today, MillerCoors is proud that Blue Moon has invited millions of drinkers to try something new, while helping pave the way for the current explosion of creativity in the brewing community.

If anyone wants to send funds I will consider setting up the Evan Parent Sympathy Society, to make reparations for the grave injustices he has encountered. It is not easy to be a beer aficionado. On a slightly more serious note, I propose that the company should seek to settle this suit by inviting the beer aficionado to spend a week at their brewery, brew it his way, up to 1,000 gallons, and see who wants to drink it.

Gluten-Free Labeling

gluten

Sorry to disappoint anyone, but that’s not Attorney John Messinger over to the left. But it is John, over to the right, covering Gluten-Free Labeling for Beer, Wine and Spirits, in a recent issue of Beverage Master Magazine.

The full article is here. The first few paragraphs are here:

Gluten-free foods and beverages were one of the popular trends of 2014. In the past year, over 70 new alcohol beverage label approvals mentioned “gluten-free,” which is more than the combined total of gluten-free labels in 2012 and 2013. Breweries, wineries and distilleries who wish to cater to the gluten-free diet market and provide those with celiac disease additional choices can do so, but there are a fair amount of rules and red tape to wade through. This article breaks down the federal requirements for gluten-free labeling.

Background

The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) regulates the labeling and advertising for the majority alcohol beverages. In May 2012, TTB issued an interim policy on gluten content statements in the labeling and advertising of beer, wine and distilled spirits, which allowed some products to make gluten-free claims (TTB Ruling 2012-2). This policy was issued pending guidance or rulemaking by the Food and Drug Administration (“FDA”) on the subject of gluten-free claims. In August 2013, FDA issued a final rule to establish a regulatory definition of gluten-free (21 CFR 101.91). TTB revised their policy on gluten-free labeling and advertising in February 2014 to be consistent with (but not identical to) FDA’s final rule (TTB Ruling 2014-2).

What Qualifies as Gluten-Free?

TTB’s current policy does not allow alcohol beverage products to be labeled and advertised as gluten-free if they are made from or contain:

  1. “Gluten-containing grains,” meaning wheat, rye, barley or crossbred hybrids (e.g. triticale);
  2. Ingredients made from gluten-containing grains, if those ingredients have not been processed to reduce the gluten content of the ingredient to a level below 20 parts per million (ppm).

In general, wines fermented from fruit and certain distilled spirits that are produced from specific non-grain commodities (e.g. rum, tequila, vodka distilled from cherries) can be labeled or advertised as gluten-free without substantial difficulty.

John is a beer and beverage lawyer in the Washington, DC area. Read on, here.

Beer with Lots of Protein – The Moderately Mighty Squirrel

mighty

A couple times a year I hear about an alcohol beverage that is somehow, against all odds, “good for you.”

It happened again this week and so I eagerly rushed to the Public COLA Registry to see what was new. Lo and behold, I found the squirrel. A mighty one — or so it purports to be. The press release purported this new beer to have something like 10 times the protein compared to Bud Light.

The average analysis for Bud Light is above, to the right, and the one for Mighty Squirrel is to the left. The TTB-approved label shows the product to be a “Whey Beer.” Whey is apparently some sort of cheese protein and byproduct so I am turning this over to the cheese law blogger extraordinaire, for further elucidation.

There is no word yet, on how hard the Squirrel folks tried to push on this label. I don’t see any signs that they pushed particularly hard. For example, the rodent in question does not seem to have particularly impressive musculature (or even a tiny but visible rodent six pack). The whey, good-for-you-beer, and protein angles are not particularly new. Here is whey from way back. Here is protein from way back (in the form of Devotion, vodka with added casein). Here is good-for-you-beer from the last decade.

I can almost hear, and almost miss, the faint echo of Battle Martin directing:  “make the calf muscles smaller.”

Webinar: The Class Action Lawsuits

webinar

A few weeks ago I had the great honor of traveling to Chicago to co-present a webinar with Simon Fleischmann and Tom Cunningham. Tom and Simon are expert defense litigators at the Locke Lord law firm, and they have deep experience representing food and beverage companies in class action lawsuits around the country. I say it’s an honor because I have learned a huge amount about class action litigation over the past year, from Tom and Simon. For any company in a jam, I don’t think they could do better than to have these fine lawyers on their side.

The webinar is entitled “Spirits Industry Under Fire:  The Threat of Class Action Litigation.” More than 125 lawyers and beverage executives tuned in for the live event. In addition, Locke Lord recorded the webinar. The audio file is here. It includes about 20 minutes from Tom (what the cases are about and why you should be concerned), 20 minutes from Robert (the TTB aspects, Tito case, and why federal approval is not a silver bullet), then 20 minutes from Simon (the first Maker’s Mark decision, and how to lessen the risks). This is followed by about 20 minutes of questions from the live attendees. You can also view the PowerPoint at the link, and download a booklet on the same topics. Overall this is an excellent way to bring yourself up to speed on the wave of litigation that has smashed up against the spirits and beer industries during the past year.

You will need to fill in a few fields at the Locke Lord website to access the webinar. The audio is high quality during most of webinar but it has some very rough spots, especially during the first 1/3 of my presentation. I do plead guilty to letting my phone buzz, but I am not sure what else could have caused the problem. The room was quiet and the microphones were good, despite how it sounds (in some moments it sounds literally like we are under fire or getting hit with a wave of litigation). It is easy to hit fast forward, rewind, and to jump around by sections. If you listen closely you can get a better idea who is likely to win and lose in these high stakes battles, and learn how to stay away from the problems that have hit Beck’s, Blue Moon, Tito’s, Beam, Bulleit, Maker’s Mark and a host of others. With scores of class action suits filed in the past year, just in the spirits area, nobody should be surprised or unprepared when the next suits hit.

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