Archive for June, 2015
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.
Here is an innovative new spirits product called Cocktail Caviar. It is “burst-able pearls of naturally flavored spirits.” You can toss them in some wine, or freeze them and add them to other drinks. The product is so new that there is not much about this product on the web so far.
If I understand correctly, these chickpea sized “pearls” are a giantized version of the tiny booze droplets that make up Palcohol. Here, the alcohol is encapsulated in a layer of kelp and so it not quite a liquid and not quite a solid. Maybe there is shock fatigue after the Palcohol surprise, or the size of the pearls makes an enormous difference, or it’s the upscale marketing — but it does not seem like this product is bound to raise hackles the way the powderized product has. Steven Hollenkamp, the man behind this product, explained that part of the appeal of the brand name is that “caviar” is not at all likely to appeal to minors.
I happened to meet Steven this week and he explained:
We worked diligently with TTB getting Cocktail Caviar approved. This included 240 emails, dozens of phone calls and several in-person meetings with TTB administrators, one of which was a lengthy sit down meeting with several high-ups at TTB Headquarters in DC. They were on top of it and met me half way. As a novel product, we felt being an open-book in terms of information and documents, as well as with the long term Cocktail Caviar vision, was the best way to cultivate a healthy long term relationship with TTB. I mean that, and while that may seem like a simple idea, you’d be surprised how many brands use a more guarded approach, trying to snake through the rules in a way that can only irritate TTB formula and COLA specialists.
TTB approved seven flavors of this product last month, and one of the approvals is here.
Earlier this week a federal court decided that TTB’s approval for Bud Light Lime Lime-A-Rita provides a “safe harbor” to protect certain label elements. Largely on account of this safe harbor, the court dismissed the class action lawsuit. The plaintiff had contended that the reference to “light” on the Rita products was misleading because it leaves an impression that the flavored malt beverages are low in calories and carbohydrates.
The Cruz v. A-B decision is in stark contrast with the Tito’s decision of three months ago. In the vodka dispute, Tito tried to locate the same safe harbor, but got pushed back into the middle of a heavy storm.
There are many class action lawsuits filed against alcohol beverage companies during the past year. They include Templeton, Angel’s Envy, Tincup, Whistlepig, Jim Beam, Maker’s Mark, Bulleit and Breckenridge. In most if not all, the defendant brands have argued that the TTB approval should create a safe harbor. But so far, until the Lime-A-Rita case, no judge has agreed that the COLA should protect the brand.
The Lime-A-Rita case may be an outlier because, at least according to Judge Birotte, the plaintiffs did a horrendous job with the pleadings. Secondly, TTB has a fairly specific policy regarding “light” labeling, and it appears that A-B complied with it. In most of the other suits so far, there is no specific TTB policy relating to the labeling at issue (as in the “handmade” cases) — or there is a specific policy but it appears the brand did not comply with it (as in the state of distillation cases).
The Lime-A-Rita court was not even a little impressed with plaintiffs argument that the Rita products should be regulated by FDA rather than TTB. The court explained that the Brown-Forman case resolved this jurisdictional issue way back in 1976 and “there is nothing in the 40 years of subsequent case law that persuades the Court to disagree with the Brown-Forman holding.”
Taking a close look at the label approvals, the court said:
Instead [of TTB’s “light ruling,” Ruling 2004-1], it is the COLAs that are considered the rulemaking authority here which trigger the safe harbor provision. Plaintiffs neglect to address the administrative force of the COLAs. They apparently presume that A-B’s safe harbor arguments solely rest on the [Ruling] but it is the COLAs that have the force of law here. … Plaintiffs do not, and cannot, dispute this ‘relatively formal administrative procedure’ and the effect of law COLAs embody. … [Because] Plaintiffs’ causes of action conflict with the TTB’s approval of the Rita Products’ labels, the safe harbor doctrine insulates A-B from liability.
I have my doubts about whether the label approval process is a “relatively formal administrative procedure.” Relative to a kegger in the frat basement, perhaps. On the other hand, it is not even as formal as a Las Vegas wedding.
In closing, and handing A-B a big victory, the judge went even further, writing: “Because Plaintiffs’ complaint is rife with deficiencies, the Court finds that Plaintiffs’ causes of action under UCL, FAL, and CLRA fail as a matter of law.”
Note: extra credit for anyone who can identify the glorious safe harbor depicted above.
Another week, another lawsuit, another whiskey brand.
The above video features Bulleit Bourbon and covers the labeling and legal controversies swirling around the whiskey industry.
Bloomberg did a good job with the video, published a few days ago. It needs more views than the 1,250 as of this writing. The images are beautiful. The video avoids the sensationalism and oversimplification common to so many other mainstream media stories about whiskey. The shots of whiskey bigshots like Chuck Cowdery and Jim Rutledge are a bonus.
Bulleit got sued June 1, five days after the video surfaced. The complaint relies in large part on the Bloomberg video. Once again, as with Tito’s, Maker’s, Angel’s, Tincup, Beam, Templeton, the lawsuit alleges deceptive labeling. This one is noteworthy, though, because Bulleit is owned by Diageo, “the world’s largest liquor conglomerate” as per the video. The label is above, and a recent label approval is here.
In a rather stunning example of the pot calling the kettle black, the complaint prattles on and on about how the whiskey is actually made by the Kirin Brewing Company, god knows where, even though it is fairly easy to see that the whiskey is made by one of the finest whiskey producers in the world, right where claimed. TTB records show two and only two distilleries in Lawrenceburg, KY. One is Wild Turkey, the other is Four Roses. Neither one is hard to find, or is a slouch when it comes to making fine whiskey.
To the extent this issue grabs you, and you care about the intersection of alcohol beverages, labeling and the law, you should not miss the webinar set out here — later this week.