Archive for the ‘vodka’ Category
Tito’s vodka was doing great for the past 15 years, then hit a gigantic speedbump this week in the form of a class action lawsuit.
Tito’s therefore provides a good example of when an approval is not really an approval. Tito Beveridge has more than 30 TTB label approvals for his vodka from 1997 to 2013 (as in the above image, from LabelVision). They may not do him much good in this lawsuit, even though, in years past, most would assume the federal approval would be dispositive. It’s a good thing most TTB approvals are not paper anymore because these would “not be worth the paper they are printed on.”
Summary: in Hoffman v. Fifth Dimension, Inc., Gary
Hoffman (a consumer) sued Tito’s vodka on behalf
of all Tito’s customers in California, claiming that
the company misleads people about whether the
product is “handmade.” The lawsuit was filed
September 15, 2014 in San Diego county court. The
federal government reviewed and approved the
Tito’s labels, but has no definition for the term at issue.
The classic case of an approval that is not really an approval would be your garden variety Napa Valley Chardonnay, Vintage 2010. TTB will take almost every one of those italicized words at face value. To the extent any one of those words is not true, your approval is not going to help you too much, in the event of an inquiry. Like an IRS tax return, the COLA (and any formula approval) is, to a surprisingly large degree, something of an honor system, stapled together with the penalty of perjury on every such document.
9/23/2014: Tito’s apparently put out a press release, sketching out a defense. I sure hope they have more. They took a jab at the plaintiff for botching the defendant’s proper name, Fifth Generation, Inc. Shanken points out that the brand is at 1.3 million cases per year (that’s a lot of hands!). Tito says “he will vigorously contest the lawsuit.” Tito largely hangs his hat on the fact that TTB approved the labels.
The Forbes article explains: “Tito’s has exploded from a 16-gallon pot still in 1997 to a 26-acre operation that produced 850,000 cases last year, up 46% from 2011, pulling in an estimated $85 million in revenue.” The article strongly suggests Tito is about to be a victim of his own success. You can say this post is a prime example of a lawyer taking something clear, like an affirmative, direct approval, and blurring it up to say it’s not really an approval. That would not change the messy, complicated reality, that TTB is not the only sheriff in town. We have a “system” and though it may be cumbersome, it actually does work pretty well. TTB approves Palcohol. Fine. That’s only one level. Then the private sector jumps in (i.e., us). This triggers the states, legislators, media, trade associations, on and on, to take action. TTB can’t and probably does not need to “do it all.” Customs jumps in on imports, states jump in on Santa and bitch issues, and now there is a clear right of private action in all such disputes. The floodgates are well open. A few weeks ago, in light of the Pom v. Coke decision, we predicted a flood of lawsuits around label claims. Some said “the sky is not falling.” Well, the water is starting to rise pretty high. Tito is up to his waist. Templeton is up to its knees. Bass and Becks are up to their ankles. All from private action with no trace of governmental intervention. Skinny Girl got dunked a few years back and we will need to go back and look to see how much water she swallowed.
The Tito’s lawsuit (Hoffman v. Fifth Dimension, Inc.) is here. Some juicy highlights are as follows.
This is a class action case brought on behalf of all purchasers of all vodka (“Vodka”) manufactured, distributed, marketed, and/or sold by FIFTH DIMENSION, INC. dba Tito’s Handmade Vodka (hereinafter “TITO’S”). Through a fraudulent, unlawful, deceptive and unfair course of conduct, TITO’S, and DOES 1 through 100 (collectively “Defendants”), manufactured, marketed, and/or sold their “TITO’S HANDMADE” Vodka to the California general public with the false representation that the Vodka was “handmade” when, in actuality, the Vodka is made via a highly-mechanized process that is devoid of human hands. There is simply nothing “handmade” about the Vodka, under any definition of the term,1 because the Vodka is: (1) made from commercially manufactured “neutral grain spirit” (“NGS”) that is trucked and pumped into TITO’s industrial facility; (2) distilled in a large industrial complex with modern, technologically advanced stills; and (3) produced and bottled in extremely large quantities (i.e., it is “mass produced”).
The Oxford Dictionary defines the term “handmade” as “[m]ade by hand, not by machine, and typically therefore of superior quality.”
On information and belief, the Vodka was made, manufactured and/or produced in “massive buildings containing ten floor-to-ceiling stills and bottling 500 cases an hour” 2 using automated machinery that is the antithesis of “handmade” that is in direct contradiction to both the “Handmade” representation and the “Crafted in an Old Fashioned Pot Still” representation on the product. Discovery will further reveal the specific automated manner in which the Vodka is made.
Defendants also concealed the fact that the Vodka is no longer made in old fashioned pot stills of the variety TITO’s proudly displayed in the 2013 Forbes article (i.e., in a shack containing a pot still cobbled from two Dr. Pepper kegs and a turkey-frying rig to cook bushels of corn). The disclosure of this information was necessary in order to make Defendants’ representations truthful and not misleading.
Consumers are particularly vulnerable to these kinds of false and deceptive labeling practices. Most consumers possess very limited knowledge of the likelihood that products, including the Vodka at issue herein, that are claimed to be “Handmade” are in fact: (1) made from commercially manufactured NGS that is trucked and pumped into TITO’s industrial facility; (2) distilled in a large industrial complex with modern, technologically advanced stills; and (3) produced and bottled in extremely large quantities (i.e., it is “mass produced”). This entire process is devoid of the caring touch of human hands. This is a material factor in many individuals’ purchasing decisions, as they believe they are purchasing a product made in small amounts that is of inherently superior quality.
As a direct and legal result of their unlawful, unfair and fraudulent conduct described herein, Defendants have been and will be unjustly enriched by the receipt of ill-gotten gains from customers, including Plaintiff, who unwittingly provided their money to Defendants based on Defendants’ fraudulent “Handmade” representation.
The plaintiffs are asking for all the money, plus attorney fees, punitive damages, interest, costs, and taxes: “all monies acquired by means of Defendants’ unfair competition.”
Right about now, every beer, wine and spirits company should be re-examining their labels, new and old, approved and prospective, and making sure every part is on firm ground. If you lack TTB approval it may hurt you a lot, but if you have it, it may not be sufficient to save you.
* A small disclaimer is, I have no idea about the underlying facts here. I am evaluating this from my couch, based on TTB approvals, public records, the plaintiff’s allegations, and the press. We look forward to presenting Tito’s side of the story, when it comes out.
You read that right. It’s far from Chopin Vodka. It’s Chokin’ Vodka. Chokin’ Chicken Vodka to be more precise. This may signal that it’s time for the Wild Turkey and even the Rex Goliath to step aside and make way for another bird.
We are pleased to see that many fun, inventive labels keep going through. I am a little surprised that it was ok to say “Not intended To Grow Hair On A Goat’s Ass.” Chokin’ Chicken is bottled by Gatlinburg Barrelhouse LLC of Gatlinburg, Tennessee.
I am glad we are not stuck in this era. Work would not be fun.
proposes to “standardize” the appearance of all alcohol beverage containers. The proposal would accomplish this by prohibiting “Any container that, by virtue of the material from which it is composed or by its shape or design, or that by its ordinary and customary use is likely to mislead the consumer as to the alcohol character of the product. . . .” The proposal expresses ATF’s concern about containers that might confuse consumers about the presence or absence of alcohol in any form. The proposal secondarily expresses concern about containers that might confuse consumers, regulators and the trade about the “alcohol character of the product.” This part of the rule could conceivably be used to prohibit a malt beverage from being packed in a container that looks like a wine bottle, or a distilled spirit cooler from being packed in a container that looks like a beer bottle.
I am delighted to report that this proposal got buried not too many years apart from when one of its foremost proponents got buried. We might otherwise be deprived of all these great ideas that make the industry more competitive, modern, vibrant and fun. A good and further example is Double Agent, as above (approved at Bendistillery, an excellent contract bottler for spirits in Bend, Oregon). The outer chamber is vodka and the inner chamber is liqueur. I am pretty sure nobody will mistake it for a juicebox. Another good example, along these lines, is Milagro Romance Tequila.
Don’t hold your breath, but if we get really creative, perhaps it would only take a few more decades to identify good reasons why this sort of thing should be prohibited (preferably well after the government is running big surpluses, unemployment is below 3%, and other priorities are well under control).
Who is this joker and why does he have a vodka? Flavor Flav has a flavored vodka, and it happens to be Bubba Gum flavored. It took almost three months to get the label approved, and so I am enjoying a vision of William Jonathan Drayton, Jr. calling in regular and increasingly anxious status checks to TTB, and arguing about font sizes.
In the above example, it is not sufficient to have VODKA on the front label. Or, the right size. In addition, it needs to be “separate and apart” from other matter. TTB has gotten more strict about this over the years. The above rejection is from a few days ago. The vodka label is from many years ago, to show the movement in the policy, or the enforcement of the policy.
TTB is quite concerned about word placement and proximity. For example, “absinthe” must appear next to other words, as here. Vodka may not, as above. It is important to understand the various proximity rules, because they can lead to unpleasant surprises, and because they extend from spirits to beer and wine. It is probably not okay to bury the word “chardonnay” amidst a sentence singing its praises. It is probably not okay, in most instances, to affix several words before and after BEER.
The rule can be difficult because it’s not always clear how much separation is required (A few spaces? A few line breaks?). It’s not always clear why some terms get treated differently (such as “Silver Rum” or “Cream Liqueur”). It is easy enough to add an extra class/type statement to the front label, to avoid any difficulties (such as adding VODKA to the above label, on its own line) — but only if you know the rule early enough.