3/23/2015 Update. Caution. The above headline seems fairly skewed. See below for what we think really happened last week. The case is not halted at all.
Tito had another bad yesterday, this time in federal court in San Diego. This further makes it obvious that the world of labeling has changed markedly since the Supreme Court’s Pom decision of June 12, 2014. On March 18, 2015, Judge Jeffrey Miller (of the U.S. District Court for the Southern District of California) ruled that the Tito’s vodka case, relating to deception and the term “handmade,” should move forward. Since the case was filed on September 19, 2014, Tito has argued that the case should be dismissed.
The judge did agree with Tito on a few points, but agreed with the complainants on the larger points. Tito had argued that the case should not move forward because there was no real damage to anyone. In response, the court’s Order Granting in Part and Denying in Part Tito’s Motion to Dismiss, noted some consumers care a lot about “processes and places of origin” when deciding what to buy. By way of example, the court pointed to past controversies about kosher, halal, diamonds from conflict zones, and wine appellations.
Background about the case is here (the main complaints) and here (the main defense). This posting is a short version, and more commentary will be available at Wine & Spirits Daily, later today (or upon request). The nub of the matter is, the label and indeed the main selling proposition for Tito’s vodka, all the way back to its inception, center on its “handmade” aspects. This claim (the biggest word on the label) is now the subject of at least five lawsuits all over the U.S. They are 1) Hoffman (as here), 2) Pye (filed in federal court in Florida), 3) Aliano (filed in Cook County and removed to federal court), 4) McBrearty (filed in New Jersey state court and removed to federal court), 5) Cabrera (filed in San Diego, federal court), and 6) Grayson (filed in Las Vegas, federal court).
The Hoffman court said the class action claimants need not show that the vodka was defective or that the vodka was worth the price paid. Instead, the relevant inquiry is whether consumers were deceived about the “handmade” claim, and persuaded to buy on the basis of that deception. In essence, the judge is saying the plaintiffs made a mistake by arguing that class member would pay less – instead of arguing that they would not buy the product at all – but for the label claim at issue.
The Order has a funny typo on page 11 (stemming from the plaintiff’s brief), referring to the label term as “homemade,” when in reality the label shows the term “handmade.” A pillar of Tito’s defense, so far, is that TTB has approved the label on many occasions and after careful review. The court was not impressed by this point: “the court concludes that [Tito] has not shown that the safe harbor bars Plaintiff’s claims.” The court said TTB’s review was peripheral and informal at most, especially in view of the fact that TTB does not even have standards or rules for the term at issue.
The order seems careful and even-handed, but then seems to lean against Tito more, by saying:
In the court’s view, the representation that vodka that is (allegedly) mass-produced in automated modern stills from commercially manufactured neutral grain spirit is nonetheless “Handmade” in old-fashioned pot stills arguably could mislead a reasonable consumer. This is not, therefore, an issue that can be resolved at this stage.
Judge Miller further ruled that the 2013 Forbes article, that largely raised the questions about the Tito claim, is reliable enough, to form a basis for the allegations. Relatedly, the court was not too impressed with Tito’s argument that this article sufficiently alerted consumers that the claim might be dubious.
Finally, the court asserted that the complaint is not too vague for Tito to prepare an adequate response. The court said Tito’s “cogent” responses prove it. The court sided with the plaintiffs in most areas, but went against the plaintiffs in dismissing three major claims, on the basis that they were not pled properly. The court also, however, provided the plaintiffs with 14 days to fix those deficiencies and so this order is overwhelmingly helpful to the plaintiff side.
Simon Fleischmann (a top class action litigator at Locke Lord in Chicago) explained:
While this is a disappointing ruling from a defense standpoint, it is important to remember that this is just one trial court decision on the pleadings in what will likely be a broader war waged in several courts across the country on similar issues. And perhaps most importantly, the opinion emphasizes the highly individualized nature of that particular plaintiff’s purchasing decisions in a way that will make it difficult to certify a class of similarly situated consumers later on in the litigation.
Simon knows the context well. He is litigating very similar issues on behalf of Templeton Whiskey.
The court’s order is here.
Palcohol is back.
After approval from out of nowhere about a year ago, and cancellation of the same approvals a few days later, it is back. I have it on good authority that TTB has ironed out the kinks and approved the labels this week. Sen. Schumer will not be pleased (aka, he may be very pleased to have this whipping boy back within striking distance). Many states have already banned it. But this gives new life to this new category. Hats off to Mark Phillips for weathering the storm and persevering.
Below is the approved label as of 2014 alongside the label as approved on March 10, 2015. There are small, technical changes, mostly relating to how to measure the taxable commodity. Boxes 20 and 23 reconfirm that it took Mark almost a year to get this approval. The back label makes it look like an awful lot of work and controversy for a small amount of alcohol (when prepared, it only has half the liquid of a beer, and 1/4 the abv compared to vodka?!?).
In an email on the day of re-approval, Mark, the force behind Palcohol, explained:
Yes, Palcohol is back. It’s been quite a journey, over four years to get Palcohol approved by the TTB. I do want people to know that the TTB has been great to work with. Very fair and professional. And I’m not just saying that to kiss up to them as they have now approved Palcohol and it’s done.
The next challenge is trying to stop the states from banning it based on misinformation and ignorant speculation. It is a mistake for a state to ban Palcohol because…
First there was ARTAL the list. Then there was ARTAL the blog post. And now, there is ARTAL: The Movie. In which Oli tries to help you remember the power and pitfalls of the big list of Allowable Revisions to Approved Labels. In brief, this should help you remember that you don’t need a new COLA every time you make a change to your already-approved label. There are dozens of small and not so small changes that are ok to make, without any need of a new COLA — or the wait, frustration, and expense.
Ladies and gentlemen it is with great pleasure that I introduce Oli, the sporadically employed climate scientist, from Chichester. What does that have to do with labels and COLAs? Watch and see. Find out why some may benefit from having a small group of specialized lawyers and paralegals to help you get things moved through TTB and to the marketplace with less pain and delay.
What was the best beer ad, or ad of any type, in yesterday’s Super Bowl broadcast? Hint, it was a Bud ad, but not the one with the dogs, horses, and wolf. Instead, it was the one above. The one in which Bud took on its main competition, directly and powerfully, roughly like those on the field. It’s the first time in many years that Bud did not seem to be on the defensive. It seems clear that Bud’s plan is to defend Bud the brand such as above, and defend Bud the company by buying a bunch of esteemed craft brewers. Maybe they can have their cake and eat it too.
- The 60 second ad opens with a view of an old brewery with a big Budweiser sign and a small American flag atop it; the building is bathing in the sun and surrounded by trees and evokes old-time Americana within a couple seconds.
- Within five seconds, it says BUDWEISER, PROUDLY A MACRO BEER and shows lots of real and good looking ingredients, to go along with the pretty buildings way back at seconds 1 and 2.
- The ad takes dead aim at and skewers various hipsters such as the ones above. Hipster number 1 is perfect, with his mustachio, earnestness, believability, dancing eyebrows. The others are just as good, as they fumble and fawn over their wee glasses of beer, as much as is probably possible in the span of 2 seconds.
- The music is just right and sets a defiant tone.
- Lots of big machines, big horses and Bud’s history are packed into this ad; it yields nothing in terms of declaring the work that goes into making this beer great.
- It suggests those hipsters are phonies and don’t necessarily enjoy drinking beer as much as normal Bud consumers.
The ad is so good, and so expertly crafted that I can’t even think of any ways to try to refute or find fault with it. Now, having said that, I am eager to go to others to see what I missed in this ad that overflows with powerful imagery.
I was surprised to see Paste call it anti-craft rather than deftly pro-Bud. The article seems to say Bud spent $9 million to air it and I would not be surprised if it cost even more to produce it (or as much as an average movie of 90 times the duration). The Atlantic calls it the event’s riskiest ad and says it’s likely to appeal to those over but not under about 40. The LA Times points out that the ad touts that it’s for people who like to drink beer, but asks you to notice that “the ad doesn’t say the beer is for people who like to taste beer.” The article says most of the ad is on target and wraps up saying “Craft drinkers have dismissed macro beer and have been openly condescending to its fans for years; turnabout is certainly fair play.” Ad Age says, and I agree, the ad is notable for its swagger. The ad, by Anamoly, “marks the return of ‘This Bud’s For You,’ which has not been used in a significant way in Bud advertising since the late 1970s, according to the brewer.”
The debate still rages over whether Bud is good beer. But the debate is over about whether Bud can craft good ads.