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Perfect Beach Reading

aspatore

For a good, edifying time, grab a bottle of craft spirits, a beach — and this book.

The book is Moonshiner to Craft Distillery: Leading Lawyers on the Business of Distilling. Aspatore Books, a division of Thomson Reuters, published the book a few weeks ago. In this book, I am pleased to be in the good company of Ryan Malkin, Gloria Materre, Alva Mather, and other notable lawyers in the alcohol beverage law field.

book

Here are a few excerpts from my chapter, entitled “Reflections on Thirty Years of Spirits Law Practice:  From a Few Score to a Few Thousand Distilleries.”

Almost thirty years ago I got lucky and happened upon the hitherto unknown field (unknown at least to me) now known as beverage law. The years have passed quickly, and this is a testament to how challenging and interesting this field can be. Things have moved a long way during that time, from shuffling paper forms, digging through millions of words in black binders, and a country with a few dozen large distilleries. The law has not changed a lot, but the related law practice has changed dramatically, and so has the business climate.

This area of the law is more heavily regulated than any other aspect of consumer products law — more than guns, tobacco, or even pharmaceuticals. What other consumer product is the focus of not just one, but two, Constitutional amendments? Tobacco and marijuana do not rate even one. Thus, in looking at what laws apply most directly to moonshining and proper distilling, we must start with the Constitution and its amendment banning most forms of commercial alcohol production and sale in 1919, as well as its amendment allowing such production, subject to many rules, fourteen years later.

Federal distillery law is made up of the twin pillars of the Federal Alcohol Administration Act (FAA) which regulates labeling and permits, and the Internal Revenue Code, which obviously regulates taxes. There are hundreds of pages of regulations under the FAA Act alone, approximately fifty of which are devoted to spirits. Most of them are common sense. Even though some politicians may rail against the profusion of federal rules and intrusions, it is hard to see how anyone can deny that we need rules addressing what to do if an alcohol claims to be 80 proof, but is truly at 81 or 79 proof.

This installment of “Inside the Minds” is also available at Amazon, where it could soon be burning up the charts. Last I heard it was #1 in Books > Professions > Law > Food > Beverages > Distilled Spirits > Craft Spirits > Books Less Than 130 Pages > Books More Than 128 Pages.

Main Tito’s Case Dismissed

spin

The main Tito’s Handmade Vodka case has been dismissed, after 19 months of heated litigation. Details are not available so far.

The main case was Hofmann v. Fifth Dimension, Inc. (first filed in state court in September of 2014 then removed to federal court in San Diego a month later). A second and similar case, Cabrera v. Fifth Generation, Inc., also got dismissed on the same day.

On April 22, 2016, both sides in both cases filed joint motions to dismiss. On May 3, Judge Miller of the U.S. District Court for the Southern District of California issued an order in each case, granting the parties’ joint motions.

At one point there were at least eight class action lawsuits against Tito’s Vodka, scattered around the U.S., challenging the very prominent references to “Handmade,” on the product’s labeling and advertising. There are no signs of any label changes, and Google says this has not been in the press to date.

United Summer of Budweiser

budbud

I keep hearing about a Bud label that is so overflowing with patriotic hues and cries, that there is no room for the term Budweiser. For example, this Chicago Tribune article, from just a few hours ago, suggests that the label is under scrutiny somewhere deep within the belly of the bureaucracy.

Lo and behold, however, the label at issue got approved way back here, on March 1, 2016.

ogI have no idea whether this marketing plan (taking the Americana theme to the extreme and then quite a bit further) is a good idea. On the other hand, it’s difficult to find any basis for the government to have disallowed this label. At first I thought it might not mention the brand name at all, but it does, on the neck label. Then I thought maybe, somehow, it was so weighed down with homages to America, and so dressed up so as to resemble U.S. currency, that the term Beer did not fit on the label. But again, it is there, barely, this time at the upper right. If real patriotism were similar to the commercial kind, I would love to take a small measure of credit for this. We worked on this Ol’ Glory beer label about five years ago, and it is an open question, which one takes the cake.

The red Bud America label will look mighty nice, in a gigantic display at 7-11, on a hot July day this summer. It will look particularly nice next to this Bud Light label, submitted within the same week.

13650.000000.BUD16PryAlu5pMS

Yes that’s the whole label and it’s once again heavy on the Americana and light on the rest. At the risk of stating the obvious, a perusal of all recent Bud labels shows the advantages and disadvantages of being enormous. They can throw almost literally everything at any would be competitor:  Americana, fish, soccer, kicking, shooting, baseball, festivals, concerts, hockey, basketball, football, etc.

TTB Got Fast!

apt

Just when it seemed like TTB labels and formulas would be slow, and get slower every year — all of a sudden things look pretty fast. The above table shows that normal formulas take two weeks or less. It’s been a really long time since the processing times have been less than a month. This is a huge benefit for producers everywhere. Over on the label side, things are also getting better. This scary looking table shows that beer, wine and spirits labels were flirting with 40 and more days of processing time, toward late 2014, until the trends started to improve (things got particularly ugly here).

aptlabels

As of today, TTB says the processing time for labels is right around 21 days.

ap

I reached out to TTB to see why things seem so much better. TTB said:

Although workloads have continued to increase since FY 2015, we have recently been able to improve our processing times in part through cross-training and because new staff hired last year are reaching full proficiency.  However, the improvements you are seeing right now are also due in large part to increased use of overtime and the temporary reassignment of staff from other mission areas, which are short term fixes until we are able to fully implement the long term solutions (such as additional personnel and IT improvements) made possible by the additional funding we received for FY 2016.

There are already millions of labels approved in the past 20 years or so, and this should be great news for everyone who wants just a few more choices.

Red Stripe Wins a Big Round

rs

Last week, a federal court dismissed a putative class-action lawsuit against Diageo, holding that Red Stripe’s labeling and packaging does not, as a matter of law, mislead reasonable consumers into thinking that Red Stripe is made in Jamaica with Jamaican ingredients.

The suit, Dumas et al. v. Diageo PLC et al., began in July 2015, when class-action Plaintiffs alleged that Diageo deceived consumers into believing that Red Stripe is manufactured in Jamaica. Plaintiffs argued that Diageo’s use of the phrases “Jamaican Style Lager” and “The Taste of Jamaica,” incorporation of the Desnoes & Geddes logo, and allusions to the “spirit, rhythm, and pulse of Jamaica,” misled consumers to believe that Red Stripe was a Jamaican Beer.

Chief Judge Barry T. Moskowitz of the United States District Court for the Southern District of California issued the opinion, disagreeing with Plaintiffs, and holding that “no reasonable consumer would be misled into thinking that Red Stripe is made in Jamaica with Jamaican ingredients based on the wording of the packaging and labeling.”

Key to Judge Moskowitz’s decision was the fact that Red Stripe says “Jamaican Style Lager” and “Brewed & Bottled by Red Stripe Beer Company, Latrobe, PA.” Judge Moskowitz concluded that the word “Jamaican” modifies the word “Style” (not “Lager”), and indicates that the product is not from Jamaica. Additionally, Judge Moskowitz concluded that the brewed and bottled by language indicating “Latrobe, PA,” was legible. Judge Moskowitz also concluded that the phrase “The Taste of Jamaica” and the allusions to the “spirit, rhythm, and pulse of Jamaica” were vague and meaningless (i.e., mere puffery), and could not reasonably be relied upon as designations of source.

Regarding the Desnoes & Geddes logo, Judge Moskowitz stated that the “logo itself does not impart information regarding the source of the product.” Judge Moskowitz added, in a footnote, that “the Court doubts that the average consumer would know that the D&G logo is associated with Desnoes & Geddes Limited, the Jamaican brewery, as opposed to, say, Diageo-Guinness.”

Overall, Judge Moskowitz appears to have reached the correct decision. I am, however, skeptical of some of his conclusions. First, regarding the Desnoes & Geddes’s logo, I tend to disagree that the logo “does not impart information regarding the source of the product.” Imparting information regarding the source of a product is the key function of a trademark. Accordingly, I don’t think it’s unreasonable for a consumer to believe that a beer bearing Desnoes & Geddes’s logo (a registered trademark) originates from Desnoes & Geddes in Jamaica.

Second, regarding the brewed and bottled by statement, Judge Moskowitz stated, “It is likely that anyone examining the label carefully enough to read the language on the back of the label would see that the beer is brewed and bottled in Pennsylvania.” I agree that someone examining the back label would understand that the beer is brewed in Pennsylvania, but that’s the problem—the fact that a consumer would have to carefully examine the back label to glean the beer’s true origin suggests that the rest of the labeling and packaging might be misleading.

My two qualms notwithstanding, I believe that this case was correctly decided, based on the “Jamaican Style Lager” language. As Judge Moskowitz noted, consumers are exposed to numerous examples of beers with a geographic indicator modified by the word “style” (Belgian-Style, Cubano-Style), denoting that the beer is not actually made in the geographic location identified.

Plaintiffs have until April 21, 2016, to file an amended complaint, if they so choose.

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