Posts Tagged ‘craft’
Last week, a federal judge in California tentatively dismissed a class action suit against MillerCoors. Yesterday, the judge made that dismissal final.
The case, Parent v. MillerCoors LLC, began in March when plaintiffs—a class of Blue Moon purchasers—alleged that Miller misled consumers into believing that Blue Moon is a craft beer. Plaintiffs argued that Miller’s reference to “Blue Moon Brewing Co.” on the beer’s label and use of the phrase “artfully crafted” in the beer’s advertising led consumers to purchase Blue Moon believing it was craft. Miller defended that the practice of listing its assumed name, “Blue Moon Brewing Co.,” on its label instead of its full business name is specifically permitted by state and federal law, and that consumers could not reasonably rely on the phrase “artfully crafted” as a guarantee that Blue Moon is craft beer.
Judge Gonzalo P. Curiel of the United States District Court for the Southern District of California tentatively agreed with Miller on both points last week, pending a hearing on the matter last Friday. Apparently, plaintiffs’ oral argument at the hearing failed to change Judge Curiel’s mind, as he issued an order yesterday dismissing the case.
Regarding TTB’s approval, Judge Curiel noted that TTB regulations “specifically permit a beer bottle and outer packaging to show, by label or otherwise, the name or trade name of the brewer.” Because California allows the name of a manufacturer to include a duly filed fictitious business name, Judge Curiel held that Miller’s use of “Blue Moon Brewing Co.”—a name properly registered as a fictitious business name in California—is specifically authorized by federal and state regulations. Accordingly, TTB approval provided Miller with a safe harbor.
Regarding the issue of whether Blue Moon fits within the definition of “craft beer” (a point of contention between the parties), Judge Curiel sidestepped the issue, stating, “… even assuming that there is such a definition, Plaintiff cannot rely on it for their argument” since plaintiffs are not pointing to Miller’s use of the phrase “craft beer,” but instead to their use of the different phrase “artfully crafted.” Regarding Miller’s “artfully crafted” claim, Judge Curiel held that the phrase is mere puffery, as it is not capable of being reasonably interpreted as a statement of objective fact. Unlike objective statements of fact, puffery refers to generalized, vague terms that cannot serve as the basis of a lawsuit.
Plaintiffs did secure one small victory, mentioned in the final order but absent from the tentative ruling: Judge Curiel found that their complaint met the heightened pleading requirements required of complaints that allege fraud. Unfortunately for the plaintiffs, this point is moot, as their allegations (well-pled though they may be) still fail to state a valid claim for relief.
Importantly, Judge Curiel distinguishes TTB approval in this case from TTB approval in Hofmann v. Fifth Generation, Inc., a case involving Tito’s “Handmade” Vodka. In Hofmann, the court found that there is no federal regulation that specifically authorizes the use of “handmade” on the label, and so the safe harbor did not apply. Regarding Blue Moon, Judge Curiel says, “Here, the conduct challenged by plaintiff is the same as the conduct authorized by law: Miller’s listing of ‘Blue Moon Brewing Co.,’ rather than MillerCoors, as the manufacturer on Blue Moon’s bottle and packaging.” Judge Curiel’s opinion suggests that in cases where TTB has duly applied specific regulations, courts will defer to TTB approval and will apply the safe harbor. On the contrary, where TTB does not have specific regulations in place, courts will be skeptical of TTB approval and may require the defendants to show that TTB actually reviewed and approved the statements at issue. The forthcoming decision in Hofmann should shed more light on this particular issue.
Parent was dismissed without prejudice, which means that plaintiffs have 30 days to submit an amended complaint against Miller. The judge directed the plaintiffs not allege claims regarding Miller’s use of “Blue Moon Brewing Co.” or the “artfully crafted” trademark.
A federal judge in California tentatively dismissed a class action suit against MillerCoors on Wednesday. Plaintiffs in the suit—a class of Blue Moon purchasers—alleged that MillerCoors misled consumers into believing that Blue Moon is a “craft beer” by stating on the label that it is brewed by the “Blue Moon Brewing Co.” and by advertising it as “Artfully Crafted.” This ruling could become final as soon as today’s hearing.
Judge Gonzalo P. Curiel of the U.S. District Court for the Southern District of California framed the issue narrowly: The question is whether MillerCoors is “specifically authorized” to list “Blue Moon Brewing Co.” as the manufacturer of Blue Moon on the beer’s labels. Judge Curiel answered that question in the affirmative, finding that Alcohol and Tobacco Tax and Trade Bureau (“TTB”) regulations “specifically permit a beer bottle and outer packaging to show, by label or otherwise, the name or trade name of the brewer.” Noting that California allows the “true name of a manufacturer” to include a “duly filed fictitious business name,” Judge Curiel held that MillerCoors’ use of “Blue Moon Brewing Co.”—a name properly registered as a fictitious business name in California—is specifically authorized by federal and state regulations. Accordingly, TTB’s approval of the Blue Moon label provides MillerCoors with a “safe harbor” from this type of litigation.
Importantly, Judge Curiel took the opportunity to distinguish Blue Moon’s claims from the “handmade” and “handcrafted” claims at issue in the cases involving Tito’s “Handmade” Vodka and Maker’s Mark. Judge Curiel noted that the conclusion that the safe harbor applies “is reinforced when the facts in the instant case are compared to those in other cases where courts found that the manufacturer’s labeling practices were not authorized by law.” He continues:
In Hofmann v. Fifth Generation, Inc. [involving Tito’s “Handmade” Vodka] the district court found the safe harbor doctrine did not apply where a vodka product was labeled as “[hand]made.” The [Hofmann] court found that no TTB regulation specifically authorized the use of “[hand]made” on the vodka’s label, and that it was “not clear that such representations are necessarily within the TTB’s regulatory purview.” [The court in Nowrouzi v. Maker’s Mark Distillery, Inc. reached the same conclusion.] By contrast, here, federal regulations specifically address which brewer name is permitted to appear on a beer’s label bottle and case or shipping containers.
Judge Curiel’s decision suggests that in cases where TTB has duly applied specific regulations, courts will defer to TTB pre-approval and will apply the safe harbor. On the contrary, where TTB does not have specific regulations in place, courts will be skeptical of TTB pre-approval and may require the defendants to show that TTB actually reviewed and approved the statements at issue. The forthcoming decision in Hofmann should shed more light on this particular issue.
Judge Curiel also found that the term “Artfully Crafted” is mere puffery, and thus non-actionable. Plaintiffs are allowed to submit an amended complaint, so long as it is not based on MillerCoors’ use of the terms “Blue Moon Brewing Co.” or “Artfully Crafted.”
* Not really Judge Curiel, in photo above.
A federal judge in California dismissed a class action suit against Jim Beam on August 21, 2015. The suit—Welk v. Beam Suntory Import Co.—concerned whether Beam’s use of the term “handcrafted” on its Bourbon labels is misleading to consumers. The court’s holding—that it is not misleading—and the case’s dismissal mark yet another win for Beam in a series of consumer fraud suits that have been brought against it (as well as a host of other alcohol producers) since 2014. Beam also did very well in this similar case, concerning Maker’s Mark.
Welk began back in February 2015, when Plaintiff Scott Welk filed a class action complaint alleging that Beam’s use of the term “handcrafted” on its Bourbon labels was misleading. According to Welk, “handcrafted” means “created by a hand process rather than by a machine.” Welk argued that the “mechanized” and “automated” process that Beam uses to make its Bourbon could not fairly be characterized as “handcrafted.”
In its defense, Beam claimed that TTB federal approval of its label provided it with a safe harbor that insulated it from label-related consumer fraud claims. Beam also argued that reasonable consumers are not actually misled by the term “handcrafted” because it is merely puffery that is not relied upon by consumers when they make their decision to purchase.
The side label, in recent years, says HANDCRAFTED – FAMILY RECIPE as above. For what it’s worth, note that Beam seems to have started using this language around 2011. It does not appear, for example, on this 2007 approval.
In a short and to-the-point opinion (less than 8 pages), Judge Larry Alan Burns of the Federal District Court for the Southern District of California sided with Beam, holding that the term “handcrafted” is “‘generalized, vague, and unspecified’ and therefore inactionable as ‘mere puffery.’” Because “handcrafted” is merely puffery, Beam’s use of the term on its Bourbon label does not violate California’s false advertising or unfair competition laws, and does not amount to an intentional misrepresentation.
Interestingly, the court held separately that the safe harbor doctrine did not insulate Beam from the consumer fraud labeling claim here. Judge Burns stated that “the TTB [COLAs] don’t reveal whether the TTB specifically investigated and approved the veracity of Beam’s use of the claim at issue.” In this case and some others, the courts ponder what TTB did and did not do, but don’t seem to look into it.
Dismissing all of the Plaintiff’s claims with prejudice, Judge Burns ended his opinion boldly, stating that “No amendment [to the Plaintiff’s complaint] would cure [the Plaintiff]’s allegation that Beam’s use of the term “handcrafted” is misleading.”
Federal district courts adjudicating these types of label disputes have split over whether TTB label approval provides alcohol producers with a safe harbor from litigation, and whether terms such as “handcrafted” and “handmade” are non-actionable puffery.
Judge Burns’ conclusions that the safe harbor doctrine does not apply and that the term “handcrafted” is non-actionable puffery are consistent with the conclusions made by Judge Houston in his recent decision regarding Maker’s Mark’s use of the term “handmade” on its label. Nowrouzi v. Maker’s Mark Distillery, Inc., 2015 WL 4523551 (S.D. Cal. July 27, 2015).
Putting last week’s decision into perspective, we now have three judicial decisions concluding that TTB label approval does not insulate producers from the potentially misleading claims on their labels (Welk, Nowrouzi, and Hofmann v. Fifth Generation, Inc.), and three decisions concluding that terms like “handcrafted” and “handmade” are mere puffery and therefore non-actionable (Welk, Nowrouzi, and Salters v. Beam Suntory Inc.). Only one of these decisions—Hofmann—has gone entirely against the brand (Tito) to the point where the court found that the safe harbor doctrine did not apply, and, that the specific term at issue is not puffery.
The takeaway from the whiskey cases, decided so far, seems to be that, independent of TTB’s review system, courts seem generally willing to find that “handcrafted” claims amount to non-actionable puffery.
In past years Dan was talking about beer law in magazines, podcasts, CLEs, on forums, and on Twitter. Now he has moved on, to radio. He was on CBS radio earlier this week, with Stacy Lyn, regarding the dramatic rise of craft brewing. Listen to Dan Christopherson and Stacy in the sound clips below. In a few years it will be hard to believe, but Dan notes that (in recent generations) “there weren’t any production breweries in the DC area until … 2011.”
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.