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Another Judge Chimes in on Tito’s

On Tuesday, January 12, 2016, a federal district court in New York granted in part and denied in part Tito’s “Handmade” Vodka’s motion to dismiss several claims brought against it by a class of consumers in the case Singleton v. Fifth Generation, Inc.

Judge Brenda K. Sannes of the U.S. District Court for the Northern District of New York issued the opinion, holding that federal approval of Tito’s labels does not provide Tito’s with a “safe harbor” from litigation, and that Tito’s use of the term “handmade” and the phrase “crafted in an old fashioned pot still” “could plausibly mislead a reasonable consumer to believe that [Tito’s] vodka is made in a hands-on, small-batch process.”

Judge Sannes’ decision to allow Singleton to move forward marks yet another instance of a federal judge finding merit in false labeling claims against Tito’s. Singleton joins Hoffman v. Fifth Generation, Inc. and Cabrera v. Fifth Generation, Inc. (both federal cases in California) as well as Pye v. Fifth Generation, Inc. (a federal case in Florida) and Terlesky v. Fifth Generation, Inc. (a federal case in Ohio), which have all survived motions by Tito’s to cut the cases short.

Singleton is more akin to the two California cases, as the judges in all three refused to apply the safe harbor and held that the term “handmade” is not puffery, and therefore actionable. The judges in Pye and Terlesky, on the other hand, both applied the safe harbor, but held that consumers did state a valid claim for breach of warranty based on Tito’s statement that its vodka is “crafted in an old-fashioned pot still.” Judge Sannes, however, dismissed the breach of warranty claims in Singleton.

 With at least ten distinct cases brought by classes of consumers against Tito’s over the past year and a half, it can be difficult to keep track of how each side is faring. What is clear is that Tito’s has won two cases—Aliano v. Fifth Generation, Inc. in Illinois, and Wilson v. Fifth Generation, Inc. in Alabama—as both cases have been dismissed and the time to appeal has expired. It also seems relatively safe to say that Tito’s has the high ground in Pye and Terlesky, as the false labeling claims have been dismissed, and only the breach of warranty claims remain. What is less clear, however, is how Tito’s will fare in Singleton, Cabrera, and Hofmann, all of which are all moving forward on the plaintiffs’ mightiest claim—that they were deceived by Tito’s use of the term “handmade.”

Because Singleton survived (in part) Tito’s motion to dismiss, Tito’s will have to answer the consumer-plaintiffs’ claims. Tito’s will, however, have another chance to dismantle the plaintiffs’ case before it goes to trial, by filing a motion for summary judgment. Tito’s tried this in both Cabrera and Hofmann, but was unsuccessful. As for the three other cases against Tito’s (not listed here), the relevant courts have yet to rule on Tito’s motions to dismiss.

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Tito’s Scorecard

scoreI don’t mean to keep harping on the Tito’s Vodka cases — but there sure are a lot of them — and they are important. Because there are so many, it is not easy to keep track of how it’s going, hence this handy Scorecard. Most of the cases are slowly grinding along, with no clear winner or loser (as shown with the ⇔ symbol). At one extreme, the Aliano case went especially well for Tito (⇑). At the other extreme is the Hofmann case (⇓). In late November Judge Miller allowed Hofmann, the first-filed case, to go forward, past the defendant’s motion for summary judgment. It got even worse, five days later, when the court gave the plaintiffs permission to go into the plant and see exactly how Tito’s Vodka is made, despite the company’s strong objections.


 

Plaintiff (State)Status (Filed Date)Notes
Aliano (IL)Closed. Dismissed 9/24/2015. (11/7/2014)⇑⇑ Big win for Tito.
Cabrera (CA)Open. On 11/20/2015 Judge Miller denied Tito's motion for summary judgment. (12/22/2014)⇓ This case is not going well for the defendant.
ConsolidationClosed. The Hofmann lawyers withdrew their motion to consolidate the cases listed on this table on 5/15/2015. (4/6/2015)
Emanuello (MA)Open. (4/3/2015)
Grayson (NV)Open. (1/26/2015)
Hofmann (CA)Open. On 11/20/2015 Judge Miller denied Tito's motion for summary judgment , and on 11/25/2015 the court ok'd a site visit. (9/15/2014)⇓⇓ This case is not going well for the defendant.
McBrearty (NJ)Open. (10/24/2014)
Pye (FL)Open. On 9/23/2015 the federal court dismissed the statutory deception-type claims but let stand the warranty-type claims. (9/25/2014)
Singleton (NY)Open. (4/7/2015)
Terlesky (OH)Open. 11/17/2015 the court dismissed the statutory deception-type claims but let stand the warranty-type claims. (6/4/2015)
Wilson (AL)Closed. Dismissed 9/30/2015. (8/4/2015)⇑ Win for Tito.

 

We reached out to Tito and his lead lawyer to make sure we are not missing anything important, and to ask a few questions, as follows. From early on, Tito said he knew it was going to be a long haul.

How’s it going? Business has continued to be good. The lawsuits have been a distraction. But our consumer base is growing, and they have been extremely loyal. They appreciate Tito’s Handmade Vodka for what it is:  a premium quality vodka at a price they can afford. That’s what we set out to make, and the fact that our fans appreciate it makes it all worthwhile.

Do you still think you are going to win? Yes, we do believe we will win. So far, the cases that have been decided on the merits have gone our way. The others are still in the early stages.

Anything you want to say and can say that has not already been in the media? As the courts get more into the issues, they are starting to understand that the regulatory process we have to go through to get label approval means something. And when the federal government issues an approval for our labels, it means they have found them to be in compliance and not misleading to consumers. Everyone in the industry should be able to rely on their approved labels to do business.

Why not just settle or compromise? Settling cases like these simply invites more people to bring more cases. Some principles are worth fighting for.

Biggest surprises about our legal system, so far? Things move slowly in the court system. And in the early stages, people can make a lot of baseless accusations and get the benefit of the doubt for a long time, with no real skin in the game and no downside when those accusations are disproven.

How if at all have the cases affected sales? I haven’t had anyone tell me they won’t buy the product because we’ve been sued. To the contrary, I’ve had people tell me that this means I’ve arrived. All I know is we keep doing the same thing we’ve been doing for years; we just do more of it.

What else? On the Florida case … continued here.

With so many cases pending, and so much at stake, it won’t be long until this scorecard needs a major update.

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Safe Harbor Defense Works, Once In a Blue Moon

Last week, a federal judge in California tentatively dismissed a class action suit against MillerCoors. Yesterday, the judge made that dismissal final.

bmooThe 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.

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Blue Moon Takes Refuge in Safe Harbor. Will Tito’s Be Able to Dock Alongside?

b22A 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.

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For Jim Beam, Puff is Enough, and No Safe Harbor is Required

beam

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.”

beam2In 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.

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