Posts Tagged ‘craft’
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.
At long last, MillerCoors filed its response, in the Blue Moon case, on July 13. The company makes some good arguments, and to my ear, these seem best:
MillerCoors is expressly authorized by state and federal law to use the Blue Moon Brewing Company trade name.
The safe harbor doctrine applies where either state or federal law has blessed the conduct at issue. (Here, MC nemesis, A-B, did the former a huge favor in the form of winning the Lime-A-Rita case just in time.) The company is careful to point out that the laws and regulations, not necessarily the label approvals, create the safe harbor.
- Should a court find liability under these circumstances, where a registered trade name is used instead of the parent company name, it would dramatically change the way that many corporations operate, effectively standing corporate America on its head. Trade names are used in many industries, and many brands have surprising corporate relationships. Just to name a few: Jiffy Lube is owned by Shell Oil Company, Haagen-Dazs is owned by Nestle in the U.S., Taco Bell and Kentucky Fried Chicken are owned by Yum! Corporation and Ben & Jerry’s ice cream is owned by Unilever.
The company’s trade name and trademark registrations put Plaintiff on notice of its ownership and use of Blue Moon Brewing Company.
There is no definition of “craft beer,” much less a legal one. Plaintiff relies on ever changing guidelines promulgated by the Brewers’ Association (“BA”), a trade group that has zero rulemaking authority, which defines an “American Craft Brewer,” but not the term “craft beer.” A trade association’s arbitrary definition of “craft brewer” does not give the trade association the power to abscond or control the use of the word “craft” or “crafted” by all beer industry participants.
The case goes on from here. In related news, at the time of my first post related to this brand and controversy, I was able to see and comment upon the plaintiff’s side only. Above, I am happy to have a chance to show the other side. Outside the court papers, the company’s response has been:
MillerCoors is tremendously proud of Blue Moon and has always embraced our ownership and support of this wonderful brand. The class action filed against MillerCoors in California is without merit and contradicted by Blue Moon Brewing Company’s 20-year history of brewing creative beers of the highest quality. There are countless definitions of “craft,” none of which are legal definitions. We choose to judge beer by the quality, skill and passion that goes into brewing it. Back in 1995, Keith Villa, Blue Moon’s founder and head brewmaster had to work extremely hard to convince people to try his cloudy, Belgian-style beer. Today, MillerCoors is proud that Blue Moon has invited millions of drinkers to try something new, while helping pave the way for the current explosion of creativity in the brewing community.
If anyone wants to send funds I will consider setting up the Evan Parent Sympathy Society, to make reparations for the grave injustices he has encountered. It is not easy to be a beer aficionado. On a slightly more serious note, I propose that the company should seek to settle this suit by inviting the beer aficionado to spend a week at their brewery, brew it his way, up to 1,000 gallons, and see who wants to drink it.
Whoa! The first of the “handmade” cases wrapped up within the past week. On May 1, 2015 the U.S. District Court in Tallahassee dismissed the class action lawsuit against Maker’s Mark “with prejudice.” The now-defunct case alleged that Beam Suntory was bs’ing about whether the bourbon was “handmade.” The court seems to be saying “handmade” is a puff term, like “delicious.”
The term at issue has been amorphous, over the centuries, and Judge Hinkle seems to have dumped that burden on the plaintiffs:
the plaintiffs have been unable to articulate a consistent, plausible explanation of what they understood ‘handmade’ to mean in this context. This is understandable; nobody could believe a bourbon marketed this widely at this volume is made entirely or predominantly by hand. This order grants the defendant’s motion to dismiss for failure to state a claim on which relief can be granted.
The Judge makes a good point, saying:
But the term ‘handmade’ is no longer used in that sense. The same dictionary now gives a circular definition: ‘handmade’ means ‘[m]ade by hand.’ Id. But the term obviously cannot be used literally to describe bourbon. One can knit a sweater by hand, but one cannot make bourbon by hand. Or at least, one cannot make bourbon by hand at the volume required for a nationally marketed brand like Maker’s Mark. No reasonable consumer could believe otherwise.
In sum, no reasonable person would understand “handmade” in this context to mean literally made by hand. No reasonable person would understand “handmade” in this context to mean substantial equipment was not used. If “handmade” means only made from scratch, or in small units, or in a carefully monitored process, then the plaintiffs have alleged no facts plausibly suggesting the statement is untrue. If “handmade” is understood to mean something else—some ill-defined effort to glom onto a trend toward products like craft beer—the statement is the kind of puffery that cannot support claims of this kind.
Another Maker’s Mark case is still pending, but darned if Judge Hinkle does not shoot a hole through its heart. The result here is refreshing in that I have rarely seen an important court case move so quickly. I suspect most observers expected this to grind on longer than it takes to make the very best Bourbon.