Posts Tagged ‘origin’
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.
Another lawsuit. On Tuesday, a Massachusetts consumer filed suit against Guinness, alleging deceptive labeling and marketing. This is yet another in the long series of nationwide class action lawsuits stalking the alcohol beverage industry in the past 15 months, since the initial Tito’s suits. The case is O’Hara v. Diageo-Guinness, filed in federal court. Just four days earlier, a New York City man filed suit against Foster’s Beer similarly.
The Guinness complaint says the company “represents that all Extra Stout sold in the North America is brewed in Ireland at the historic St. James’s Gate Brewery in Dublin.”
This, however, would seem to be an extra stout assertion, because new lawyer Frank and I walked over to a beer store today. The store had Guinness in various sizes and shapes, but all of the packaging seemed to show the origin clearly. Most clearly said brewed in Ireland; some (such as above) clearly said BREWED IN CANADA. We did not see any packages that made the origin hard to divine. Things may be different up in Massachusetts but nonetheless, this would seem to drastically limit the size of any class and any damages. With all the Guinness on display at the local store, clearly showing product of Ireland, and labels like this, we don’t see how the plaintiff could possibly be right in asserting “Extra Stout is not manufactured, brewed, bottled and/or imported from Ireland.” Does anyone else see a conflict between the photo above and this?: “Extra Stout’s outer packaging does not mention, reference and/or indicate that Extra Stout is manufactured, brewed, bottled and/or imported from Canada. … Extra Stout’s label only contains one small print disclosure on the back label of the bottle acknowledging that Extra Stout is actually brewed and bottled in New Brunswick, Canada.”
The plaintiff fares better when challenging the second of these assertions, from the Guinness website (click to enlarge):
Even if the second FAQ is wrong, it looks to be simply a mistake. It would be tough to avoid any such mistake in view of the other FAQ, showing that the product is made in almost 50 countries and needs to comply with the laws of “well over 100.” It looks like the plaintiffs are in for some tough sledding.
There are something like 25 pending lawsuits, about whether various alcohol beverage labels are misleading.
Right there, that should tell you there is not much safe harbor, even though every one of those labels was federally approved, pre-market. Most of the labels were approved many times over many years.
Of course, the first refuge of every defendant is to argue that heavens no, the label can’t possibly be misleading, because the mighty TTB examined and approved it, after all.
The very recent Beck’s settlement should put this trite notion to rest. Over and over TTB said yeah the Beck’s label is fine, even though it has a bunch of references to Germany and the brand’s history, and even though the beer has been made in the U.S. for many years now. The court approved the settlement on October 20, 2015.
In my opinion, the harbor should not be any safer than the review is rigorous. To the extent TTB carefully focused on the specific issue in controversy, and ruled on it, according to rigorous standards, that would be a different story. But, by contrast, a quick review and a shot from the hip should not a safe harbor make. I don’t mean to be too critical of TTB or A-B. The same parties can also provide a good example of the very opposite phenomenon, where the review is more probing, and the harbor stood up as safe. The Lime-A-Rita case shows this other side of the coin. In the Lime-A-Rita case, the plaintiffs said the label is deceptive because it refers to (Bud) Light, when in fact the product is loaded with sweeteners and is no paragon of lightness. But A-B beat back this challenge, and rightly so, because in this instance TTB did have good, solid, narrow, relevant, rigorous standards, duly applied by TTB and duly complied with by A-B, and so eureka the many TTB approvals did in fact provide a warm and cozy safe harbor.
TTB has narrow, careful rules around many terms such as “straight,” “estate bottled,” chardonnay, Napa Valley, “Late Harvest.” Thus, these are the types of terms that should provide a safe harbor (when properly used and approved, according to the same rules). But, by contrast, TTB nor anyone else has good, solid, rigorous rules around terms such as craft, handmade, handcrafted, small batch, reserve, etc. — and so it is much less clear that a safe harbor should apply. It is true that the terms could be puff, in the absence of such rules, but who ever said it is either black or white, puff or not, all or nothing? Surely there are some terms somewhere in the middle, neither pure opinion nor hard fact. I do agree that many label terms do gravitate toward one pole or the other, and I do agree that such terms should be protected, as either puff or within a safe harbor. But we still need a good plan for the terms somewhere in the middle. Maybe TTB should develop and apply some rigorous rules on such. Or maybe the companies that want to use them should explain what they mean by them, to put them in a comprehensible context.
One more example should make the point. Templeton Rye, like Beck’s, Bass, Kirin and many others, also of course had TTB-approved labels. This did not stop the lawsuits or provide any safe harbor. If there were a safe harbor to be found, anywhere near these controversies, the defense lawyers certainly would have found it.
The Beck’s case underscores one other quandary. It is hard for me to understand how it can be a good, long-term business plan, to take the Beck’s brand, known for being German if nothing else, and blur the life out of it by making it elsewhere. The penalty within the lawsuit is something like $28 million, but the obliteration of the Beck’s identity seems far more expensive in the long term. A-B paid a couple billion dollars for the brand in 2012. I can only assume it is short-term, quarter-to-quarter, propping up the numbers, Wall Street thinking, designed to enrich the near-term stakeholders, at the expense of those who arrive at the punch bowl later.
This morning I awakened to find yet another lawsuit about sketchy alcohol beverage labels. It sounds like Red Stripe is being sued for being a fake Jamaican, like the guy depicted off to the right. I am going to see if my colleagues John and Frank are around to liveblog this with me, this Friday morning.
John: is the above label roughly representative?
Not really. This one is more representative because it shows Red Stripe made in Pennsylvania, instead of the above label showing a beer made in Great Britain. Most of the recent label approvals show made in the U.S. (not Jamaica or Great Britain).
My initial view of the label is, this lawsuit may be one of the worst yet. The label seems to do an excellent job of saying, front, center, not small, not low contrast, that the product is JAMAICAN STYLE (not necessarily “Jamaican”). In point of fact, JAMAICAN STYLE tends to imply it’s not Jamaican at all, at least in Battle Martin-land (he approved this label for TTB and famously maintained that, e.g., a “Spokane Style Beer” could not be made in Spokane). The label also mentions Product of Great Britain (or BREWED & BOTTLED BY RED STRIPE BEER COMPANY, LATROBE, PA), to fairly well disabuse any false notions.
The web page (as of 9:50 am ET today, at left) does not look confusing, either (at least the first page).
Mike (former bartender to the nearly rich, famous and cool): as of last week, where did/do you think Red Stripe is made (or, what Jamaican beers do you like)?
When I worked at a college bar in Fairfax, Red Stripe was very popular. All day, they would come in and ask for “the Jamaican one.” We sold a ton of Red Stripe.
The class action lawsuit against Diageo, filed in federal court in San Diego, preposterously claims:
This is a class action on behalf of consumers of Red Stripe® beer who have been deceived that Red Stripe, a historically Jamaican beer, is manufactured in and imported from Jamaica to the United States. Defendants have committed unfair and deceptive practices and have been unjustly enriched by marketing and selling beer in a way that misleads consumers into believing that Red Stripe is still imported from Jamaica. In particular, Red Stripe’s packaging claims that it is a “Jamaican Style Lager,” that contains “The Taste of Jamaica,” and the packaging contains the distinctive logo of Desnoes and Geddes Limited (“D&G”), a Jamaican brewery. In addition, on Red Stripe bottles, Defendants write that “For Over 80 years… Red Stripe® has embodied the spirit, rhythm and pulse of Jamaica and its people.” Further, Red Stripe is sold at substantially higher prices than those of domestic beer, despite the fact that the beer is brewed in the United States with domestic ingredients.
I wonder if anyone, or anyone other than the guy at upper right, is truly deceived or truly deceiving anyone.
Tito’s vodka was doing great for the past 15 years, then hit a gigantic speedbump this week in the form of a class action lawsuit.
Tito’s therefore provides a good example of when an approval is not really an approval. Tito Beveridge has more than 30 TTB label approvals for his vodka from 1997 to 2013 (as in the above image, from LabelVision). They may not do him much good in this lawsuit, even though, in years past, most would assume the federal approval would be dispositive. It’s a good thing most TTB approvals are not paper anymore because these would “not be worth the paper they are printed on.”
Summary: in Hofmann v. Fifth Dimension, Inc., Gary Hofmann (a consumer) sued Tito’s vodka on behalf of all Tito’s customers in California, claiming that the company misleads people about whether the product is “handmade.” The lawsuit was filed September 15, 2014 in San Diego county court. The federal government reviewed and approved the Tito’s labels, but has no definition for the term at issue.
The classic case of an approval that is not really an approval would be your garden variety Napa Valley Chardonnay, Vintage 2010. TTB will take almost every one of those italicized words at face value. To the extent any one of those words is not true, your approval is not going to help you too much, in the event of an inquiry. Like an IRS tax return, the COLA (and any formula approval) is, to a surprisingly large degree, something of an honor system, stapled together with the penalty of perjury on every such document.
9/16/2014: Judge Eddie C. Sturgeon is assigned to handle the case.
9/23/2014: Tito’s apparently put out a press release, sketching out a defense. I sure hope they have more. They took a jab at the plaintiff for botching the defendant’s proper name, Fifth Generation, Inc. Shanken points out that the brand is at 1.3 million cases per year (that’s a lot of hands!). Tito says “he will vigorously contest the lawsuit.” Tito largely hangs his hat on the fact that TTB approved the labels.
9/25/2014: the plaintiff amended the defendant’s name, from Fifth Dimension, Inc. to Fifth Generation, Inc. In so doing the plaintiff declared being ignorant of the company’s true name, when filing the complaint on 9/15/2024. This is odd because the plaintiff used the correct name on the Affidavit of Venue filed the same day. Plaintiff did a good job covering this point, though, in the original complaint, by saying: “Plaintiff is ignorant of the true names and capacities of the defendants sued herein as DOES 1-100, inclusive; therefore, Plaintiff sues these defendants by such fictitious names. … Plaintiff will amend the complaint to allege their true names and capacities when ascertained.”
9/30/2014: things just got much more serious for Tito, as the case ballooned into a nationwide class action suit. The amended complaint states: “This is a nationwide class action case brought on behalf of all purchasers of vodka (“Vodka”) manufactured, distributed, marketed, and/or sold by FIFTH GENERATION, INC. dba Tito’s Handmade Vodka (hereinafter “TITO’S”).” Also boding ill, the original and amended complaints refer to Sidley Austin (suggesting that the small San Diego firm on the plaintiff side, may be working with a much bigger firm.) The same small law firm, in San Diego, just recently won hundreds of thousands of dollars in another labeling suit as described here in The Wall Street Journal.
10/3/2014: a copycat lawsuit filed in Florida on 10/25/2014, in federal court this time, under Florida law.
10/14/2014: and now another lawsuit, this time in Illinois.
10/21/2014: finally I was able to find a copy of Tito’s response. I looked around but was not able to find the press release earlier.
10/27/2014: Tito has a full-throated defense of his vodka today. I think he is saying it is in fact substantially made in a pot still in Austin. In Wine & Spirits Daily he says, “I, Tito Beveridge, believe the pot still distillation process, like that of single malt scotches and French cognacs, is the cornerstone of craft spirits production, period.” There are lots of other words in Tito’s statement but I can’t find much in it to suggest the degree or extent of this much-vaunted pot-/hand-/craft-production. Is it a fig-leaf kind of thing, or the main way the product is made? I see lots of other jazz about foreign companies, etc. but precious little new information about how this product is made, or anything important that makes it any more “handmade” than the next 500 vodkas.
11/10/2014: another lawsuit, this time New Jersey.
The Forbes article explains: “Tito’s has exploded from a 16-gallon pot still in 1997 to a 26-acre operation that produced 850,000 cases last year, up 46% from 2011, pulling in an estimated $85 million in revenue.” The article strongly suggests Tito is about to be a victim of his own success. You can say this post is a prime example of a lawyer taking something clear, like an affirmative, direct approval, and blurring it up to say it’s not really an approval. That would not change the messy, complicated reality, that TTB is not the only sheriff in town. We have a “system” and though it may be cumbersome, it actually does work pretty well. TTB approves Palcohol. Fine. That’s only one level. Then the private sector jumps in (i.e., us). This triggers the states, legislators, media, trade associations, on and on, to take action. TTB can’t and probably does not need to “do it all.” Customs jumps in on imports, states jump in on Santa and bitch issues, and now there is a clear right of private action in all such disputes. The floodgates are well open. A few weeks ago, in light of the Pom v. Coke decision, we predicted a flood of lawsuits around label claims. Some said “the sky is not falling.” Well, the water is starting to rise pretty high. Tito is up to his waist. Templeton is up to its knees. Bass and Becks are up to their ankles. All from private action with no trace of governmental intervention. Skinny Girl got dunked a few years back and we will need to go back and look to see how much water she swallowed.
This is a class action case brought on behalf of all purchasers of all vodka (“Vodka”) manufactured, distributed, marketed, and/or sold by FIFTH DIMENSION, INC. dba Tito’s Handmade Vodka (hereinafter “TITO’S”). Through a fraudulent, unlawful, deceptive and unfair course of conduct, TITO’S, and DOES 1 through 100 (collectively “Defendants”), manufactured, marketed, and/or sold their “TITO’S HANDMADE” Vodka to the California general public with the false representation that the Vodka was “handmade” when, in actuality, the Vodka is made via a highly-mechanized process that is devoid of human hands. There is simply nothing “handmade” about the Vodka, under any definition of the term,1 because the Vodka is: (1) made from commercially manufactured “neutral grain spirit” (“NGS”) that is trucked and pumped into TITO’s industrial facility; (2) distilled in a large industrial complex with modern, technologically advanced stills; and (3) produced and bottled in extremely large quantities (i.e., it is “mass produced”).
The plaintiffs are asking for all the money, plus attorney fees, punitive damages, interest, costs, and taxes: “all monies acquired by means of Defendants’ unfair competition.”
Right about now, every beer, wine and spirits company should be re-examining their labels, new and old, approved and prospective, and making sure every part is on firm ground. If you lack TTB approval it may hurt you a lot, but if you have it, it may not be sufficient to save you.
* A small disclaimer is, I have no idea about the underlying facts here. I am evaluating this from my couch, based on TTB approvals, public records, the plaintiff’s allegations, and the press. We look forward to presenting Tito’s side of the story, when it comes out.