Posts Tagged ‘policy’

Judge Miller Not Too Impressed With TTB System or Tito Approvals


There is big news out of a federal court in San Diego. On Friday, the judge in two of the Tito’s labeling cases said it, loud and clear. Words matter — on labels. This is important because it was starting to get very confusing, what with all the label cases floating around, and many dismissals. There are at least eight separate Tito’s cases scattered around the country, and a couple dozen alcohol beverage litigations pending in recent months. Along the way, Judge Miller made it clear he is not too impressed with the rigor of TTB’s label review system, or the fact that the Tito’s “Handmade” Vodka labels have been approved on many occasions.

On Friday, November 20, 2015, in the U.S. District Court for the Southern District of California, Judge Jeffrey Miller issued two very similar Orders in two separate cases against Tito’s Vodka. The cases are:
   – Hofmann v. Fifth Generation
   – Cabrera v. Fifth Generation

In hindsight, Judge Miller’s November 20th Orders seem obvious. If the claim meant little to nothing, why would Tito spend zillions of dollars to make sure everyone knows his vodka is “handmade”? Why else would it be the main word on the main label, and throughout his marketing? Why else would it work so well, to shoot this brand to the top of a tall and slippery pole? In recent months Tito has argued that the term is mere puff. But I can’t think of any puff term that has a prayer of moving the bottles as well as a term, such as the one at issue, with a little more grit and traction. I don’t see the terms “premium,” “finest,” “smooth,”  or any other agreed-upon puff terms getting anyone far, as compared to a term that is much more likely to actually mean something.

tIn a 17 page Order, Judge Miller denied Tito’s motion for summary judgment in Hofmann v. Fifth Generation, the first of many such cases. The Judge did likewise in a 14 page Order, in the Cabrera case. This means both cases have much greater odds of ending up at trial someday, even though most such cases are settled well before that. This also means the odds are much higher, that a judge or jury might actually tell us, someday in our lifetimes, what this inscrutable term actually means, and whether Tito’s is made thusly. Without having a strong opinion on whether Tito should win or lose, I do have a strong opinion that it is a huge copout to say, the term is simply too hard to define, or, as so many people on the internet like to say about it, “who cares.” For better or worse, my job is more or less about what words do, don’t, should, or shouldn’t mean, hence my deep interest in this case. A term like “bourbon” or “straight” means a lot, and that is good.

The Orders tend to say that TTB approval of the label and term at issue are determinative only to the extent TTB conducted a rigorous review. It is hard to say TTB’s review is other than non-rigorous, inasmuch as TTB quite clearly said they don’t even have any standards or rules around such a term. The plaintiffs argued, and the Judge agreed (in the Hofmann and Cabrera Orders), that “a federal regulator’s actions create a safe harbor only … where the agency’s actions ‘were the result of a formal, deliberative process akin to notice and comment rulemaking or an adjudicative enforcement action,’ and are therefore sufficiently formal to merit Chevron deference.” I have been interacting with TTB’s label review system on a daily basis for more than 25 years now. It would be preposterous to claim that the system has been anything close to formal, deliberative, or similar to an adjudication. Most of the time, no lawyers or neutrals are involved. Most of the time there is no evidence, and there are no evidentiary rules. Many times the system has all the rigor of a bouncer, at the trendiest nightclub, deciding whether you are cool enough to enter the club. Far less often, the system involves knowledgeable people, on opposing sides of an issue, with a plausibly neutral decisionmaker.

It is quite easy to illustrate this. Take a competing vodka; let’s call it Pedro’s. Pretend Pedro’s Vodka is demonstrably distilled in a humongous vodka plant, outside Texas, and shipped to Dallas in railroad tankers. Pedro adds water, bottles it, and declares it to be “Texas Made.” It is entirely plausible that this claim would be entirely false, by most measures. It is also entirely plausible that TTB would approve it, over and over. First, TTB would tend to take the assertion at face value, because the system is an honor system, to a large extent, duct-taped together with a penalty of perjury. Second, TTB probably does not have clear, rigorous standards, about where is the dividing line between “Texas Made” and not. Instead, TTB has the far less rigorous misleading or not standard; this is so largely subjective as to be not much of a standard at all. Third, it is possible that the agency would approve the label and claim, with no experts involved, no evidence, no adversarial system, no site visit, and less than a few minutes of review. Even if Pedro has a great lawyer, you should be very skeptical if he tries to tell you that the system is so rigorous and deliberative that the output should be put on a pedestal, treated as sacrosanct, or creates a safe harbor. That would be nuts, especially in view of the fact that TTB makes a lot of mistakes, and does not even deny it. TTB confirmed it here, in the Palcohol case. TTB did or should have admitted it here, in the “potato whiskey” case. Even TTB does not assign much precedential weight to prior approvals. We know there are lots of mistakes just as much as we know the system is made up of people, and complicated rules and fact situations. TTB has the arduous task of “adjudicating” several hundred thousand labels per year and these labels are replete with invitations to make mistakes large and small. I don’t mean this as a criticism of TTB or human nature; I have no doubt that I too would make lots of mistakes if ever forced to review tens of thousands of labels per year.

Plaintiff Hofmann does a good job seizing upon this issue, by comparing the TTB situation to that of a sister agency, as litigated in the Mead case. Mead relates to tariff classification rulings by the U.S. Customs Service. In 2001 the Supreme Court said these rulings should trigger less deference because they lack formality. Quoting Mead, Judge Miller said “'[a]ny suggestion that rulings intended to have the force of law are being churned out at a rate of 10,000 a year … is simply self-refuting,’ Plaintiff argues that the sheer number of TTB rulings undermine its position that its rulings are entitled to Chevron deference.” The TTB system is so low on deliberation that even Tito’s excellent lawyers can’t rehabilitate it. Grasping at straws, the defendant asserts that yes indeed the TTB system is mightily deliberative and even more so than for example an FDA letter. Judge Miller importantly asserted (in both Orders):

The COLA procedures remain less formal than those required “of a formal, deliberative process akin to notice and comment rulemaking or an adjudicative enforcement action.” … In sum, TTB’s action related to its examination and approval of the term “Handmade” on Tito’s label, including the COLA it issued, is insufficient to trigger the safe harbor doctrine at this juncture in the case.

Judge Miller could not detect sufficient review or rigor around the term at issue and said (again, in both Orders) this “raises a genuine issue as to whether TTB  [really, after all] determined ‘Handmade’ not to be misleading.” Allowing these important cases to move forward, the Judge closed by saying “Fifth Generation’s motion for summary judgment on the safe harbor issue is denied, and its motion for summary judgment on the negligent misrepresentation claim is stricken without prejudice.” Stay tuned.


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alcohol beverages generally, vodka

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Kombucha Law Webinar

Last week I had the honor of participating in AHPA‘s webinar on kombucha law. Part of the recording is above and here. The American Herbal Products Association has been active since 1982, and now has more than 300 food, beverage and supplement members. It was an honor because of the eminence of my co-presenters:

  1. Justin Prochnow, FDA lawyer at Greenberg Traurig, Denver
  2. Will Garvin, FDA lawyer at Buchanan Ingersoll, Washington
  3. Peter Evich, Lobbyist, Van Scoyoc Associates, Washington
  4. Art Libertucci, Consultant, The Buckles Group, Washington

Justin spoke on bottle bills issues. Will covered FDA labeling. Peter covered pending legislative issues. Art helped organize the webinar. I spoke on the various TTB issues raised by kombucha.

It was also an honor because the issues are so timely and challenging. Kombucha is surging in popularity. It raises difficult issues such as:

  1. is it beer, wine, cereal beverage, malt beverage, food, supplement, or some combination
  2. what TTB permits may be needed
  3. does it need FDA or TTB labeling, or both
  4. what taxes apply
  5. what penalties may apply, if you blow it

The entire video is about 2 hours, but I have chopped it down to the 30 minutes or so that covers the TTB issues (1-5 as listed above). The entirety, with about 20 minutes of questions and answers, is available from AHPA as here.



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Cannabis Labeling


Is it just a matter of time before TTB is scutinizing cannabis labels — for sneaky references to — wine?

I hope so. That would be great.

This article about cannabis beer got me to thinking about all manner of cannabinoid-related issues.

Did TTB approve the label yet? Not that I can see. I don’t find any Indica label approved for this Colorado brewery so far. But I do find this Dank label, which is pretty close. The label mentions a run-in with “the man” and pounds of resinous west coast Cannabacae. Dad and Dudes (the brewer) did a wonderful job of securing some trademark rights in this important term (DANK) sure to be much and more in demand in the future. But the label oddly implies that the company has a trademark registration on the term DANK in and of itself, when it does not appear that anyone does. I wonder if D&D’s registration will be sufficient, someday, to block pot purveyors from using the term DANK as part of their branding, and if pot will be considered highly-related to beer/wine/spirits.

Thanks to LabelVision, it’s quite easy to see that TTB has allowed only two “cannabis” labels so far:  vodka with cannabis sativa, and Cabernet Franc with notes of cannabis (“pairs well with baked food or an after dinner smoke”).

There are quite a few Indica labels (not including the one in the drinks business article). There are plenty of pot labels wafting around already, and it seems clear there are many more on the way, in one form or another.


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alcohol beverages generally, marijuana

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Here we are, checking in a year later, after this post on GMO labeling. TTB still does not allow GMO labeling of the sort depicted above. This sort of labeling seems to be sweeping across the grocery store, but not in the alcohol beverage aisle. We have at least two bases for saying this. First of all, there is this recent Needs Correction (NC) notice. It says the GMO talk is misleading, therapeutic and not acceptable.

Second, we checked through LabelVision and see essentially no GMO-related labels. It is pretty amazing that few if any seem to have slipped through, even though this list tends to say quite a few alcohol beverage products meet the Non-GMO Profect standards.

This NC notice is good because it also happens to cover a few other issues. It reminds us that grape varietal terms should not be used on flavored wine products. It also reminds us that if you have something like a margarita-flavored wine product, it may be necessary to clearly mention that it’s a “wine cocktail.”


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alcohol beverages generally

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Gluten-Free Labeling


Sorry to disappoint anyone, but that’s not Attorney John Messinger over to the left. But it is John, over to the right, covering Gluten-Free Labeling for Beer, Wine and Spirits, in a recent issue of Beverage Master Magazine.

The full article is here. The first few paragraphs are here:

Gluten-free foods and beverages were one of the popular trends of 2014. In the past year, over 70 new alcohol beverage label approvals mentioned “gluten-free,” which is more than the combined total of gluten-free labels in 2012 and 2013. Breweries, wineries and distilleries who wish to cater to the gluten-free diet market and provide those with celiac disease additional choices can do so, but there are a fair amount of rules and red tape to wade through. This article breaks down the federal requirements for gluten-free labeling.


The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) regulates the labeling and advertising for the majority alcohol beverages. In May 2012, TTB issued an interim policy on gluten content statements in the labeling and advertising of beer, wine and distilled spirits, which allowed some products to make gluten-free claims (TTB Ruling 2012-2). This policy was issued pending guidance or rulemaking by the Food and Drug Administration (“FDA”) on the subject of gluten-free claims. In August 2013, FDA issued a final rule to establish a regulatory definition of gluten-free (21 CFR 101.91). TTB revised their policy on gluten-free labeling and advertising in February 2014 to be consistent with (but not identical to) FDA’s final rule (TTB Ruling 2014-2).

What Qualifies as Gluten-Free?

TTB’s current policy does not allow alcohol beverage products to be labeled and advertised as gluten-free if they are made from or contain:

  1. “Gluten-containing grains,” meaning wheat, rye, barley or crossbred hybrids (e.g. triticale);
  2. Ingredients made from gluten-containing grains, if those ingredients have not been processed to reduce the gluten content of the ingredient to a level below 20 parts per million (ppm).

In general, wines fermented from fruit and certain distilled spirits that are produced from specific non-grain commodities (e.g. rum, tequila, vodka distilled from cherries) can be labeled or advertised as gluten-free without substantial difficulty.

John is a beer and beverage lawyer in the Washington, DC area. Read on, here.



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alcohol beverages generally

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