In the last few years, there has been an influx of false advertising and labeling claims targeting food and beverage producers, principally though consumer class actions. The lawsuits seem to be an outgrowth of consumers’ growing interest in foods and beverages that are artisanal and locally grown or made.  The beverage alcohol industry has not been spared from these suits, seemingly bearing a disproportionate load of claims including those alleging false “country of origin”, and those alleging misleading statements pertaining to methods of manufacturing.  Fortunately for the industry, courts have recently shown a willingness to dispose of these cases early in the lawsuit, principally by way of motion to dismiss for failure to state a claim.

Late last year, the Southern District of California dismissed a case brought against the makers of Red Stripe beer for using an allegedly misleading label regarding the beer’s purported country of origin.  The allegations focused on labeling statements such as “The Taste of Jamaica” and further suggestions in advertising that the beer was a “Jamaican Style Lager.”  While long produced in Jamaica, production of Red Stripe beer moved to the United States in 2012.

In its order dismissing the case, the court, using a “rational consumer” test, determined “no reasonable consumer would be misled into thinking that Red Stripe [was actually] made in Jamaica with Jamaican ingredients based on the wording of the packaging and labeling.”  Red Stripe’s labels were compared to that of a “Swiss Army Knife” where “Swiss” modifies “Army” as “Jamaican” modifies “Style” rather than suggesting the true country of origin for the finished product.  The court also noted that even if consumers believe it was once brewed in Jamaica, no legal authority places a duty on its maker and distributors to refute any pre-conceived notions consumers may have as to the product’s country of origin. Red Stripe’s label clearly states, consistent with TTB regulations, that the beer is brewed and bottled in Latrobe, Pennsylvania.

Beverage alcohol products touted as “craft” have also faced a number of suits over the past few years.  Perhaps most notable was the matter involving MillerCoors’ Belgian witbier Blue Moon.  A class action was instituted in California contending that use of the term “Artfully Crafted” was misleading to consumers as it connoted the beer was a craft beer where in reality the product was brewed in MillerCoors’ Golden Colorado mega-brewery.  The complaint also alleged that Blue Moon was sold at a premium price, that MillerCoors directs retailers to place Blue Moon alongside other craft beers, and that it instructed retailers to refer to Blue Moon as a “craft beer.”  The case was dismissed with the court concluding that a premium price does not amount to a representation about the product and MillerCoors was not responsible for any misrepresentations by retailers when it does not have “unbridled control” over them.

The complaint against Blue Moon cited to the definition of a “craft beer” proposed by the Brewers Association guidelines, which provides that entities making “craft beers” produce less than 6 million barrels annually, are less than 25% owned or controlled by a non-craft brewer, and make beer using only “traditional or innovative brewing ingredients.”  The Brewers Association, however, admits that its definition of “craft beer” has no legal force.  The court generally ignored this putative definition in dismissing the class claims.

The phrases “handmade” and “handcrafted” have also been the subject of much class action litigation in the United States.  Several suits have been dismissed against Maker’s Mark, a whiskey-making subsidiary of Beam Suntory.  Using the same “rational consumer” test noted above, the judge in Salters v. Beam Suntory found that “no reasonable person would understand ‘handmade’ in this context to mean literally by hand” and that no national consumer would believe that whiskey was made without substantial equipment.

Similar claims were made in no less than five suits brought against the makers of Tito’s Handmade Vodka.  In general, the various class plaintiffs claimed that “handmade” had to mean “made by hand, not by machine, and typically, therefore of superior quality,” a dictionary-based definition. Tito’s, the lawsuits explained, uses “mechanized and/or automated machinery and processes to manufacture and bottle its vodka, rather than human hands.” Several of these matters were similarly dismissed in the early stages of litigation, again based on findings that reasonable consumers were not being misled by the brand name or by marketing that focused on the brand’s modest beginnings.  One of those cases, however, survived a similar motion to dismiss, with that judge finding reasonable consumers could be misled by the statements.  Shortly before trial in that case, the parties apparently resolved their disputes.

What This Means to You

Beverage alcohol manufacturers should exercise care in selecting brand names, as well as coining label slogans and advertisements for their products.  Ambiguous or potentially misleading terms and claims regarding the product’s place of origin, ingredients used, or methods of manufacture can bring about costly litigation in the form of class action lawsuits.  Even though many courts have ruled early in the litigation against the class plaintiffs, brewers, distillers, winemakers, and other alcohol beverage brand owners should consider the arguments made by the class plaintiffs when selecting brand names and developing advertising and labels.