The lawsuits can be seen as an outgrowth of consumers’ growing interest in food and beverages. Over the past decade, consumers have demonstrated an increased interest in foods and beverages that are natural, organic, and locally made. In response, many restaurants now tout their gluten-free menu items and locally sourced ingredients, and food and beverage producers aggressively market their “healthy,” “natural,” and “handmade” products. Even McDonald’s introduced an “artisan” grilled chicken sandwich last year.

Consumer class action attorneys also took note of these developments. Since the mid-2000s, dozens of class action lawsuits have been filed targeting food producers’ claims that their foods are all “natural” or contain “no artificial ingredients.” Plaintiffs alleged that such claims are false or misleading in light of various ingredients or chemicals found in such foods. Many of these cases were filed in the Northern District of California, and claimed violations of California consumer protection laws as well as false advertising under the federal Lanham Act.¹ The Northern District has been dubbed the “Food Court” in light of the many food-related false advertising cases filed there.

More recently, class action counsel set their sights on alcohol beverage makers. These suits do not attack “natural” claims, as most alcohol beverage makers do not make such claims, but instead have targeted the use of terms such as “handmade” and “craft,” or have targeted statements indicating or suggesting that a beverage was made in a particular geographic location.

“Handmade” Alcohol: Mere Puffery or False Advertising?

The “handmade” and “handcrafted” lawsuits against alcohol beverage makers initially did not fare well for plaintiffs, with cases being dismissed even before discovery. More recently, however, these cases have survived the motion to dismiss or demurrer stage.

For example, in May 2015, Judge Robert Hinkle of the Northern District of Florida dismissed a suit against Beam Suntory and its Maker’s Mark Distillery alleging that the use of “handmade” in labeling and marketing materials was misleading.² Similarly, in August 2015, a federal court in California dismissed another suit against Maker’s Mark, finding that “a reasonable consumer wouldn’t interpret the word ‘handcrafted’ on a bourbon bottle to mean that the product is literally ‘created by a hand process rather than by a machine.’”³ And in yet another “handmade” case in Florida, Pye v. Fifth Generation, Judge Hinkle also dismissed most, but not all, of the “handmade” claims filed against Fifth Generation and its Tito’s Handmade Vodka, stating that the term “handmade” “obviously cannot be used literally to describe vodka. One can knit a sweater by hand, but one cannot make vodka by hand. Or at least, one cannot make vodka by hand at the volume required for a nationally marketed brand like Tito’s. No reasonable consumer could believe otherwise.”⁴

But not all of the “handmade” suits have been dismissed. Where plaintiffs have alleged claims beyond the mere use of “handmade” or “handcrafted,” courts have allowed some of these claims to survive the initial pleadings stage. In the Florida suit against Fifth Generation, Judge Hinkle found the complaint’s allegation that the vodka was not made in “an old fashioned pot still” (as represented on the label) was sufficient to state a claim for breach of an express warranty and survive a motion to dismiss.⁵

And in another California federal suit against Fifth Generation, Hofmann v. Fifth Generation, the court dismissed the plaintiff’s statutory false representation claims, but did not dismiss the plaintiff’s negligent misrepresentation claim based in tort because the plaintiff alleged that the vodka was purchased in reliance on the claim that the product was “handmade.”⁶

In November 2015, the court also denied Fifth Generation’s summary judgment motion arguing that the “safe harbor” exception to California’s consumer protection laws shielded Fifth Generation from liability.⁷ Under the “safe harbor” doctrine, where the legislature has permitted certain conduct by a party, that party is immune from liability under state consumer protection laws, namely, the California Consumers Legal Remedies Act.⁸ Fifth Generation argued, among other things, that because it had obtained federal approval for its vodka label from the federal Alcohol and Tobacco Tax and Trade Bureau (TTB), the labels fell under the safe harbor. The court rejected this argument, finding that Fifth Generation had not established that the TTB’s label approval “issued from a formal process sufficient to trigger the California safe harbor doctrine” even though the TTB had raised questions regarding use of “handmade” on the labels before issuing label approval.⁹

The parties in Hofmann subsequently engaged in discovery, and the plaintiff filed a motion to certify the class in early 2016. In May 2016, the parties filed a joint motion to dismiss the case, which was granted. This suggests that the parties have settled the case, but no settlement has been publicly announced.

Other “handmade” suits remain pending, so it remains to be seen how these false advertising suits will ultimately be resolved.

Blue Moon: What Is a “Craft” Beer?

Perhaps the most widely publicized false advertising suit against an alcohol beverage maker is the Blue Moon “craft” beer case, Parent v. MillerCoors, which was filed in California state court in April 2015 and removed to federal court.¹⁰ In Parent, the plaintiff alleged that the labeling and marketing of Blue Moon beer was misleading because the beer was marketed as being made by a small brewery when the beer was made by the large corporate brewery, MillerCoors. MillerCoors is not identified on the Blue Moon beer label or in product marketing. Rather, the label uses the name “Blue Moon Brewing Company” and the marketing of the beer rarely, if ever, mentions MillerCoors.

After the suit was filed, many people took to social media to criticize the lawsuit. Hardcore craft beer fans expressed disbelief that anyone actually believed that Blue Moon was a “craft” beer made by a small brewery. The court seemed to agree, at least in part, and dismissed most of the original complaint in October 2015. The court found that the use of the trade name “Blue Moon Brewing Company” by MillerCoors on the beer label was protected under the safe harbor doctrine due to the TTB label approval.¹¹ The judge distinguished Hofmann on the grounds that decision found no federal TTB regulation specifically authorized the use of “handmade” on the vodka’s label, whereas federal regulations did specifically address which brewer name (such as a fictitious business name, Blue Moon Brewing Company) was permitted on a beer bottle label. The court did, however, allow the plaintiff leave to amend the complaint.

The plaintiff filed an amended complaint in November 2015. The amended complaint focused less on the beer label itself and instead targeted MillerCoors’s marketing. This marketing included online videos that contained images of beer being made in small 10-barrel size tanks, in a small brick building with signs that read “Blue Moon Brewing Company,” and with brewmaster Keith Villa appearing as the company’s founder, rather than showing large industrial tanks at a MillerCoors facility.¹² MillerCoors struck back by filing a motion to dismiss the amended complaint, asserting that the videos simply tell the story of how Bellyslide Belgian White beer (the precursor to Blue Moon beer) was developed, and that the video’s “representations” were mere “puffery” that do not constitute false advertising.¹³

In June 2016, the court granted the motion, agreeing with MillerCoors that “at best, these advertisements contain ‘generalized, vague, and unspecified assertions’ that amount to ‘mere puffery upon which a reasonable consumer could not rely.’”¹⁴ The court observed that the video depicting a Blue Moon brewery with comparatively small brewing tanks never claimed that brewery is the only place in which Blue Moon is produced. The plaintiff himself did not dispute that brewmaster Keith Villa formulated Blue Moon’s Belgian White recipe. Finding that the plaintiff failed to point to any “specific and measurable claim[s], capable of being proved false or of being reasonably interpreted as a statement of objective fact” made in the advertisements, the court dismissed the case with prejudice.¹⁵

Regardless, some segment of craft beer buyers are probably unaware of the corporate ownership of the Blue Moon brand by MillerCoors, and may prefer to buy beer made by a craft or local brewery rather than from a large corporate brewery. As large corporations like Anheuser-Busch InBev, MillerCoors, and Constellation Brands continue to acquire small craft breweries at an unprecedented pace, the situation becomes even murkier. Does a small craft brewery cease being a “craft” brewery simply because it was acquired by a larger brewery? For the past few years, the national Brewers Association has itself grappled with this very question. A few years ago, the Brewers Association came out with a revised definition of “craft” brewery that caused quite a stir in the industry. One criterion required that a brewery make less than six million barrels a year; this was viewed as a move to keep the Boston Beer Company, the maker of Samuel Adams beer and the largest “craft” brewery, within the definition of “craft.” The definition also required that no more than 25 percent of the brewery be owned by a large corporation. The plaintiff in Parent relied on the Brewers Association definition, but the court found that none of the advertisements described or referred to Blue Moon as a craft beer.¹⁶

The Brewers Association has also called for transparency in labeling, including in identifying corporate ownership. In its Transparency in Labeling position statement, the Brewers Association states: “Consumers have an interest in knowing the name of the brewing company or parent corporation that ultimately owns the beer brand.”¹⁷ That is a laudable goal, but does the failure to identify corporate ownership on a label or in marketing materials constitute “false” or “misleading” labeling or advertising under current law?

While the courts and lawyers debate these issues, some beer drinkers assert that all that should really matter is how the beer tastes regardless of it is “craft” or made by a large brewery or small brewery. But consumers are becoming more discerning and demanding, they care about who is brewing their beer or producing their meal. They want to know if their money is going to a large publicly traded corporation or to a locally owned and operated company. Taste is important but is not the only criteria in making a purchase.

Made and Not Made in the U.S.A.

In addition to the “handmade” and “craft” false advertising cases, alcohol beverage makers, primarily large breweries, are also facing lawsuits claiming that breweries have mislead consumers as to the geographic origins of their beers. Last year, Anheuser-Busch settled a lawsuit alleging that Beck’s beer labels were misleading because Beck’s beer sold in the United States is not brewed in Germany, despite statements on labeling and packaging such as: “Originated in Germany,” “Brewed under the German Purity Law of 1516,” and “German Quality.”¹⁸ In the Beck’s beer case, the court denied Anheuser-Busch’s arguments that a “Product of USA” disclaimer and the safe harbor doctrine shielded it from liability. The court also rejected the argument that the statement that the beer was of “German Quality” was mere puffery.

Anheuser-Busch also settled a suit involving its Kirin beer, which is brewed in the United States rather than Japan. As part of the settlement, Anheuser-Busch agreed to print the statement “Brewed under Kirin’s strict supervision by Anheuser-Busch in Los Angeles, CA and Williamsburg, VA” on its labels.¹⁹ Kirin beer consumers were also eligible to receive $0.50 for each six-pack of Kirin beer that they had bought and $0.10 for each bottle or can.

Last year, Anheuser-Busch was also sued in a class action case in California state court regarding the origin of its popular Busch brand beer. According to the complaint, Busch beer labels identify the beer as a “Product of U.S.A.” despite being brewed with a significant amount of imported hops.²⁰ The suit alleges that Anheuser-Busch’s use of “Product of U.S.A.” is therefore misleading and used to “evoke feelings of patriotism and images of quality.” Anheuser-Busch filed a demurrer to the first amended complaint, arguing that raw ingredients like hops are not “made, manufactured, or produced” in a particular place, as well as asserting the safe harbor doctrine. But the parties recently stipulated in May 2016 to the filing of a second amended complaint, so for now it appears the case will move forward.

The tide may be turning in favor of beverage makers in these geographic representation cases. In April 2016, Diageo PLC recently prevailed on its motion to dismiss a complaint alleging that it engaged in false or deceptive labeling and marketing of its Red Stripe beer.²¹ The complaint alleged that Diageo misled consumers by using the terms “Jamaican Style Lager” and “The Taste of Jamaica” on product labels and packaging, among other statements evoking Jamaica, despite Red Stripe beer being brewed and bottled in Latrobe, Pennsylvania. In granting Diageo’s motion to dismiss, the court stated: “The mere fact that the word ‘Jamaica’ and ‘Jamaican’ appear on the packaging is not sufficient to support a conclusion that consumers would be confused regarding the origin and ingredients of the beer.”²²

The court relied primarily on a Second Circuit decision in Forschner Group, Inc. v. Arrow Trading Co.²³ involving the Swiss Army knife. In Forschner, the court found that the term “Swiss” modified the noun “Army” rather than “knife” and that the term “Swiss Army knife” as a whole did not mean the product was made in Switzerland.²⁴ Similarly, the court in the Red Stripe case found that the word “Jamaican” in “Jamaican Style Lager” modified the term “Style” rather than “Lager.” Moreover, the “very fact that the word ‘style’ is used indicates that the product is not from Jamaica.”²⁵ The court analogized this to the use of “Belgian” in the phrase “Belgian-Style Wheat Ale” by (ironically) “Blue Moon Brewing Company in Colorado.” And as to the phrase “The Taste of Jamaica,” the court found it was “a vague and meaningless phrase—who can say what Jamaica ‘tastes’ like?”²⁶

The court also distinguished the Beck’s beer case, finding that the facts of that case were not comparable. According to the court, the statement “Originated in Germany” could be understood to mean that the beer actually came from Germany, and the claims that Beck’s beer was “brewed under the German Purity Law of 1516” and that beer was of “German quality” “make[] it sound like the production of the beer was subject to German law.”²⁷

Conclusion

As these false advertising cases continue, alcohol beverage makers must carefully review their product labels and marketing materials to ensure that they are not making any potentially misleading statements.

Endnotes

1. 15 U.S.C. § 1125(a)(1)(B).

2. Salters v. Beam Suntory, Inc., No. 4:14-CV-659-RH/CAS, 2015 WL 2124939 (N.D. Fla. May 1, 2015).

3. Welk v. Beam Suntory Import Co., 124 F. Supp. 3d 1039, 1044 (S.D. Cal. 2015).

4. Pye v. Fifth Generation, Inc., No. 4:14-CV-00493-RH/CAS, 2015 WL 5634600, at *2 (N.D. Fla. Sept. 23, 2015).

5. Id. at *4.

6. Hofmann v. Fifth Generation, Inc., No. 14-CV-2569 JM(JLB), 2015 WL 5440330 (S.D. Cal. Mar. 18, 2015).

7. Hofmann v. Fifth Generation, Inc., No. 14-CV-2569 JM(JLB), 2015 WL 7430801 (S.D. Cal. Nov. 20, 2015).

8. Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527 (Cal. 1999) (safe harbor doctrine); Alvarez v. Chevron Corp., 656 F.3d 925, 933–34 (9th Cir. 2011) (applying the safe harbor doctrine to claims under the California Consumers Legal Remedies Act).

9. Hofmann, 2015 WL 7430801, at *6.

10. See Parent v. MillerCoors LLC, No. 3:15-CV-1204-GPC-WVG, 2015 WL 6455752 (S.D. Cal. Oct. 26, 2015).

11. Id. at *4–5.

12. First Amended Complaint for Damages, Restitution, and Injunctive Relief, Parent v. MillerCoors LLC, No. 3:15-CV-1204-GPC-WVG (S.D. Cal. Nov. 25, 2015).

13. Motion to Dismiss Plaintiff’s First Amended Complaint, Parent v. MillerCoors LLC, No. 3:15-CV-1204-GPC-WVG (S.D. Cal. Dec. 22, 2015).

14. Parent v. MillerCoors LLC, No. 3:15-CV-1204-GPC-WVG, slip op. at 12 (S.D. Cal. June 16, 2016).

15. Id. at 15–16 (denying the plaintiff leave to amend because, “[h]aving already given Plaintiff a second opportunity to plead his case, and having found the merits lacking, the Court finds that at this juncture, amendment would be futile”).

16. Id. at 12.

17. BA Position Statements, Brewers Ass’n, https://www.brewersassociation.org/government-affairs/ba-position-statements.

18. Marty v. Anheuser-Busch Cos., LLC, 43 F. Supp. 3d 1333 (S.D. Fla. 2014); 

19. Oliva v. Anheuser-Busch Cos., LLC, No. 13-033620-CA-01 (Fla. Cir. Ct. Apr. 17, 2015); see also https://www.kirinbeersettlement.com.

20. Nixon v. Anheuser-Busch Cos., LLC, No. CGC-15-544985 (Cal. Super. Ct. filed Mar. 27, 2015).

21. Dumas v. Diageo PLC, No. 15-CV-1681 BTM, 2016 WL 1367511 (S.D. Cal. Apr. 6, 2016).

22. Id. at *3.

23. 30 F.3d 348 (2d Cir. 1994).

24. Id. at 355.

25. Dumas, 2016 WL 1367511, at *4.

26. Id.

27. Id. at *5.