Templeton Rye Whiskey Accused of Deceptive Advertising Because It’s Allegedly Not “Made In Iowa” and Not a Prohibition-Era Recipe

Templeton Rye Spirits, LLC  from Templeton, Iowa has been accused of consumer fraud, false and/or deceptive advertising and unjust enrichment in a putative class action lawsuit filed in Cook County Circuit Court in Chicago, Illinois.

The Complaint, filed on September 9, 2014, highlights Templeton Rye’s marketing which, among other things, touts that its namesake rye whiskey is  “Made in Iowa” using small-scale production methods and produced pursuant to “a prohibition-era whiskey recipe that was the favorite drink of Chicago mobster Al Capone.”

Plaintiff alleges that, contrary to these representations, Defendant’s rye whiskey is actually mass produced in Indiana where it is “distilled and aged at the Indiana factory of MGP Ingredients, Inc.” and “the only activity that occurs in Iowa is the emptying of the barrels and the filling of the bottles….”

Plaintiff further contends that Templeton Rye has admitted that the rye whiskey it obtains from MGP is a “stock” recipe from MGP and “not one tied to Templeton’s Prohibition era” and that “reproducing the [prohibition-era] recipe is impossible due to federal rules regulating the proof and production of rye whiskey.”

Based on the foregoing, Plaintiff filed claims under Iowa and Illinois consumer fraud and deceptive business practices statutes and common law claims for “consumer fraud”, “fraud by omission” and “restitution / unjust enrichment.”  All of these claims contend that consumers have been damaged because they reasonably believed the “premium” price they allegedly paid for the product was based on it being a small-batch, “Iowa whiskey, made in Iowa, distilled just like the prohibition-era  ‘good stuff’, and [made] with Iowa ingredients (e.g , Iowa water).”

As is common for these cases, it may ultimately prove difficult for plaintiffs to show that the alleged deception actually caused them any damage, i.e., payment of a premium price because of the alleged misstatements.  After all, they paid for a good rye whiskey and received a good rye whiskey and the associated marketing may simply be “typical advertising fluff” not be tied to any economic harm.

September 16th Webcast: Food and Beverage Marketing – Significant Legal Issues in 2014 and Beyond

I’ll be participating in a webcast on Tuesday, September 16 from 10 am to 12 pm EST.  The webcast is sponsored by the Knowledge Group and will focus on significant legal issues in 2014 relating to food and beverage marketing. There’ll be three speakers, with the others being Catherine Bate of Miller Thomson and James Alterbaum of Moses & Singer, LLP.

Additional details and registration information can be found here.  If you’re interested in attending, please feel free to contact me with respect to a complimentary pass.

Popcorn Companies in Battle Over “Chicago Mix” Trademark

Candyland, Inc., which operates stores in Minneapolis – St. Paul, has filed trademark infringement suits against three sellers and/or distributors of popcorn that allegedly use the term “Chicago Mix,” including Chicago-area favorite Garrett Popcorn.   In 1992, Candyland obtained a federal trademark registration for CHICAGO MIX in connection with “flavored popped popcorn.”  For Candyland, the “Chicago Mix” refers to the ” combination of traditional seasoned popcorn mixed with caramel and cheddar flavored popcorn.”

On August 7 and 8, 2014, Candyland filed three separate suits in the Northern District of Illinois against CandyCrisp LLC (which does business as Garrett Popcorn Shops), Snyder’s-Lance, Inc. (which distributes a line of popcorn under the O-KE-DOKE mark), and Cornfields (which distributes a line of popcorn under the G.H. CREDTORS mark).  All three defendants are accused of distributing and/or selling popcorn using the term “Chicago Mix” and thus infringing Candyland’s trademark rights.

With respect to Garrett, the Chicago Tribune reports that “[t]his isn’t the first time Candyland has tussled with … Garrett Popcorn Shops.”

In 2008, while in Chicago for a trade show, [Candyland co-owner Brenda Lamb] noticed that Garrett was using the name and promptly sent the company a friendly letter asking them to remove it.  It complied, according to Lamb, but a while later, the Lambs noticed that the Chicago Mix name had returned to use.

“We’ve been back and forth with Garrett’s for years,” Lamb said.  “We’re trying to be friendly colleagues of the business, and I think we were successful at being that way.  It wasn’t that we were spitting venom at each other.”

The Tribune further reports that Candyland and Garrett are engaged in settlement discussions and that Garrett is already transitioning from “Chicago Mix” to “Garrett Mix”, a change that Garrett states was initiated prior to the lawsuit.

Ghirardelli Settles “White Chocolate” Labeling Suit for $5.25 Million

White-Chips

Ghirardelli Chocolate Co. has agreed to pay approximately $5.25 million to resolve a putative class action that accused the company of improperly advertising certain products as containing “white chocolate” when they failed to contain cocoa butter, which is required for “white chocolate” or “white chocolate flavor” under FDA regulations.  A motion for preliminary approval of the proposed class settlement was filed on August 20th, with the settlement also providing that Ghirardelli make certain changes to its labeling.

Notably, the front labels for all of the targeted products, listed below, include the company name, Ghirardelli Chocolate, as shown in the above image:

a. Ghirardelli® Chocolate – Premium Baking Chips- Classic White,
b. Ghirardelli® Chocolate – White Chocolate Flavored Confectionary Coating Wafers,
c. Ghirardelli® Chocolate – Sweet Ground White Chocolate Flavor,
d. Ghirardelli® Chocolate – Premium Hot Beverage- White Mocha, and
e. Ghirardelli® Chocolate – Frappe Classico – Classic White

However, none of these products are specifically identified as “white chocolate,” in contrast to many other Ghirardelli products that include real coca butter.  Plaintiffs nevertheless argued that, for a variety of reasons, the labels were inconsistent with FDA regulations and that labels are misleading because consumers would reasonably believe that the products include “white chocolate.”

For example, the packaging of the [Classic White Baking Chips] prominently uses the term”chocolate” in the company name “Ghirardelli® Chocolate.”  It refers to the product as “Classic White” to deceptively mislead consumers into believing that it is classic white chocolate.  It states that the product is “Premium” leading consumers to incorrectly believe that, unlike its competitors, the product is a premium white chocolate chip product.  It then goes on to deceptively state [on the reverse]: “The luxuriously deep flavor and smooth texture of Ghirardelli Premium Baking Chocolate delivers the ultimate chocolate indulgence.”  But because there is no chocolate or white chocolate in Defendants’ chips, the product cannot deliver a “deep chocolate flavor or texture” or the “ultimate chocolate indulgence.”  The label further says [on the reverse] that the product contains the “Finest grind for smoothest texture and easiest melting” but in fact, unlike real white chocolate, the product is not “ground” from cocoa beans.

Per Law360, Ghirardelli stands behind the accuracy of its labeling and marketing but “opted to settle the suit to avoid the ‘expense and distractions’ of litigating what it believes to be ‘nuisance allegations.'”

This case highlights the dangers of including regulated terms in a company name/trademark and the need to scrutinize marketing language across product lines.  In this regard, in evaluating the risk of a lawsuit, the question is not whether you believe that reasonable consumers are misled by a label, but whether a colorable argument exists that consumers might be misled (thus creating the risk of a colorable lawsuit).  

Courts Continue Staying or Dismissing Evaporated Cane Juice Cases on Primary Jurisdiction Grounds

Numerous labeling class action suits were spawned by the FDA’s 2009 draft guidance advising that, in the FDA’s view,  “the term ‘evaporated cane juice’ is not the common or usual name of any type of sweetener, including dried cane syrup.”   Plaintiffs generally cite this draft guidance, and FDA warning letters citing the guidance, as indicating the FDA’s view that “evaporated cane juice” (ECJ) is false and misleading and violates regulations that ensure labeling with common ingredient names.  But on March 4, 2014, the FDA reopened the comment period on this guidance and announced its intent, following review of the comments, to “revise the draft guidance” and “if appropriate, … issue it in final form.”

Not surprisingly, this announcement prompted defendants in these class action suits to assert the primary jurisdiction doctrine as a basis for dismissing or staying the lawsuits.  This doctrine was recently asserted in the context of natural claims with varying success until the FDA dispelled any notion that it might define “natural” in the near future or in the context.

This time, the courts have been very receptive to the argument.  To date, the following putative class actions over evaporated cane juice (“ECJ”) have been stayed or dismissing without prejudice in light of the FDA’s pronouncement:

  • Gitson v. Clover Stornetta Farms, No. 13-cv-01517, 2014 WL 2638203 (N.D. Cal. Jun. 9, 2014) (yogurt);
  • Swearingen v. Late July Snacks LLC, No. 13-cv-4324, 2014 WL 2215878 (N.D. Cal. May 29, 2014) (crackers and chips);
  • Swearingen v. Yucatan Foods, L.P., No. 13-cv-3544, 2014 WL 2115790 (N.D. Cal. May 20, 2014) (guacamole);
  • Avila v. Redwood Hill Farm & Creamery, Inc., No. 5:13-cv-00335, 2014 WL 2090045 (N.D. Cal. May 19, 2014) (yogurt);
  • Swearingen v. Attune Foods, Inc., No. C 13–4541 SBA, 2014 Wl 2094016 (N.D. Cal. May 19, 2014) (cereal and probiotic bars);
  • Figy v. Lifeway Foods, Inc., No. 13-cv-04828, 2014 WL 1779251 (N.D. Cal. May 5, 2014) (kefir);
  • Figy v. Amy’s Kitchen, Inc., No. 13-cv-03816, 2014 WL 1379915 (N.D. Cal. Apr. 9, 2014) (variety of food products).

And just recently, over the past 7 days, two additional cases have followed the exact same reasoning on this issue:

  • Gitson v. Trader Joe’s Company, No. 13-cv-01333 (N.D. Cal. Aug. 8, 2014): Staying case and observing that, “b]ecause the FDA appears to be actively considering the lawfulness of the use of the term ‘evaporated cane juice’ on food labels, it makes sense to stay the plaintiffs’ evaporated cane juice claims to see if the agency does, in fact, issue final guidance on the issue.  Several other courts in this district have done the same.”  
  • Saubers et al. v. Kashi Co., No. 3:13-cv-00899 (S.D. Cal. Aug. 11, 2014): Dismissing case without prejudice and stating that “[a]llowing the FDA to resolve this matter in the first instance would permit the court to benefit from the agency’s technical expertise and would also provide for uniformity in administration of the agency’s food labeling requirements.”

The agreement by the courts on this issue is not surprising given the strong reliance placed by plaintiffs on the FDA draft guidance and associated warning letters regarding ECJ.  Such reliance is necessary because ECJ is simply a listed ingredient on the nutrition facts label and that label also includes the total sugars in the product.  These claims thus differ from most other labeling class actions because they generally do not encompass allegedly misleading statements on the front of the product that tend to make irrelevant the nutrition facts label on the back of the product. See Williams v. Gerber Products Co., 552 F.3d 934, 939 (9th Cir. 2008) (“reasonable consumers should [not] be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list[]”).

Duke v. The Duke: Trademark Dispute Over Alcoholic Beverages

Duke University and John Wayne Enterprises, Inc. (“JWE”) are engaged in trademark litigation over the “Duke” trademark in connection with alcoholic beverages.  JWE is operated by John Wayne’s descendants and enters into licenses and partnership agreements with respect to the name and likeness of John Wayne.  The dispute arose when Duke opposed trademark applications filed by JWE for “Duke” and “Duke John Wayne” in connection with alcoholic beverages except for beers.  In its oppositions, Duke University alleged that JWE was seeking trademarks substantially similar to the university’s “famous mark … for goods that are closely related to goods and services with which” Duke uses its DUKE marks.  Accordingly, Duke asserted that the applications should be rejected because the applied-for marks were likely to cause confusion and/or dilution with respect to Duke’s trademarks.

JWE was apparently so taken aback by Duke’s position that it filed a complaint for declaratory judgment with the U.S District Court for the Central District of California.   Specifically, it asserted that it feared that Duke University “intends to sue JWE for trademark infringement” and it therefore “seeks a judicial declaration of no likelihood of confusion and nondilution to remove that cloud.”  JWE calls Duke’s position “ludicrous” and noted that the DUKE bourbon sold under license features John Wayne’s signature, an image of a shotgun casing and the words “Kentucky Straight Bourbon Whiskey Small Batch.”

From Duke University’s perspective, they are doing what most companies (or universities) would do in their position — they are exercising their affirmative duty to police their trademarks by objecting to the registration of a substantially similar mark.  After all, Duke University uses its mark on a wide variety of products and those marks can be weakened if there are lots of other “Duke” marks on the trademark registry.  JWE’s position is equally rationale.  It does not believe its “Duke” mark, as specifically used on its products in connection with John Wayne and especially on alcoholic products, could ever be confused with Duke University.

See complete copy of the complaint here.