UPDATE: Hershey’s Settles Lawsuit Against Marijuana Company

I previously wrote about Hershey’s trademark lawsuit against pot-infused candy makers in Colorado.  The parties have now settled the lawsuit (the outcome of which was never really in doubt).  The Denver Post reports as follows:

In a settlement penned in late September, TinctureBelle agreed to recall and destroy all edibles it sold that looked like the famed chocolate company’s products, or with names that played on their brands.

Although the edibles company said it had stopped making products that appeared like those produced by Hershey — including well-known names such as Reese’s, Almond Joy and Heath — long before the federal lawsuit was filed in June in U.S. District Court in Denver, the settlement makes sure it won’t happen again.

See more details here.

Tito’s Vodka Faces Two Class Action Lawsuits Claiming That it is Not “Handmade”

Titos-from-ComplaintLast week, I wrote about the putative class action lawsuit filed in Illinois against Templeton Rye alleging that its advertising was false and deceptive with respect to the claims that it is “Made in Iowa” and uses a unique, Prohibition-era recipe.

A similar lawsuit was filed at approximately the same time in California state court against Fifth Generation, Inc., parent company of Tito’s Handmade Vodka.   Now, another lawsuit has been filed against Tito’s in the U.S. District Court for the Northern District of Florida.   See the new complaint here.

The allegations in the new federal lawsuit echo the same complaints from the state court action.  Specifically, plaintiffs allege that Tito’s labels claim that the product is “Handmade” and “Crafted in an Old Fashioned Pot Still by America’s Original Microdistillery” but:

[o]n information and belief, the vodka was made, manufactured and/or produced in “massive buildings containing then floor-to-ceiling stills and bottling 500 cases an hour” using automated machinery that is the antithesis of “handmade” that is in direct contradiction to both the “Handmade” representation and the “Crafted in an Old Fashioned Pot Still” representation on the product.

As a basis for establishing damages, plaintiffs further allege that “[c]onsumers generally believe that ‘handmade’ products are of higher quality than their non-handmade counterparts, and are produced in small batches by hand” and that this caused “members of the general public” to purchase the vodka “at inflated prices.”  Plaintiffs assert claims under Florida’s consumer protection and false advertising statutes as well as claims for breach of warranty, negligence and unjust enrichment.

In response to the same allegations in the California lawsuit, Tito’s issued a statement which stated, among other things:

We distill at the same distillery in Austin, Texas where I, Tito, started the business in 1995, distilling in batches in pot stills that are customized and hand-built on-site to our proprietary specifications.

We hand-connect the hoses and pumps as we taste and qualify the next steps with the distillate. We taste our product to ensure head and tail cuts, all of which are done at our distillery in Austin, are made to our exacting standards to deliver the highest quality.

The artistry involved in knowing when it’s time to make those cuts is something that cannot be duplicated by even the most sophisticated machines.

Tito’s has also noted that the US Alcohol and Tobacco Tax and Trade Bureau (TTB) approved the brand’s label and that Tito’s “small-batch distillation process” differentiates it from other vodka brands.

For the plaintiffs, it will be difficult to establish what constitutes “handmade” and, similarly, show that this term isn’t tantamount to mere “puffery” such as “premium” or “best” that cannot, as a matter of law, be reasonably relied upon by consumers.  As for Tito’s, it likely cannot rely on TTB approval of its label as a defense since the TTB approval process does not focus on the truth or falsity of such terms.

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).