Bulleit Bourbon is Latest Target of Deceptive Advertising Lawsuits Against the Spirits Industry

Bulleit Bourbon, owned by Diageo plc, has been sued for false advertising, deceptive trade practices and unfair competition in light of allegedly misleading statements on its bottles.  In a spate of recent lawsuits,  Tito’s Vodka, Maker’s Mark, and Jim Beam were targeted because of “handmade” claims.  The Bulleit lawsuit targets a different but common practice in the spirits industry.  Specifically, the Complaint alleges that Bulleit’s label erroneously states that the product is “DISTILLED BY THE BULLEIT DISTILLING CO … IN LAWRENCEBURG, KENTUCKY.”  Rather, the complaint alleges, Bulleit does “not currently operate a distillery in Lawrenceburg, Kentucky” and its products are actually “’distilled’ and/or produced by the Kirin Brewing Company, Limited.”

For support, Complaint refers to an article by Bloomberg Business titled Bourbon Bait and Switch: What’s Really in Your Glass? which asserts that Bulleit, “[d]espite saying on the label that it’s ‘distilled by the Bulleit Distilling Company in Lawrenceburg, Kentucky,’ there is in fact, no such thing.”  Reference is also made to an article from Fox Business, titled Global Liquor Giant Diageo To Produce Bulleit Bourbon, Rye Whiskeys At New Kentucky Distillery, which notes that Bulleit is currently made at a non-Diageo distillery in Kentucky.

What the Complaint doesn’t mention is that it is generally known that Bulleit Bourbon sources their bourbon from Four Roses Distillery which is, in fact, located in Lawrenceburg, Kentucky (and owned by Kirin Brewing Co. Ltd).  And that this practice of sourcing whiskey is quite common but not generally highlighted on labels.

Nevertheless, the key questions in the lawsuit are likely to be: How was anyone harmed by Bulleit sourcing its bourbon from a respected distiller in Kentucky as opposed to distilling the bourbon in Kentucky itself?  And is there an identifiable class of consumers that reasonably relied on the alleged misrepresentations in purchasing the product?

For its part, the Complaint offers the usual allegations for damages, i.e., that “Plaintiff and other similarly situated consumers” were presented with “the false impression that the bourbon was of superior quality by virtue” the misrepresentations, that they therefore overpaid for the bourbon, and “had they been made aware that Bulleit Bourbon was not was not distilled by or at ‘THE BULLEIT DISTILLING CO.,’ they would have not purchased the bourbon, or would have paid less for the product, or would have purchased a different product from another manufacturer.”

A spokesperson for Diageo has labeled the lawsuit as  a “baseless and frivolous action.”

My Q&A with Food Manufacturing on Food Labeling Issues

It was my pleasure to participate in a Q&A with Food Manufacturing Magazine to provide an update and insight on significant labeling issues, which can be found here.

My Article in Food Safety Magazine on Court Ruling That Vermont’s GE-Labeling Requirement Will Move Forward

Please see my article in Food Safety Magazine located HERE.

Court Dismisses Suit Against Maker’s Mark Over “Handmade” Claims

I previously wrote about the lawsuit against Maker’s Mark regarding claims that its bourbon is “handmade.”   The complaint alleged that the “handmade” claims were false or misleading because “Defendant actually employs mechanized and/or automated processes to manufacture and bottle its whisky, including but not limited to, (1) the process involved in grinding / breaking up the grains;
(2) the process involved in mixing the grains with other ingredients, such as yeast and water; (3) the process involved in transferring this mixture into its fermenting location; and, (4) the process involved in bottling the whisky.”

On May 1, 2015, the Court dismissed plaintiffs’ complaint as a matter of law, because “nobody could believe a bourbon marketed this widely at this volume is made entirely or predominantly by hand.”   Significantly, plaintiffs were unable to articulate a plausible and consistent definition of “handmade” in this context, especially since they had to concede that it could not mean “made entirely by hand.”  In this regard, the court held that “[n]o reasonable person would understand ‘handmade’ in this context to mean substantial equipment was not used.”  And [i]f ‘handmade’ means only made from scratch, or in small units, or in a carefully monitored process, then the plaintiffs have alleged no facts plausibly suggesting the statement is untrue.”

Ultimately, the court found that “handmade” in this context was little more than “a general, undefined statement” that, even if it connotes greater value, is mere “puffery” and could not support plaintiffs’ claims “detached from any factual representation.”  As the court observed,”One might as easily label a bourbon ‘smooth’ or say it is made with the same skill and care as has been used for decades.”

Please see the complete opinion HERE.  The ruling is compelling and will likely sway courts handling similar claims, including the Tito’s Vodka case I previously discussed where a similar motion to dismiss is pending.

Kind Snack Bars Hit with Putative Class Action Following FDA Warning Letter Over “Healthy” Claims

It was about as surprising as gridlock in Washington D.C. when a putative class action was filed yesterday (April 22) against Kind LLC following an FDA warning letter dated April 17th regarding alleged “healthy” claims on Kind’s snack bars.

In the warning letter, the FDA asserted that the labels of certain Kind snack bars  bear the claim “Healthy and tasty, convenient and wholesome” in connection with statements such as “good source of fiber,” “no trans fats,” “very low sodium” and “+ antioxidants.”  The FDA stated, however, that none of those products “meet the requirements for use of the nutrient content claim ‘healthy’ that are set forth in 21 CFR 101.65(d)(2).”

To no one’s surprise, less than a week after the warning letter, a putative class action lawsuit was filed that piggy-backed off the FDA warning letter.  In the Kind Lawsuit, plaintiff Charity Bustamante simply contends that certain Kind snack bars “are misbranded in violation of the Federal Food, Drug and Cosmetic Act … for the reasons set forth in a warning letter that the FDA sent to Defendant on or about March 17, 2015.”

In addition, plaintiff alleges that Kind LLC “falsely and prominently labels [certain Kind snack bars] as ‘All Natural’ and ‘Non GMO,’ while manufacturing the Products with genetically modified and non-natural, highly processed ingredients including soy lecithin, soy protein isolate, and canola oil.”

Based on these allegations, the plaintiff asserts the usual claims for: (1) breach of express warranties; (2) violations of California’s Consumers Legal Remedies Act; (3) violations of California’s False Advertising Law; and (4) violations of California’s Unfair Competition Law.  Please see the entire Complaint here.

Just last month, a putative class action against Kind LLC was dismissed with prejudice that involved “no refined sugars” claims on its Healthy Grains products.  In light of the FDA warning letter in the recently-filed case, however, obtaining a similar ruling in the early stages will be more difficult.

Lanham Act Claim Targeting Nestlé’s “Poland Spring” Bottled Water Dismissed For Lack of Standing

Last summer, Maine Springs LLC filed a false advertising suit over the use of “Poland Springs” on bottled water sold and distributed by Nestle Waters North America Inc. (a unit of Nestle SA).   Yesterday, however, a Maine district court dismissed the lawsuit, holding that Maine Springs’s plans to eventually sell bottled water that would compete against Nestle’s Poland Spring® brand product was too speculative to constitute injury-in-fact.

Maine Springs LLC, based in Poland Springs, Maine, sells bulk water and aspires to produce and sell its own bottled water.   In its Complaint against Nestle, it alleged two sets of related, but distinct, facts.

First, Maine Springs alleged that Nestle had previously asserted that Maine Springs could not identify the source of its water, Poland Spring, Maine, without creating confusion with Nestle’s “Poland Spring” products.  Accordingly, Nestle demanded that Maine Springs not use any label that would identify Poland Spring, Maine as the source of its water.  Maine Springs responded by noting that, as a matter of federal and state law, bottled water must identify its source on the label.  When an amicable resolution could not be reached, Maine Springs alleged that it lost proposals to supply bulk water to several companies based on fears that Nestle might file suit.  As a result, Maine Springs alleged that it was “prevented from selling any of its water and the bottling and distribution facilities have sat idle.”

Second, Main Springs’s alleged that Nestle was engaged in false advertising because the water contained in the Poland Spring products was not “extracted from the [actual] Poland Spring,… does not even come from the same aquifer as the original source,” “does not necessarily come from carefully selected mountain springs that are continually replenished, as advertised, but from other sources including ground water and well water,” and was “sold as 100% natural spring water when it is not.”

In light of the second set of allegations, Main Springs alleged a claim under Section 43(a) the Lanham Act for false advertising which included the following allegation on damages:  “As a direct and proximate result of Nestle Water’s misrepresentations about Poland Spring® Brand water, competitors, such as Plaintiff Maine Springs, have and continue to suffer damage.”   And Main Springs alleged a second claim for tortious interference regarding the first set of facts which included the following damages allegation: “As a result of Defendant’s interference, Plaintiff has suffered actual damages in that it is being prevented from entering the market and selling its product.”

The Court granted Nestle’s motion to dismiss both claims.  With respect to the Lanham Act claim, the Court labeled Maine Springs’s damages allegation as a “bald and conclusory assertion [that] alone is insufficient to state an injury.” Construing all facts in the Complaint in the most favorable light for the plaintiff, the Court further found that the “allegedly false advertising or false designation of origin cannot have harmed Maine Springs by channeling customers toward Poland Spring® Brand water when Maine Springs has not even begun to offer bottled water.”  Moreover,  although the rejection of supply proposals was viewed as concrete and particularized, and is a sufficient injury at the pleading stage of litigation, the Court held that Maine Springs did not establish that this injury was fairly traceable to Nestle’s alleged false advertising.  Thus, Maine Springs did not establish causation and there was not Article III standing.

In light of its dismissal of the Lanham Act claim, the Court refused to exercise supplemental over the state law claim and it was dismissed without prejudice.

Wal-Mart Targeted with False Advertising Class Action Over Pomegranate-Cranberry Juice

Great-Value

To no one’s surprise, the POM Wonderful v. Coca-Cola ruling from the U.S. Supreme Court has inspired class action lawsuits against similar fruit blends. The crux of the claim is essentially the same, as highlighted in the following allegations:

Defendant strategically and purposely misleads the consuming public to believe that the Product is, or at a minimum, primarily consists of, cranberry and pomegranate juice.  The Product’s label prominently displays the words “CRANBERRY POMEGRANATE,” while at the same time down plays the other words in smaller and thinner font that reveal the juice is actually a flavored juice blend from concentrate, primarily consisting of water and cheap white grape juice concentrate, apple juice concentrate, and plum juice concentrate.  The names o f the cheap juices are not identified on the front of the label.  Cranberries and pomegranates are prominently depicted on the Product’s label, while none of the other cheaper juices are even pictured on the Product’s label.

Plaintiff’s allege claims under Florida’s Deceptive and Unfair Trade Practices Act, and common law claims for negligent misrepresentation and unjust enrichment.

Notably, the central holding of the Supreme Court’s POM Wonderful v. Coca-Cola ruling is that a federal Lanham Act claim between competitors is not precluded by FDA regulations under the Food, Drug and Cosmetic Act (FDCA) because these acts complement, rather than contradict, each other — and claims under the Lanham Act are thus not precluded by regulations under the FDCA.  That reasoning does not apply to the Wal-Mart case which involves state law claims that do not involve competitors.

Accordingly, the plaintiffs in Wal-Mart have an entire section of their complaint titled “Plaintiff’s Claim is Not Preempted” which alleges as follows in an effort to to ride the coattails of the Supreme Court ruling while attempting to avoid preclusion.

The Supreme Court of the United States has ruled on this issue.  Plaintiff’s claim is predicated on the fact that the naming, labeling, and marketing are misleading, deceptive, and unfair according to Florida’s Food Safety Act, but only in regards to the provisions that are identical in material aspects to the FFDCA or FDA regulations already imposed by the Federal Government.

****

A simple reading of the plain language of the Florida’s Food Safety Act and the FFDCA shows that Plaintiffs claims do not seek to contest or enforce anything in Florida’s Act that is beyond the FFDCA or FDA regulation requirements.  Instead, Plaintiff’s claims are predicated on the fact that Defendants’ naming, labeling, and marketing are misleading, deceptive, and unfair according to Florida’s Food Safety Act, but only in regards to the provisions that are identical in material aspects to the FFDCA.

Whether this contention holds up in light of any potential motion to dismiss remains to be seen.  A copy of the Complaint may be found here.