In our recent post about alcohol companies facing false advertising claims, we discussed the suits filed against Maker’s Mark, Tito’s Handmade Vodka, and Templeton Rye. These suits involve allegations that target the companies’ advertised claims that the whiskeys and vodkas are “handmade” or locally-produced. As these cases move forward, they continue to raise important issues that may have a broad impact on alcohol manufacturers and advertisers and those beyond the alcohol industry. We’ll discuss a few of the notable issues here.
Expanding Industry-Wide Risk. In our past post, we anticipated additional scrutiny into the alcohol industry’s advertising practices. Indeed, Scott Welk, representing a potential class of consumers, has filed suit against Beam Suntory in the U.S. District Court in the Southern District of California. The suit accuses Beam Suntory of advertising its Jim Beam bourbon as “handcrafted” when Jim Beam is actually produced by machines. The plaintiffs requested damages for negligent and intentional misrepresentation and violations of California’s broad False Advertising Law and Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17500; 17200. In response, Beam Suntory noted that the “handcrafted” label was about 1/16 inch high and only present on the back of the bottle, and therefore unlikely to deceive a “reasonable consumer.”
Federal Label Approval Remains an Unclear Defense. Beam Suntory filed a motion to dismiss in the California suit, arguing that because alcohol bottle labels are pre-approved by the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), a federal agency, they should be insulated from the plaintiffs’ claims. Defendants in the Maker’s Mark case asserted a similar defenses. It remains to be seen whether this argument will succeed in the Jim Beam or Maker’s Mark matters.
The Tito’s Handmade case may serve as a preview, however. Judge Jeffrey Miller of the Southern District of California was not persuaded by Tito’s argument that the label should be immune from scrutiny because it was approved by the TTB. The court ruled that TTB’s approval process is merely an informal agency action, not a detailed rulemaking that might otherwise preclude label-focused lawsuits. The court also emphasized that TTB does not typically focus on or fully investigate “handmade” claims on labels. Judge Miller’s ruling is consistent with the TTB’s longstanding rule that approval of a label does not constitute approval of the brand name as a trademark, and is not binding on the US Trademark Office when it considers an application to register the brand name.
We will continue to monitor developments as these cases continue and the parties “distill” their arguments.