Court says Kona’s motion to dismiss is mostly froth

Pitted

With brand names like Longboard Island Lager, Big Wave Golden Ale, Fire Rock Pale Ale, Wailua Wheat Ale, Hanalei Island IPA, and Castaway IPA, it’s fairly obvious that Kona Brewing Co., a subsidiary of Craft Brew Alliance (CBA), is happy to move product based on a cheery, Hawaiian-island vibe. But plaintiffs Sara Cilloni and Simone Zimmer, filing in the Northern District of California, objected to the labeling and advertising by bringing a class action against Kona back in March.

Kona beer, they claim – the Kona beer sold on the U.S. mainland, specifically – is not brewed in the Hawaiian Islands; it’s produced in mainland breweries. And this discrepancy inspired them to pursue a number of charges, including violations of the California False Advertising Law, the California Consumer Legal Remedies Act and the California Unfair Competition Law.

Island Allure

How much influence can implied Hawaiian origin have on the popularity of a product? Quite a bit, the plaintiffs claim. Alongside the labeling and advertising that is alleged to appeal to consumer sentiments inspired by a Hawaiian origin, they cite Kona’s own brewmaster, who once stated that the Hawaiian water used in the original brews contributed positively to the taste and the quality of the beer. So much so, in fact, that the company installed a water treatment system on the mainland to mimic the original Hawaiian water.

Moreover, the plaintiffs claim, Hawaiian products carry a certain cache on the mainland; they cite massive purchases of island products by Whole Foods as proof. Together these factors lead them to claim that the net impression of Kona’s labeling and marketing is deceptive and that they were injured by paying a premium for an attribute that does not exist.

Is Product Origin a State of Mind?

Leading off with the memorable line “Hawaii is a state as well as a state of mind,” the court blocked a motion to dismiss by the defendant in September 2017. The motion argued that the references to Hawaii were nothing more than non-actionable puffery or were qualified by a clear disclaimer – at best suggestive marketing on which a reasonable consumer would not rely. CBA also noted that five brewery locations were referenced on the product label.

The court responded by noting that for a claim to be actionable, a statement must be “specific and measurable” and capable of being proven true or false. “If the…complaint solely alleged pictures of surfboards and the vague phrase ‘Liquid Aloha’ on the beer packaging, the case would end there,” the court wrote.

However, it went on to find that the Hawaiian address, the Hawaii map pinpointing Kona’s brewery, and the marketing tag “visit our brewery and pubs whenever you are in Hawaii” were specific and measurable claims that could deceive a reasonable consumer. Additionally, the court noted that the list of brewery locations on the label was not “an explicit statement that the beer is brewed and packaged at a particular location.” Moreover, the list was obscured by packaging – and a reasonable consumer should not be expected to open or remove a product from packaging to learn the truth about the purchase.

The Takeaway

In short, companies should ensure their marketing claims are substantiated. If the net impression suggests an implied claim that cannot be supported, it can only be qualified by language that is clear, conspicuous and proximate to the potentially deceptive elements such that a reasonable consumer’s net impression would not be mistaken.