Last month, a federal district court in Los Angeles refused to dismiss a putative class action lawsuit filed against Asahi Beer U.S.A., Inc. (“Asahi”) amidst allegations that the brewery’s Asahi Super Dry beer labels are deceiving consumers.
How can a brewery lawyer help keep craft breweries on schedule and legally compliant?
Asahi Super Dry – Canadian Brewed, U.S. Distributed
Asahi Breweries, Ltd., which began selling beer in Japan in 1987, established the Asahi U.S. subsidiary in 1998. Since 2004, Asahi’s Super Dry beer distributed in the United States has been brewed and bottled under Asahi’s supervision by Molson in Vancouver, Canada.
The Japanese-style rice lager bears the “Asahi” name in English; “Asahi beer” and “Super Dry” in Japanese Katakana script; and “dry taste” in Japanese Kanji characters. Each Asahi Super Dry bottleneck label and six-pack carton includes the disclaimer “BREWED AND BOTTLED UNDER ASAHI’S SUPERVISION BY MOLSON CANADA, TORONTO, CANADA. IMPORTED BY ASAHI BEER U.S.A., INC. TORRANCE, CA PRODUCT OF CANADA.”
Asahi Sued over Beer Labels
On April 5, 2017, Alexander Panvini filed a putative class action lawsuit against Asahi in the U.S. District Court for the Northern District of California. Five days later, Matin Shalikar filed a similar putative class action against Asahi in the Central District of California (Case No. 17-cv-2713). The two named plaintiffs ultimately joined forces in the Los Angeles lawsuit, alleging that Asahi’s beer labels deceive consumers in violation of, inter alia, California Consumer Legal Remedies Act, California Unfair Competition Law and California False Advertising Law.
According to Shalikar and Panvini’s Second Amended Complaint, “the Plaintiffs and other members of the proposed Classes purchased the Product reasonably believing it was brewed in Japan,” and would not have paid “premium” prices for Asahi Super Dry had they known that the beer was brewed in Canada.
In June 2017, Asahi filed a motion to dismiss the subject complaint, claiming that:
- reasonable consumers would not be misled by its beer labels; and
- the U.S. Treasury’s Alcohol and Tobacco Tax and Trade Bureau’s (“TTB”) Certifications of Label Approval (“COLAs”) for Asahi’s Super Dry beer labels creates a safe harbor.
Asahi’s Motion to Dismiss Denied
On October 16, 2017, the Court denied Asahi’s motion to dismiss. The Court was unpersuaded by Asahi’s arguments, holding that the beer labels’ Japanese elements “could give rise to a reasonable inference or belief that the Product was produced in Japan.”
Further, the Court found that “Defendant has not met its burden of showing that the COLA issued for the Product in 2014 has the force of law,” calling into question whether the TTB label approval process was formal and deliberate enough to carry such weight.
How a Craft Brewery Lawyer Can Help
Professional plaintiffs’ attorneys are filing (and threatening to file) an increasing number of class action lawsuits against advertisers whose product labels and other marketing materials could be construed as misleading to consumers. Likewise, beyond private legal risks, such as the above-referenced actions, federal beer regulations are often complex, and the TTB licensing and approval process is notoriously meticulous. Craft breweries must also comply with applicable state and local laws, rules and regulations. Working with a brewery lawyer can help keep craft brewers on schedule and protected from substantial liability.
Likewise, a brewery lawyer can help address a number of related legal concerns, such as:
- Obtaining COLAs for beer bottles and cans;
- Business entity formation and counsel;
- Trademark registration, protection and enforcement;
- Distribution agreements, employment agreements, commercial lease agreements and other craft brewery-related contracts; and
- The purchase or sale of a craft brewery.