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| Christine A. Scheuneman |
TTB Label Approval Would Not Likely Entitle Defendants to Protection of State Safe Harbor Provisions
When filing their motions to dismiss the claims against them, liquor makers have argued that they are protected from consumer claims under state safe harbor provisions because the Alcohol and Tobacco Tax and Trade Bureau has preapproved their labels.
TTB is charged with regulating the alcohol industry and preapproves all labels on liquor. This argument, however, has been struck down by both the California and Illinois district courts at the motion to dismiss stage. First, in Hofmann v. Fifth Generation Inc.,[2] brought against the maker of Tito’s Vodka, the court ruled that California safe harbor provisions may not extend to “informal agency action” such as TTB approval of labels, and it is unclear if the meaning of the word “handmade,” which is prominently displayed on the label, is even within the purview of the TTB.
Similarly in Aliano v. WhistlePig LLC[3], brought against the maker of WhistlePig whiskey, the Northern District of Illinois was not convinced that TTB approval was stringent enough to warrant dismissing the case. There was no evidence presented that the terms in dispute (that WhistlePig was “handbottled at WhistlePig Farm”) were expressly reviewed and approved or that the TTB affirmatively investigated or confirmed the validity of the “handbottled” representation. It was also not clear to the court that TTB even has criteria for evaluating the term.
Courts Are Split on Whether “Reasonable Consumer” Could Be Deceived by “Handmade”
While Tito’s argued in Hofmann that no reasonable consumer could be deceived by the word “handmade” on its label because vodka, by definition, is created by heating neutral spirits and distilling vapors that any reasonable person would know must be done by using some sort of equipment, the Southern District of California did not agree and found that at the motion to dismiss stage, there is still the possibility that a reasonable consumer could be misled.
On the other hand, the Northern District of Florida in Salters v. Beam Suntory Inc.,[4] involving Maker’s Mark Bourbon, granted Maker’s motion to dismiss, in part because it definitively found that “nobody could believe a bourbon marketed this widely at this volume is made entirely or predominantly by hand.”
Burden Is Likely on Plaintiff to Meet Difficult Task of Defining “Handmade”
In dismissing the Salters case, the Florida district court clearly put the burden on the plaintiffs to define “handmade” as a necessary part of alleging reliance on the term. The court considered various definitions of “handmade” and found each lacking or inapplicable. To the Oxford English Dictionary definition of “handmade” as “distinguished from work of nature,” the court said that bourbon, like coffee or orange juice, cannot be grown in the wild. The plaintiffs proposed definitions of “made by scratch” and “made in small units.” The court found no evidence that Maker’s Mark bourbon did not fit those requirements. To plaintiffs’ alternative definition of “connotes greater value and trades on current fashion that also brought us craft beer,” the court ruled that “a general, undefined statement that connotes greater value, detached from factual representation, is not actionable.” Such a definition is just a “statement of puffery.”
Just as with cases involving use of the term “all natural” (e.g., Pelayo v. Nestle USA Inc. (C.D. Cal. Oct. 25, 2013), where the plaintiff’s claim was dismissed for failure to provide enough detail as to why the offending ingredients are unnatural), the burden is likely on the plaintiffs to define “handmade” or similar terms — a difficult task, as demonstrated by the Salters case.
Individual Characteristics of Product May Make a Difference
Considerations such as whether a reasonable consumer would be deceived and whether a consumer actually relied on the label at issue may be affected by the individual characteristics of the product. For example, the term at issue is displayed prominently on some labels, such as “handmade” on the label of Tito’s Vodka, whereas on others, it is only printed on the side of the label, such as “handcrafted” on the label of Jim Beam Whiskey.
Depending on how a liquor is actually made, a maker may have a better chance at qualifying as “handmade” under certain definitions. Because Maker’s Mark was able to claim that its product is made from scratch and in small, carefully tended batches, it was able to overcome two of the definitions of “handmade” offered by the plaintiffs in Salters.
—By Christine A. Scheuneman and Elaine Y. Lee, Pillsbury Winthrop Shaw Pittman LLP
Christine Scheuneman is a partner and Elaine Lee is an associate in Pillsbury Winthrop Shaw Pittman's Los Angeles office.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] A suit has not yet been brought under federal law, although federal law and TTB regulations prohibit false and misleading labeling statements, 27 U.S.C. Section 205(e); 27 C.F.R Section 5.42(a)(1).
[2] Case No. 3:14-cv-02569 (S.D. Cal. March 18, 2015).
[3] Case No. 1:14-cv-10148 (N.D. Ill. May 18, 2015).
[4] Case No. 4:14-cv-00659 (N.D. Fl. May 1, 2015).