In June of last year, the Supreme Court decided a rather revolutionary case for the food industry: Pom Wonderful LLC v. The Coca-Cola Company. The case, which was commenced by Pom Wonderful, questioned the label of a competitor’s product, Coca-Cola’s Minute Maid Blueberry Pomegranate juice. The Minute Maid label contained the words “blueberry pomegranate” in greater predominance than other text on the label that indicated the juice was a blend of five fruit juices. In actuality, the Minute Maid Pomegranate Blueberry juice contained 0.3% pomegranate juice and 0.2% blueberry juice, whereas 99.4% of the blend contained apple and grape juice (the remaining 0.1% was raspberry juice). See Pom Wonderful LLC v. The Coca-Cola Company, 573 U.S. ___ (2014), 134 S. Ct. 2228. While this label may seem misleading on its face, Coca-Cola argued its labeling was actually in compliance with FDA rules and regulations. Id. Pom Wonderful, on the other hand, alleged that the use of the label by Coca-Cola was misleading and deceptive under § 43 of the Lanham Act, which allows a competitor to sue another provided it asserts unfair competition from false or misleading product descriptions.
Because the Federal Food Drug and Cosmetic Act (“FD&C Act”), which authorizes the FDA to oversee food safety, does not provide an express or implied private right of action to enforce the Act’s provisions, Pom Wonderful brought a claim under the Lanham Act. The Lanham Act, which prohibits a number of activities, does allow a competitor to bring a private right of action against its competitor for unfair competition arising from false or misleading advertising. 15 U.S.C. § 1051 et seq. Because advertising and labeling are generally not mutually exclusive, the regulation of certain products can present interesting questions, especially in the context of the food and beverages. For example, how do the Lanham Act and FD&C Act interact when a label is in compliance with the FD&C Act and enacting agency regulations, yet may present grounds for unfair competition claims? Such was an issue presented to the Supreme Court last year. In an 8-0 decision, the Supreme Court ruled that competitors may bring Lanham Act claims challenging food and beverage labels regulated by the FD&C Act.
What does this mean for alcohol beverages?
With respect to labeling (and generally speaking), the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) has primary jurisdiction over alcohol beverages. The TTB’s enacting statute is the Federal Alcohol Administration Act (“FAA”). Neither the FAA nor the TTB were mentioned by the Supreme Court in Pom Wonderful, so many ponder how the Supreme Court’s ruling may apply to alcohol beverages. Presumably, the Supreme Court would have to analyze the issue with respect to the FAA. Others suggest that, because Pom Wonderful contains dicta regarding how the FDA treats food differently from drugs (whose labels generally require pre-approval from the FDA), this may mean the Court’s holding would not apply to pre-approved drug labels and the holding may extend to other pre-approved labels like alcohol beverages. See, e.g., POM Wonderful LLC. v. Coca-Cola Co. Sound Preclusion Jurisprudence or Pandora’s Juice Box? However, until this issue is actually examined by the Court—directly or indirectly—it is likely we will see some interesting lower court jurisprudence involving similar issues and implications. For example, as beverage attorney Robert Lehrman explained in one of his prior blog posts, “This case could have enormous implications far beyond FDA labels, and could extend all the way over to TTB labels, TTB formulas, excise taxes, TTB permits, to almost every area that alcohol beverage regulators have firmly controlled in the past.” See Pom v. Coke, Battle of the Misleading Fruits.
Another interesting consideration is that, upon submitting a label application to TTB, an applicant must certify that the representations on the label truly and accurately represent the contents of the beverage product. Specifically:
Under the penalties of perjury, I declare; that all statements appearing on this application are true and correct to the best of my knowledge and belief; and, that the representations on the labels attached to this form, including supplemental documents, truly and correctly represent the content of the containers to which these labels will be applied. I also certify that I have read, understood and complied with the conditions and instructions which are attached to an original TTB F 5100.31, Certificate/Exemption of Label/Bottle Approval.
[Emphasis added.] A bolder question may be whether the TTB perjury statement is strong enough to combat a Lanham Act claim, and how an agency’s pre-approval of a label may impact such claims. This is also yet to be seen.
In recent news, we’ve actually seen a lot of similar claims arise against alcohol beverage companies. While not exactly the same types of suits (i.e., not filed on behalf of competitors), the subsequent lawsuits have presented similar concerns about the labeling of alcohol beverages. For example:
- A group of consumers sued Anheuser-Busch for “deliberately” overstating the alcohol content of its beers. See Anheuser-Busch Accused of Watering Down Several Brands. In December, Law360 reported that the plaintiffs bringing the lawsuit urged the Sixth Circuit to revive the suit and contended that the Pom Wonderful decision invalidated Anheuser-Busch’s defenses (which mostly relied on the Federal Alcohol Administration Act’s tolerance of 0.3% of the stated ABV on the label). See Anheuser-Busch Suit Buoyed By Pom Ruling, 6th Circ. Told.
- In December, two consumers accused Maker’s Mark of false advertising and overcharging customers with respect to the brand promoting its bourbon as handmade on the product’s label when, as alleged by plaintiffs, the product is mass produced through a mechanized process. See Maker’s Mark ‘Handmade’ Claims Are False, Class Says. Case # 3:14-cv-2885-JAH-NLS.
- Similar claims were brought against Tito’s Handmade Vodka with respect to the term “handmade” and against Templeton Rye with respect to the claims “Small Batch” and “Made in Iowa.” (For Templeton, the plaintiffs claim the product is not actually produced in Iowa but is instead distilled and aged in an Indiana-based factory that distilled and ages whiskey for countless other brands.) See Lawsuit: Tito’s Vodka Isn’t Actually ‘Handmade’; see also Al Capone Liked It, But …
- Finally, just last week, it was reported that a class action lawsuit was brought against Angel’s Envy Rye in Cook County, Ill, Circuit Court with respect to “small batch.” Lawsuit: Angel’s Envy Rye is No Small Batch Whiskey.
A quick search of the TTB label database using LabelVision indicates there are well over 700 labels approved since 1998 that have some reference to “handmade”; over 6,000 labels that have a reference to “handcrafted”; and near 1,000 labels that use the term “small batch.” A curious consideration about these terms is that neither “handmade,” handcrafted,” nor “small batch” are actually defined by the TTB or its regulations. Contrast this to fruit juice labels, which have specific rules and regulations on how a juice product can be labeled depending on its contents. The absence of a formal definition could, potentially, weigh in favor of a false advertising claim—especially if one considers how the Court in Pom Wonderful asserted that the Lanham Act and the FD&C Act were designed to be read together, and not one substituting the other. Still, it remains to be seen how the Court would rule with respect to TTB-regulated products.
While the above matters are still pending, it will certainly be interesting to see how different courts interpret and apply the Pom Wonderful ruling in the context of alcohol beverages as well as with respect to class actions. Further, it may be of even greater interest to beverage producers to see how many other similar suits appear in the near future.
For more information on wine or alcohol law, labeling, or food law, please contact Lindsey Zahn.
DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.