On August 21, the U.S. District Court for the Southern District of California dismissed a putative class action lawsuit alleging that Beam Suntory falsely advertises its Jim Beam bourbon as “handmade.” Order of Dismissal, Scott Welk v. Beam Suntory Import Co. and Jim Beam Brands Co., Case No. 15-cv-328 (S.D. Cal. Aug. 21, 2015).
The ruling comes less than a month after a different judge in the same court dismissed a nearly identical suit against Maker’s Mark and less than four months after a federal judge in Florida dismissed another would-be class action against Beam Suntory also concerning Makers Mark. [Beam Suntory owns both Jim Beam and Maker’s Mark among other brands.] See our analysis of the earlier rulings at the Brand Protection Blog post, “Maker’s Mark prevails in “handmade” false advertising suit.”
In each of these cases – and in a similar case brought against Tito’s Handmade Vodka – the plaintiffs were consumers who claimed they purchased the defendant’s liquor because its label contained the statement that it was “handmade.” This representation allegedly led the plaintiffs to believe the product was superior in quality to others. The plaintiffs claimed the labels were false or misleading insofar as the process the defendants use in producing their spirits allegedly involves little or no human supervision or involvement.
In his order of dismissal in Welk, Judge Larry Burns analyzed the earlier rulings in the Hoffman, Salters and Nowrouzi cases and found the latter two decisions persuasive. According to Judge Burns, “Welk’s proposed definition of the word ‘handcrafted’ doesn’t fit the process of making bourbon.” Order at 6.
To make bourbon, grains are ground into ‘mash’ and cooked; then yeast is added, and the mixture ferments; then the mixture is distilled, i.e., heated until the alcohol turns to vapor; then the alcohol is cooled until it returns to liquid form, and transferred to barrels for aging. Fermentation, distillation, and aging are necessary to meet the legal definition of bourbon. Machines, including stills and other equipment, have always been necessary to make bourbon.
Id. (citations omitted).
Thus, the court concluded a “reasonable consumer” would not interpret the word “handcrafted” on a bourbon label to mean that the product was literally “created by a hand process rather than by a machine.” Id.
It is worth noting that in Welk, Nowrouzi and Hoffman, the distillers also sought dismissal based on California’s Safe Harbor Doctrine. This doctrine provides that if the legislature permits certain conduct or “considered a situation and concluded no action should lie,” the courts cannot override that determination. See Cel-Tech Comms. Inc. v. L.A. Cellular Tel. Co., 20 Cal. 4th 163, 182 (1999). In other words, “when specific legislation provides a ‘safe harbor’, plaintiffs may not use the general unfair competition law to assault that harbor.” Id.
In these cases, the liquor producers claimed that the federal Alcohol Tobacco Tax and Trade Bureau (“TTB”) reviewed and pre-approved their labels to ensure they complied with applicable laws and regulations thus providing a safe harbor. However, in each case, the Court concluded that it was not clear – at least at the motion to dismiss stage – that the TTB had actually reviewed and approved the specific label claim (i.e., “handmade”) in question.
It is possible that at a later stage, with a more developed record (i.e., on summary judgment), a court would entertain dismissal based on the Safe Harbor Doctrine. But, if distillers continue winning dismissal on “reasonable consumer” grounds, that theory may never be tested.