Tag: Maker’s Mark

On National Bourbon Day, Maker’s Mark Toasts to Consumer Protection Reform

June 14th is National Bourbon Day, so it’s a nice time to highlight the resolve of the recent class action lawsuit filed against Maker’s Mark, one of America’s favorite whiskeys, by two consumers who said the company falsely advertised its product as “handmade.”

The suit seized on the word “handmade” used in Maker’s Mark advertising, claiming consumers had been misled. U.S. District Judge Robert Hinkle ruled on behalf of Maker’s Mark, stating that “no reasonable person would understand ‘handmade’ in this context to mean literally made by hand.”

This case is representative of an increasingly common national trend. Similar suits have recently been filed against Tito’s Handmade Vodka and Jim Beam Bourbon.

Consumer advocates say that these class action lawsuits are the most effective way to hold companies accountable for what they allege to be misleading marketing. But real-life consumers, those the litigation is supposed to protect, are often harmed as defendants’ legal costs and sometimes multimillion-dollar verdicts or settlements are passed on in the form of higher prices and fewer choices.

So all across the country, state policymakers are rethinking and reforming their respective consumer protection acts (CPAs) to their original mission of preventing and punishing truly deceptive business practices.

Most state CPAs were modeled on the Federal Trade Commission Act when they were first enacted in the 1960s and 1970s. But since then, many of these laws have come to include expansive amendments and judicial interpretations that now allow lawsuits like the one aimed at Maker’s Mark.

Emory University law professor Joanna Shepherd’s white paper, Consumer Protection Acts or Consumer Litigation Acts?, was published last year and demonstrates this devolution. It begins with the origins of the federal law a century ago when “Congress first sought to define and deter” a “new class of consumer harms” that arose as “the merchant-consumer relationship” evolved rapidly, along with new products and services, retail models, and credit-based payment systems. “Unfair and deceptive acts or practices in or affecting commerce” were prohibited by the broadly worded new law.

But to prevent litigious mischief, Congress purposely limited enforcement of the law to its newly created FTC, prohibiting private lawsuits out of fear that “a certain class of lawyers” would otherwise “arise to ply the vocation of hunting up and working of such suits,” the number of which “no man can estimate,” warned Sen. William J. Stone (D-MO) prior to the act’s 1914 passage.

Fifty years later, the states were no longer willing to leave consumer protection entirely to the federal government. Eventually all 50 states and the District of Columbia adopted their own consumer protection statutes and authorized state attorneys general to enforce them.

By the 1980s, however, many state CPAs were being expanded well beyond their original scope. No longer were these laws enforced primarily by state attorneys general seeking injunctive relief in the public interest. Now they permitted and even promoted private lawsuits seeking significant awards for sometimes theoretical damages and inflated attorney’s fees. Incredibly, some plaintiffs no longer have to prove injuries, demonstrate that they relied on allegedly deceptive representations, or even behaved reasonably in order to prevail in lawsuits.

But here’s to judges like Judge Hinkle who require plaintiffs to explain precisely how they were misled by innocuous advertising terms like “handmade.”  And here’s to those state lawmakers working to refocus their consumer protection laws in the interest of consumers who were truly misled into making a purchase and suffered an actual injury as a result.

Happy National Bourbon Day, everyone.

ARTICLE BY Sherman Joyce of American Tort Reform Association
Copyright © 2015 American Tort Reform Association

Maker’s Mark Defeats “Handmade” Class Action Lawsuit

Could consumers have plausibly believed that one of the country’s top-selling bourbon brands is “handmade”?  Not according to one federal district court in Florida, which recently dismissed a class action alleging Maker’s Mark deceived consumers by labeling its whiskey as “handmade.” The decision by U.S. District Judge Robert Hinkle comes on the heels of a California federal court’s decision not to dismiss outright a similar consumer class action involving Tito’s Handmade Vodka.  Compare Salters v. Beam Suntory, Inc., 14-cv-659, Dkt. 31, (N.D. Fla. May 1, 2015) with Hofmann v. Fifth Generation, Inc., 14-cv-2569, Dkt. 15 (S.D. Cal. Mar. 18, 2015)).  These divergent opinions suggest that courts are still puzzling over just how much credence to grant putative class claims based on allegedly deceptive liquor labels at the motion to dismiss stage, particularly under the U.S. Supreme Court’s decision in Bell Atlantic Corp v. Twombly, 550 U.S. 544 (2007).  In Twombly, the Court made clear that plaintiffs must include enough facts in a complaint to make their claim to relief not just conceivable, but plausible—or else face dismissal.

Salters, the Florida case, is part of a wave of recently filed class actions accusing alcoholic beverage producers of violating state consumer protection statutes.  In the typical case, as here, the plaintiffs claim to have purchased the brand in reliance on allegedly deceptive labeling and contend they would not have purchased it or would have paid less otherwise.  The Salters plaintiffs claimed they were damaged because Maker’s Mark sold “their ‘handmade’ Whisky to consumers with the false representation that the Whisky was ‘handmade’ when, in actuality, the Whisky is made via a highly-mechanized process, which is devoid of human hands.”

Judge Hinkle flatly rejected the idea that this could support a claim.  Citing Twombly, he noted that although whether a label is false or misleading is generally a question of fact, a motion to dismiss should be granted if the complaint’s factual allegations do not “render plaintiffs’ entitlement to relief plausible.”  The court observed that taken literally, all bourbon is handmade, because it is not a naturally occurring product; construed less literally, which was apparently the plaintiffs’ approach, “no reasonable consumer could believe” that bourbon could be made by hand, presumably without commercial-scale equipment, “at the volume required for a nationally marketed brand like Maker’s Mark.”  In any event, court found the plaintiffs’ claims implausible under any definition of “handmade,” writing:

In sum, no reasonable person would understand “handmade” in this context to mean literally made by hand.  No reasonable person would understand “handmade” in this context to mean substantial equipment was not used.  If “handmade” means only made from scratch, or in small units, or in a carefully monitored process, then the plaintiffs have alleged no facts plausibly suggesting that statement is untrue.  If “handmade” is understood to mean something else . . . the statement is the kind of puffery that cannot support claims of this kind.

The court appears to have concluded that when applied to a product as popular as Maker’s Mark, the word “handmade” is more an unactionable “general, undefined statement that connotes greater value,” like describing a bourbon as “smooth,” than a factual representation easily capable of being false or misleading.  Though this may pass the common sense test, it is less clear whether other courts will agree.  In the Tito’s case, for instance, the court declined to accept at the motion to dismiss stage an argument similar to the one that persuaded the Maker’s Mark judge, holding that “the representation that vodka that is (allegedly) mass-produced in automated modern stills from commercially manufactured neutral grain spirit is nonetheless “Handmade” in old-fashioned pot stills arguably could mislead a reasonable consumer.”

These cases highlight the need to carefully examine product labeling and advertising claims and consider whether consumers (or plaintiffs’ attorneys) could challenge them as untrue.  This is relatively simple when claims involve factual issues such as where a product is produced, but less so with words like “handmade,” which could arguably qualify as either non-actionable “puffery” or a quantifiable claim.

ARTICLE BY Jennifer Aronoff of McDermott Will & Emery
© 2015 McDermott Will & Emery