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Liquor Industry Targeted by False Advertising Class Actions

By Jonathan M. Boulahanis / Nov 25, 2014

A hot new trend in class action litigation is to bring suits against companies for false advertising of company products. In particular, a recent target of these suits is the liquor industry, which is surprising because the Federal Alcohol Administration Act gives the Alcohol Tax and Trade Bureau ("TTB") the authority to regulate advertising of liquor products. However, federal laws, like the Lanham Act, and state laws also protect consumers from deceptive practices in advertising.

At least two well-known liquor products are facing class action lawsuits. First, Templeton Rye Whiskey is defending a potential class action suit in Cook County, Illinois, and in Polk County, Iowa. The putative class plaintiffs have alleged that Templeton deceives consumers and violates Illinois and Iowa law by stating that its products are made in Iowa, and that its recipe is a Prohibition Era recipe. The product contains some stock whiskey made in an Indiana distillery, though the company's owners state that ingredients that give the distinct Prohibition Era flavor are added at the Templeton facility in Iowa.

Tito's Vodka is also facing multiple class action suits, one in a federal court in Florida and another in state court in California. The lawsuits dispute the use of a label stating that the vodka is "hand-made." The consumers claim that the "hand-made" label makes the purchase deceptive, because consumers believe "hand-made" is of a higher quality, while the plaintiffs claim, in reality, the vodka is manufactured similarly to most other vodkas. In response to these claims, Tito's asserts that the TTB approved the brand's label and that Tito's "small-batch distillation process" differentiates it from other vodka brands.

It will be interesting to watch how these suits play out on multiple fronts. First, there is a question of whether individuals can maintain a suit against a company that has passed the government advertising regulations of the TTB and  received specific approval. These suits will likely provide clarity to whether such suits are preempted and the TTB has exclusive authority to regulate, or whether individuals may maintain an action regardless of TTB decision. Additionally, courts may have to analyze how terms like "hand-made" are defined. Finally, these cases may clarify if consumers can rely on terms like "Prohibition Era recipe," "hand-made," "premium," or "best," as a matter of law. 

Please contact Jonathan Boulahanis at 312.985.5930, or another member of Clark Hill's Food and Beverage Team, if you have any questions on the content of this article.