Distilling the Meaning of "Handmade": Alcohol Companies Suffer Legal Headaches

In the last several months, multiple suits have been filed against alcohol companies challenging claims that their liquors are &"handmade" or locally-produced. These suits may foreshadow additional scrutiny into the industry's advertising practices.

• Maker's Mark. On Friday, December 5, a lawsuit was filed in California federal court, accusing Maker's Mark Distillery, Inc. of false advertising. The suit accused Maker's Mark of advertising its whiskey as "handmade" when it is actually produced by machines. The plaintiffs claim that they paid more for Maker's Mark whiskey because they believed that it was handmade and, therefore, higher quality. The plaintiffs requested damages for negligent and intentional misrepresentation and violations of California's broad False Advertising Law and Unfair Competition Law. As of writing this post, Maker's Mark has not issued a statement about the lawsuit.

• Tito's Handmade Vodka. Similarly, in the fall of 2014, a series of lawsuits were filed against Tito's Handmade Vodka and its parent company, Fifth Generation Inc. Plaintiffs alleged that Tito's marketed its vodka as small batch, "handmade," and "crafted in an Old Fashioned Pot Still." Plaintiffs argue that this labeling and marketing is misleading, however, because the vodka is largely "mass produced" by machine. The first suit was filed in California state court in September -- by mid-October, three additional suits had been filed alleging violations of federal and state consumer protection and alcohol labeling laws in Florida, Texas, Illinois, and New Jersey. In a written statement, Tito's founder, Tito Beveridge, called plaintiffs' allegations misguided and emphasized that the product's labels had been approved by federal officials.

• Templeton Rye. Claims of being "handmade" are not the only recent challenges that have been brought against liquor companies. In September, a suit was filed against whiskey maker Templeton Rye, alleging fraud, unjust enrichment, and violations of Iowa and Illinois consumer protection statutes. Plaintiffs claimed that they paid more for the rye because Templeton advertised it as locally made in Iowa, distilled in small batches, and based on a local Prohibition-era recipe. According to the plaintiffs, however, Templeton Rye buys rye whiskey that is distilled and aged in Indiana and transports it to Iowa, where the rye is blended with other whiskeys and ingredients. Plaintiffs also argue that Templeton Rye is not produced according to a decades-old recipe. In October, the Iowa State Attorney General's Office evaluated the lawsuit and determined that the claims were not frivolous, a threshold requirement of Iowa's consumer protection laws. Speaking to an industry publication, the co-found of Templeton Rye defended the product, calling the whiskey "very unique."

The next step in these cases is class certification, likely to be a challenge for the plaintiffs as we discussed in the recent Skinnygirl Margarita case (another advertising-related lawsuit brought against an alcohol company). In that case, the judge denied class certification and observed that it would be difficult to determine who actually purchased the product, as purchasers do not typically keep their receipts. The Skinnygirl Margarita plaintiffs have filed a renewed motion for class certification, but will still need to provide a method to determine the impacted consumers.

The plaintiffs in the whiskey and vodka cases are likely to face similar challenges with class certification. However, even if class certification in these cases is an uphill battle, defending a lawsuit is still costly. As the Tito's Vodka case demonstrates, a suit in one jurisdiction can frequently encourage "copy-cat" suits in other states. Plaintiffs and consumers are likely to continue taking "shots" at liquor companies -- manufacturers and advertisers should take care to review their advertisements and labeling to minimize the risk of suit, particularly if the alcohol is being branded as "handmade," "small batch" or "locally distilled."

© Arnold & Porter Kaye Scholer LLP 2014 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.