Bottoms Up! Maker’s Mark Defeats “Handmade” Class Action
As previously outlined in an earlier post, many distilleries or liquor manufacturers are facing “labeling” class actions. A consumer in these class actions generally alleges, through various causes of action, that he or she would not have purchased the product, but for the label stating that the product was “handmade” or “handcrafted.”
In Salters v. Beam Suntory, Inc., the plaintiff—on behalf of a class of Florida retail purchasers of Maker’s Mark—brought suit against Maker’s Mark, alleging the following (as succinctly stated by the court): “the Maker’s Mark label says the bourbon is ‘handmade’; the plaintiffs bought bottles of Maker’s Mark because of this statement; Maker’s Mark is not made by hand but is instead manufactured with large machines in a highly mechanized process.”[1]
Maker’s Mark moved to dismiss the class action for failure to state a claim. At oral argument on the Motion to Dismiss, plaintiffs narrowed their claim to a negligent misrepresentation claim. The court noted that plaintiffs’ claims relied upon the assertion that labeling the product as “handmade” is false or misleading. At the Motion to Dismiss stage, however, if a reasonable juror could not find a statement is false or misleading, plaintiffs’ factual allegations do not make relief plausible, and the Motion to Dismiss must be granted. Although the court recognized that the current definition of handmade is “made by hand,” the court nevertheless concluded that the “term obviously cannot be used literally to describe bourbon” and “[n]o reasonable consumer could believe otherwise.”
Ultimately, the court concluded:
"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 the statement is untrue. If “handmade” is understood to mean something else—some ill-defined effort to glom onto a trend toward products like craft beer—the statement is the kind of puffery that cannot support claims of this kind. In all events, the plaintiffs have not stated a claim on which relief can be granted."
Although the Tito’s court opinion rejected this argument at the Motion to Dismiss stage holding that further factual inquiry was required,[2] the Maker’s Mark decision provides precedent for the argument that these cases can be resolved at the Motion to Dismiss stage where no reasonable consumer would be misled by the applicable label.
Under Texas law, consumer reliance is required to assert a negligent misrepresentation claim or a claim that some act was false or misleading under the Texas Deceptive Trade Practices Act (“DTPA”).[3] As a result, if your company is facing class action allegations premised on the claim that your product is not “handcrafted” or “handmade,” then you may want to rely on the Northern District of Florida’s opinion, identifying that no reasonable juror would believe the statement is false or misleading, and seek a Motion to Dismiss in an effort to resolve the dispute early and efficiently.
[1] Salters v. Beam Suntory, Inc., No. 4:14CV659-RH/CAS, 2015 WL 2124939, at *2 (N.D. Fla. May 1, 2015).
[2] Hofmann v. Fifth Generation, Inc., 14-CV-2569 JM JLB, 2015 WL 5440330 (S.D. Cal. Mar. 18, 2015).
[3] Fed. Land Bank Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991) (to state a claim for negligent misrepresentation, a plaintiff must allege that he or she suffered “pecuniary loss by justifiably relying on the representation”); Tex. Bus. & Com. Code § 17.50(a) (a consumer may maintain a cause of action against a defendant for false, misleading, or deceptive acts that are enumerated by the DTPA and where the act was “relied on by a consumer to the consumer’s detriment”).