Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Fla.: “Homemade” vodka claims hard to swallow, (Sep 25, 2015)

By Michael Menzhuber, J.D., LL.M.

A motion to dismiss plaintiffs’ claims based on statements appearing on the label of a vodka manufactured by the defendants were false and misleading was granted in part and denied in part by the federal district court in Tallahassee, Florida. The court granted the motion to dismiss the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) claims and claims based on Florida’s “bait and switch” advertising statute. The court denied the motion to dismiss the express warranty claim (Pye v. Fifth Generation, Inc., September 23, 2015, Hinkle, R.).

Background. Two individuals purchased bottles of Tito’s Handmade Vodka at local liquor stores. They alleged that they purchased the vodka because the bottle label said that it was “handmade” and made in “an old fashioned pot still.” According to the plaintiffs, the vodka was manufactured with large machines in a highly mechanized process and was not made in an old fashioned still. Based on these allegations, the plaintiffs filed a class action against the manufacturer, Fifth Generation, Inc., and the distillery, Mockingbird Distillery Corporation (collectively, “defendants”) which asserted: (1) violation of the FDUTPA, Florida Statutes §§ 501.201 – 5-1.213; (2) bait-and-switch advertising in violation of Florida Statutes § 817.44; (3) breach of express warranty; (4) breach of implied warranty; (5) negligence; and (6) unjust enrichment. The defendants moved to dismiss all the claims.

False labeling. The court noted that the claims rested on their assertion that the “handmade” and “old fashion pot still” label statements were false and misleading. It determined that the use of the term “handmade”, standing alone, was not sufficient to support the claim because: (1) no reasonable person would understand “handmade” in this context to mean that substantial equipment was not used; (2) if “handmade” meant a carefully monitored process, the plaintiffs did not allege any facts plausibly suggesting that the statement was not true; and (3) if “handmade” was understood to mean something else, then the statement was merely puffery. With respect to the claim regarding the label statement “old fashion pot still”, the court determined that whether this was or was not false could not be properly resolved on a motion to dismiss. Therefore, the court determined that the plaintiffs adequately alleged that the vodka label was false and misleading.

Florida Deceptive and Unfair Trade Practices Act (FDUTPA). The court noted that the FDUPTA, which prohibits selling goods with false or misleading labels, contains a safe-harbor provision under which it does not apply to an act or practice required or specifically permitted under a federal or state law or regulatory action. It further noted that the Alcohol Tax and Trade Bureau (TTB), the federal agency that enforces regulations relating to the distribution of distilled spirits, expressly approved the vodka’s label. Based on its conclusion that the FDUPTA safe harbor applied to the statements on the vodka label, the court determined that the plaintiffs failed to state a claim on which relief could be granted.

Bait-and-Switch. The court noted that, under Florida’s statute which prohibits bait-and-switch, a person is prohibited from offering to sell property or services with the intent either not sell the property or services at all or sell them at a different price than advertised. It determined that this was not what the plaintiffs alleged had happened because their contention was only that they did not get what they thought they were getting. Because the bait-and-switch statute did not apply to misrepresentations of this kind, the court determined that the plaintiffs failed to state a claim upon which relief could be granted.

Breach of Express Warranty. The court determined that the plaintiffs successfully stated an express warranty claim because they alleged that: (1) they purchased the vodka; (2) the vodka was warranted to be “homemade” in an “old fashion pot still”; (3) the vodka was not “homemade” or made in an “old fashion pot still”; (4) the plaintiffs gave notice; and (5) the plaintiffs suffered harm by paying for a product they would not have bought if they had been told the truth.

Breach of Implied Warranty. The court noted that a seller impliedly warrants that its goods are merchantable and fit for the ordinary purpose for which the goods are used. The court determined that the plaintiffs failed to state an implied-warranty claim on which relief could be granted because: (1) by selling the vodka, the defendants warranted that that the vodka was merchantable and fit to drink; and (2) the plaintiffs did not allege that the vodka failed to meet those warranties.

Negligence. The court determined that the plaintiffs failed to state a negligence claim on which relief could be granted because negligence claims ordinarily only extend to personal injury, physical damage to property, and professional services.

Unjust Enrichment. The court noted that recovery for unjust enrichment sounds in quasi-contract and operates to restore funds to the rightful owner when no express contract exists. It further noted that: (1) the plaintiffs acknowledged that a contract existed that governed their relationship with the defendants; and (2) the contract was the basis for their breach of warranty claim. Because an express contract existed, the court determined that the plaintiffs could not recover for unjust enrichment.

The case is No. 4:14cv493-RH/CAS.

Attorneys: Louis Martin Bograd (Center for Constitutional Litigation PC) for Shalinus Pye and Raisha Licht. John K. Londot (Greenberg Traurig, LLP) for Fifth Generation Inc.

Companies: Fifth Generation, Inc.; Mockingbird Distillery Corporation

Cases: Advertising FloridaNews