Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—SDNY: Class Certification Denied in Proposed Class Action Complaint Over Skinnygirl Margarita Marketing, (Jan 16, 2013)

By Tobias J. Gillett, J.D., LLM.

A Massachusetts purchaser of an alcoholic beverage sold as a natural food product when it allegedly contained a preservative cannot proceed with a proposed class action complaint under New York’s deceptive acts and practices statute against the manufacturers because his claims would not be typical of the proposed class, the federal district court in New York has ruled (Rapcinsky v. Skinnygirl Cocktails, LLC, January 9, 2013, Oetken, J.).

The purchaser, a Massachusetts resident, bought the beverage, “Skinnygirl Margarita,” for his wife at a Massachusetts convenience store. She had first tried the product at a party, without seeing the bottle, and he bought it for her “because I love my wife.” He stated that he purchased a bottle to relieve her stress, that the price “could have been $250” and he “would have bought ten of them,” and that he bought a second bottle to complement the first when offering them to guests.

The purchaser alleged that he had believed the product “was ‘All-natural’ and contained only ‘100% Blue Agave tequila,’ Agave nectar and caramel color” due to the manufacturers’ representations. He claimed he later discovered the product contains the preservative sodium benzoate and mixto tequila, allegedly a “Tequila by-product” that is “essentially a mash of Tequila and some unknown additives (rarely organic).” He alleged that these facts contradicted the labeling of the beverage, which contained the statements “All-natural,” “With Natural Flavors,” and “the margarita you can trust,” as well as the healthy lifestyle associated with the product due to its marketing.

The beverage was originally manufactured by Skinnygirl Cocktails, L.L.C., but Beam Global Spirits & Wine, Inc. acquired the Skinnygirl Margarita trademark and assets in 2011, following which Skinnygirl Cocktails, L.L.C. changed its name to SGC Global, L.L.C. The purchaser brought a purported class action complaint against all three companies, alleging violations of the New York General Business Law and the New York Agriculture and Markets Law, among other claims.

The manufacturers opposed certification of his proposed class, arguing, among other grounds, that his claims were not typical of the putative class and would be subject to unique defenses. The court explained that Federal Rule of Civil Procedure 23(a) requires that “the claims or defenses of representative parties are typical of claims or defenses of the class.” New York’s Deceptive Acts and Practices statute prohibits “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state,” while New York’s Agriculture and Markets Law prohibits manufacturing or selling any “adulterated or misbranded” food article “within this state.”

Here, although the court acknowledged that the purchaser would share the “same, central claim” as the other members of the class, who would each allege harm from either “(1) ingesting a non-natural substance or (2) paying a premium for an ‘all natural’ product,” the court nonetheless found that his claims would not be typical of his putative class. The purchaser had bought both bottles of Skinnygirl Margarita at a Massachusetts convenience store, meaning, in the court’s view, that “the laws he invokes do not protect his purchases.” Therefore, his claims would subject to a defense that would not be typical of the defenses available against the class of New York consumers he sought to represent.

Moreover, the court observed in a footnote that it had “serious doubts as to the causation element of [the purchaser’s] claims,” and that defenses specific to his claims would likely become the focus of the litigation. Although a plaintiff would not have to show reliance on a materially deceptive statement to state a claim under the Deceptive Acts and Practices statute, the plaintiff would still have to show that the “defendant’s material deceptive act caused the injury.” Here, the court noted that the purchaser had “stated that he would have purchased the Skinnygirl bottle whatever the price, given his home situation, and given his desire to please his wife.” Therefore, his claims suffered from a causation problem that would “focus the litigation on the particularities and factual circumstances of [his] own purchase.”

The court also found that his claims for breach of express warranty and promissory estoppel would not satisfy Rule 23(a)’s typicality requirement, for similar reasons. Therefore, the court denied his motion for class certification.

The case is No. 11 Civ. 6546 (JPO).

Attorneys: Thomas M. Mullaney (Law Offices of Thomas M. Mullaney) for Christopher Rapcinsky. Philip Harry Cohen (Greenberg Traurig, LLP) for Skinnygirl Cocktails, LLC Donald I. Strauber (Chadbourne & Parke LLP) for Beam Global Spirits & Wine, Inc.

Companies: Skinnygirl Cocktails, LLC; Beam Global Spirits & Wine, Inc.

Cases: StateUnfairTradePractices Advertising ConsumerProtection NewYorkNews