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Alleged Unfair and Deceptive Trade Practices Lawsuit for Hawaiian Beer Brewed in Oregon

DRS-head-shot-200x300On September 1, 2017, a federal court issued an order permitting a putative class action lawsuit against Craft Brew Alliance, the owner of the Kona Brewing Company beer brand, to move forward.   The lawsuit, Broomfield v. Craft Brew Alliance, No. 17-cv-01027-BLF (N.D. Cal. Filed Feb. 28, 2017), alleges that Craft Brew Alliance engaged in unfair and deceptive trade practices by packaging beer sold under the Kona Brewing Company name in a manner that led the plaintiffs to believe they were purchasing beer brewed in Hawaii, when in actuality, the beer was brewed in the continental United States.  Broomfield v. Craft Brew Alliance, 2017 WL 383843 (N.D. Cal. 2017).  Specifically, the plaintiffs allege that the outer packaging of six and twelve packs of Kona beer, which includes Hawaiian imagery, the statement “Liquid Aloha,” a map of Hawaii with the location of the Kona brewery marked, the address of Kona’s Hawaii brewery, and the statement “visit our brewery and pubs whenever you are in Hawaii” can lead a reasonable consumer to believe that the beer was brewed in Hawaii.  Id. at *1.  While the address listed on the packaging is the address for Kona’s brewery, only the draft Kona beer sold in Hawaii is brewed there—all bottled and canned Kona beer is brewed in Oregon, Washington, New Hampshire, and Tennessee.  Id.  The plaintiffs allege that they paid a premium for Kona beer believing it to be Hawaiian and brought claims for violations of California’s consumer protections laws, breach of warranties, fraud, and misrepresentation.  Id. at *2.

Craft Beer Alliance filed a motion to dismiss the complaint arguing that the statements on the Kona packaging are at most “mere puffery” and that reasonable consumers cannot interpret the packaging to mean that the beer was brewed in Hawaii, as well as that the claims fail to state a sufficient claim upon which relief can be granted because the labels of the bottles and cans identify all five locations that Kona is brewed.  Id. at *6.  The court, however, found that the statements and imagery on the packaging, particularly the map of Hawaii identifying the Kona brewery, the Hawaii address of the brewery, and the invitation to visit the Hawaii brewery could possibly lead a reasonable consumer to believe that the beer was brewed in Hawaii.  Id. at 7.  The court also stated that the identification of all five breweries on the labels of the bottles and cans is insufficient to eliminate any potential confusion because consumers are not required to remove bottles and cans from their outer packaging to ascertain whether the representations on the packaging are misleading.  Id.  The court therefore denied Craft Beer Alliance’s motion to dismiss.

The court’s ruling differs from other recent rulings in lawsuits against the makers of Foster’s (Nelson v. MillerCoors, LLC, 2017 WL 1403343 (E.D.N.Y. 2017)), Red Stripe (Dumas v. Diageo PLC, 2016 WL 1367511 (S.D. Cal. 2016)), and Sapporo (Bowring v. Sapporo, 234 F.Supp.3d 386 (E.D.N.Y. 2017)), all of which dismissed similar putative class action claims because the labels identified that the beers were brewed in the United States, not in the foreign countries from which the plaintiffs contended they were lead to believe the beer was produced.  The ruling, however, is not unprecedented.  In Marty v. Anheuser-Busch Companies, LLC, 43 F.Supp.3d 1333 (S.D. Fla. 2014), a class action claim against the maker of Becks, Anheuser Busch, for marketing that allegedly deceived the plaintiffs into believing Becks was brewed in Germany, not the United States, was permitted to proceed despite the labels stating that the beer was brewed in the United States.  Anheuser Busch eventually settled the lawsuit for $20 million.

With many craft breweries opening second breweries far from their origins – for example, Sam Adams Boston Lager is primarily brewed in Ohio and Pennsylvania, while California’s Sierra Nevada and Colorado’s New Belgium are both now also brewed in North Carolina – breweries are sure to follow the proceedings in the class action lawsuit against Craft Brew Alliance to determine the risk associated with their traditional marketing imagery and slogans relating to a beer’s origins.

 

David Scott is an associate at Kang Haggerty & Fetbroyt LLC and concentrates his practice on business litigation matters such as partnership disputes, contract disputes, civil RICO, and breach of fiduciary duty.  David also devotes significant aspects of his practice to securities litigation, class action cases and creditor’s rights.