Aren’t the markets better equipped than the courts to handle this?
Recently, a New York based attorney filed a class action lawsuit against Sazerac Company for what it alleges is fraudulent and deceptive advertising centered around Sazerac’s Fireball Cinnamon Brand.
Sazerac makes a popular Fireball Cinnamon Whisky and also makes a Malt Beverage called Fireball Cinnamon. Fireball Cinnamon’s statement of composition on the label reads “Malt Beverage with Natural Whisky & Other Flavors and Carmel Color.
The lawsuit focuses around this statement of composition, as the lawsuit states “Using the words “With Natural Whisky & Other Flavors is a clever turn of phrase because consumers who strain to read this will see how it “Natural Whisky is distinct from Other Flavors.”
The lawsuit indicates that the correct and proper format would be for the statement of composition to read “Natural Whisky Flavors and Other Flavors.”
What’s alleged is that because when a distilled spirit is used to manufacture flavors, it losses its class and type when blended with other ingredients, putting whisky on the label is misleading consumers to believe that the product contains distilled spirits.
The cherry picked plaintiff in this suit is Anna Marquez of Chicago, she stated that she prefers distilled spirits to malt-beverage products and when she noticed the Fireball Cinnamon, she did not immediately notice the difference between the two products. Her expectation was Fireball Cinnamon was a whisky or contained a non-de minimis amount.
Based on this belief, she purchased the Fireball Cinnamon with the expectation that the product contained whisky, which it did not. The lawsuit alleges that if the plaintiff knew the true facts, she would not have purchased the products.
The lawsuit on behalf of a class of consumers is in excess of $5 million. Interestingly enough, the law suit states that “no individual injury is necessary since the focus in only on Defendant’s practices.”
TTB Approval as an affirmative defense
I think the big question in these lawsuits is, should TTB approval provide an affirmative defense for producers?
Federal laws require a producer disclose its contents and its labels should not mislead. Anyone who has ever done a TTB label registration has gone through the back and forth with TTB, and knows that they will pinpoint words for revisions.
Previous to obtaining label approval, Sazerac’s Fireball Cinnamon was required to go through formula approval. During this process it would need to disclose the elements that went into the formula. Its label’s statement of composition would derive from the formula approval process.
In this case Sazerac’s Fireball Cinnamon was submitted as a malt beverage and it contained natural whisky flavors along with other flavors.
It passed a stringent test and nothing in its formula or its label was false.
As the TTB prohibits statements that are misleading, shouldn’t this standard control the legal conclusions in this case.
The complaint itself relies on essentially the words of the plaintiff indicating why they were misled.
But one must ask, should the legal standard of whether the producer is misleading be the rigorous TTB standard or the subjective and vague standard of a consumer?
Read the fine print
Preferring the consumer standard to judge misleading information versus the TTB becomes questionable at best when the facts are examined more closely.
The complaint states that “One writer who saw a “huge Fireball display in front of the cash register  at a gas station” wondered if “th[at] specific store [was] doing something they’re not supposed to be doing[?]” by selling “cinnamon flavored whiskey!”
I guess this begs the question, if you know consumers can’t purchase spirits in a gas station or a grocery store in your state, shouldn’t you be smart enough to know it is not a whisky product.
Second, the Fireball Cinnamon and Fireball Cinnamon Whiskey bottles are different, one says “Fireball” with “Cinnamon Whisky” across the bottom, and says “Whisky with Natural Cinnamon Flavors” The other bottle says “Fireball” with “Cinnamon” across the bottom, and says “Malt Beverage with Natural Whisky and Other Flavors”
The labels are distinct and different, one bottle indicates it’s a Cinnamon Whisky and its statement of composition indicates it’s a whiskey and then indicates how it is flavored. The other bottle indicates that it is Fireball Cinnamon and does not include the word whiskey with cinnamon, which is a major and important difference. Also, the label indicates a malt beverage and not a whiskey and like the other label, includes after its classifications, the flavoring added to the alcohol type.
A simple break down demonstrates the opposing character of these two products.
So again, when the consumer is confused by either the circumstances (where a product is permitted to be sold in certain states) or the writing on the bottle, should we rely on the TTB’s approval or the consumer’s view to carry the day?
As with most class action lawsuits, the key for the plaintiff is to survive a motion to dismiss. If they survive this stage, there is probably a decent chance this case gets settled. But we should ask what does this case do for the betterment of the industry? The injuries seem tenable and are not concretely measured, yet over $5 million is requested for the plaintiffs.
The industry needs a concrete standard for these cases and in my mind, TTB approval should provide producers a defense against vague and ambiguous attacks against producers, because if not, the alcohol industry plays Russian roulette every time they put a label on the bottle.
Finally, if Fireball is wrong shouldn’t this play out in the market? If the consumer is confused and thought they were buying whiskey and they did not, then isn’t it their choice to take issue with Fireball and reduce or stop buying their product. I mean compensating them for accidentally buying a 99-cent bottle is a little extreme, as we know the damages will mostly go to the class action attorneys with the supposed injured party getting next to nothing, as their injury is de minims.
Instead of forced settlements that don’t rectify wrongs and enrich a small group of attorneys, letting consumers show their dissatisfaction through the market remains the best solution!