Jim Beam’s “Crafty” Advertising Questioned by Class Action Lawsuit

August 07, 2015

Many alcohol companies have been under fire for making false advertising claims about the production of their alcohol. Oftentimes, they hype their spirits as being “handmade” or “locally produced” on the labels. In turn, consumers are willing to pay extra money for products that are purportedly made by individuals rather than machines.

Beam Suntory, the maker of Jim Beam bourbon, promotes its bourbon as “handmade.” The label specifically states that the bourbon has been “Handcrafted Since 1795”, with the words “Family Recipe” underneath. The inference from these buzz words is that with all the special care taken at the Beam distillery, you’re drinking a better bourbon.

A class action lawsuit[1] for negligent and intentional misrepresentation and violations of California’s broad False Advertising Law and Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17500; 17200 has been filed in the Southern District of California. The complaint alleges Jim Beam’s bourbon is made on an automated assembly line that involves little to no human interaction, let alone skill. According to the complaint, the distinction of being “handcrafted” from a “family recipe” garners a premium price. A 1.75l bottle of bourbon can sell for as low as $13.49, whereas Beam’s version sells for $33.99.

Beam Suntory has issued a statement calling the lawsuit “frivolous.” It alleges the “handcrafted” claim is on the label on the back of the bottle and is in very small print (1/16 of an inch high to be exact). It argues the advertisement was too small to be noticeable and therefore unlikely to deceive a “reasonable consumer.” Beam Suntory has also filed a motion to dismiss, invoking the “safe harbor doctrine.” It argues that because alcohol bottle labels are pre-approved by the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), a federal agency, they are immune from the plaintiffs’ claims.

Although there has not been a ruling yet on the Motion to Dismiss, this argument failed in a similar case. The makers of Tito’s Handmade Vodka were also sued in the Southern District of California in a false advertisement class action suit for claiming it was a “handmade” vodka on its label. The Court was not persuaded that Tito’s label should be insulated from scrutiny because it was approved by the TTB.  The Court ruled that TTB’s approval process is not a formal agency action and the TTB does not typically focus on or fully investigate “handmade” claims on labels.  The Court’s ruling is in keeping with the TTB’s longstanding rule that its approval of a label does not equal approval of the brand name as a trademark, and is not binding on the US Trademark Office when it considers an application to register the brand name.

Scott Welk v. Beam Suntory Import Co., et al., Case No. 3:15-cv-00328, in the U.S. District Court for the Southern District of California.

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