This case won't improve this blog's MPAA rating

Christopher A. Cole of Manatt Phelps Phillips sent word of a Manatt client’s recent victory in CKE Restaurant v. Jack in the Box, Inc. (C.D. Cal. 2007). Here’s Manatt’s description of the case:

Jack in the Box has been sued by Carl Karcher Enterprises (owner of Carl’s Jr. and Hardees restaurants) over its television commercials touting its new “100% Sirloin Burger.” In the commercials, Jack, the clown-headed fictional CEO of Jack in the Box, makes fun of its competitors’ products made from Angus beef by using a play on the word “Angus,” but does not mention any specific competitor by name. In one commercial, Jack is in a meeting when he points to an area on a butcher’s diagram and says: “For those of you not from Texas, that’s the sirloin area.” An employee raises his hand and says: “Jack, our competitors serve Angus burgers. Could you point to the Angus area?” Jack responds: “I’d rather not.” In the second commercial, an employee gives a report on what the competitor is doing with its Angus burger while her co-workers laugh each time she says the word “Angus.” Jack then describes the new “100% Sirloin Burger” to his staff and asks if there are any questions. An employee raises his hand and says: “Are you saying that people will find our sirloin more attractive than their Angus...es?” Laughter erupts. (The commercials can be viewed in full at www.jackinthebox.com). [Editor’s note: or on YouTube.]

Plaintiff, which has heavily promoted its Angus burgers, alleged state and federal false advertising claims based on the theory that consumers would think that Angus burgers were from the “unsavory end of the cow.” Angus is a breed and sirloin is a cut, so the commercials compare, as it were, apples and oranges. That can be false advertising in some circumstances – for example, when a pregnancy test touts itself as a “one-step” test compared to competing multiple-step tests, but counts physical steps for the former and chemical reactions for the latter.

Here, the ads allegedly claimed that sirloin burgers are superior to Angus burgers, and falsely implied that Angus burgers came from cows’ anal areas by emphasizing phonetic similarity between Angus and anus. Since literal falsity wasn’t at issue, the Lanham Act claims required evidence of deception; plaintiff offered a pilot survey. The pilot survey instructed consumers to answer questions based only on the commercials they saw, then asked them whether “Angus” referred to a cow part or a cow breed (with both/neither/don’t know options). Then it asked whether the commercial affected the likelihood they’d buy an Angus burger. The court found the survey questions leading, and criticized the survey for not offering consumers an open-ended opportunity to give their own interpretations of the ad. Moreover, the court deemed the survey to be worded in a way that discouraged consumers from indicating that they got the joke.

Likewise, plaintiff’s survey didn’t persuade the court on materiality. Seventeen percent of respondents said they were less likely to buy Angus burgers as a result of the commercial, but 14% said they were more likely to do so. (If these results are accurate, defendant won the false advertising battle but may be losing the advertising war.) The court thought that these results showed that consumers are not as “unsophisticated and gullible” as plaintiff contended. Also, asking about consumers’ general feelings about Angus burgers didn’t provide any evidence that their feelings about Carl’s Jr. or Hardees in particular had changed.

Requiring a showing that a particular statement is material through survey evidence is a relatively recent trend; in the past, the type of statement has often been enough for the court to conclude that it was material, and beef quality would have been a reasonable candidate for that treatment. To my knowledge, courts have not required survey evidence of materiality in literal falsity cases, even though such survey evidence would logically be required just as much when the statement was literally false as when it was misleading.

Separately, plaintiff argued that injury could be presumed because the advertising was comparative, but the court disagreed, because there was no direct reference to plaintiff (and there are many competitors in the fast food market, despite the ad’s reference to “our competitor”).

Plaintiff’s state law claims failed because the requirements of a California false advertising claim are “quite similar” and “substantially congruent” to those of the Lanham Act. Inexplicably, plaintiff failed to point to the California state cases that reject application of the Lanham Act’s false/misleading distinction to California law, allowing a plaintiff to prevail without survey evidence of misleadingness. (Well, the explanation is that they’re state cases, and Lanham Act litigators rarely pay attention to state cases; moreover, having determined to reject the Lanham Act claim, the court is extremely unlikely to find the ads misleading based on its own analysis of the ads.)

Finally, the court rejected defendant’s unclean hands defense, which was that plaintiff’s own advertising had engaged in similar techniques. While one of plaintiff’s ads equated milkshakes to shaking a cow, and another might be understood to equate chicken nuggets with testicles, neither suggested that the food itself came from an unsavory part of the relevant animal, and thus the ads were neither misleading nor relevant to this claim.

reasonable consumers wouldn't think Dunkin Donuts Angus Steak was intact piece of meat

Chen v. Dunkin’ Brands, Inc., No. 18-3087-cv, --- F.3d ----, 2020 WL 1522826 (2d Cir. Mar. 31, 2020)

Plaintiffs sued Dunkin for deceptively marketing the Angus Steak & Egg Breakfast Sandwich and the Angus Steak & Egg Wake-Up Wrap, alleging that Dunkin deceived consumers into believing that the Products contained an “intact” piece of meat when the products actually contained a ground beef patty with multiple additives. There wasn’t jurisdiction over the out of state plaintiffs’ claims, and no reasonable consumer would have been fooled under GBL §§ 349 and 350.

All three challenged ads “conclude with multiple zoomed-in images that clearly depict the ‘steak’ in the Products as a beef patty.” And “steak” doesn’t always mean a slice of meat;  it is also defined as “ground beef prepared for cooking or for serving in the manner of a steak” by the Merriam-Webster Online Dictionary, as in chopped steak, hamburger steak, and Salisbury steak.  In the context—the sandwiches cost less than $4 and less than $2 respectively, and they’re marketed as grab-and-go products that can be consumed in hand, without the need for a fork and knife—a reasonable consumer would not be misled into thinking she was purchasing an “unadulterated piece of meat.”

ABA Antitrust section: consumer protection roundup

ABA Antitrust Section Spring Meeting

Falsity Fallout: The Evolution of the Falsity Standard in Recent Advertising Cases

Session Chair and Moderator:

Christie L. Grymes, Kelly Drye Collier Shannon, Washington, DC

Lesley Fair, Senior Attorney, Federal Trade Commission, Washington, DC

On the FTC’s radar: (1) Health claims. The Q-Ray case involved 7 studies allegedly substantiating the health claims, but the FTC staff rebutted them all. An important issue: a product that works just because of the placebo effect can’t make a health claim. Judge Easterbrook was concerned that products that “work” because of the placebo effect would deter people from using treatments that actually work and also have a placebo effect. Easterbrook characterized Q-Ray’s alleged substantiation as “bunk” in the opinion.

Easterbrook said testimonials aren’t substantiation – they can’t prove cause and effect. This bolsters the FTC’s position that testimonials aren’t substantiation, but rather create the need for substantiation. The type of claim controls what type of substantiation is required: when you make health claims, you are likely to need double-blind placebo-controlled studies. This isn’t a heightened standard but an ordinary application of substantiation rules.

Childhood obesity and green claims are other FTC concerns.

(2) Promotional practices: do-not-call is here to stay. Recent settlements with Craftmatic, ADT, and Ameriquest resulted in a total of $7.7 million in civil penalties, involving things like using a sweepstakes form to request phone numbers and treating that as permission to engage in telemarketing. One of the cases involves a corporate VP individually: advertisers, take note.

Budget: alleged that Budget falsely claimed that those who returned cars with full tanks wouldn’t pay a fee, but those who drove short distances were charged for doing so. And when people complained, they were told they’d have to go back inside, which most people returning cars didn’t want to do. Company’s defense: additional fee was disclosed elsewhere; the FTC didn’t think that was good enough, both because it was confusing and because the “no charge” ad operated as a bait and switch.

Blue Hippo: For consumers with bad credit, promised a computer after making 13 automatic payments. But if in that time, consumers changed their minds for any reason, they couldn’t get their money back – FTC alleged that failing to disclose this clearly and conspicuously was a deceptive practice. Result: $3.5-5 million in consumer redress.

Rebates: FTC had a workshop on the subject. Soyo: ads said rebate checks would come in 10-12 weeks, but the 90-95% of consumers didn’t get their money within that time. InPhonic: consumers who turned in their rebate materials “too early” – company set up the rebate so that consumers had to wait 3-6 months to file. The effect on “breakage” as the industry calls it was profound. If they sent in claims before that, their rebates were denied. The FTC alleged unfairness.

Internet-based lead generators: ValueClick/Adaractive – little messages on websites saying “you’ve won X.” The FTC alleged that getting the free product required navigating a ziggurat of layers – starting with a requirement that consumers buy a small-ticket item, luring them in. But to get to the top, consumers had to buy an expensive satellite TV subscription or finance a car. There were significant civil penalties. The “Sound of Music” principle: When you promise something for free, you can’t require consumers to “climb every mountain, ford every stream, chase every rainbow” before they claim their prizes.

(3) Information security. ValueClick’s privacy policy promised certain levels of encryption and safety measures, yet its sites were vulnerable to a SQL injection attack. The FTC did not allege that this had lead to a breach. The FTC standard is reasonableness: it was unreasonable to fail to protect consumers from this foreseeable problem. Another case: American United mortgage papers were found in a dumpster; this violated rules that confidential consumer information should be securely destroyed, not dumped. The “Life is Good” website suffered a breach and names and credit card numbers due to a SQL injection attack, and the FTC alleged a violation.

FTC.gov/infosecurity offers a toolkit of materials for consumers. For law firms: you’re free to take FTC guides and disseminate them with the FTC’s name on them or with your own. (No attribution rights here!)

(4) Cautionary tale: Enzyte, the male enhancement product. FTC brought a case alleging that consumers were offered “free samples” that turned into automatic shipments and credit card charges, making it hard for consumers to cancel. Company officials were later criminally indicted and convicted. One defendant was convicted of conspiracy to obstruct FTC proceedings. There was a multimillion-dollar forfeiture.

Julie S. Brill, Assistant Attorney General, Vermont Attorney General’s Office

Montpelier, VT

The AGs have been active over the past year.

Subprime mortgages, of course. Many settlements for falsity in advertising and marketing from institutions like Ameriquest, but now there’s devolution from the big players to focus on the smaller players who’ve caused the biggest problems. Fifty-plus investigations pending into lenders and brokers, including Countrywide. Settlements define what mortgage terms are presumptively unfair. Scams from “mortgage rescue” operators are also a great concern; people in desperate circumstances are duped into signing over title to their houses. Other areas: statements by people in the secondary market; appraisers’ practices.

Initiatives: Iowa’s foreclosure rescue hotline; State Foreclosure Prevention Working Group. The problem is, as we’ve seen, getting the servicers actually in touch with homeowners. Once that happens, half can work out a solution.

The AGs have found that most problems in subprime occur before a rate reset, which means that the loans were inappropriate, teaser rates aside.

Health care. Oxycontin: 26 states plus DC settled with Perdue Pharma for $19.5 million over allegations of off-label marketing and failed to disclose abuse and diversion risks. Guidant defibrillator: 35 states plus DC settled for $16.75 million over a redesign, when they continued to sell 4000 defective devices while knowing they were subject to shorts. Guidant agreed to do more disclosure and add $1 million to its warranty program. Pharmaceutical benefit managers: grease the wheels between pharmacos and employers by purchasing large volumes and negotiating rebates; they engage in aggressive “switch” programs to save money. Settlement with Caremark: 28 states plus DC, $38.5 payment to the states, plus reimbursement to consumers for costs they may have occurred in switching statins.

Product safety, especially lead. California recently sued a large number of major toy manufacturers, alleging that they knowingly exposed consumers to unlawful quantities of lead and failed to disclose the risks. Alcohol drinks: “Cocaine,” advertised as “speed in a can.” Illinois and Connecticut AGs ordered it removed from shelves in May 2007, while Texas obtained a preliminary injunction against it.

Insurance and securities: As baby boomers age, annuities will be a bigger issue in consumer protection. Settlement between Aetna and NY: Aetna developed a doctor ranking system that they represented was based on quality, but really it was based on cost to the insurer.

Privacy and Information Security: The states followed FTC action on Choicepoint, and there are lots of state privacy laws. The AGs have been very concerned about social networking sites, especially age verification. E.g., requiring MySpace to rapidly move into age and identity verification, and getting MySpace and Facebook to focus on complaints about inappropriate conduct and contacts. 49 states also reached agreement with AOL about how it dealt with people who sought to cancel service.

August T. Horvath, Heller Ehrman LLP, New York, NY

Highlights in competitor and consumer lawsuits:

Axcan v. Ethex: Claims of drug equivalence—FDA rules didn’t preempt the lawsuit because the definition of equivalent can be derived without reliance on the FDA; Horvath is a bit bothered by the result because there was no evidence of what the relevant consumers understood “equivalent” to mean.

Brooks v. Topps Co.: Claims that a story about a baseball player’s nickname was false weren’t actionable.

CKE v. Jack in the Box: defendant’s TV ads contrasted their sirloin hamburgers to “Angus” burgers, where the ad suggested that the sirloin area of a cow is better than the “angus” area of a cow, relying on the play with “anus.” The district court found this wasn’t false, rejecting a consumer survey. Other restaurants advertise “Angus” beef but don’t explain why that’s a good thing, and Horvath thought the ads were a funny way of showing the meaninglessness of the “Angus” label.

Morton Grove v. National Pediculosis Ass’n: a nonprofit sued over an allegedly competing lice comb. Defendant claimed that it wasn’t a commercial competitor, but the court agreed that it sold a competing product, even if the sales went to fund nonprofit activities.

The seduction industry: men who teach other men how to meet and seduce women. Parker v. Learn the Skills Corp., 2008 WL 108674 (D. Del.), alleging that one such teacher set up a hate site about the other. The judge found the statements not false but opinion, and to be about the competitor rather than the competitor’s services. Because the statements were “juvenile,” there was no Lanham Act claim, though Horvath considers this a bit of a non sequitur.

Proctor & Gamble v. Ultreo: disclosure of substantiating surveys.

Russian Standard Vodka v. Allied Domecq: A love letter to the NAD.

DirecTV case: Horvath called attention to the court of appeals’ finding that the website comparison was puffery because the cable picture was so obviously fuzzy. He pointed out that, given that everyone accepted that digital cable and satellite HD are equivalent, it’s not clear why this isn’t an exaggeration of a false claim and thus still false.

Cert. was just denied in the Phoenix of Broward case. Petitioner had argued (correctly) that Conte Bros. is only supposed to increase the scope of Lanham Act standing, not shrink it when applied to actual competitors.

Barbara’s Sales, Inc. v. Intel: Changing from Pentium 3 to Pentium 4 is not inherently a statement of improvement, and even if it were, that would be too vague to be actionable.

Druyan v. Jagger (SDNY): a lawsuit against Mick Jagger & others because Jagger cancelled a concert when he got ill, even though the concert promoter offered a ticket for another performance. The disclaimers on the concert ticket were adequate: dates and times may change without warning; the concert might not take place as scheduled. The plaintiff had no recourse for her incidental and consequential damages. You can’t always get what you want.

Lawsuits against Coca-Cola over Enviga have foundered on failure to allege ascertainable loss.

Pervasiveness of conduct: L.A. Limousine v. Liberty Mutual Ins. Co. (D. Conn. 2007): screwing up one insurance claim doesn’t violate consumer protection law; you need to allege a course of conduct. Another NJ case involved a seller who sold the same car to many different people—Slavick v. McKinney (N.J. Super. A.D. 2007)—the trial court found that defendant wasn’t in the “business” of selling cars, but just sold this one car many times. The court of appeals reversed because he’d sold other cars before.

McKinnis v. Kellogg USA (C.D. Cal. 2007): based on a couple who wanted to buy healthy products for their kids, and argued that Froot Loops was deceptive because it contains no fruit. They lost because the ingredients are on the box, and “Froot” is not fruit. The same people sued over Trix, Fruity Cheerios, GoGurt, and Kix. The same result: you’re allowed under the FDCA to describe the “flavor profile” – what it’s supposed to taste like.

A word on expert witnesses: MySpace sued a spammer who registered 11,000 profiles; defendant proferred a witness to testify on consumer perceptions and social networking sites, but the witness was an aerospace engineer. The court gave his testimony no weight. MySpace v. Wallace, 498 F. Supp. 2d 1293 (C.D. Cal. 2007).

Parker v. Howmedica, 2008 WL 141628 (D.N.J.): NJCFA claim over a squeaky artificial hip. Emotional distress isn’t an available source of damages; if you just lived with the squeak, you have no remedy.

When you can sue medical practitioners: Michael v. Mosquery-Lacy: a woman who had peridontal work done sued because she repeatedly asked her provider not to use animal bone, only human bone, in her jaw reconstruction, but the provider used cow bone instead. The court allowed the case to proceed, but said she’d have to show damage to property at trial, not just distress over the presence of cow bone. Usually medical practice is off limits, but here the representations are at issue, as distinct from medical practice. Contrastingly, a Conn. case, Rosenberg v. Langdon, refused to allow a malpractice-type claim to be recast as consumer protection when the plaintiff suffered burns.

malt "cocktails" with no wine or spirits were plausibly misleading

Cooper v. Anheuser-Busch, LLC, 2021 WL 3501203, No. 20-CV-7451 (KMK) (S.D.N.Y. Aug. 9, 2021)

Plaintiffs alleged that the labels on the “Ritas” line of beverages (Lime-A-Rita Sparkling Margaritas, Sangria Spritz Sparkling Sangria Cocktail and Rosé Spritz Sparkling Rosé Cocktail, and Mojito Fizz Sparkling Cocktail) were deceptive and misleading, generating claims for (1) violations of §§ 349 and 350 of the New York General Business Law, (2) breach of express warranty, (3) common law fraud, and (4) unjust enrichment. The court partially granted and denied the motion to dismiss.

The Margarita Products allegedly prominently display “LIME-A-RITA” and “SPARKLING MARGARITA,” with an image of a margarita served with a salted rim and lime wedge in the fornt, but do not contain tequila; plaintiffs allege that a reasonable consumer expects tequila in a margarita. The fact that the products are malt beverages flavored to resemble a margarita are only disclosed in “a small font statement” on the bottom panel of the packaging. The allegations for the other products are similar. For example, plaintiffs alleged that the term “Spritz” is “well known as a wine-based cocktail.” The Mojito Products say “SPARKLING COCKTAIL,” and also have, e.g., small images of Collins cocktail glasses and a martini glass next to a number indicating how many cans of each flavor come in the package. (I have to admit, as a cocktail fan, I’m offended.)

"sparkling margarita"

"sparkling classic cocktails" (mojito, cosmo)

"Spritz": sangria, rosé

The plaintiffs also alleged that the misleadingness was enhanced by the market context. Other companies allegedly sell canned beverages with labeling such as “SPARKLING MARGARITA” (Jose Cuervo), “CLASSIC Margarita” (Salvador’s), or “Perfect Margarita” (BuzzBox), but they do have tequila. So too for canned mojitos, canned sangria, and canned rosé.

An actual canned margarita

The misleadingness arguments were not “patently implausible” or “unrealistic.” “To the contrary, Plaintiffs have cogently explained how reasonable consumers might be misled into thinking that the Products were canned cocktails, instead of ‘Flavored Malt Beverage[s].’ Such a mistake is not hard to imagine.” The dictionary agrees that a cocktail is a “usually iced drink of wine or distilled liquor mixed with flavoring ingredients,” a “margarita” is as “a cocktail consisting of tequila, lime or lemon juice, and an orange-flavored liqueur,” “rosé” is as a type of wine, “sangria” is a wine-based “punch,” and a “mojito” is a cocktail containing rum. It was “more than plausible” that a reasonable consumer viewing a package labeled “SPARKLING MARGARITA” would assume the beverage inside contained tequila, and so on. The imagery on the packages did little to dispel misconceptions and, if anything, would reinforce the impression of liquor/wine content.

Defendant argued that consumers would understand these merely as “flavor designators.” That didn’t work at this stage.

Alleged misrepresentations of quantitative aspects may be more easily dispelled by disclaimers than with qualitative characteristics. What about the “truffle oil” case? Well, that was nonprecedential, and also in the special context of “the most expensive food in the world.” Although the ingredient list was a factor, it wasn’t dispositive, and binding Second Circuit precedent says “[r]easonable consumers should not be expected to look beyond misleading representations on the front of [a] box to discover the truth from the ingredient list in small print on the side of the box.” Nor are the recent vanilla cases similar, despite defendant’s argument that these too are merely flavors with non-liquor/wine sources. Fairly construed, plaintiffs alleged that the whole beverage “purports to be something—a ‘margarita’—which it is not,” etc. Margaritas and mojitos can be distinguished from vanilla, “which generally serves as a flavoring agent in other products, as opposed to a discrete item one might order in a bar or restaurant.”
Defendants argued that context made deception implausible, including (1) federal regulations, (2) the “full context” of the packaging, (3) the setting in which plaintiffs purchased them, and (4) the labels of the comparator products.

Defendants argued that federal regulations allowed it to use “a cocktail name as a brand name or fanciful name.” But the regulations prohibit a malt beverage label from containing “[a]ny statement, design, device, or representation that tends to create a false or misleading impression that the malt beverage contains distilled spirits or is a distilled spirits product.” They don’t ban “[t]he use of a cocktail name as a brand name or fanciful name of a malt beverage, provided that the overall label does not present a misleading impression about the identity of the product.” Thus, plaintiffs’ theory was fully consistent with federal regulations. The target of this Action is not Defendant’s use of “a cocktail name as a brand name or fanciful name.”

What about the full context of the packaging?  References to (1) “Ritas,” (2) “ ‘sparkling’ drinks,” and (3) a “wide variety of flavors in both words and images” did not make it “obvious” that these were malt beverage. Anheuser-Busch suggested that because it was “synonymous with beer,” reasonable consumers would conclude that there was no wine or liquor in the products. [Hmm, I wonder if it wants to be bound by that argument at the TTAB?] First, the court wasn’t about to accept that claim as fact at this stage. Second, “Anheuser-Busch” or “A-B” didn’t appear in the images in the complaint, so how would consumers know? Third, “Ritas” and the other flavors/images in the packages wouldn’t obviously mean “no liquor/wine.”

What about the fact that NY doesn’t allow sales of wine and liquor in convenience and drug stores like those in which plaintiffs purchased the products? Although “reasonable consumer[s] do[ ] not lack common sense,” at this stage, the court wasn’t going to resolve questions regarding “the background knowledge, experience[,] and understanding of reasonable consumers” as a matter of law. What consumers know about alcohol regulations “cannot be resolved without surveys, expert testimony, and other evidence of what is happening in the real world…. A consumer’s mistaken assumption that she can purchase a beverage containing wine or distilled liquor in a drug or convenience store is not comparable to a consumer’s putative belief that an ‘Angus’ breakfast sandwich sold for under $5 at Dunkin Donuts is an actual, ‘intact’ steak, or that a ‘mass produced, modestly-priced olive oil [is] made with ‘the most expensive food in the world.’ ” Contextual discrepancy based on price is different from contextual discrepancy based on state alcohol laws, “something that may be far less obvious to the reasonable consumer.”

Comparator products “expressly state that they contain spirits and wine.” Thus, defendant argued, reasonable consumers expect a product that does have liquor/wine to state as much explicitly. Surprising me, the court is most sympathetic to this argument, but it still can’t be resolved on a motion to dismiss. (I would think that instead, the fact that there are actual canned cocktails out there means that consumers are far less likely to read through the full label to see that this “mojito” is not.)

And, of course, putting “flavored malt beverage” on the bottom of the package isn’t enough at this stage. The court wasn’t persuaded that “disclosures aren’t dispositive” only applies when there’s an express claim about ingredients or a suggestion that a particular ingredient dominates; there’s no coherent distinction between those situations and these ones.

Materiality: Under GBL §§ 349–50, a material misrepresentation is one that is “likely to mislead a reasonable consumer acting reasonably under the circumstances.” “In other words, the materiality requirement is incorporated in the legal standard courts use when evaluating whether plaintiffs have adequately pled the second element of a deceptive labeling claim. It does not form some quasi-distinct element that plaintiffs must separately satisfy.” Certainly the court couldn’t say that the type of alcohol was immaterial to a reasonable consumer.

Injury: Plaintiffs alleged that, had they known the products were merely flavored malt beverages that did not contain tequila, wine, or rum, they would not have purchased the them, or would have paid considerably less for them. Defendant argued that more should be required here, especially since plaintiffs brought comparator brands into the complaint without disclosing their prices. At this stage, the allegations of a price premium were enough.  “Although plaintiffs sometimes point to comparators in support of a price premium claim, a plaintiff is not required to do so in order to allege injury.”

The breach of express warranty claims failed for lack of sufficient pre-suit notice, and unjust enrichment was duplicative.

Fraud claims failed because the allegations didn’t establish a “strong inference” of fraudulent intent. “[S]imply alleging a defendant’s self-interested desire to increase sales does not give rise to an inference of fraudulent intent,” and the complaint didn’t allege “strong circumstantial evidence of conscious misbehavior or recklessness,” though this was a closer call. Plaintiffs alleged that defendant ran an ad in which the speaker appears in front of a wine cellar, but that wasn’t enough. 

“The outcome might be different, for example, if Plaintiffs had plausibly alleged that Defendant was aware of consumers’ preferences for beverages with distilled liquor or wine, and then deliberately marketed the Products as such in order to capitalize on that market,” or that “Defendant was losing market share because of competition from canned cocktail manufacturers, and then decided to market its malt beverages deceptively as ‘cocktails’ to salvage its position in the market for alcoholic beverages.” So maybe they’ll replead.