Nothing but blue skies: beverage case reinstated

Chavez v. Blue Sky Natural Beverage Co., 2009 WL 1956225 (9th Cir.)

A little over two years after I wrote about the district court decision, I bring you the appeal, reversing the dismissal of Chavez’s false advertising complaint. Defendant sells lots of beverages; in 2000, it bought the Blue Sky product line from a company that had been based in and operated from Santa Fe since 1980. Until 2006, Blue Sky containers allegedly contained the terms “SANTA FE, NEW MEXICO” or “SANTA FE, NM” and also “CANNED FOR THE BLUE SKY NATURAL BEVERAGE COMPANY SANTA FE, NM 87501” or “CANNED UNDER THE AUTHORITY OF BLUE SKY NATURAL BEVERAGE CO., SANTA FE, NM USA.” The trade dress also presented a “Southwestern look and feel,” including pictures of what appear to be the Sangre de Cristo mountains that border Santa Fe. The website also used the notation “Santa Fe, New Mexico, U.S.A.” and a phone number with a Santa Fe area code (forwarded to company headquarters in California).

Chavez brought a purported class action on behalf of consumers allegedly deceived by the geographic misrepresentations thus entailed. The district court dismissed the complaint on the ground that Chavez failed to adequately allege an injury-in-fact. The court of appeals concluded that Chavez had alleged some injury, albeit perhaps slight, in fact. First, he allegedly chose Blue Sky over other brands because he believed that it was New Mexican in origin. He allegedly lost money because he didn’t receive what he paid for. He alleged that he is a native New Mexican who bought Blue Sky to support a New Mexico company and to associate himself with a New Mexican product. Though this perhaps limites the extent of the putative class, it also supports his claim that he wouldn’t have paid the full price for Blue Sky, or wouldn’t have bought it at all, if not for the alleged misrepresentation.

The court refused to rule on Blue Sky’s alternate ground for affirmance, preemption by the FDCA, on the ground that the district court should be the first to address this important issue of apparent first impression.