Tuesday, March 20, 2012

Class action against alcohol/caffeine blend not preempted

Cuevas v. United Brands Co., Inc., 2012 WL 760403 (S.D.Cal.)
Cuevas (there’s a spelling inconsistency in the opinion, but I’m going with the caption) brought a putative class action against United Brands for selling a flavored caffeinated alcoholic beverage, JOOSE, which had 9.9-12% alcohol by volume and about 125 mg of caffeine (lowish end of a cup of coffee, more than 3x than in a Coke).  Joose went on the market in late 2007, and in November 2010, the FDA sent defendant a warning letter stating that “based on the publicly available literature, a number of qualified experts have concerns about the safety of caffeinated alcoholic beverages.”  Studies indicated that caffeine reduces subjective perception of intoxication but didn’t improve diminished motor coordination or slower visual reaction times.  The FDA concluded that, as used, caffeine was an unsafe food additive, rendering the product adulterated.  United Brands discontinued shipping Joose.
Cuevas bought three cans of Joose in 2010, and alleged that she saw ads and looked at the labeling before she bought.  She alleged that defendant failed to disclose the amount of caffeine in the product or the risks associated with caffeine added to an alcoholic beverage, and that these would have been material to her decision to buy.
The court rejected defendant’s motion to dismiss.  First, federal alcohol labeling law didn’t preempt the claims.  Federal law mandates the warning on alcoholic beverages, and bars other state requirements for any statement “relating to alcoholic beverages and health” on a container.  Because ads and consumer protection are traditionally state regulatory areas, the court applied a presumption against preemption.  The court read federal law as covering statements regarding health risks “associated with consuming or abusing alcohol.”  However, there was no reason to think Congress intended to ban warnings “regarding other non-alcoholic ingredients in an alcoholic beverage that may have adverse health effects in and of themselves or when combined with alcohol.”  Cuevas was arguing that United Brands should have warned about the interaction of caffeine and alcohol, not about alcohol per se.  Thus, there was no preemption, either express or implied.  (And to the extent her claims were based on ads other than packaging, they clearly weren’t preempted, since—unlike federal cigarette law—federal alcohol law doesn’t address warning statements in advertising or promotion.)
Cuevas also had standing under the UCL because she alleged sufficient economic injury in that she bought something she wouldn’t have bought if she’d known the truth.  She properly alleged a violation of the CLRA from failure to disclose a material fact that was within defendant’s superior knowledge.  (In a footnote, the court held that Rule 9(b) applied, and that plaintiff’s allegations regarding ads she saw lacked the requisite specificity, but she did specifically allege that she looked at the product containers before buying them and that there were no warnings; the complaint included pictures of the labels of those specific products.) 
Finally, though she didn’t state a claim for breach of express warranty, she did state a claim for breach of the implied warranty of merchantability.  California law bars a product liability action if a product is inherently unsafe and known to be so by the ordinary consumer, and the product is also a common consumer product intended for personal consumption, “such as sugar, castor oil, alcohol, and butter.”  United Brands argued that this provision barred plaintiff’s claim, but the court disagreed, as it had with the preemption argument: “Plaintiff's claims are not based on the inherent dangers of alcohol but on the undisclosed effects of caffeine and alcohol combined.”  Indeed, the Restatement (Second) of Torts, from which this provision is derived, specifies that adulterated products can be unreasonably dangerous: “Good whiskey is not unreasonably dangerous merely because it will make some people drunk, and is especially dangerous to alcoholics; but bad whiskey, containing a dangerous amount of fuel oil, is unreasonably dangerous.”

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