"German Quality" could mislead as to German origin

Marty v. Anheuser-Busch Companies, LLC, --- F. Supp. 2d ----, 2014 WL 4388415, No. 13–23656 (S.D. Fla. Sept. 5, 2014) (magistrate judge)

AB brews Beck’s Beer, which originated from and was brewed in Germany from 1873 until 2012 when AB began brewing Beck’s in St. Louis, Missouri.  Plaintiffs, Florida, New York, and California consumers, bought Beck’s allegedly in reliance on misrepresentations of Beck’s German origin. 

The judge ruled that a reasonable consumer could have been deceived by AB’s representations. The complaint alleged that the marketing touted Beck’s as “Originated in Germany” with “German Quality” while “Brewed Under the German Purity Law of 1516.”  However, there’s a “Product of USA, Brauerei Beck & Co., St. Louis, MO” statement on the label as well as “BRAUEREI BECK & CO., BECK’S © BEER, ST. LOUIS, MO” on the bottom of the carton.

At AB’s invitation, the court examined demonstrative samples of 12-ounce bottles and cans.  The judge found that the “Product of USA” disclaimer as printed on the actual cans and bottles themselves was difficult to read.  It could be obscured by overhead lighting “because the disclaimer is printed in a white font against a shiny, metallic silver background.”  However, the “Product of USA” disclaimer printed on the label appearing on AB’s Alcohol and Tobacco Tax and Trade Bureau (TTB) certification for Beck’s was visible at any angle: the words were printed on a gray, matte background. There was thus a “discernable difference in legibility” between the disclaimer on the actual product and the disclaimer approved by the TTB. More importantly, the disclaimer was blocked by the carton.  Consumers would have to open cartons/lift bottles from a six-pack to see it.  “A reasonable consumer is not required to open a carton or remove a product from its outer packaging in order to ascertain whether representations made on the face of the packaging are misleading” (citing Williams v. Gerber Prods. Co., 552 F.3d 934, 939 (9th Cir. 2008)).

In addition, “BRAUEREI BECK & CO., BECK’S © BEER, ST. LOUIS, MO” might not be sufficiently descriptive to alert a reasonable consumer as to the location where Beck’s is brewed. Nothing says that Beck’s is brewed in Missouri, and anyway it was underneath the carton.  “A reasonable consumer may not necessarily look at the underside of the carton in deciding whether to purchase a product.”

AB argued that “Brewed under the German Purity Law of 1516” was true because “German Purity Law has nothing to do with place of production or source of ingredients. This law simply concerns the type of ingredients used to brew beer (water, hops, barley, and yeast).”  However, plaintiffs alleged that AB violated the German Purity Law because that law allowed onlybarley, hops and water in beer, and Beck’s contained yeast and other ingredients and additives. This couldn’t be resolved on a motion to dismiss.  More importantly, even if the statement were true, “a reasonable consumer may not know what compliance with the German Purity Law means.”  A reasonable consumer could be misled, especially in conjunction with other statements on the carton; an alleged overall marketing campaing to maintain a German brand identity; and Beck’s German heritage, including 139 years of being brewed in Germany.

The court also determined that “German Quality” was not mere puffery as a matter of law, if it contributed to the deceptive context of the packaging as a whole.

Then, AB argued that it was eligible for safe harbor protection from consumer claims because the TTB approved the labels. Florida law provides that FDUTPA does not apply to “[a]n act or practice required or specifically permitted by federal or state law,” New York has a similar provision, and California doesn’t expressly have a safe harbor but implies its existence.  A defendant bears the burden of establishing a safe harbor. While the TTB approved the labels, plaintiffs alleged that part of the label including “Product of the USA” wasn’t visible at the time of purchase.  Thus, AB didn’t show entitlement to the safe harbor. 

Also, the claims here weren’t based on the labels approved by the TTB, but rather on representations on cartons and other representations and omissions. True, there was some overlap between the TTB-approved labels and the statements on Beck’s cartons, but the fact that the key disclosure on the TTB-approved labels wasn’t visible until after purchase was important, as was the ready legibility of the disclaimer on the TTB certificate compared to on the actual bottles.  Plus, the carton prominently displayed “German Quality,” which was not contained in the TTB approved labels.

The court then accepted plaintiffs’ price premium theory of harm, even though AB doesn’t sell directly to consumers and doesn’t set prices.  The complaint that alleged that consumers were willing to pay, and did pay, a premium for high quality, imported beer.

The court also declined to dismiss unjust enrichment claims. While some cases say California doesn’t recognize an independent unjust enrichment case of action, others do, and unjust enrichment could be an available theory if plaintiffs lacked a remedy at law; at least pleading in the alternative was acceptable. The price premium theory also precluded AB’s argument that plaintiffs received the benefit of their bargain by paying for and receiving Beck’s.

Then the court found that plaintiffs lacked standing to seek injunctive relief because they didn’t plead they were likely to buy Beck’s again if it were appropriately labeled.  The court responded to policy concerns (this precludes an order stopping false advertising in consumer protection cases) by reasoning that (1) Article III trumps policy, and (2) it’s possible to plead entitlement to injunctive relief in consumer protection cases by pleading willingness to buy the product again if the false advertising stops.

Comment: I don’t really know why such willingness is enough to count for Article III standing if the threat of future injury has to be “real and immediate—as opposed to a merely conjectural or hypothetical.”  (As the court even says, “The permissive word ‘may’ seems at odds with Supreme Court precedent which requires a real and immediate threat of future injury.”)  What’s the injury?  Not being able to buy Beck’s at an acceptable price?  I think you have to bite the bullet and say yes, no injunctions in consumer protection cases if you follow this reasoning.  (However, I don’t know why, having demonstrated standing for damages, a class representative couldn’t ask for injunctive relief on behalf of the still-deceived members of the class who do indeed have standing even under this limited interpretation; the court here said that at least one named plaintiff has to have standing, but I don’t see why standing for one remedy wouldn’t be enough.)  The court would, however, allow an amended complaint, which could test the theory that plaintiffs could plead that they’d be willing to buy properly labeled Beck’s (which, by their harm theory, would be cheaper Beck’s).