Tuesday, September 05, 2017

False indication of Hawaiian origin might violate consumer protection law, not warranty

Broomfield v. Craft Brew Alliance, Inc., No. 17-cv-01027, 2017 WL 3838453 (N.D. Cal. Sept. 1, 2017)

“Hawaii is a state as well as a state of mind. When adults want to escape the mainland, they can go to their local grocery store, purchase a package of Kona Brewing Company beer, and feel as though they are transported to the beaches of Hawaii. This case is about the importance of where that beer actually is brewed.” Defendant CBA, d/b/a Kona Brewing Co., allegedly intentionally misled consumers into believing that Kona Brewing Company beer was exclusively brewed in Hawaii.  The court granted in part and denied in part CBA’s motion to dismiss the resulting claims.

The Kona brand includes a variety of beer that references Kona’s Hawaiian origins, including “Longboard Island Lager,” “Big Wave Golden Ale,” “Fire Rock Pale Ale,” “Wailua Wheat Ale,” “Hanalei Island IPA,” “Castaway IPA,” “Lavaman Red Ale,” “Lemongrass Luau,” “Koko Brown,” and “Pipeline Porter.” Kona has a Hawaiian brewery that makes its draft beer sold in Hawaii, but all of its bottled and canned beer, as well as its draft beer sold outside of Hawaii, are brewed in Oregon, Washington, New Hampshire, and Tennessee.  Despite this, on the top of the box for twelve-packs of Kona beer there is an image of a map of Hawaii which marks the location of the Kona Brewing Co. Brewery on the Big Island. The packaging also includes the statement: “We invite you to visit our brewery and pubs whenever you are in Hawaii.” An image of the Hawaiian island chain and the phrase “Liquid Aloha” are embossed on the front of each bottle, and each variety’s packaging has its own Hawaiian-related images, including orchid flowers, volcanoes, palm trees, surfers, canoes, waterfalls, and hula dancers. The bottom of the package for the six-pack includes the image of a Hawaiian island, such as Oahu, the Big Island, or Molokai. Plaintiffs alleged that the only address listed on the packaging was “75-5629 Kuakini Highway, Kailua-Kona, Hawaii 96740,” though CBA indicated that its Island Hopper Variety twelve-pack included a list of five brewing locations next to the address in Kona.

Plaintiffs also allged that CBA misrepresented Kona as “craft beer” when it isn’t, though they argued that this claim went to CBA’s intent to deceive rather than to a deception that they relied upon.

First, CBA argued that the words and images on the packaging were “mere puffery,” and that no reasonable consumer would be misled into believing that the Kona beer he or she purchased was brewed exclusively in Hawaii. The court disagreed.  Deceptiveness is usually a question of fact.  CBA argued that none of its “references” to Hawaii was “ a specific and measurable factual statement about where the beer is made.” The labels disclosde five locations where the beer is brewed, only one of which is Hawaii, so representations on the six- and twelve-pack packaging couldn’t amount to actionable misrepresentations. While “pictures of surfboards and the vague phrase ‘Liquid Aloha’ on the beer packaging” would be insufficient, the fact that the only listed address on the outer packaging was Hawaiian, the image of the Hawaiian map identifying the location of Kona’s Big Island Brewery, and the invitation to visit “our brewery” whenever you are in Hawaii were “specific and measurable representations of fact that could deceive a reasonable consumer into believing that the six- and twelve-packs of Kona beer were brewed in Hawaii.” “[M]erely referencing Hawaii and its culture on the packaging is not enough on its own to confuse a reasonable consumer regarding the origin of the beer” (citing Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241 (3d Cir. 2011)).  But the address, map, and invitation went beyond those references to spirit or style.

CBA argued that the disclaimer on the labels of Kona beer was enough to contradict the representations on the outer packaging. But reasonable consumers are “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.” There was no disclaimer identifying Kona’s brewing locations on the packaging except on the Island Hopper Variety twelve-pack.  Plus, the disclaimer on the beer label listed five locations, including “Kona, HI, Portland, OR, Woodinville, WA, Portsmouth, NH, and Memphis, TN” which encompass “all locations where the beers are brewed.” “A list of multiple locations on a product label does not amount to an explicit statement that the beer is brewed and packaged at a particular location.” A reasonable consumer could easily think that the beer was brewed in Kona—and plaintiffs alleged that no bottled or canned beer bearing the Kona label was actually brewed in Kona. Thus, even consumers who read this “vague” disclaimer could be deceived.
Label, with locations listed on left side
While the consumer protection claims survived, the express warranty claims failed because the representations weren’t “an unequivocal statement or promise to the consumer that Kona beer is brewed exclusively in Hawaii.” The implied warranty claim also failed without an affirmative misrepresentation; the factual claims on the label were true, albeit potentially misleading.

Injunctive relief claims were dismissed for lack of standing (noting that, even if plaintiffs would be willing to buy properly labeled beer in the future, they alleged they wouldn’t have bought it at Kona’s price/they paid extra for beer they thought was from Hawaii.)

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