Claims against "Southern Comfort" malt beverage not preempted

Del Rosario v. Sazerac Co., 2023 WL 6318083, No. 23-cv-1060 (AS) (S.D.N.Y. Sept. 28, 2023)

Sazerac sells a malt version of its famous Southern Comfort whiskey. Plaintiff alleged that Sazerac designed this malt version to look just like the original one, misleading consumers in violation of New York laws on deceptive practices and false advertising. Although the court dismissed her unjust enrichment claim as duplicative, the main claim survived Sazerac’s preemption argument.

Along with using the same name, colors, themes, fonts, symbols, and spacing as the whiskey, and including the word “Original” on its front label, the malt version’s “statement of composition” reads “Malt Beverage with Natural Whiskey Flavors, Caramel Color and Oak Extract.” “Natural Whiskey Flavor” allegedly misleads consumers into thinking that the beverage contains a non-negligible amount of whiskey, and “Oak Extract” allegedly “creates the false impression” that the beverage was “aged in barrels.”

Sazerac argued that federal regulation required these terms. But it’s possible to comply with both state and federal law, there’s no preemption by impossibility. The relevant federal regulation requires malt-beverage labels to include a statement of composition identifying added coloring materials, artificial sweeteners, and “flavoring material(s) used before, during, and after fermentation.” However, it wasn’t “evident from the face of the complaint” that “whiskey flavors” was even a flavoring material, and anyway the regulation offered obvious alternatives: flavoring materials can be “specifically identified (such as ‘Ale fermented with grapefruit juice’) or generally referenced (such as ‘Ale with natural flavor’).” Sazerac didn’t explain why it couldn’t use “Malt Beverage with Natural Flavors” (or some other general reference) instead. Sazerac didn’t argue that giving producers choices on generality was a significant objective of the regulation. So too with “Oak Extract.”