bad influence: claims against vodka producer proceed, including failure to disclose endorser payments

Sava v. 21^st Century Spirits, LLC, 2024 WL 3161625, No. 22 C 6083 (N.D. Ill. Jun. 25, 2024)

21^st Century sells Blue Ice Vodka and uses influencers to promote it. Plaintiffs brought claims under the state consumer protection statutes of Florida, Illinois, and California, as well as unjust enrichment, negligent misrepresentation, and breach of express warranty. Some of their claims survive.

Plaintiffs challenged representations that Blue Ice is “handcrafted,” is manufactured in a distillery owned by 21st Century, is filtered four or five times, “tastes better than other vodkas,” has between 52 and 57 calories per ounce, and is “fit-friendly” and has “health benefits,” including that it helps with personal fitness and weight management. In addition, they challenged failure to disclose 21^st Century’s relationships with influencers, one of whom stated that she makes Blue Ice cocktails that have fewer calories than an apple, allegedly implying that Blue Ice “is the healthier alternative.” Plaintiffs alleged that Blue Ice (1) is not “handcrafted” but is, rather, “industrially manufactured” by machines without the “constant supervision of a human,” (2) is not filtered multiple times but is, rather, filtered only once, (3) is not better tasting than other vodkas but is, rather, “inferior,” “generic,” “substandard,” and “low quality,” (4) is not a “healthy product” that helps with personal fitness and weight management but is a product that “poses significant health risks,” and (5) is not manufactured in a distillery owned by 21st Century but is, rather, manufactured as a “private label” for 21st Century at a distillery owned by Distilled Resources Inc. Despite that, to give the impression that Blue Ice is manufactured in a distillery owned by 21st Century and dedicated only to the production of Blue Ice, 21st Century allegedly includes on the Blue Ice website a doctored photograph of the Distilled Resources distillery, digitally placing the Blue Ice logo over the distillery’s actual sign.

allegedly altered sign

actual industrial production facility, as alleged

They further alleged that Blue Ice does not, as alleged, have either 52 or 57 calories per ounce but has, instead, no fewer than 64 calories per ounce. Nor does Blue Ice have only 52 calories per serving; rather, Blue Ice has at least 96 calories per serving.

Skipping a lot of procedural stuff: While plaintiffs’ allegation that one influencer “compares vodka with an apple, suggesting that vodka is the healthier alternative” paraphrased the actual statement (“I make fit-friendly cocktails that have fewer calories than an apple.”), “it is not for the court to decide on a motion to dismiss whether a consumer might or might not reasonably understand the Influencer’s actual representation to suggest.” Also, whether “handcrafted” may be deceptive in a particular case depends, at least in part, on the size of the brand holding its products out as “handcrafted,” and plaintiffs sufficiently alleged that Blue Ice was not a mass seller, so reasonable consumers could believe it “handcrafted” its vodka.

However, “best tasting” was puffery in the context of the statement “We are handcrafted and American made with a singular goal – to create the best tasting vodka. Because taste is everything.”

Disclosure of material connections: The court reasoned that, although the states had adopted FTC rules and guides as their own, the guides remained only guides, not the source of per se violations of statutes like FDUTPA (Florida’s law). Nonetheless, Florida had still instructed that “due consideration and great weight shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to [Section] 5(a)(1) of the Federal Trade Commission Act” when courts are construing “unfair or deceptive acts or practices in the conduct of any trade or commerce.”

Plaintiffs alleged both representations and omissions that could meet the relevant standard. “[T]he court finds it nearly frivolous to argue that a reasonable consumer might not be deceived by defendants’ representations that Blue Ice is filtered multiple times or has as few as 52 calories per serving. These representations are specific and unambiguous and simply cannot be given to ‘fanciful interpretation.’ Put another way, these representations are the antithesis of puffery.” Likewise, “it is difficult to comprehend how a reasonable consumer could not be deceived by 21st Century’s representation on the Blue Ice website, where 21st Century has allegedly doctored a photograph of the distillery by placing its own logo over the logo of the actual distillery.” And, as to claims that the vodka had health benefits that may help with personal fitness and weight management, the Alcohol and Tobacco Tax and Trade Bureau (TTB) views such representations as “mislead[ing] consumers by presenting incomplete information about the health effects and nutritional content of alcohol beverages.” This didn’t control the outcome, but it “strongly suggests that a reasonable consumer might be misled.”

Defendants also argued that “there is no allegation of an endorsement,” and “a photograph [of an Influencer] holding Blue Ice or mentioning [that] a cocktail was made with Blue Ice ... is not an endorsement or advertisement within the meaning of Section 255.5 [of the FTC Endorsement Guides].” The court gave this argument way more weight than it deserved, noting that many of the posts involved far more than holding/mentioning. The court pointed to posts like, “There’s nothing better than relaxing with a smooth @blueicevodkausa cocktail in hand after a long day. With only 52 calories a serving, no sugar added and gluten free, Blue Ice can definitely help you stay fit during quarantine. Have a bottle delivered to your door ... . #fitfriendlyvodka #ketofriendly #potatovodka #vodka.” Anyway, the FTC considers “testimonials” interchangeable with endorsements, meaning “any advertising message ... that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.” “Drawing all reasonable inferences in plaintiffs’ favor, at least a significant majority of these posts qualify.”

21^st Century argued that reasonable consumers would know that the influencers were paid and thus didn’t need disclosure. Plaintiffs specifically alleged that they took the influencers to be offering “honest advice” about Blue Ice and “would not have purchased [Blue Ice] products if they knew that the Influencers were paid” to promote it. And disclosure “might materially affect the weight or credibility of the [Influencers’] endorsements.”

Florida’s safe harbor didn’t apply because, although the TTB approved the Blue Ice label, the alleged misrepresentations appeared only on the secondary label and bottle collar, as well as the website/social media, none of which were approved by the TTB.

So too with Illinois law, despite defendants’ arguments that their conduct wasn’t in Illinois: “[W]here an Illinois consumer purchases a product in Illinois that a company has marketed to Illinois and distributed for sale in Illinois, the transaction has occurred ‘primarily and substantially’ in Illinois.” Unjust enrichment under Illinois law survived, but not under Florida law because of an unanswered argument that Florida law requires that any benefit must be directly conferred on the defendant by the plaintiff. Express warranty claims failed for want of privity.