litigation

There is a big lawsuit brewing in the center of Brooklyn, NY about – of all things – a beverage that can only be made 2,585 miles away. A hefty law firm, with about 80 lawyers and 10 US offices, filed suit against Diageo about how much agave distillate is and should be in their top-selling Casamigos and Don Julio brands of Tequila. The suit was filed May 5th in the U.S. District Court for the Eastern District of New York. With a claim of false marketing, the plaintiffs allege that these products tell consumers that the products are made from 100% (expensive) Blue Weber Agave even though they have “significant concentrations of cane or other types of alcohol. …”

The 22 page complaint backs up this bold assertion, so far, by pointing to press accounts saying thousands of agave farmers in Mexico have been angrily and publicly protesting the use of various sources of alcohol other than agave, such as corn and cane, in various high-end Tequilas. The complaint alleges that lab testing verifies the use of other-than-agave-distillates. A recent label approval for Casamigos Tequila shows how the brand label states “Tequila 100% Agave Azul.”

The complaint stops short of pounding the table, and it probably does not need to do so. The defendants may be forced...

Atlas Brew Works sued the United States on January 15, 2019 in the DC District Court. Atlas is a brewer based in Washington, DC and argued that the law does not allow the government to, at the same time, require a label approval for beer, when the shutdown makes it impossible to obtain such an approval.

As of this writing, Google has 48,600 articles about the controversy, so I will refrain from summarizing the case, or trying to guess who will win. Instead, I will set out some of the juiciest morsels, from the fascinating arguments presented by both sides. On one side is the famous lawyer Alan Gura, representing the beer company. On the other side is the Acting Attorney General Matthew Whitaker and Assistant U.S. Attorney Jason T. Cohen. The judge is the hugely accomplished Christopher R. Cooper.

Atlas’ complaint, filed January 15th, begins:

The First Amendment never “shuts down.” … The [FAA Act] subjects Atlas to criminal penalties should it ship beer with unapproved labels in interstate commerce. But Congress has not enacted legislation funding the issuance of [COLAs] for beer labels at the present time. There is no telling whether or when such legislation might be forthcoming, or how long it might take the government to approve COLA applications...

The plaintiff in a would-be class action lawsuit against Sazerac voluntarily dismissed all his claims in late January, ending the litigation. The case (Parker v. Buffalo Trace Distillery, Inc. et al.) began in November of last year, and concerned a subtle change on the label of Sazerac’s “Old Charter” brand of bourbon whiskey. The older and newer labels are above, side by side.

Among the various changes, the old label says, “AGED 8 YEARS,” while the new label simply displays the number “8.”

Plaintiff Nicholas Parker alleged that the Old Charter bourbon sold under the new label was no longer aged for 8 years, and that Sazerac’s continued use of the number “8” on the label caused consumers to believe that the bourbon was aged for 8 years. Sazerac responded with a motion to dismiss the complaint, alleging that Alcohol and Tobacco Tax and Trade Bureau (TTB) approval of the label provided Sazerac with a “safe harbor” from Mr. Parker’s claims.

Just two weeks after Sazerac filed its motion to dismiss, Mr. Parker voluntarily dismissed the action. This voluntary dismissal meant that the court did not have to rule on the merits of Sazerac’s safe harbor defense, or Mr. Parker’s claims. If the Tito’s “Handmade” Vodka cases are any indication, it is likely that the safe harbor defense would not...