Misleading Labeling Suit Continues to Brew

Advertising Law

A putative class action alleging that Kona Brewing Co. tricked consumers into believing its beer line is locally brewed in Hawaii will move forward after a California federal court judge denied the advertiser’s motion to dismiss.

Earlier this year, a pair of plaintiffs filed suit against Kona Brewing Co., claiming the marketing and labeling of the beer line—featuring maps of the islands, tropical imagery (such as orchid flowers, volcanoes, palm trees, surfers and hula dancers) and the statement, “Visit our brewery and pubs whenever you are in Hawaii”—misled consumers, as all the beers are brewed on the mainland, not the Hawaiian islands.

The defendant moved to dismiss, arguing that the claims were mere puffery and not actionable misrepresentations. Kona has a Hawaiian brewery that makes draft beer sold in Hawaii, so the maps and address of the brewery were factual, Kona Brewing Co. told the court, and the packaging contains a disclaimer listing the five brewery locations used by the company.

Applying the “reasonable consumer” test, U.S. District Court Judge Beth Labson Freeman sided with the plaintiffs.

“If the Consolidated Complaint solely alleged pictures of surfboards and the vague phrase ‘Liquid Aloha’ on the beer packaging, the case would end there,” the court wrote. “However, the Court finds that the Hawaiian address, the map of Hawaii identifying Kona’s brewery on the Big Island, and the statement ‘visit our brewery and pubs whenever you are in Hawaii,’ are not mere puffery but are 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.”

These representations go beyond mere references to Hawaii and its culture, the court noted, and do more than evoke the “spirit” of the islands or indicate that the beer is “Hawaiian-style.” And the fact that Kona operates an actual brewery at the location listed is not dispositive, as the relevant question is whether the statements, taken as a whole, still support liability under the reasonable consumer standard—not whether they are objectively true.

“Considered together and in context, these statements and images amount to specific and measurable representations that could deceive consumers into believing that they were purchasing beer made in Kona, Hawaii at the specific brewery location listed and depicted on the package,” Judge Freeman said.

The court was not impressed by the defendant’s “vague” disclaimer, which it characterized as “a non-descriptive list of five brewing locations that includes Kona.”

“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,” the court wrote. “In fact, there is no way to tell from the label which brewery made the beer being purchased by consumers. From the vantage point of the reasonable consumer reading the label with the disclaimer, the beer is just as likely to be brewed in Kona, Hawaii as it is to be brewed in Memphis, Tennessee. Particularly the inclusion of Kona, Hawaii on the list mitigates the disclaimer’s effectiveness, since Plaintiffs allege that no bottled or canned beer bearing the Kona label is actually brewed in Kona, Hawaii.”

The court denied the defendant’s motion to dismiss the plaintiffs’ claims pursuant to California’s False Advertising Law, Unfair Competition Law and Consumer Legal Remedies Act, as well as their common-law fraud and misrepresentation (both negligent and intentional) claims. Other counts—injunctive relief and express and implied warranty claims—were tossed.

To read the order in Broomfield v. Craft Brew Alliance, Inc., click here.

Why it matters: The court was clear that an objectively true statement—in this case, that Kona Brewing Co. operates a brewery in Hawaii—can still support liability under the reasonable consumer standard found in California state law “if the representations are actually misleading or have the ‘capacity, likelihood or tendency to deceive or confuse members of the public,’” an important reminder for advertisers. However, these same factual statements allowed the defendant to avoid the implied and express warranty claims.



pursuant to New York DR 2-101(f)

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