On Wednesday, the Northern District of California wrote an order denying in part and granting in part with leave to amend the defendant’s motion to dismiss in a class-action case between plaintiffs Barry Kay and Bryan Dodge Jr., and defendant Copper Cane, LLC., challenging the allegedly misleading bottles on a line of pinot noir.
The order notes that the Federal Alcohol Administration (FAA) “requires that alcoholic beverage labels comply with regulations […] which must ‘prohibit deception of the consumer.’” The Alcohol and Tobacco Tax and Trade Bureau (TTB) regulates labels of these products. A beverage distributor, like Copper Cane, must submit forms to a TTB officer to receive a certificate of label approval. Additionally, “(t)he TTB also has the authority to create appellations of origin for wine grapes and American viticultural area (AVA).” In order to receive a state appellation, at least 75% of the wine needs to be from fruit grown in the appellation area and finished in that state or an adjacent state. AVA designation is stricter, limiting these criteria to a specific region within a state, the order states.
According to the complaint, Copper Cane produced a pinot noir called Elouan with its phrase “Purely Oregon, Always Coastal,” claiming to derive its wine from three AVA appellations within Oregon and to be produced there, but had “two lines of text referencing California” on the back labels. According to the court, the federal government “forced Copper Cane to alter the Elouan labels after a determination that they were misleading,” but bottles with the original labels are still in circulation. This new label says “Purely Elouan, Always Coastal.” The plaintiffs alleged that Copper Cane was “falsely fostering the belief first that Elouan is a genuineOregon wine associated with the three AVAs referenced above, and second that the grapes are grown on ‘coastal’ vineyards,” claiming violations of California’s Unfair Competition Law (UCL), Consumer Legal Remedies Act (LRA), and False Advertising Law (FAL).
The UCL claim was dismissed with leave to amend, as the plaintiff who bought the bottle was from Louisiana and could not establish a “sufficient nexus between California and the misrepresentations.” Copper Cane tried to invoke the safe harbor doctrine, “insulating defendants from civil liability when the ‘legislature has permitted [the challenged] conduct or considered a situation and concluded no action should lie,’” but the court could not determine if the TTB’s approval entitled the defendant to this doctrine. The court agreed that the original labelling could “potentially mislead a reasonable consumer” as well. The unjust enrichment and breach of warranty claims were dismissed due to lack of evidence, and preliminary standing for injunctive relief was granted to the plaintiffs.