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

Sava v. 21^st Century Spirits, LLC, 2024 WL3161625, No. 22 C 6083 (N.D. Ill. Jun. 25, 2024)

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

Plaintiffs challenged representations that Blue Ice is“handcrafted,” is manufactured in a distillery owned by 21st Century, isfiltered four or five times, “tastes better than other vodkas,” has between 52and 57 calories per ounce, and is “fit-friendly” and has “health benefits,”including that it helps with personal fitness and weight management. Inaddition, they challenged failure to disclose 21^st Century’srelationships with influencers, one of whom stated that she makes Blue Icecocktails that have fewer calories than an apple, allegedly implying that BlueIce “is the healthier alternative.” Plaintiffs alleged that Blue Ice (1) is not“handcrafted” but is, rather, “industrially manufactured” by machines withoutthe “constant supervision of a human,” (2) is not filtered multiple times butis, rather, filtered only once, (3) is not better tasting than other vodkas butis, rather, “inferior,” “generic,” “substandard,” and “low quality,” (4) is nota “healthy product” that helps with personal fitness and weight management butis a product that “poses significant health risks,” and (5) is not manufacturedin a distillery owned by 21st Century but is, rather, manufactured as a“private label” for 21st Century at a distillery owned by Distilled ResourcesInc. Despite that, to give the impression that Blue Ice is manufactured in adistillery owned by 21st Century and dedicated only to the production of BlueIce, 21st Century allegedly includes on the Blue Ice website a doctoredphotograph of the Distilled Resources distillery, digitally placing the BlueIce 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 64calories 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 thatvodka is the healthier alternative” paraphrased the actual statement (“I makefit-friendly cocktails that have fewer calories than an apple.”), “it is notfor the court to decide on a motion to dismiss whether a consumer might ormight not reasonably understand the Influencer’s actual representation tosuggest.” Also, whether “handcrafted” may be deceptive in a particular casedepends, 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 massseller, so reasonable consumers could believe it “handcrafted” its vodka.

However, “best tasting” was puffery in the context of thestatement “We are handcrafted and American made with a singular goal – tocreate 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 guidesremained only guides, not the source of per se violations of statutes likeFDUTPA (Florida’s law). Nonetheless, Florida had still instructed that “dueconsideration and great weight shall be given to the interpretations of theFederal Trade Commission and the federal courts relating to [Section] 5(a)(1)of the Federal Trade Commission Act” when courts are construing “unfair ordeceptive acts or practices in the conduct of any trade or commerce.”

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

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

21^st Century argued that reasonable consumerswould 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 TTBapproved the Blue Ice label, the alleged misrepresentations appeared only onthe 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 thattheir conduct wasn’t in Illinois: “[W]here an Illinois consumer purchases aproduct in Illinois that a company has marketed to Illinois and distributed forsale in Illinois, the transaction has occurred ‘primarily and substantially’ inIllinois.” Unjust enrichment under Illinois law survived, but not under Floridalaw because of an unanswered argument that Florida law requires that anybenefit must be directly conferred on the defendant by the plaintiff. Expresswarranty claims failed for want of privity.