Broomfield v. Craft Brew Alliance, Inc.
| Decision Date | 01 September 2017 |
| Docket Number | Case No. 17-cv-01027-BLF |
| Parties | THEODORE BROOMFIELD, ET AL., Plaintiffs, v. CRAFT BREW ALLIANCE, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
[Re: ECF 16]
Hawaii is a state as well as a state of mind. When adults want to escape the mainland, they can go to their local grocery store, purchase a package of Kona Brewing Company beer, and feel as though they are transported to the beaches of Hawaii. This case is about the importance of where that beer actually is brewed. Plaintiffs Theodore Broomfield, Sara Cilloni, and Simone Zimmer (collectively, "Plaintiffs") allege on behalf of themselves and three putative classes of consumers, that Defendant Craft Brew Alliance, Inc. ("CBA"), doing business as Kona Brewing Company, intentionally misleads consumers into believing that Kona Brewing Company beer ("Kona beer") is exclusively brewed in Hawaii.
Before the Court is CBA's Motion to Dismiss Plaintiffs' Consolidated Class Action Complaint. Motion to Dismiss ("Mot."), ECF 16; Consolidated Complaint ("Compl."), ECF 15. Plaintiffs filed an opposition to CBA's motion to dismiss on May 26, 2017. ("Opp'n"), ECF 21. CBA filed a reply on June 9, 2017. ("Reply"), ECF 23. The Court heard oral argument on August 3, 2017 and thereafter took the matter under submission. The Court has reviewed the parties' briefing, the oral argument of counsel, and the robust legal authority involving food and drink labeling. For the reasons below, the Court GRANTS IN PART and DENIES IN PART CBA's Motion to Dismiss.
Defendant Craft Brew Alliance, Inc. ("CBA") is a publicly traded conglomerate that acquired Kona Brewing Company ("Kona") in 2010. Compl. ¶ 18. Prior to its acquisition by CBA, Kona had been brewing its beer in Hawaii since the company started in 1994. Id. ¶ 17. The Kona brand includes a variety of beer that references Kona's Hawaiian origins, including "Longboard Island Lager," "Big Wave Golden Ale," "Fire Rock Pale Ale," "Wailua Wheat Ale," "Hanalei Island IPA," "Castaway IPA," "Lavaman Red Ale," "Lemongrass Luau," "Koko Brown," and "Pipeline Porter." Id. ¶ 22.
Although Kona has a Hawaiian brewery that makes its draft beer sold in Hawaii, all of its bottled and canned beer, as well as its draft beer sold outside of Hawaii, are brewed in the states of Oregon, Washington, New Hampshire, and Tennessee. Id. ¶¶ 1, 19. Plaintiffs allege that Kona beer is packaged and marketed in a manner that is intended to mislead reasonable consumers seeking to purchase a Hawaiian-made beer. See, e.g., Id. ¶¶ 23-25 ().
Plaintiffs take issue with a number of representations on the packaging of Kona beer. The Consolidated Complaint contains various images of the packaging for six-packs and twelve-packs of beer to support Plaintiffs' arguments that CBA intended to create the impression that Kona beer is brewed in Hawaii and exported to the continental United States. See generally, Compl. For example, on the top of the box for twelve-packs of Kona beer there is an image of a map of Hawaii which marks the location of the Kona Brewing Co. Brewery on the Big Island. Id. ¶¶ 26, 32. The packaging of the twelve-packs also includes the statement: "We invite you to visit our brewery and pubs whenever you are in Hawaii." Id. As for the bottles of Kona beer themselves, an image of the Hawaiian island chain and the phrase "Liquid Aloha" are embossed on the front of each bottle. Id.
The packaging for each variety of beer is further adorned with its own Hawaiian-related images, including orchid flowers, volcanoes, palm trees, surfers, canoes, waterfalls, and hula dancers to match the theme of whichever beer is being marketed and sold. Id. ¶¶ 28-73. Eachtype of beer has its own slogan printed on the handle of the six-pack, such as "Thirst's Up!" on the package for Longboard Island Lager, "Catch a Wave!" for Big Wave Golden Ale, and "Crack Open Aloha!" for Koko Brown. Id. ¶¶ 30, 35, 70. Depending on the type of beer, the bottom of the package for the six-pack includes the image of a Hawaiian island, such as Oahu, the Big Island, or Molokai, next to a narrative and a description of the specific beer. Id. ¶¶ 31, 36, 41, 46, 51, 56. Plaintiffs allege that the only address listed on the packaging is "75-5629 Kuakini Highway, Kailua-Kona, Hawaii 96740." Id. ¶¶ 32, 37, 42, 47, 52, 57, 60, 64, 67; but see CBA's Request for Judicial Notice ("RJN"), ECF 17, Exhibit E (Island Hopper Variety twelve-pack includes list of five brewing locations next to address in Kona, Hawaii). Plaintiffs assert that these "prominent references to and images of Hawaiian landmarks, traditions, history, and culture, taken in isolation and as a whole, are clearly designed to create the false impression that the Kona Brewing Co. Beers are brewed in Hawaii." Id. ¶ 73.
Separate and apart from the representations on the beer packaging, Plaintiffs allege throughout the Complaint that CBA misrepresents Kona beer as "craft beer" when it is not. See, e.g., id. ¶¶ 115, 116, 133. Plaintiffs base their assertion on statements made by a CBA executive on an earnings call in 2016 that discussed how "the Kona brand plays like a craft brand imported from Hawaii." Id. ¶ 75. Moreover, CBA's 10-K filing with the Securities and Exchange Commission ("SEC") states that "Kona Brewing is one of the most distinctive craft brewers with a broad portfolio of beers that reflect a uniquely Hawaiian flavor profile, a recognized track record in sustainable business practices, and deep ties to its local community as Hawaii's oldest and largest craft brewery." Id. ¶¶ 78, 79. None of the Plaintiffs alleges that they relied on these "craft brew" representations.
Specifically, Plaintiff Theodore Broomfield alleges that he purchased a twelve-pack of Kona's Longboard Island Lager from Walgreens in San Francisco. Id. ¶ 12. Plaintiff Sara Cilloni alleges that she regularly purchased Longboard Island Lager, most recently purchasing a six-pack in San Jose. Id. ¶ 13. Plaintiff Simone Zimmer alleges that she regularly purchased packages of Kona beer, including the Island Hopper Variety twelve-pack, which includes a selection of Kona beer. Id. ¶ 14. All three Plaintiffs allege that they saw and relied on the representations on thepackaging of Kona beer, which varied based on the type of beer they purchased. Id. ¶¶ 12, 13, 14. Specifically, Plaintiffs allege they relied on the image of the map of the Hawaiian Islands which marks the location of the Kona Brewing Company Brewery on the Big Island. Id. Plaintiffs allege they believed the beer was brewed in Hawaii, and they would not have purchased Kona beer (or would have paid significantly less for it) had they known the beer was actually brewed in the continental United States. Id.
Plaintiffs allege that CBA has intentionally capitalized on consumers' willingness to pay more for goods that are from Hawaii. See id. ¶ 82. These allegedly unfair and deceptive practices have harmed Plaintiffs and the purported classes of purchasers of Kona beer by causing them to pay a "premium" for Kona beer they bought under the mistaken belief that it was brewed in Hawaii. Id. ¶ 96. Plaintiffs seek to enjoin CBA from continuing to deceptively package Kona beer, and sue for damages. Id. ¶ 97.
The putative class action is brought pursuant to Rule 23 of the Federal Rules of Civil Procedure and consists of three classes: (1) a Nationwide Class of "[a]ll persons in the United States who purchased any of the Kona Brewing Co. Beers within the relevant statute of limitations periods," (2) a California Subclass of "[a]ll persons, who are California residents who purchased any of the Kona Brewing Co. Beers, or who purchased any of the Kona Brewing Co. Beers within the State of California, during the relevant statute of limitations periods," and (3) a California Consumer Subclass of "[a]ll persons, who are California residents who purchased any of the Kona Brewing Co. Beers, or who purchased any of the Kona Brewing Co. Beers within the State of California, for personal, family, or household purposes during the relevant statute of limitations periods." Id. ¶ 99. Plaintiffs assert nine causes of action against CBA arising from its marketing and sale of Kona beer. Specifically, Plaintiffs seek to represent the California consumer subclasses against CBA for the following causes of action ("COA"): violation of California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750, et seq. (First COA); unlawful, unfair, and fraudulent business practices in violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et seq. (Second COA); false and misleading advertising in violation of California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500, etseq. (Third COA); breach of express warranty (Fourth COA); and breach of implied warranty (Fifth COA). Plaintiffs also seek to represent the California subclasses as well as the broader nationwide class of consumers on claims for the following causes of action: common law fraud (Sixth COA); intentional misrepresentation (Seventh COA); negligent misrepresentation (Eighth COA); and restitution based on quasi-contract/unjust enrichment (Ninth COA). See generally Compl. This Court has jurisdiction pursuant to 28 U.S.C. § 1332(a) and (d).
"A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted 'tests the legal sufficiency of a claim.'" Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When...
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