In 2011, I visited Templeton, Iowa, to cover this hot rye whiskey that Al Capone supposedly liked. At the time, I knew they were purchasing bulk whiskey from what was then called LDI, the former Seagram’s facility that gave the world beautiful 95% rye mashbills, but I had never approached the company about this. Going into the interview, I half expected them to be confrontational. Keith Kerkhoff, one of the founders, played college football and tried out for an NFL team; and let’s just say, his lineman shoulder could crush my spine.
When questioned, the founders, Kerkhoff and Scott Bush, were honest about the sourcing process and I later found their sales reps disclosed the whiskey origins. Templeton even disclosed this fact on its Website, producing a video captured at the Lawrenceburg, Indiana, and openly discussed the fact on social media. But for whatever reason, the company never disclosed the state of distillation on the label. Instead, Templeton sold the small town’s infamous Prohibition heritage.
For years, even before my 2011 visit, hardcore whiskey geeks called foul on Templeton’s marketing efforts and even the locals didn’t care for Kerkhoff’s and Bush’s attempt to bring unwanted attention to the town. (Illicit whiskey makers are still very much in business in Templeton!) All of this would be chalked up as noise or slightly bad publicity for a brand that became a consumer favorite.
But all of that changed in late August when a class-action lawsuit was filed against Templeton in Cook County, Illinois, citing “deceptive marketing practices” and that Templeton violated consumer protection laws. The plaintiff claimed he was led to believe that the whiskey was made in Iowa. This lawsuit was given the green light to proceed and two additional class-action suits have been filed, with the most recent one being filed this week in Iowa. Tito’s Handmade Vodka faces a similar class-action lawsuit.
To understand the depths of the suit and how it might impact the future of the spirits business, I reached out to attorney Joel Ard, an alcohol attorney specialist with Foster Pepper PLLC in Washington.
Templeton’s labels were approved by the TTB. How are they vulnerable for a lawsuit?
That’s a surprise often to a lot of people, certainly among smaller craft producers, but even among larger industry participants. This idea that a government agency has approved their label and then they can get called on it for alternative reasons is often a bit of a surprise.
But isn’t the TTB to blame for not catching an improper label?
The reality is that the TTB is the Tax and Trade Bureau. It’s not a Trademark Office. It’s not an advertising office. It’s not a consumer protection office. They collect excise tax on ethanol and their primary concern about labels is the Surgeon General’s Warning is on it, in the right font, in the right size and that the percent alcohol by volume is accurate.
There are a bunch of regs about no obscenity, no nudity. Just start looking at wine labels for what stuff gets through. There’s a lot of stuff that can get through because they’re pushing through an enormous volume of labels; it’s not primarily a place for judging the accuracy of advertising or the consumer protection statute.
On to the Templeton lawsuit; what kind of case is this?
This is the kind of lawsuit where an enterprising lawyer dug up a more or less imaginary plaintiff and sued somebody and he’s going to pocket the proceeds in the lawsuit. Pick a consumer protection statute, find a target and sue them.
Will this become a trend? Will enterprising lawyers start dissecting alcohol labels for violations of regulations?
I’m sure that somebody could come up with a particularly creative claim that somehow a person was harmed because a wine bottle had the American Flag on it and that’s forbidden by regulation. Hard to imagine what the claim would be. What’s the harm to the consumer?
Now, you might say, where is the consumer harm that Tito’s Vodka is actually not made by hand; and Tito’s lawyers and the California consumers will fight over that, maybe there’s no harm, maybe it’s really bad.
It seems like a lot of this could be fixed if the TTB had more authority to police labels for accuracy.
I’m not sure it would be the best thing to try to give them more authority. A few years back, the label approval backlog was huge. If you are a startup distillery, you need to get a label approved pretty quickly. You can’t afford to wait for your label and don’t have the resources to have an army of lawyers push them through TTB. So, my concern would be if you were [adding] authority, it’s going to hurt the little guys. The big guys have plenty of resources to get their labels approved. The way the TTB runs now, there’s very little legal involvement.
The TTB right now is a decent balance of making sure that people aren’t misled about alcohol content, poisoned by strange distilled spirits, or blatantly obviously lied to on labels. For the broad run of the rest of it, most of the time the market’s going to sort it out. If you put bad stuff in a bottle, it doesn’t matter how cool your label is.