adjectival order matters (some) in finding literal falsity

Suzie’s Brewery Company v.
Anheuser-Busch Companies, LLC, — F.Supp.3d —-2021 WL 472915, No.
3:21-cv-178-SI (D. Ore. Feb. 9, 2021)

Alleged ambiguity didn’t
save AB from this false advertising claim.

AB makes Michelob
ULTRA Hard Seltzer, which has earned USDA organic certification, and sells it in
all states except Utah. Suzie’s Brewery also makes and sells hard seltzer that
earned USDA organic certification before AB’s did, but only sells it in 6

Based on these
facts, it was deceptive for AB to advertise Michelob ULTRA Hard Seltzer as “the
only” or “the first” “national USDA certified organic hard seltzer.” Suzie’s
got a TRO (assisted by the TMA). AB could, however, advertise that Michelob
ULTRA Hard Seltzer is “the only” or “the first” USDA certified organic hard
seltzers that are distributed nationally, as long as that remained true.

Crucially, federal
regulation of “organic” labels makes heavy use of the term “national.” The USDA
National Organic Program (NOP) sets national standards for the production,
handling, and processing of organically grown agricultural products. The
National Organic Standards Board (NOSB) advises the Secretary of Agriculture in
setting the standards upon which the NOP is based. “National” appears
prominently throughout the regulatory scheme and “is consistently associated
with the federal program that governs any mention, use, or display of the
official USDA organic seal or label. Further, the word ‘national’ always
immediately precedes the word ‘organic’ in all official references to the
USDA’s National Organic Program.”

AB issued a press
release: Michelob ULTRA Introduces First National USDA Certified Organic Hard Seltzer
That’s ‘As Real As It Tastes’ With The Launch Of Michelob ULTRA Organic
Seltzer. The body claimed that it was “the first-ever national USDA certified
organic hard seltzer” and called it “an innovative, first-of its-kind organic
option” for the hard-seltzer category. Likewise, one TV ad claimed that it was the “only national USDA Certified Organic Hard
Seltzer,” while another said it was “the only national hard seltzer that is USDA Certified
Organic. Don’t fall for anything else.”

AB also apparently
was partnering with influencers to promote the same message, e.g. “It is the first National USDA Organic Seltzer”
and “the first ever USDA
National Organic Certified Seltzer with realass fruit flavors.” So “first national organic”
was a big part of the message.

Suzie’s contended
that this caused consumers to question whether Suzie’s Organic Hard Seltzer
really is organic. Suzie’s was ok with “only national hard seltzer that is USDA
certified organic” or “the first-nationally distributed USDA certified organic
hard seltzer.”

AB argued that there
was no harm to Suzie’s in 44 states of the union, so it lacked national Lanham
Act standing. Suzie’s “correctly replies that the concept of standing asks who
has a right to sue, which is different from the scope of an appropriate remedy.”

Under the
circumstances, the court found literal falsity in: (1) “only national USDA
certified organic hard seltzer”; (2) the “first-ever national USDA certified
organic hard seltzer”; and (3) “bringing an innovative, first-of its-kind
organic option to the hard seltzer category.” In the alternative, even if these
statements weren’t literally false, they were still likely to mislead
consumers. AB’s alternative reading of the phrase as “the only (or the first)
USDA certified organic seltzer that is nationally distributed” was not a
reasonable reading and thus the phrase was not ambiguous. This was because
“national” is also integral to the organic certification program, a main
purpose of which was “to create a national, unified standard for organic
labelling, designation, and advertising.”

Grammar explanation:
Most adjectives come before the thing they modify. Multiple adjectives that all
modify a single noun generally are separated by commas or “and.” AB didn’t use
commas, and “national” made no sense as a modifier of “seltzer.” “There is no
such thing as a ‘national seltzer.’” While plain seltzer can’t be organic or USDA
certified, seltzer can be hard/alcoholic, and hard seltzer can be certified
organic. So the adjectives were not all modifying the noun “seltzer.” Even
viewing “national” as a cumulative modifier, it would modify “USDA certified”
and not “seltzer” based on its placement, supporting Suzie’s. The only reasonable
interpretation was that the entire phrase “national USDA certified organic” constituted
a phrasal adjective, aka a compound modifier, which “functions as a unit to
modify a noun.”  The court also commented
that, given the expense of the launch, “[i]t is highly unlikely that the word
“national” was placed where it was as the result of careless copywriting.”

There was a
presumption of deception from literal falsity, and Suzie’s also submitted
evidence that three consumers and a distributor contacted it after AB’s false
TV ad aired, questioning the veracity of Suzie’s organic certification. “The
fact that a presumably knowledgeable beverage distributor could be misled by
Anheuser-Busch’s commercial is additional circumstantial evidence that less
sophisticated consumers were and can be deceived.” And a news story reported
that AB was “tout[ing] its recent release as the first USDA-certified organic
hard seltzer: Michelob Ultra Organic Seltzer.” “Similarly, the fact that a
presumably knowledgeable journalist could be misled by Anheuser-Busch’s
representations is additional circumstantial evidence that less sophisticated
consumers were and can be deceived.”

This evidence also
showed materiality, as did the significant resources required to get USDA
certification as organic. Also, “[p]resumably, Anheuser-Busch would not
highlight this feature of its product in its advertising unless it believed
that doing so would promote sales.”

The court noted that
the TMA covered §43(a) in its entirety, thus providing a presumption of
irreparable harm upon a finding of likely success on the merits. AB didn’t
rebut that presumption, and even without it the evidence above would have been

AB asked for a big
bond because it would cost “at least $37,900 to produce and distribute
replacement advertising necessary to appropriately support the nationwide
launch of a new product on the scale that the ULTRA Seltzers are being
released.” But it didn’t explain how it got those numbers, and the court didn’t
think that moving “national” to “distributed nationally” or deleting “only”/
“first” would be expensive. Bond of $5,000.

from Blogger

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