Goose Island scores win in action over refunds for “off” Bourbon County from 2015

Goose Island recently scored a win in Federal District Court Massachusetts where it achieved the dismissal of a class action brought by two Bourbon County Brand Stout purchasers who bought BCBS and variants from the 2015 year that was part of the bad batch fiasco for which Goose Island instituted a refund program. Those looking for more information on the Lactobacillus acetotolerans infection That cause Goose Island to issue the refund can read a good article by Josh Noel of the Chicago Tribune on it here. And if that interests you, you may want to follow up with both his excellent review of how these off beers tasted here, and take a deeper dive into the Goose Island story with his new book released this week, “Barrel-Aged Stout and Selling Out: Goose Island, Anheuser-Busch, and How Craft Beer Became Big Business.“

It should be noted from the outset that there was no recall of this beer as off-flavors aren’t a hazard to the public and there was no safety issue involved. As a brewer concerned with its brand and its image, Goose Island undertook a voluntary refund program to pay back loyal customers that had purchased infected beer.

You can read the facts of the case as laid out in the Court’s opinion granting the dismissal here. As the opinion relates, two purchasers of Goose Island Bourbon County Brand variants brought claims against Goose Island for the beer they bought that was from the 2015 infected batches. One of the plaintiffs bought a case of Bourbon County Brand Stout, two bottles of Bourbon County coffee stout, and one bottle of Bourbon County barleywine for a total purchase price of $196.85. The other bought 32 bottles of Bourbon County Brand Stout two bottles of coffee stout and 6 bottles of barleywine for what the opinion notes in a footnote as approximately $600 worth of beer. The complaint alleged (you can read the amended complaint here)  that one of the plaintiffs was unable to participate in the refund program and the other only received a partial refund. They also sought to achieve class status as representatives of the group of individuals who are unable to achieve refunds from the program but who are nonetheless affected by the off beers in that they purchased them but were unable to obtain refunds.

Those of you following the ongoing evolution of class action cases know that there’s a particular strategy of reimbursing or paying damages to individual plaintiffs before class actions are certified that has been percolating through the circuits. Basically, in some cases it’s possible to defeat a class action by paying the individual plaintiffs what they’re owed, or the maximum of what they could possibly recover individually, thereby mooting their claims which results in their inability to prosecute not only their individual actions but also to stake a larger claim as representatives of a class.

In this case the attorneys for the plaintiffs, following Massachusetts law, had sent a letter after they filed suit detailing there assertions against Goose Island and in response Goose Island sent a letter denying the claims that their refund process was underpublicized and unfair, but tendered checks to the each of the plaintiffs – one for $3,000 and one for $5,000 – reflecting what Goose Island calculated was the maximum amount recoverable by each of the plaintiffs under the Massachusetts statute at issue. You can read the letter Goose Island attorneys sent here which is included as an exhibit as part of their motion to dismiss.  It is a well-crafted response to the allegations and also reiterates that the beer posed to no public safety risk and that the plaintiffs had failed to provide some necessary information to identify whether their beers were part of the affected batches or were outside the affected batch range:

Goose Island believes that the fixed submission period for refund requests related to the 2015 Bourbon County Stout release was a reasonable limitation, particularly when no safety or health issue was involved. Nonetheless, Goose Island has granted substantiated requests for refunds on the affected variants after the expiration of the deadlines in some instances. We likewise are willing to provide refunds to Mr. Kaplan and Mr. Roach. Enclosed for that purpose are checks … payable to [each], respectively. These payments reflect the maximum amount potentially available to them under M.G.L. ch. 93A, plus additional funds to cover court costs and attorneys’ fees….

….

[T]he monetary tender enclosed provides more than full relief, and we trust it will conclude this matter.

The plaintiffs’ attorney returned the checks claiming that their return was a rejection of an attempt to resolve the matter.

The plaintiffs thought that kept the issue alive, but Goose Island didn’t and it filed a motion to dismiss the case based on the fact that the payments mooted the claims “because Goose Island has unconditionally offered all of the relief that plaintiffs seek and there is no more relief that the court could provide.”

And the court agreed:

To the extent that the plaintiffs allege that they were injured by the “unfair” refund program, the injury they allege is that they were unable to fully participate in the refund program. Thus, their claim for damages is equivalent to the value of the beer for which they were unable to collect a refund, which is no more than the value of the beer that they purchased. In unconditionally tendering more than the maximum amount that plaintiffs could recover under ch. 93A (treble damages), Goose Island satisfied plaintiffs’ claims under the legal theories pled in Counts I-IV.

More importantly the court found that there wasn’t much potential for the repetition of the harm and that tendering the checks and offering a refund program wasn’t part of a concerted effort of gamesmanship meant to thwart judicial determination of real class issues based primarily on the fact that Goose Island had not acted in this fashion before:

There is no evidence of a comparable scheme in this case where Goose Island voluntarily instituted a refund program before suit was filed for beer that was produced on one occasion. The plaintiff has offered no evidence that Goose Island is likely to produce more “contaminated” beer or that Goose Island has engaged in a pattern and practice of tendering full relief to named plaintiffs in putative class actions in related cases prior to class certification as an effort to “thwart[] judicial review[.]” … Absent such evidence of either continuing wrongful behavior or any nefarious plan to “pick off” plaintiffs to evade judicial review, the ordinary principle that the settlement of individual claims moots potential class action claims applies.

I bet the plaintiffs are wishing their attorney had kept those checks now.

While the opinion is limited to the facts at hand and is based on precedent applicable in only the 1st Circuit, it’s worth noting as it is an example of a manufacturer not being punished for doing what’s right by offering a refund for a product that didn’t meet its standards and wasn’t what the purchaser expected.