Bacardi wins grains of paradise lawsuit. Court finds state alcohol law preempted by Federal statute for GRAS ingredients.
A quick liquor lawyer tip: You’ve lost when an opinion about your silly adulterated alcohol case starts like this:
“Numerous class actions have greatly benefited society such as Brown v. Board of Education, In re Exxon Valdez, and In re Agent Orange Product Liability Litigation. This is not one of those class actions.”
That’s how the Court started its opinion dismissing this ridiculous lawsuit.
We wrote extensively about this case over an archaic alcohol adulteration law in this Libation Law Blog entry – you can use the link to read about the matter and find a great article from the Miami Herald about the case.
Briefly, a consumer brought suit against Bacardi based on a 150-year-old law on Florida’s books regarding some compounds and ingredients that, prior to decent Federal regulation and at a time when little was known about such compounds, declared different substances, including grains of paradise, adulterants and banned their use in liquor.
Here’s the Florida statute:
562.455 Adulterating liquor; penalty.—Whoever adulterates, for the purpose of sale, any liquor, used or intended for drink, with cocculus indicus, vitriol, grains of paradise, opium, alum, capsicum, copperas, laurel water, logwood, brazil wood, cochineal, sugar of lead, or any other substance which is poisonous or injurious to health, and whoever knowingly sells any liquor so adulterated, shall be guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
The lawsuit sought a class certification and damages claiming because the statute declared the liquor adulterated, the alcohol was therefore worthless. Bacardi moved to dismiss arguing against the claims, in relevant part, stating that because Federal law allowed grains of paradise as part of the FDA’s general recognized as safe (GRAS) ingredients the Florida law was preempted.
You can read the full opinion from the District Court dismissing the liquor lawsuit with prejudice here.
Importantly, the District Court agreed that Federal law preempts the old state statute.
Explaining its decision the Court said:
Conflict preemption arises where “(1) compliance with both federal and state regulations is a physical impossibility, or (2) the challenged state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Fresenius Med. Care Holdings, Inc. v. Tucker, 704 F.3d 935, 936 (11th Cir. 2013) (internal quotation marks omitted). The Plaintiff’s claims are preempted by the Federal Food, Drug, and Cosmetic Act (“FFDCA”) and the Federal Drug Administration’s (“FDA”) regulations because they conflict with § 562.455, Florida Statutes. Section 562.455, the Florida statute prohibiting the adulteration of a liquor product with grains of paradise, frustrates the purposes and objectives of the FFDCA and its implementing FDA regulations, which establish that grains of paradise is generally regarded as safe. Fla. Stat. § 562.455; 21 U.S.C. § 321; 21 C.F.R. § 182.10.
The Court then went on to rebut the assertions that somehow, the Twenty-First Amendment makes alcohol different:
The Plaintiff argues that his claims are not preempted because the Twenty-First Amendment grants states the right to regulate liquor. (ECF No. 33 at 19.) The Plaintiff’s argument is mistaken. The Supreme Court has stated that “the Twenty-first Amendment does not in any way diminish the force of the Supremacy Clause.” 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 516 (1996). Therefore, the Twenty-First Amendment does not meaningfully change the preemption analysis here. Moreover, this case is comparable to recent court decisions finding state law claims stemming from the use of partially hydrogenated oils (“PHOs”) in food were preempted because they conflicted with the FFDCA, which deemed PHOs to be safe. See, e.g., Beasley v. Conagra Brands, Inc., 374 F. Supp. 3d 869, 875 (N.D. Cal. 2019); Beasley v. Lucky Stores, Inc., 400 F. Supp. 3d 942, 954 (N.D. Cal. 2019).
This opinion is an excellent first step to ensuring that the vagaries of class action silliness don’t impact alcohol in a fashion that is expressly different from other food cases. It also helps liquor lawyers in pressing the case that many state liquor regulations regarding the manufacture of alcohol may not stand against preemption arguments.
In conjunction with the Court’s determination regarding preemption, it held that there was no legal presumption that an illegal or adulterated substance was “worthless” because the law declaring it illegal was preempted by Federal law.