Valuable insight on packaging design and labeling offered in Court’s dismissal of claims that hard seltzer conveyed the impression it contained tequila. Saying “Margarita Hard Seltzer” is not the same as saying “Sparkling Margarita” or “Margarita Cocktail.”
Context is crucial. That’s the takeaway from this recent opinion out of a New York Federal Court dismissing consumer claims asserting that Coca Cola’s 12-pack Topo Chico branded Margarita Hard Seltzer packaging misleads consumers to thinking the product contains tequila and is made from Mexican mineral water. This opinion provides excellent information and analysis for those looking to further assess their packaging and understand what may cross a line and what should not in creating hard seltzer branding for those seltzers meant to taste like popular cocktails.
The claims the plaintiff raised in the lawsuit boil down to three basic contentions of packaging providing false impressions:
1. The use of the term Margarita on the packaging along with a picture of the agave plant conveys the impression that the product contains tequila.
2. The use of the term “Hard Seltzer” conveys the impression the product contains spirits because “hard” in the context of alcohol refers to distilled spirits i.e., “hard liquor”.
3. The use of the brand Topo Chico for the product implied that like the popular Topo Chico mineral water, the product contained sparkling mineral water from Monterrey Mexico.
Here is the full packaging diagram provided by the defendants in support of their motion for judgment on the pleadings:
The Court rejected all these claims and found for the hard seltzer maker in an extensively reasoned opinion that broke some new ground and cited to some recent opinions in a way that establishes them as further precedent for ideas and holdings regarding alcoholic beverage packaging that manufacturers and their designers will want to consider in creating multipacks.
The Court rejected the idea that the product contains tequila. The opinion details the fact that the packaging’s use of the word Margarita cannot be taken out of the context of the full wording in which it is contained on the packaging – Margarita Hard Seltzer. “The Product’s label does not use the word ‘Margarita’ in a vacuum.”
The Court found that the context provided by the term “Hard Seltzer” was both critical and fatal to the plaintiff’s claim. Citing the Future Proof v. Molson Coors decision from the 5th Circuit the Court noted that the term hard seltzer implies a product containing carbonated beverages, alcohol and usually fruit flavoring and that consumers WOULD recognize hard seltzer as different from cocktails like margaritas also noting that the word hard cannot be read alone when added to “seltzer” and that people understand hard to convey alcoholic but not necessarily spirits as in the case of hard cider and hard lemonade. Holding as a matter of law that hard seltzer conveys to a consumer that the product simply contains alcohol not a particular type of alcohol.
The Court contrasted the phrasing “Margarita Hard Seltzer” to products from Buzzbox and Dulce Vida which use phrases like “ready to drink … margarita beverages” with packaging calling out “Perfect Margarita” and “Sparkling Margarita” holding that such phrases, without further qualification and which also use phrasing like “premium cocktails” could be construed to contain tequila and sometime explicitly state that they do. The Court put stock in the fact that the Topo Chico packaging did not describe the drink “solely as any kind of Margarita – perfect, sparkling or otherwise.” But rather “the Product’s label uses ‘Margarita’ as a modifier of the term ‘hard seltzer,’ without any reference to cocktails or tequila.” Holding as a matter of law that a reasonable consumer viewing the products label as a whole would understand that they were purchasing a hard seltzer made to taste like a margarita “and not a ready-to-drink margarita cocktail.” The Court also took note of the fact that in other cases, pictures on the side of the packaging showed cocktails and salt-rimmed glasses conveying the impression of a spirits based margarita drink normally associated with tequila mixed-in but that this packaging did not.
A footnote from the Court further clarified this holding:
That “Margarita” refers to the taste of the Product and is not a representation that the Product is a margarita is further confirmed by the flavor varieties within the package. The package contains images of those varieties, which say, “Strawberry Hibiscus,” “Signature Margarita,” “Tropical Pineapple,” and “Prickly Pear,” and below each such flavor designation the words “Naturally Flavored with other Natural Flavors” appear. (Compl. ¶ 1.) It would be abundantly clear to a reasonable consumer that those varieties — including “Signature Margarita” – do not represent margaritas but instead describe the flavors of the hard seltzer contained in the package. See Future Proof Brands, L.L.C., 982 F.3d at 287 (“Hard seltzers are alcoholic beverages that contain carbonated water, alcohol, and—in most cases—fruit flavors . . . .”) (emphasis added).
The Court also made reference to the idea that since New York prohibits the sale of spirits and spirits-based drinks in grocery stores and the plaintiff bought the product in a grocery store, she should have been aware that the product could not contain spirits.
At bottom, Plaintiff’s alleged belief is based on her “selective interpretation of individual words from [the] [P]roduct’s [*15] labeling,” Hairston v. S. Beach Beverage Co., Inc., No. 12-CV-1429, 2012 U.S. Dist. LEXIS 74279, 2012 WL 1893818, at *4 (C.D. Cal. May 18, 2012), and is “plainly inconsistent with the face of the package, and with common sense,” Seljak, 2023 U.S. Dist. LEXIS 36111, 2023 WL 2354976, at *13. But Plaintiff is not “entitled to take a fleeting glimpse at the front of a product label, home in on the one word that confirms h[er] hopes about the product and ignore the other words, and then sue to recover the purchase price when [s]he eventually learns that the product is what the label, read in its entirety, says it is.” Alvarez v. Ashley Furniture Indus., Inc., No. 16-CV-630, 2017 U.S. Dist. LEXIS 173869, 2017 WL 4785970, at *6 (C.D. Cal. Sept. 20, 2017); see Hairston, 2012 U.S. Dist. LEXIS 74279, 2012 WL 1893818, at *4 (C.D. Cal. May 18, 2012) (rejecting consumer protection claim “based on a single out-of-context phrase found in one component of [the product’s] label.”).
The Court also noted that the packaging (what the consumer could see on the exterior panels of the packaging at the time of purchase without having to open it up and take out the cans and read them) featured an ingredient panel on the back which did not reference tequila even where there was a picture of the agave plant on the packaging because the ingredient panel listed agave based sweetener.
The Mexican origin claim fared no better with the Court holding that the use of Topo Chico’s brand name conveyed the impression that the product contained Mexican sparkling mineral water was “not plausible.” Noting that the label contained no such statements regarding origin or contents and the packaging included the ingredients labeling making no such claims island in fact stating that the product was produced and bottled in Milwaukee, Wisconsin.
One other thing to note. The complaint had only provided a picture of the packaging’s front panel and top panel and did not provide a full picture of all six sides of the packaging. This is important because as we’ve seen in other cases involving false advertising on mixed-pack or multipack displays, the inability of the consumer to open the packaging and read clarifying or differing information or find the “ingredients” only on the cans or bottles that are inaccessible without opening the box can be a determining factor. Here the Court implicitly continued that line of reasoning and assessment of these cases over multipacks by refusing to take judicial notice of the can labels, but by taking notice of the full box label explicitly because the plaintiff could have viewed the entire box but could not have viewed the interior cans without opening the box prior to purchase.
The entire 12-pack packaging, including the complete Nutrition Facts panel, is “incorporated by reference” because it is “referenced in and relied on in the [C]omplaint,” in the context of Plaintiff’s allegations “that the product labels . . . are misleading.” Eshelby v. L’Oréal USA, Inc., No. 22-CV-1396, 2023 U.S. Dist. LEXIS 52092, 2023 WL 2647958, at *3 n.4 (S.D.N.Y. Mar. 27, 2023); see Randolph v. Mondelēz Glob. LLC, No. 21-CV-10858, 2022 U.S. Dist. LEXIS 59104, 2022 WL 953301, at *1 n.1 (S.D.N.Y. Mar. 30, 2022) (“[T]he full labels, provided via a defendant’s declaration, are cognizable on a motion to dismiss claims under GBL §§ 349 & 350, because the full packaging is integral to the complaint and [*8] incorporated by reference.”). I will therefore consider the entire 12-pack packaging, and may do so without converting Defendant’s motion into a motion for summary judgment. See Islam v. Fischer, No. 07-CV-3225, 2008 U.S. Dist. LEXIS 19796, 2008 WL 650380, at *2 (S.D.N.Y. Mar. 6, 2008) (“The Court may consider documents . . . incorporated by reference into the complaint without converting the motion into a motion for summary judgment.”). The labels on the individual cans contained within the 12-pack, however, are on a different footing. It is not clear that a prospective purchaser could even see the individual cans, and those labels are not the basis of Plaintiff’s claims or otherwise appropriate for consideration on this motion. Accordingly, I do not consider them.
In all, a well reasoned opinion with careful distinctions based on context that provide information to those designing packaging and labeling for beer, wine, spirits, hard seltzers and other alcoholic beverages about statements or tactics that might land you in hot water like persisting to use the term margarita cocktail or showing a picture of a cocktail or a mixed drink on a hard seltzer beverage.