TTB Gets the Permit Wrong—and the Distillery Pays the Price

An agency should not escape an otherwise valid negligence claim merely by sending a letter announcing its mistake. Yet a recent TTB permit termination dispute pushes federal immunity in that direction, treating restrictions on a distillery’s approval access as part of the government’s misinformation rather than separate conduct. For suppliers and wholesalers, that distinction could determine whether a damages claim reaches the merits. 

Red Boot Distillery’s TTB permit dispute

In JDSO, Inc. v. United States, No. 4:25-cv-00444-SHL-SBJ (S.D. Iowa July 24, 2026), Red Boot Distillery alleged that TTB overlooked ownership documents submitted during an earlier permit amendment. Almost three years later, the agency declared that the company’s permits had terminated automatically and threatened civil and criminal penalties for continued operations. 

TTB also restricted access to approval functions through the TTB’s online portals (COLAS, Permits, Formulas). According to the complaint, those restrictions prevented JDSO from obtaining necessary approvals and serving customers. TTB allegedly later acknowledged that the permits “always remained in full force and effect.” JDSO claimed a shutdown lasting several days and more than $3.5 million in lost business and profits over the following months and years. 

Nevertheless, the court dismissed its Federal Tort Claims Act claim under the misrepresentation exception. 

Why the misrepresentation analysis goes too far

The FTCA permits certain negligence suits against the United States, but 28 U.S.C. § 2680(h) excludes claims arising from misrepresentation. That exclusion prevents recovery when the claimed economic injury flows solely from reliance on incorrect government information.

But a false statement does not erase separate negligence. In Block v. Neal, 460 U.S. 289, 297–98 (1983), the Supreme Court distinguished claims involving “the Government’s breach of a different duty” and warned against allowing the government to avoid liability by “adding misrepresentations to whatever otherwise actionable torts it commits.” That warning fits this dispute.

The district court emphasized the notice: “But for the Notice, JDSO would have suffered no injuries.” It also rejected the separate significance of the systems restrictions, observing that “[t]he loss of access did not happen spontaneously.” 

That observation only underscores JDSO’s allegation that TTB imposed the restrictions. The stronger question asks whether those restrictions would have caused harm even if JDSO immediately recognized the notice’s errors. A company cannot obtain an approval through a disabled function merely by refusing to believe the agency’s explanation. Restricting access to online portals and the ability to perform the functions they support exercises control over the business; communicating the restriction describes that exercise.

The opinion gives too little attention to that difference. Its approach risks converting harmful government conduct into protected misinformation whenever an agency sends a notice explaining its actions.

How suppliers and wholesalers can protect their claims

Start by documenting conduct, not just correspondence. Preserve screenshots, rejected submissions, access logs, customer cancellations, and the dates each restriction began and ended. Separate losses caused by actual approval barriers from losses caused by stopping operations in response to a warning. That distinction requires evidence, not creative pleading.

Identify the independent duty with equal care. The FTCA requires a state-law basis for comparable private-person liability; a federal obligation to administer permits correctly does not suffice by itself. Counsel must also address other immunity defenses, including the discretionary-function exception. Defeating the misrepresentation argument would not automatically establish a right to recover. 

Meanwhile, pursue correction and restoration of access immediately. A damages claim cannot reopen an approval function. For covered basic-permit orders, 27 U.S.C. § 204(h) provides court-of-appeals review with a 60-day filing deadline. An asserted automatic termination requires separate scrutiny of the available review route; do not assume that every TTB notice supports the same appeal or an Administrative Procedure Act lawsuit. 

Preserve the damages claim while seeking operating relief. The FTCA generally requires administrative presentment within two years after accrual and suit within six months after the agency mails a qualifying final denial. Suit ordinarily must await denial or six months of agency inaction; discussions with TTB do not replace proper presentment.

JDSO’s complaint repeatedly connected its losses to the notice, giving the government an opening. Future claimants should clearly plead and prove any independent conduct and resulting injury.  But courts should scrutinize the government’s characterization just as closely: a shutdown does not become mere bad advice because the agency puts its explanation in writing.