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ANHEUSER-BUSCH STILL PURSUING FORMER OPS DIRECTOR CLAIMING TO BE WHISTLEBLOWER

Judge throws out watered-down Budweiser beer fraud claims against Anheuser-Busch

By Ben Bouckley+

09-Jun-2014
Last updated on 09-Jun-2014 at 13:50 GMT

Chris Dodds/Flickr
Chris Dodds/Flickr

A US judge has dismissed class action claims that Anheuser-Busch routinely watered-down US beer brands including Budweiser to misrepresent alcohol levels and boost profits.

Last Monday's dismissal of Re: Anheuser-Busch Beer Labeling, Marketing and Sales Practices Litigation – claimants cannot now bring an action on the same basis – by Donald Nugent in the US District Court in Northern Ohio, halts litigation originally begun in February 2013.

The court in Ohio had consolidated a series of multi-district class action involving plaintiffs from California, Colorado, Florida, New Jersey, Ohio, Pennsylvania and Texas, which claimed that Anheuser-Busch used technology to ensure alcohol levels within 0.01%, and used it to water down beer.

Former ops director claimed he blew whistle on watery beer

An intriguing twist to the case centers on the fact that Anheuser-Busch's former operations director, James Clark, said he blew the whistle on the brewer's alleged watering-down of drinks, and in his new capacity as an attorney he worked with law firms representing consumers in the Californian class action.

He was sued on March 1 2013 by AB , which denied his claims regarding watered-down beer, for misappropriating trade secrets, in a case still ongoing before the US District Court for the Eastern District of California.

In the original Californian filing on February 22 2013, for instance, plaintiffs Nina Giampaoli and John Elbert claimed that Anheuser-Busch’s alcohol statements were “based on its uniform corporate policy of overstating the amount of alcohol in each of AB’s products”.

Budweiser, Bud Ice, Bud Light Lime under fire…

The claimants allege that 11 AB brands they bought between August 29 2009 and August 29 2013 were all under-strength – including Budweiser, Bud Ice, Mechelob, Michelob Ultra, Hurricane High Gravity Lager, King Cobra, Busch Ice and Bud Light Lime (pictured).

Such uniform misrepresentations deceived reasonable consumers who relied on AB’s labels, the claimants asserted in their original claim for damages, allowing the brewer to gain an unfair competitive advantage in violation of state law.

But last Monday, Nugent granted Anheuser-Busch’s motion to dismiss the case; while denying strenuously denying fraud, AB noted that malt beverages with 0.5%+ ABV are permitted a variance of 0.3% either way.

In its motion to dismiss, AB InBev argued that the claimants failed to allege any deviation in labeling of alcohol content that exceeded the regulatory tolerance of 0.3%, which is demanded by the Alcohol and Tobacco Tax and Trade Bureau (TTB) implementing the Federal Alcohol Administration Act (1935).

Intentional or not, ABV misstatement has ‘no different effect’

Fatally for their case, it seems, the claimants did not dispute this fact. But they argued that the court should use its equitable powers to “create an exception to the tolerance when a misstatement of alcohol content, no matter the degree, is knowing or intentional”.

The claimants added that allowing such tolerance, even in the case of deliberate misstatements, would subvert the legal and regulatory framework that allowed it – since it was specifically designed to prevent fraud, and only unintentional deviations in alcohol content should be allowed.

But granting ABI’s motion to dismiss, Nugent refused to rewrite US law to distinguish between intentional and unintentional deviations from the alcohol content stated on labelling.

“Courts should not imbue legislative or administrative enactments with their own policy preferences,” he wrote in his order, insisting it was irrelevant whether he agreed with the plaintiffs or not.

“An intentional 0.3% misstatement of ABV has no different effect on the nature or adequacy of the information available to the consumer than does an unintentional misstatement of the same degree,” Nugent added. 

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