Source: https://litigation.consusgroup.com/2017/03/01/new-class-action-cilloni-et-al-v-craft-brew-alliance-inc/
Timestamp: 2019-04-23 06:49:22+00:00

Document:
New Class Action: Cilloni et al v. Craft Brew Alliance, Inc.
Plaintiffs and other consumers purchased Kona Brewing Co. beer because they reasonably believed – based on Craft Brew’s advertising and labeling – that this beer originates from Hawaii. As a result, Plaintiffs and other consumers have been deceived and have suffered economic injury.
Put yourself in their place and imagine the pain and suffering you would feel if you enjoyed a beer only to learn months later it had been brewed in the wrong state.
Plaintiffs Sara Cilloni and Simone Zimmer (“Plaintiffs”), on behalf of themselves and all others similarly situated, bring this class action against Defendant Craft Brew Alliance, Inc. and Does 1 through 50 (“Craft Brew” or “Defendants”) to recover monetary damages, injunctive relief, and other remedies. Plaintiffs make the following allegations based on the investigation of their counsel and on information and belief, except as to allegations pertaining to Plaintiffs individually, which is based on their personal knowledge.
Through false and deceptive advertising, Craft Brew intentionally misleads consumers into believing that Kona Brewing Company beer (a brand of Craft Brew) is a local beer made in Hawaii. In actuality, this beer is made in the continental United States.
Brewing Company in Hawaii. Rather, these beers are made by Craft Brew in Oregon, Washington, Tennessee, and/or New Hampshire.
Plaintiffs seek relief in this action individually, and on behalf of all other similarly situated individuals who purchased Kona Brewing Co. beer during the statute of limitations period, for violations of California’s False Advertising Law (“FAL”), Cal. Bus. & Prof. Code §§ 17500, et seq., California’s Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code §§ 1750, et seq., California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200, et seq., and for breach of express warranty, negligent misrepresentation, and unjust enrichment.
As a result of the unlawful scheme alleged herein, Craft Brew has been able to overcharge Plaintiffs and other consumers for beer, induce purchases that would otherwise not have occurred, and/or obtain wrongful profits. Craft Brew’s misconduct has caused Plaintiffs and other consumers to suffer monetary damages. Plaintiffs, on behalf themselves and other similarly situated consumers, seek a refund and/or rescission of the transaction, and all further equitable and injunctive relief as provided by applicable law.
This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a) because Plaintiffs are citizens of the State of California, Craft Brew is a citizen of the State of Oregon, and the amount in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.
28 U.S.C. § 1332(d)(2), because this is a class action filed under Rule 23 of the Federal Rules of Civil Procedure, there are thousands of proposed Class members, the aggregate amount in controversy exceeds five million dollars, and Craft Brew is a citizen of a state different from that of Plaintiffs and members of the proposed Class and Subclass.
This Court has personal jurisdiction over Craft Brew because a substantial portion of the wrongdoing alleged in this Complaint took place in the State of California. Craft Brew is corporation that is authorized to do business in the State of California, has sufficient minimum contacts with the State of California, and/or otherwise intentionally avails itself of the markets in the State of California through the promotion, marketing, and sale of products in this State to render the exercise of jurisdiction by this Court permissible under traditional notions of fair play and substantial justice.
Plaintiff Cilloni is a citizen of the United States and the State of California and she currently resides in the County of Santa Clara. During the statute of limitations period, Plaintiff Cilloni purchased Kona Brewing Co. beer at a retail store located in the County of Santa Clara, among other locations.
Plaintiff Zimmer is a citizen of the United States and the State of California and she currently resides in the County of San Bernardino. During the statute of limitations period, Plaintiff Zimmer purchased Kona Brewing Co. beer at a retail store located in County of San Bernardino, among other locations.
Craft Brew is a publicly traded company and the fifth-largest craft brewing company in the United States. Craft Brew owns and operates five breweries. In addition to Kona Brewing Company, Craft Beer owns the Red Hook, Widmer Brothers, Omission, Square Mile Cider Company, and KCCO brands. Craft Brew’s corporate headquarters are located at 929 North Russell Street, Portland, Oregon 97227.
Craft Brew acquired Kona Brewing Company in 2010. During the statute of limitations period, Craft Brew has sold hundreds of thousands barrels and bottles of Kona Brewing Co. beer throughout the State of California and the United States.
Brew. Anheuser-Busch InBev is the world’s largest producer of alcoholic beverages.
of such DOE Defendants. Plaintiffs will seek leave of the Court to amend this Complaint to allege the true names and capacities of such DOE Defendants when ascertained.
Brew sold the equivalent of over 27 million twelve ounce bottles.
And the Kona Brewing brand continues to grow.
Craft Brew reported a 19% growth for Kona Brewing Co. beer.
Craft Brew deceptively labels its Kona Brewing Co. beer as made in Hawaii in order to exploit strong consumer sentiment for Hawaiian-made products.
In order to maximize profits, Craft Brew has capitalized on the Hawaii brand image of Kona Brewing Co. beer. The entire brand image of Kona Brewing Company – including the name itself – revolves around its purported Hawaii origins. Craft Brew ubiquitously uses Hawaii imagery, references, metaphors, and outright misstatements in order to cultivate this image.
The Kona Brewing Co. logo is displayed on the front of the bottle and on the bottle caps.
It states “Liquid Aloha” on the front of the bottle.
Embedded into the front of the bottle is an image of the Hawaiian island chain.
“KONA BREWING CO.” is prominently printed on the front of the cardboard packaging.
The name Long Board Island Lager refers to surfing and the Hawaiian lifestyle.
There is imagery of surfboards and surfers on waves in front of Diamond Head (a landmark in Oahu, Hawaii) on both the bottle label and the packaging.
in the shadow of Diamond Head, under swaying palm trees, Waikiki Beach is still the spot to learn the tradition of Longboard surfing. Here you can catch set after set of rolling 13 waves until the sun fades below the horizon, and then it’s time for a beer!
See, g., Figures 3 and 4.
21 29. The name Big Wave Golden Ale refers to waves and the power of the ocean 22 surrounding Hawaii.
23 30. There is imagery of four people in an outrigger canoe (a traditional Polynesian 24 canoe) riding a wave on both the bottle label and the packaging.
13 Makaha are just as sweet. This is the place where the first surf competition in Hawaii was held in 1954 and continues to attract world class pros to ride the giants of winter surf.
See, e.g., Figures 2 and 5.
24 lava flowing into the ocean on both the bottle label and the packaging.
On the label of the neck of the bottle it states, “Active volcanoes on the Big Island of Hawaii leave visitors awestruck by their power. The glow of lava as it meets the ocean is an 3 amazing sight. Our Fire Rock Pale Ale is inspired by this place with a bright copper color and 4 rich roasted malt taste. Aloha!
5 See, e.g., Figures 6 and 7.
7 39. The name Wailua Wheat Ale refers to the Wailua waterfalls – a landmark in Maui, 8 Hawaii.
9 40. There is imagery of a woman standing in front of a waterfall on both the bottle 10 label and the packaging.
11 41. On the label of the neck of the bottle it reads, “Wailua is Hawaiian for two fresh 12 water streams mingling. This was just the inspiration we needed for our Wailua Wheat Ale.
It also states on both the bottle label and the cardboard packaging, “Wailua Falls.
into a natural pool, cradled in the surrounding volcanic rock. Take a dip in the cool, refreshing water, under the canopy of palm trees, and you will feel the timelessness of this Hawaiian paradise.
See, e.g., Figures 8 and 9.
The name Hanalei Island IPA refers to Hanalei – a town in Kauai, Hawaii.
Hawaii on both the bottle label and the packaging.
5 canoe) riding a wave on both the bottle label and the packaging.
paddlers who continue to race against the high winds and strong currents, earning worldwide admiration and acclaim.
It is those early island explorers, and the new ones too, that inspired us to make an equally spirited IPA. Take a sip of this copper-colored India Pale Ale and you’ll taste bold, citrusy hops with a touch of tropical mango and passion fruit balanced by the rich caramel malts.
packaging it prominently states, “A WAVE LIKE NO OTHER.” See, g., Figures 13 and 14.
The name Koko Brown refers to Koko Head – a landmark in Oahu, Hawaii.
” See, e.g., Figure 15.
both isolation and as a whole, are clearly designed to create the mistaken impression that Kona Brewing Co. beer is made in Hawaii.
Kona Brewing Co. beer bottles contain an affirmative, false statement that the beer 3 is made in Kona, Hawaii.
See, g., Figure 16 (relevant portion circled in red).
other words, the statement “Kona, HI” is false. The only specific information regarding 18 geographic origin affirmatively misrepresents to consumers that Kona Brewing Co. beer is made 19 in Kona, Hawaii.
21 67. In addition to false advertising and statements on the product labels and packaging 22 themselves, Craft Brew has undertaken a pervasive advertising campaign to cultivate its unique 23 Hawaii image.
24 68. Kona Brewing Company’s social media – which on information and belief is 25 operated by Craft Brew – is rife with Hawaii imagery and references.
3 Hawaii’s Big Island.” There are 4,235 tweets, 1050 photos, and 28.2k followers as of the date the 4 Complaint was filed.
5 70. Almost every single one of these thousand-plus photos depicted on Twitter have 6 strong Hawaii imagery. See, e.g., Figures 17-20.
 “Fire up, bruddahs and sistahs! Fire Rock is now available with your other craft beer 9 favorites…” December 19, 2016.
10  “What’s cooler than a pineapple wearing shades? A pineapple wearing shades with a 11 Longboard Lager…” November 6, 2016.
 “A Hanalei sunset in a glass.” September 30, 2016.
Anheuser-Busch InBev’s acquisition of a significant percentage of Craft Brew.
Kona Brewing Co. beer that is bottled and canned, and draft beer sold in the 19 mainland, is made by Craft Brew in the continental United States.
Island, which produces more than 12,000 barrels of beer annually.
23 Under strict guidance, Kona Brewing Company also produces its bottled beer and mainland draft beer in Portland, Oregon, Woodinville, Washington, Memphis, Tennessee, 24 and Portsmouth, New Hampshire, as part of its partnership with Craft Brew Alliance Inc.
Kailua-Kona brewery for sensory evaluation. The brewmaster and quality assurance employees are in daily contact with mainland partner breweries.
See Figure 21 (relevant text circled in red).
Thus, Craft Brew admits that all bottled/canned and mainland draft Kona Brewing 8 Co. beer is made in Oregon, Washington, Tennessee, and/or New Hampshire.
By comparison, Craft Brew produced 154,700 kegs of beer in 2014 alone.
The water mineral levels at each breweries utilizes Kona’s hops, malt and proprietary yeast.
Indeed, water makes up more than 90 percent of beer. It is generally accepted that the type of water used impacts the taste and quality of the beer. And even if Craft Brew could adequately replicate the taste of Hawaii water in its mainland beer (Plaintiffs allege it cannot) consumers are still being deprived of what Craft Brew has promised them and what they have paid for – namely, a Hawaiian beer.
Relations” section of Kona Brewing Company’s website, it directs you to a link to Craft Brew’s investor relations page. Moreover, on Craft Brew’s website, there is a direct link to the Kona Brewing Co. website. See Figure 23. These websites are interrelated and are either controlled solely by Craft Brew or jointly by Craft Brew and Kona Brewing Company.
The Hawaii-brand image in the context of marketing and consumer purchase decisions is extremely powerful.
Consumers purchase items, and are willing to pay more for items, because they are from Hawaii. Craft Brew is well aware of this.
During the statute of limitations period, Plaintiffs each separately purchased Kona Brewing Co. beer at retail stores located in the State of California.
Plaintiffs each read the labels on the Kona Brewing Co. beer bottles and packaging, and based on this labeling and advertising, they reasonably believed that the beer was made in Hawaii.
Plaintiffs’ reasonable beliefs that the Kona Brewing Co. beer they purchased was made in Hawaii was a significant factor in their decision to purchase the beer. Plaintiffs would not have purchased the beer, or would have paid significantly less for the beer, had they known the true origins of the Kona Brewing Co. beer they purchased.
As with Plaintiffs, Class members were likely to be deceived by Craft Brew’s misrepresentations regarding the origin of Kona Brewing Co. beer, in that they would not have purchased the beer, or would have paid substantially less for the beer, but for the misrepresentations.
As a result of Craft Brew’s misrepresentations, Plaintiffs and the Class have been injured to the financial benefit of Craft Brew.
All persons who purchased any Kona Brewing Co. beer in the United States at any time beginning four (4) years prior to the filing of this action and ending at the time this action settles or proceeds to final judgment.
All persons who purchased any Kona Brewing Co. beer in the State of California at any time beginning four (4) years prior to the filing of this action and ending at the time this action settles or proceeds to final judgment.
Excluded from the Class and California Subclass are the following individuals and/or entities: all persons who purchased any Kona Brewing Co. draft beer (i.e., non-bottled or canned) in the State of Hawaii; Craft Brew and its parents, subsidiaries, affiliates, officers and directors, current or former employees, and any entity in which Craft Brew has a controlling interest; all individuals who make a timely election to be excluded from this proceeding using the correct protocol for opting out; and all judges assigned to hear any aspect of this litigation, as well as their immediate family members.
Plaintiffs reserve the right to modify or amend the definition of the proposed classes and/or add subclasses before the Court determines whether certification is appropriate.
United States and the State of California during relevant time period is at least in the thousands. These Class members are identifiable and ascertainable through Craft Brew’s records and other records and proofs of purchase.
Whether Plaintiffs and the Class are entitled to an award of reasonable attorneys’ fees, interest, and costs of suit.
Craft Brew engaged in a common course of conduct giving rise to violations of the legal rights sought to be enforced uniformly by Plaintiffs and Class members. Similar or identical statutory and common law violations, business practices, and injuries are involved. Therefore, individual questions, if any, pale in comparison to the numerous common questions presented in this action.
The injuries sustained by members of the proposed classes flow, in each instance, from a common nucleus of operative fact. Each instance of harm suffered by Plaintiffs and Class members has directly resulted from a single course of illegal conduct – namely, Craft Brew’s false labeling and advertising of Kona Brewing Co. beer.
Given the similar nature of the Class members’ claims and the absence of material differences in the statutes and common laws upon which the Class members’ claims are based, the proposed classes will be easily managed by the Court and the parties.
Because of the relatively small size of the individual Class members’ claims, no Class member could afford to seek legal redress on an individual basis. A class action is superior to any alternative means of prosecution.
The representative Plaintiffs’ claims are typical of those of the Class and California Subclass, as all members of the proposed classes are similarly affected by Craft Brew’s uniform unlawful conduct as alleged herein.
Craft Brew acted, and failed to act, on grounds generally applicable to Plaintiffs and the proposed classes, supporting the imposition of uniform relief to ensure compatible standards of conduct toward the members of the Class and California Subclass.
Plaintiffs will fairly and adequately protect the interests of the proposed classes, and they have retained counsel competent and experienced in class action litigation. The Class representatives have no interests which conflict with or are adverse to those of the other Class members.
Plaintiffs incorporate herein by specific reference, as though fully set forth, the allegations in paragraphs 1 through 104.
California’s False Advertising Law (“FAL”), California Business and Professions Code § 17500, et seq., prohibits unfair, deceptive, untrue, or misleading advertising.
Craft Brew’s practice of representing that its Kona Brewing Co. beer is made in Hawaii violates the FAL. Specifically, the FAL makes it unlawful for “[a]ny person . . . to make or disseminate or cause to be made or disseminated from this state before the public in any state . . . in any advertising device . . . or in any other manner or means whatever, including over the Internet, any statement, concerning . . . personal property or services, professional or otherwise, or performance or disposition thereof, which is untrue or misleading and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading.” Bus. & Prof. Code § 17500.
Craft Brew has engaged in a scheme of offering mislabeled beer for sale to Plaintiffs and Class members by way of product packaging, labeling, internet advertising, and other promotional materials. These labels and materials misrepresented and/or omitted the true content and nature of the mislabeled beer. Craft Brew’s labels, advertisements, and inducements were made in California and come within the definition of advertising as contained in Bus. & Prof. Code § 17500, et seq., in that the product packaging, labeling, and promotional materials were intended as inducements to purchase Kona Brewing Co. beer, and they are statements disseminated by Craft Brew to Plaintiffs and Class members. Craft Brew knew or should have known that these statements were inaccurate and misleading.
Craft Brew’s false advertisements, as alleged herein, were calculated to induce Plaintiffs and Class members to purchase beer they otherwise would not have and/or to spend more money than they otherwise would have spent, in order to increase Craft Brew’s profits.
Through its unfair acts and practices, Craft Brew has improperly obtained money from Plaintiffs and the Class. As such, Plaintiffs request that this Court cause Craft Brew to restore this money to Plaintiffs and all Class members, and to enjoin Craft Brew from continuing to violate the FAL in the future.
In prosecuting this action for the enforcement of important rights affecting the public interest, Plaintiffs also request that the Court award reasonable attorneys’ fees and costs pursuant to Cal. Code of Civ. Proc. § 1021.5.
Plaintiffs incorporate herein by specific reference, as though fully set forth, the allegations in paragraphs 1 through 111.
Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq.
Plaintiffs and Class members are “consumers” within the meaning of Cal. Civ.
“transactions” within the meaning of Cal. Civ. Code § 1761(e). The beer purchased by Plaintiffs and Class members are “goods” within the meaning of Cal. Civ. Code § 1761(a).
As alleged herein, Craft Brew violated the CLRA by falsely labeling and advertising that the beer is made in Hawaii, when in fact, the beer is made in the continental United States.
By engaging in the conduct alleged herein, Craft Brew violated, and continues to violate, sections 1770(a)(4), (5), (7) and (9) of the CLRA.
Plaintiffs relied on the misrepresentation that the Kona Brewing Co. beer they purchased was made in Hawaii. Plaintiffs would not have purchased the beer, or would have paid significantly less for the beer, but for Craft Brew’s unlawful conduct. Plaintiffs and Class members acted reasonably when they purchased Kona Brewing Co. beer based on the belief the beer was made in Hawaii because they were misled by the clear-cut and deceptive representations alleged herein.
Under Cal. Civ. Code § 1780(a), Plaintiffs and Class members seek injunctive and equitable relief for Craft Brew’s violations of the CLRA. On February 28, 2017, Plaintiffs sent a notice letter by certified mail to Craft Brew of their intent to pursue claims under the CLRA, and an opportunity to cure, consistent with Cal. Civ. Code § 1782. Concurrent with the filing of the Complaint, Plaintiffs are filing declarations of venue, consistent with Cal. Civ. Code § 1780(d), attached hereto as Exhibit A.
Plaintiffs seek injunctive relief only pursuant to the CLRA. If Craft Brew fails to take corrective action within 30 days of receipt of the notice letter, Plaintiffs intend to amend the Complaint to include a request for damages as permitted under Cal. Civ. Code § 1782(d).
Plaintiffs incorporate herein by specific reference, as though fully set forth, the allegations in paragraphs 1 through 121.
Plaintiffs and Class members are “persons” within the meaning of Cal. Bus. & Prof. Code § 17204.
The California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq., defines unfair business competition to include any “unlawful, unfair or fraudulent” act or practice, as well as any “unfair, deceptive, untrue or misleading” advertising.
A business act or practice is “unfair” under the UCL if the reasons, justifications and motives of the alleged wrongdoer are outweighed by the gravity of the harm to the alleged victims. A business act or practice is “fraudulent” under the UCL if it is likely to deceive members of the consuming public. A business act or practice is “unlawful” under the UCL if it violates any other law or regulation.
Craft Brew has violated the “unfair” prong of the UCL by mislabeling and falsely advertising its Kona Brewing Co. beer in order to induce consumers to believe the beer is made in Hawaii when it is not.
The business acts and practices alleged herein are unfair because they caused Plaintiffs and Class members to falsely believe that Craft Brew is offering a beer that is superior and/or more desirable to what they actually received. This deception was likely to have induced reasonable consumers, including Plaintiffs, to buy Kona Brewing Co. beer, which they otherwise would not have purchased, or would have paid substantially less for such beer.
The gravity of the harm to Plaintiffs and Class members resulting from these unfair acts and practices outweighs any conceivable reasons, justifications and/or motives of Craft Brew for engaging in such deceptive acts and practices. By committing the acts and practices alleged herein, Craft Brew has engaged in, and continues to engage in, unfair business practices within the meaning of California Business & Professions Code § 17200, et seq.
Craft Brew has also violated the “unlawful” prong of the UCL by violating several California laws, as alleged herein, including the FAL, Cal Bus. & Prof. Code § 17533.7 and the CLRA.
Craft Brew also violated the “fraudulent” prong of the UCL by misleading Plaintiffs and Class members to believe that its Kona Brewing Co. beer is Hawaii-made, when in actuality, it is brewed in the continental United States.
Through its unlawful acts and practices, Craft Brew has improperly obtained money from Plaintiffs and the Class. As such, Plaintiffs request that this Court cause Craft Brew to restore this money to Plaintiffs and the Class, and to enjoin Craft Brew from continuing to violate the UCL as alleged herein.
Plaintiffs incorporate herein by specific reference, as though fully set forth, the allegations in paragraphs 1 through 132.
In connection with the sale of its Kona Brewing Co. beer, Craft Brew issued an express warranty that these brands of beer were in fact made in Hawaii.
Craft Brew’s affirmation of fact, representations, promise, and description.
here does not live up to Craft Brew’s express warranty.
Class members are likely to have reasonably relied upon Craft Brew’s express warranties in purchasing Kona Brewing Co. beer.
Plaintiffs incorporate herein by specific reference, as though fully set forth, the allegations in paragraphs 1 through 137.
As alleged herein, Craft Brew misrepresented that its Kona Brewing Co. beer is made in Hawaii.
At the time Craft Brew made these representations, Craft Brew knew or should have known that these representations were false, or made them without knowledge of their truth or veracity.
At minimum, Craft Brew negligently misrepresented and/or negligently omitted material facts about its Kona Brewing Co. beer.
The negligent misrepresentations and omissions made by Craft Brew, upon which Plaintiffs and Class members reasonably and justifiably relied, were intended to induce, and actually induced, Plaintiffs and Class members to purchase the beer at issue.
Brew’s deceptive labeling and advertising in purchasing Kona Brewing Co. beer.
Plaintiffs incorporate herein by specific reference, as though fully set forth, the allegations in paragraphs 1 through 144.
As a result of Craft Brew’s wrongful and deceptive conduct, Plaintiffs and Class members have suffered a detriment while Craft Brew has received a benefit.
Craft Brew’s misleading, inaccurate and deceptive marketing and labeling intentionally cultivates the perception that consumers are being offered a product that they are not. Plaintiffs and Class members were intended to rely upon Craft Brew’s misrepresentations when they purchased Kona Brewing Co. beer. Plaintiffs and Class members likely would not have purchased Kona Brewing Co. beer, or would have paid significantly less for it, if Craft Brew had not misrepresented the nature of this beer.
Craft Brew has received a premium price benefit and/or additional sales from Plaintiffs and Class members as a result of this unlawful conduct.
Craft Brew should not be allowed to retain the premium price profits and/or additional sales generated from the sale of products that were unlawfully marketed, advertised and promoted. Allowing Craft Brew to retain these unjust profits would offend traditional notions of justice and fair play and induce companies to misrepresent key characteristics of their products in order to increase sales.
Thus, Craft Brew is in possession of funds that were wrongfully retained from Plaintiffs and Class members that should be disgorged as illegally gotten gains.
9 7. For such further relief that the Court may deem just and proper.
11 Plaintiffs, on behalf of themselves and the proposed classes, hereby demand a jury trial 12 with respect to all issues triable of right by jury.
 Kona Brewing Company’s draft beers (i.e., non-bottled or canned) sold in Hawaii may actually be brewed in Kona, Hawaii.
 During a small portion of the beginning of the statute of limitations period the language quoted in paragraph 64 may not have been listed, and there was simply no information on Kona Brewing Co. beer labels or packaging relating to geographic origin.

References: v. 
 § 1332
 § 1332
 § 17500
 § 17500
 § 17500
 § 1021
 § 1750
 § 1761
 § 1761
 § 1780
 § 1782
 § 1780
 § 1782
 § 17204
 § 17200
 § 17200
 § 17533