Tunick v. Takara Sake USA Inc.

Background

Colby Tunick alleged that Takara Sake USA Inc. manufactured, labeled, advertised, distributed, and sold Sho Chiku Bai sake products produced in California. Tunick purchased a 375-milliliter bottle of Sho Chiku Bai Nigori Unfiltered Sake in San Diego in or around August 2020. He alleged that the brand name, Japanese lettering, and a front-label gold emblem stating “Licensed by TaKaRa Japan, Since 1851” led him to believe the product was made in Japan. He said he would not have purchased it, or would have paid significantly less for it, had he known it was not made in Japan.

Tunick alleged that three groups of products were deceptively labeled and marketed as made in Japan: Sho Chiku Bai Nigori Unfiltered Sake, Sho Chiku Bai Classic Junmai, and Sho Chiku Bai Tokubetsu Junmai. His First Amended Complaint asserted claims under California’s Consumers Legal Remedies Act, False Advertising Law, and Unfair Competition Law; claims for breach of express and implied warranties; and an unjust-enrichment claim.

Motion to Dismiss Standard and Label Evidence

Takara moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court generally must accept well-pleaded factual allegations as true and draw reasonable inferences for the plaintiff, but a claim must be plausible rather than merely possible.

The court granted Takara’s request to incorporate by reference product-label exhibits because the labels formed the basis of Tunick’s claims and their authenticity and relevance were not contested. The court specifically considered the back label of the product Tunick purchased, which stated that it was “Produced & Bottled by Takara Sake USA Inc, Berkeley, California.”

Consumer-Protection Claims

For the False Advertising Law, Consumers Legal Remedies Act, and fraudulent-prong Unfair Competition Law claims, the issue was whether a significant portion of reasonable consumers could be misled into believing the products were made in Japan. The court stated that deception is generally a fact-intensive issue and that dismissal at the pleading stage is unusual.

The court found it plausible that reasonable consumers could interpret “Licensed by TaKaRa Japan, Since 1851” as indicating that the products were made in Japan, particularly in the context of sake. The court also considered the prominent Japanese characters, the Sho Chiku Bai brand name, and sake’s historical and cultural associations with Japan. It held that the back-label disclosures identifying California did not, at this stage, eliminate the alleged deception.

The court reached a different conclusion for three versions of Sho Chiku Bai Classic Junmai: the 180-milliliter product for the period before 2021, the three-liter product for the entire period, and the 18-liter product for the period before 2021. Those products lacked the gold emblem and “Licensed by TaKaRa Japan, Since 1851” language; the three-liter and 18-liter products also stated on the front label that they were produced in Berkeley, California. The court found the claims based on those products and periods implausible, granted dismissal of those claims, and denied leave to amend. It denied dismissal of the consumer-protection claims based on the other products.

Express-Warranty Claim

Under California law, a product-label statement can create an express warranty if it is an affirmation of fact, promise, or description of the goods; formed part of the basis of the bargain; and was breached. The court held that Tunick’s allegations about the gold emblem and “Licensed by TaKaRa Japan” language were sufficient to state an express-warranty claim for the products that contained those representations.

The court granted dismissal of the express-warranty claim to the same extent as the consumer-protection claims: the 180-milliliter Classic Junmai before 2021, the three-liter Classic Junmai throughout the relevant period, and the 18-liter Classic Junmai before 2021. It denied leave to amend those claims because the relevant products did not contain the alleged language. The court denied dismissal of the express-warranty claim as to the other products.

Implied-Warranty Claim

An implied warranty of merchantability can require a product to conform to promises or factual statements on its container or label. The court found that the gold emblem, prominent Japanese characters, and brand name could support Tunick’s implied-warranty theory for some products.

The court granted dismissal of the implied-warranty claim for the same three product-and-period combinations identified above, denied leave to amend those claims, and denied dismissal of the claim as to the other products.

Unjust-Enrichment Claim

Tunick based his unjust-enrichment claim on the same alleged misrepresentations underlying his other claims. The court found that he adequately pleaded unjust enrichment for the products that plausibly could have been misleading. It granted dismissal of the claim for the 180-milliliter Classic Junmai before 2021, the three-liter Classic Junmai for the entire period, and the 18-liter Classic Junmai before 2021. It denied leave to amend those portions and denied dismissal as to the other products.

Disposition

The court granted dismissal of all claims to the extent they were based on the three specified products during the specified periods and denied Tunick leave to amend those claims. Otherwise, the court denied Takara’s motion to dismiss.