Plaintiffs' Co-Lead Counsel v. Anheuser-Busch Companies, LLC

• Court: Court of Appeals for the Sixth Circuit
• Decided: March 22, 2016
• Docket: 14-3653
• Status: Unpublished

Opinion

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 16a0162n.06

Case No. 14-3653 FILED UNITED STATES COURT OF APPEALS Mar 22, 2016 DEBORAH S. HUNT, Clerk FOR THE SIXTH CIRCUIT

IN RE: ANHEUSER-BUSCH BEER ) LABELING MARKETING AND SALES ) PRACTICES LITIGATION. ) ) ON APPEAL FROM THE UNITED ) STATES DISTRICT COURT FOR ) THE NORTHERN DISTRICT OF ) OHIO ) ) ) )

BEFORE: KEITH, MERRITT, and BOGGS, Circuit Judges.

BOGGS, Circuit Judge. Various consumers in seven states brought class-action lawsuits

with state and federal claims against Anheuser-Busch Companies, LLC (“Anheuser-Busch”),

alleging that Anheuser-Busch intentionally overstates the alcohol content of many of its malt

beverages on those beverages’ labels. After the Judicial Panel on Multidistrict Litigation

consolidated the actions into one multidistrict litigation in the Northern District of Ohio, the

plaintiffs filed an amended complaint, which sought to certify an additional class of plaintiffs

from forty-eight states.

Anheuser-Busch moved to dismiss on the ground that any alleged misstatement of

alcohol content, even if intentional, fell within a tolerance of 0.3 percent created by a federal

beverage-labeling regulation that has been incorporated into the relevant states’ law. The district Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

court agreed. After observing that the plaintiffs had conceded that all of their claims would fail

if Anheuser-Busch’s alleged misstatements did not run afoul of federal regulations, the court

dismissed the plaintiffs’ complaint. For the reasons given below, we affirm the judgment of the

district court.

I

Anheuser-Busch brews various malt beverages, among them Budweiser, Bud Ice, Bud

Light Platinum, Michelob, Michelob Ultra, Hurricane High Gravity Lager, King Cobra, Busch

Ice, Natural Ice, Black Crown, and Bud Light Lime. The plaintiffs—individuals who either

consume or consumed one or more of these malt beverages—claim that Anheuser-Busch

employs sophisticated process-control technology that enables it to precisely measure and

control the alcohol content of its malt beverages. According to the plaintiffs, Anheuser-Busch

does not use this technology to produce beverages that reflect the alcohol-by-volume content

listed on its products’ labels. On the contrary, the complaint alleges that Anheuser-Busch “uses

its precise knowledge of the alcohol content of its products to deceive consumers.”

The plaintiffs explain that Anheuser-Busch adds extra water to its products to dilute the

alcohol content to levels below those represented on product labels. As a result, say the

plaintiffs, Anheuser-Busch is able to save money on production costs and gain a competitive

advantage over other brewers, while intentionally misrepresenting the quality of its products to

consumers. The plaintiffs claim that they purchased malt beverages in reliance on the

misrepresentations on Anheuser-Busch’s product labels, would not have made those purchases if

they had known that the alcohol content was in fact lower than the amount stated on the labels,

and ultimately received beer with less value than the beer that Anheuser-Busch promised on its

labels.

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The plaintiffs sought redress for the harm they allegedly suffered by bringing actions in

federal district court in the Northern District of California, the District of Colorado, the Middle

District of Florida, the District of New Jersey, the Northern District of Ohio, the Eastern District

of Pennsylvania, and the Northern District of Texas. The Judicial Panel on Multidistrict

Litigation consolidated the cases into one litigation, which it assigned to the Northern District of

Ohio. The plaintiffs then filed an amended complaint, seeking certification of classes of

plaintiffs residing in each of the seven states. Each class of plaintiffs sought relief under state

consumer-protection and—with the exception of the Florida plaintiffs—warranty law, as well as

Section 109(d) of the federal Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C. §§ 2301–

2312, which creates a federal cause of action for the violation of a warranty implied by state law,

see id. §§ 2301(7), 2310(d)(1)(B). The plaintiffs also proposed a new nationwide class

comprising residents of all forty-eight contiguous states, which alleged violations of the law of

Missouri, where Anheuser-Busch maintains its principal place of business.

Anheuser-Busch moved to dismiss on the ground that the plaintiffs failed to state a claim

upon which the district court could grant relief. Anheuser-Busch argued that because the

plaintiffs never alleged that it had overreported the alcohol content in its malt beverages by more

than 0.3 percent, Anheuser-Busch fully complied with state and federal regulations governing

alcoholic beverages, thereby precluding liability under state consumer-protection law.

In particular, Anheuser-Busch pointed out that a federal regulation codified at 27 C.F.R. § 7.71

explicitly allows the alcohol content of the malt beverages in question to diverge by up to 0.3

percent from the alcohol content stated on the beverages’ labels. See 27 C.F.R. § 7.71(c)(1).

And although states may impose their own labeling regulations with no tolerance or a tolerance

more forgiving than that set forth in § 7.71, see id. § 7.71(a), each of the eight states whose law

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is in question has adopted that federal tolerance of 0.3 percent into state law. Drawing on the

principle of statutory construction “that the specific governs the general,” Morales v. Trans

World Airlines, Inc., 504 U.S. 374, 384 (1992), Anheuser-Busch argued that because the

plaintiffs’ “general” consumer-protection and warranty claims conflicted with the “specific” state

and federal beverage-labeling regulations that allow for a variance of up to 0.3 percent, its

compliance with the latter regulations precluded the former claims. Anheuser-Busch also

pointed out that many of the states have statutory or common-law safe-harbor rules, which

exempt from consumer-protection law any conduct permitted under state or federal law. And

because Section 109(d) of the MMWA simply provides a federal claim based on a breach of a

state-law warranty, see 15 U.S.C. §§ 2301(7), 2310(d)(1)(B), Anheuser-Busch argued that the

plaintiffs’ federal warranty claims should fail, as well.

After reviewing two additional written submissions from each party and hearing oral

argument, the district court granted Anheuser-Busch’s motion to dismiss. The court first

observed that “Defendant has asserted, and Plaintiffs have not contested, that if the Court finds

that Anheuser-Busch’s alleged over-reporting of alcohol content is permitted under 27 C.F.R.

§ 7.71(c), this action must be dismissed.” The court explained that “Plaintiffs have not disputed

this premise in any of their briefing, and Plaintiffs’ counsel explicitly conceded this point at oral

argument.” The court then turned to § 7.71 and examined the plaintiffs’ contention that the plain

language of the regulation prohibits Anheuser-Busch from intentionally targeting the lower end

of the statutory tolerance. Finding no indication of an exception for intentional variations in the

text or structure of the regulation, the court rejected the plaintiffs’ “intent-based” reading of the

regulation and concluded that the “protection afforded by § 7.71(c)(1) is provided without regard

to the cause of any deviation or variation, and without regard to the intention behind any

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misstatement of alcohol content within the defined tolerance range.” Having heard no argument

from the plaintiffs that their state-law claims and corresponding MMWA claims should not fall

along with their interpretation of § 7.71, the court granted Anheuser-Busch’s motion to dismiss.

The plaintiffs appealed and now argue that the district court erred when it failed to adopt

an intent-based reading of § 7.71. In the alternative, they argue that because Anheuser-Busch’s

compliance with the state and federal regulations does not entitle it to immunity from state

consumer-protection or warranty law, the district court should have considered those claims

irrespective of whether or not § 7.71 permits Anheuser-Busch’s conduct. As for the district

court’s observation that the plaintiffs never raised such an argument, the plaintiffs disagree and

point to various pages in their briefing to the district court where they purportedly did so. The

plaintiffs also contend that any failure to properly raise the argument before the district court

should not prevent this court from considering that argument on appeal, since the Supreme

Court’s intervening decision in POM Wonderful LLC v. Coca-Cola Co., 134 S. Ct. 2228 (2014),

which in the plaintiffs’ view requires this court to reverse the judgment of the district court, was

not available to the parties in the district court.

II

We review de novo a district court’s decision granting a motion to dismiss for failure to

state a claim under Federal Rule of Civil Procedure 12(b)(6). Ass’n of Cleveland Fire Fighters v.

City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007). While we must “accept as true” all of the

factual allegations made in a complaint, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), we are not

bound by any legal conclusion “couched as a factual allegation,” ibid. (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007)). To survive a motion to dismiss, a complaint must contain

“enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570.

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With this standard of review in mind, we proceed by considering the plaintiffs’ intent-based

reading of § 7.71 before turning to their argument that their claims survive the district court’s

interpretation of that regulation.

III

In the wake of the ratification of the Twenty-First Amendment, Congress enacted the

Federal Alcohol Administration Act (“FAAA” or the “Act”), Pub. L. No. 74-409, 49 Stat. 977

(1935) (codified as amended at 27 U.S.C. §§ 201–219a), which, among other things, authorized

the Federal Alcohol Administration (“FAA”) to eliminate “unfair competition” in the production

and sale of alcoholic beverages. Id. § 5, 49 Stat. at 981 (codified at 27 U.S.C. § 205). As

amended, the Act empowers the Secretary of the Treasury—who acquired the FAA’s authority in

1939, see Reorganization Plan No. III, § 2, 54 Stat. 1231, 1232 (1939)—to adopt regulations

governing the labeling of alcoholic beverages that will “provide the consumer with adequate

information as to the identity and quality of the product[s] [and] the alcoholic content thereof[.]”

27 U.S.C. § 205(e), invalidated in part by Rubin v. Coors Brewing Co., 514 U.S. 476 (1995).

The Act also empowers the Secretary to write regulations that “will prohibit deception of the

consumer with respect to [alcoholic beverages]” and “will prohibit statements on the label that

are . . . fals[e] [or] misleading[.]” Ibid. The Secretary exercised his authority through the Bureau

of Alcohol, Tobacco and Firearms (“ATF”) between 1972 and 2003, at which time the Secretary

transferred the ATF’s FAAA responsibilities to the Alcohol and Tobacco Tax and Trade Bureau

(“TTB”). See Revised Treasury Department Order 120-01, 68 Fed. Reg. 3583, 3583 (2003);

Treasury Department Order 221, 37 Fed. Reg. 11,696, 11,696 (1972).

In 1936, the FAA adopted a general provision, now found at 27 C.F.R. § 7.29(a)(1), that

forbids any statement on a malt-beverage label that is “false or untrue in any particular, or that,

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irrespective of falsity, directly, or by ambiguity, omission, or inference, . . . tends to create a

misleading impression.” Labeling & Advertising of Malt Beverages, 1 Fed. Reg. 2013, 2015

(1936); 27 C.F.R. § 7.29(a)(1). The FAA’s 1936 regulations also prohibited statements of

alcohol content on malt-beverage labels except where required by state law. 1 Fed. Reg. at 2015.

After a federal court enjoined that latter prohibition in 1992, the ATF enacted 27 C.F.R. § 7.71,

which continues to govern how alcohol content must appear on malt-beverage labels today.

Alcoholic Content Labeling for Malt Beverages, 58 Fed. Reg. 21,228, 21,228 (1993). Paragraph

(b)(2) of § 7.71 states that for any labels on “malt beverages containing 0.5 percent or more

alcohol by volume, statements of alcoholic content shall be expressed to the nearest one-tenth of

a percent, subject to the tolerance permitted by paragraph (c)(1) . . . of this section.” 27 C.F.R.

§ 7.71(b)(2). Paragraph (c)(1), in turn, states that “[f]or malt beverages containing 0.5 percent or

more alcohol by volume, a tolerance of 0.3 percent will be permitted, either above or below the

stated percentage of alcohol.” Id. § 7.71(c)(1).

Consistent with the states’ “broad authority” to regulate the sale of alcoholic beverages

within their borders, Sam & Ali, Inc. v. Ohio Dep’t of Liquor Control, 158 F.3d 397, 402 (6th

Cir. 1998) (Krupansky, J., concurring in the judgment), many states have enacted their own

legislation and regulations governing the manufacture and sale of alcoholic beverages. Each of

the eight states whose law is at issue in this case—California, Colorado, Florida, Missouri, New

Jersey, Ohio, Pennsylvania, and Texas—has such statutory and regulatory law in place.

Although § 7.71 does not apply where states have chosen to impose their own requirements for

statements of alcohol content, see 27 C.F.R. § 7.71(a), both parties agree that the eight states

have all incorporated § 7.71 into state law, either explicitly in their own statutes and regulations

or implicitly, by forbidding the sale of malt beverages without TTB-approved labels. See

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Appellant Br. 13; Appellee Br. 5; see also Cal. Bus. & Prof. Code § 25200, amended by Act of

Oct. 1, 2015, ch. 420, § 2, 2015 Cal. Legis. Serv.; Fla. Stat. § 563.045; Colo. Code Regs. § 203-

2:47-904(F)–(G); Fla. Admin. Code Ann. r. 61A-4.005; Mo. Code Regs. Ann. tit. 11 § 70-

2.060(1); N.J. Admin. Code § 13:2-27.1(a)(4); Ohio Admin. Code 4301:1-1-43(D)(3); 40 Pa.

Code § 9.108(b)(1); 16 Tex. Admin. Code § 45.79; Pa. Liquor Control Bd., Advisory Op. 14-404

(2014); Fla. Dep’t of Bus. & Prof’l Regulation, Form DBPR-ABT 1: Brand/Label Registration, at

4 (2010); Ohio Dep’t of Commerce, Form DLC 1511: Product/Label Registration, at 2 (2015).

Because each state has in some way incorporated § 7.71 into its own alcohol-labeling

regime, Anheuser-Busch moved to dismiss and argued to the district court that the tolerance

created by § 7.71(c)(1) protects the manufacturer from state-law liability for any deviations in

alcohol content within that tolerance, intentional or not. The plaintiffs, on the other hand, argued

for an intent-based reading of § 7.71 that would not protect producers who intentionally sell malt

beverages with less alcohol than is stated on the beverage label. The district court agreed with

Anheuser-Busch. The court emphasized that “courts must, in the first instance, focus on the

plain wording of the provision at issue.” Because nothing in the text of § 7.71 distinguishes

intentional from unintentional deviations in alcohol content on beverage labels, the court held

that the language of § 7.71(c)(1) creates a safe harbor for any brewer who does not exceed the

tolerance, irrespective of whether the deviation from the label was intentional.

On appeal, the plaintiffs raise two arguments in support of their assertion that “the most

reasonable construction of Section 7.71 is that the tolerance language allows an unintentional

variance of no more than .3% from the claimed level while intentional dishonesty about the

alcohol level remains prohibited.” Appellant Br. 35. First, they argue that the word “tolerance”

is a “technical or specialized word” that permits only unintentional variations. Id. at 38. Second,

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the plaintiffs argue that the district court’s interpretation of § 7.71 is inconsistent with the context

and purpose of the regulatory framework created by the FAA, ATF, and TTB and of that

framework’s adoption into state law. After examining the plain text of § 7.71, we contend with

each argument in turn.

A

We begin our analysis with the text of 27 C.F.R. § 7.71. See Milner v. Dep’t of Navy,

131 S. Ct. 1259, 1264 (2011). As we have mentioned, so long as state law does not impose its

own requirements, when a manufacturer places the alcohol content of a malt beverage on that

beverage’s label, § 7.71 sets forth the exact requirements for how that alcohol content must

appear. 27 C.F.R. § 7.71(a). Paragraph (b)(2) of § 7.71 provides that “[f]or malt beverages

containing 0.5 percent or more alcohol by volume, statements of alcoholic content shall be

expressed to the nearest one-tenth of a percent, subject to the tolerance permitted by paragraph

(c)(1).” Id. § 7.71(b)(2). Paragraph (c)(1) sets forth that tolerance in greater detail:

For malt beverages containing 0.5 percent or more alcohol by volume, a tolerance of 0.3 percent will be permitted, either above or below the stated percentage of alcohol. Any malt beverage which is labeled as containing 0.5 percent or more alcohol by volume may not contain less than 0.5 percent alcohol by volume, regardless of any tolerance.

Id. § 7.71(c)(1).

Nothing in the language of § 7.71(c)(1) distinguishes intentional from unintentional

variances within the applicable tolerance of 0.3 percent. The key word in § 7.71(c)(1)—

“tolerance”—strongly suggests that the ATF intended no such distinction. The regulations do

not define the word “tolerance,” and “[i]n the absence of such a definition, [courts] construe a

statutory term in accordance with its ordinary or natural meaning.” FDIC v. Meyer, 510 U.S.

471, 476 (1994). The relevant ordinary meaning of the word “tolerance” says nothing about the

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intentionality of a deviation. See, e.g., American Heritage Dictionary 1817 (4th ed. 2006)

(defining “tolerance” as “[l]eeway for variation from a standard”); Webster’s Third New

International Dictionary 2405 (1981) (defining “tolerance” as “the allowable deviation from a

standard”). Moreover, the phrase “a tolerance of 0.3 percent will be permitted” employs

mandatory language analogous to “shall,” which we must ordinarily regard as inconsistent with

judicially created exceptions. See Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach,

523 U.S. 26, 35 (1998) (explaining that “mandatory” language, such as “‘shall,’ . . . normally

creates an obligation impervious to judicial discretion”); Hewitt v. Helms, 459 U.S. 460, 471

(1983) (referring to “shall,” “will,” and “must” as “language of an unmistakably mandatory

character”), abrogated on other grounds by Sandin v. Conner, 515 U.S. 472 (1995).

Nor does the language in any other part of § 7.71 suggest that the ATF intended the

tolerance in § 7.71(c)(1) to apply only when producers do not intentionally target its lower end.

On the contrary, the ATF’s inclusion of additional strict limitations on deviations in other parts

of the same regulation suggests that the ATF knew how to eliminate or restrict tolerances when it

saw fit to do so. For example, the latter part of Paragraph (c)(1) establishes a rule whereby any

malt beverage labeled as containing 0.5 percent or more alcohol by volume “may not contain less

than 0.5 percent alcohol by volume, regardless of any tolerance.” 27 C.F.R. § 7.71(c)(1). And

Paragraph (c)(2) provides that any malt beverage labeled as “low alcohol” or “reduced alcohol”

must not have an alcohol content that equals or exceeds 2.5 percent alcohol by volume without

regard to any tolerance permitted by Paragraph (c)(1). Id. § 7.71(c)(2). These provisions render

the absence of any language limiting the tolerance in Paragraph (c)(1) all the more striking.

In short, nothing in the text of § 7.71 implies any distinction based on the motive of the

manufacturer.

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B

The plaintiffs counter that the word “tolerance” does not bear its ordinary meaning in the

context of the § 7.71. They argue that in light of the “high-tech manufacturing setting” in which

“the alcohol content of beer is controlled using sophisticated equipment and statistical process

control methods,” the word “tolerance” is a term of art with a specialized meaning. Appellant

Br. 38. According to the plaintiffs, that specialized meaning does take the intent of a producer

into account and allows for a “deviation from a standard” only when that deviation is

unintentional.

Finding no evidence for this specialized meaning in the text of the FAAA or TTB

regulations, the plaintiffs point to a guidebook on measuring devices entitled “Handbook 44,”

which is published by the National Institute of Standards and Technology (“NIST”), an

organization within the Department of Commerce that Congress has authorized to develop

“methods for testing materials, mechanisms, structures, equipment, and systems, including those

used by the Federal Government.” 15 U.S.C. § 272(b)(8); see also Nat’l Inst. of Standards &

Tech., Handbook 44, at 1 (2014) (“Handbook 44”). In a section entitled “Tolerances for

Commercial Equipment,” Handbook 44 provides:

Tolerances are primarily accuracy criteria for use by the regulatory official. However, when equipment is being adjusted for accuracy, either initially or following repair or official rejection, the objective should be to adjust as closely as practicable to zero error. Equipment owners should not take advantage of tolerances by deliberately adjusting their equipment to have a value, or to give performance, at or close to the tolerance limit. Nor should the repair or service personnel bring equipment merely within tolerance range when it is possible to adjust closer to zero error.

Handbook 44 at A-4 (emphasis added).

As further evidence for their specialized reading of the word “tolerance,” the plaintiffs

point to two cases applying California law, which incorporates Handbook 44. See Cal. Bus.

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& Prof. Code § 12107. Even though a California statute considers odometers to be “[c]orrect” if

their readings stay within the bounds of a four-percent tolerance created by the NIST, see id. §

12500(c), the two courts relied on Handbook 44’s exhortation that “[e]quipment owners should

not take advantage of tolerances” to hold that automobile manufacturers could not claim that

their odometers were “correct” as a matter of law if they had intentionally miscalibrated the

odometers, even if the extent of any miscalibration was within the tolerance specified in the

statute. See In re Nissan N. Am., Inc. Odometer Litig., 664 F. Supp. 2d 873, 888 (M.D. Tenn.

2009); Lopez v. Nissan N. Am., Inc., 135 Cal. Rptr. 3d 116, 123 (Cal. Ct. App. 2011).

None of this explains why Handbook 44 or the two cases applying its standards to

California law is relevant to the question of what the ATF intended when it used the word

“tolerance” in § 7.71. The district court found Handbook 44 inapplicable—and the plaintiffs’

invocation of California law irrelevant—on the ground that the NIST does not regulate

“alcoholic beverages, or the[ir] labeling.” We agree. The NIST standards govern “weights and

measures and weighing and measuring devices,” not products or their labels as does § 7.71.

Handbook 44 at 1; see also 15 U.S.C. § 272(b)(6) (authorizing the NIST to “assist industry in the

development of measurements, measurement methods, and basic measurement technology”).

And nothing in Title 27 of the Code of Federal Regulations references Handbook 44, nor is there

any other evidence that the ATF considered NIST standards when drafting § 7.71.

The plaintiffs urge that Handbook 44 is relevant to this case because each of the eight

states has incorporated NIST standards into state law. On their view, the states’ adoption of

Handbook 44 “provides critical insight into the States’ view of the intentional abuse of

‘tolerances,’ and shows that the States did not intend to exempt such conduct from scrutiny.”

Appellant Br. 23. But the plaintiffs do not point to any evidence that the legislatures or

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administrative agencies of any of the eight states intended the NIST standards to apply outside of

the context for which they were expressly adopted. Indeed, the plaintiffs themselves implied

quite the opposite when they informed the district court that “four of the states at issue in this

case (California, Missouri, New Jersey, and Texas) have explicitly adopted the same labeling

requirements for claims of alcohol content as has the TTB.” (emphasis added).

Both odometer litigations involved the application of NIST standards to an NIST

tolerance established specifically for odometers and explicitly adopted into California law

governing weights and measures. See Cal. Bus. & Prof. Code § 12107. In this case, by contrast,

the applicable tolerance derives from an entirely separate regulation enacted by a distinct

regulatory body, the ATF. In this context, the states’ decision to embrace the NIST’s general

guidelines, which include an admonition that equipment owners “should not” take advantage of

tolerance levels for measuring devices, Handbook 44 at A-4 (emphasis added), is less relevant

than their adoption of § 7.71’s specific alcohol-labeling regulation, under which “a tolerance of

0.3 percent will be permitted,” 27 C.F.R. § 7.71(c)(1) (emphasis added). Just as “[e]vils in the

same field” may “requir[e] different remedies,” Williamson v. Lee Optical of Okla., Inc.,

348 U.S. 483, 489 (1955), states may and do choose to confront the same evil in different fields

with different remedies, see, e.g., Wilder v. Aetna Life & Cas. Ins. Co., 433 A.2d 309, 310 (Vt.

1981). Such is the case here.

The plaintiffs’ reliance on the NIST Handbook reveals an additional flaw in their

assertion that the word “tolerance” necessarily applies to unintentional variances only. If this is

what “tolerance” means, the NIST would not have had any reason to separately counsel

equipment owners not to “take advantage of tolerances by deliberat[e]” conduct. Handbook 44

at A-4. That same quandary also exists in the regulatory scheme that the TTB administers, since

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other provisions explicitly create intent-based exceptions to applicable tolerances. 27 C.F.R.

§ 27.42a, for example, provides that:

Still wines may contain not more than 0.392 gram of carbon dioxide per 100 milliliters of wine; except that a tolerance to this maximum limitation, not to exceed 0.009 gram of carbon dioxide per 100 milliliters of wine, will be allowed where the [excess] amount of carbon dioxide . . . was due to mechanical variations which could not be completely controlled under good commercial practices. Such tolerance will not be allowed where it is found that the limitation . . . is continuously or intentionally exceeded.

Ibid. (emphasis added). Likewise, 27 C.F.R. § 25.142 denies manufacturers the benefit of a

tolerance that concerns the volume of beer in bottles “when filling is not conducted in

compliance with good commercial practice.” Id. § 25.142(d). And under 27 C.F.R. § 4.37, a

tolerance for discrepancies regarding the volume of wine in a bottle “shall be allowed” for those

discrepancies that occur “due exclusively to errors in measuring which occur in filling conducted

in compliance with good commercial practice,” id. § 4.37(d)(1), or “due exclusively to

differences in the capacity of containers, resulting solely from unavoidable difficulties in

manufacturing such containers so as to be of uniform capacity,” id. § 4.37(d)(2) (emphasis

added).

That the ATF believed it necessary to explicitly include intent-based exceptions when

using the term “tolerance” in certain provisions supports the conclusion that the ATF did not

understand that term to apply only to unintentional variances. See Russello v. United States,

464 U.S. 16, 23 (1983) (“‘[W]here Congress includes particular language in one section of a

statute but omits it in another section of the same Act, it is generally presumed that Congress acts

intentionally and purposely in the disparate inclusion or exclusion.’ . . . We refrain from

concluding here that the differing language in the two subsections has the same meaning in

each.” (first alteration in original) (quoting United States v. Wong Kim Bo, 472 F.2d 720, 722

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(5th Cir. 1972) (per curiam))). In response, the plaintiffs argue that “the fact that the TTB

described intent more explicitly in other regulations has no bearing on the appropriate

construction of Section 7.71.” Appellant Br. 43. But as the plaintiffs themselves repeatedly

suggest in support of their own arguments, courts must read regulations as a whole. See Dada v.

Mukasey, 554 U.S. 1, 16 (2008) (“In reading a statute we must not ‘look merely to a particular

clause,’ but consider ‘in connection with it the whole statute.’” (quoting Kokoszka v. Belford,

417 U.S. 642, 650 (1974))).

The plaintiffs draw on the TTB’s and ATF’s own publications to make one last argument

in favor of giving the word “tolerance” a “technical gloss” that allows only unintentional

variances. Appellant Br. 38. They point out that the ATF designed the tolerance in § 7.71(c)(1)

to allow for “normal variations in the production of beer, ale, and so forth brought about by

differences in raw materials and brewing practices.” Id. at 42 (quoting 58 Fed. Reg. at 21,229).

And in ATF Ruling 80-3, the ATF wrote that the intent of tolerances related to caloric,

carbohydrate, protein, and fat labeling on malt beverages “is to provide for normal production

and analytical variables while continuing to ensure that the labeling is not misleading to the

consumer.” ATF Ruling 80-3, 1980-2 A.T.F. Q. Bull. 13. The plaintiffs also argue that TTB

Ruling 2013-2, a ruling that allows manufacturers to include alcohol content as part of a

voluntary “serving facts” statement on the back of malt-beverage containers, supports their

argument because the ruling incorporates “explicit language regarding intent.” Appellant Br. 45.

On their view, because “it is inconceivable that the TTB intended to prohibit misleading

statements of alcohol content based on ‘tolerances’ on one part of a product label but allow the

same misstatements elsewhere on the label,” this court must give § 7.71(c)(1) an intent-based

15 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

reading “so as to avoid an unjust or an absurd conclusion.” Ibid. (quoting In re Chapman,

166 U.S. 661, 667 (1897)).

The difficulty with the plaintiffs’ argument is that even if the tolerance created by

§ 7.71(c)(1) was designed to allow for “normal variations in the production” of malt beverages,

nothing in that statement of policy evinces an intent to disallow intentional variations. As we

have explained, the ATF’s inclusion of an intent-based exception to other tolerances in related

regulations strongly supports the opposite conclusion. Nor does TTB Ruling 2013-2 help the

plaintiffs. Ruling 2013-2, which regulates how alcohol content must appear in voluntary

“serving facts” labels that list caloric and fat content and other information on the back of wine,

distilled-spirit, and malt-beverage containers, explicitly allows malt-beverage manufacturers the

same tolerance that is set forth in § 7.71(c).

Given the structural difficulties that accompany the plaintiffs’ reading of the word

“tolerance,” as well as the lack of any evidence that the ATF or state legislatures or regulators

meant anything other than “the allowable deviation from a standard” when they used the word

“tolerance,” we conclude that the word bears its ordinary meaning.

C

Having failed to show that the word “tolerance” is a term of art, the plaintiffs argue that

“any decision about the meaning of Section 7.71 should [be] made in light of the purposes of the

enabling statute [that] the Section was enacted to implement.” Id. at 36. According to the

plaintiffs, Congress designed the FAAA to “prevent consumer deception.” Id. at 37. To that

end, Congress prohibited misleading labels on alcoholic beverages and authorized the Secretary

of the Treasury to explicate and enforce the prohibition. See 27 U.S.C. § 205(e). The

importance of that policy goal, the plaintiffs claim, is evidenced in the FAA’s adoption of a

16 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

“broad prohibition [against] any statement on an alcoholic beverage label which is ‘false or

untrue in any particular.’” Appellant Br. 37 (quoting 27 C.F.R. § 7.29(a)(1)). The plaintiffs

suggest that an interpretation of § 7.71(c) that ignores the intent behind a deviation from the

alcohol-by-volume content listed on a malt-beverage label would subvert this core purpose of the

FAAA and § 7.29(a)(1) and should therefore be avoided.

The plaintiffs are correct that “a court should not interpret each word in a statute with

blinders on, refusing to look at the word’s function within the broader statutory context.” Id. at

36 (quoting Abramski v. United States, 134 S. Ct. 2259, 2267 n.6 (2014)). Context may be

relevant even when interpreting unambiguous language, since context is often the reason that the

language is unambiguous in the first place. See FDA v. Brown & Williamson Tobacco Corp.,

529 U.S. 120, 132 (2000). But it is equally true that where, as here, the text of a regulation is

clear, courts may not rely on broad conceptions of statutory or regulatory purpose to overcome

otherwise clear language, because “no law pursues its purpose at all costs, and . . . textual

limitations upon a law’s scope are no less a part of its ‘purpose’ than its substantive

authorizations.” Rapanos v. United States, 547 U.S. 715, 752 (2006) (plurality opinion).

Moreover, interpreting § 7.71(c) according to its plain meaning would not, as the

plaintiffs contend, conflict with the purpose of the regulatory scheme as a whole. We can easily

reconcile § 7.29(a)’s general prohibition against false or misleading statements with

§ 7.71(c)(1)’s later-enacted, specific allowance of a tolerance of 0.3 percent by concluding that

the ATF determined that such small variances are not misleading to consumers (and therefore not

deceptive). The ATF clearly paid close attention to consumer expectations when devising

tolerances. For example, the ATF eliminated any tolerance for understatements of alcohol

content on beverages labeled as “low alcohol” on the ground that “it would be misleading to

17 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

consumers to purchase product containing more than the labeled content of alcohol when the low

alcohol content may be a primary reason for the selection of a particular malt beverage.” 58 Fed.

Reg. at 21,230. In this context, we assume that the ATF concluded that the relatively minor

variation specified in Paragraph (c)(1) would not meaningfully interfere with consumer

expectations.

What is more, 27 C.F.R. § 7.29(a)’s prohibition against “[a]ny statement . . . that,

irrespective of falsity . . . tends to create a misleading impression,” 27 C.F.R. § 7.29(a)(1), does

not obviously favor an intent-based reading of § 7.71(c) since the plaintiffs fail to explain why

the producer’s intent would have anything to do with whether a label that does not reflect the

correct alcohol content in a malt beverage “tends to create a misleading impression” to

consumers. In other words, a customer who is “misled” by a beverage label that overstates the

alcohol-by-volume content of the beverage would be misled irrespective of the producer’s intent.

D

In this case, the plain language of § 7.71 suggests that the relevant tolerance applies

irrespective of the producer’s intent. Nothing in the structure or content of the FAAA or other

TTB regulations requires otherwise. Cf. Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531,

552–53 (1987) (“When statutory language is plain, and nothing in the Act’s structure or

relationship to other statutes calls into question this plain meaning, that is ordinarily ‘the end of

the matter.’” (quoting Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842

(1984))). This reading of the regulation best fulfills the court’s duty to reasonably construe

provisions of a regulation harmoniously, see FTC v. Mandel Bros., Inc., 359 U.S. 385, 389

(1959), as well as to construe specific provisions as exceptions to seemingly contradictory

general provisions, see RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S. Ct. 2065,

18 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

2071 (2012); Morales, 504 U.S. at 384. In light of the foregoing, we conclude that § 7.71 does

not distinguish between intentional and unintentional deviations from the alcohol content listed

on a malt-beverage label. Because the plaintiffs do not allege that Anheuser-Busch exceeded the

tolerance created by § 7.71(c)(1), we agree with the district court that the record shows no

violation of the relevant TTB regulations.

IV

Having concluded that the district court properly held that Anheuser-Busch did not

violate § 7.71, we must ask what this defeat means for the plaintiffs’ claims. The plaintiffs do

not claim that the FAAA or § 7.71 creates a private right of action that will redress the harm that

the plaintiffs allegedly suffered. Rather, the plaintiffs ground their claims in state consumer-

protection law and the state law of express and implied warranty.

The regulations that the TTB administers are certainly relevant to those claims. Although

states may impose labeling requirements that vary from the requirements set forth in § 7.71, see

27 C.F.R. § 7.71(a); cf. Bronco Wine Co. v. Jolly, 95 P.3d 422, 424–25, 442–58 (Cal. 2004)

(upholding California restrictions on the use of the word “Napa” on wine bottles against

preemption challenge even where such use was permitted by federal law), the plaintiffs do not

dispute that each of the eight states whose law is at issue has in some way incorporated the

requirements of § 7.71 into state law. And they agree that five of those eight states have

common-law or statutory safe-harbor doctrines that offer defendants some insulation from

consumer-protection law for conduct that is authorized by state or federal law. See Appellant Br.

29; see also Colo. Rev. Stat. § 6-1-106(1)(a); Fla. Stat. 501.212(1); Ohio Rev. Code Ann.

§ 1345.12(A); Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 541–42 (Cal.

1999); Grace v. St. Louis County, 348 S.W.3d 120, 127 (Mo. Ct. App. 2011) (per curiam).

19 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

Accordingly, in order to succeed on their claims in the face of regulatory authorization of

Anheuser-Busch’s conduct at the state and federal levels, the plaintiffs would have to show that

the safe-harbor provisions do not apply to those regulations (or at least that the safe harbors

protect Anheuser-Busch from only consumer-protection law, not warranty law). If the plaintiffs

were to overcome that hurdle in those states where it exists, they would also have to show that,

under the relevant rules of statutory construction, Anheuser-Busch’s compliance with state

labeling regulations does not preclude the plaintiffs’ state-law consumer-protection and warranty

claims.

On appeal, the plaintiffs argue that they can meet these requirements. They argue that

“compliance with the TTB regulation does not entitle [Anheuser-Busch] to a ‘safe harbor’

defense under state law,” Appellant Br. 28, because each state’s safe harbor “requir[es] clear

indication that the State has affirmatively authorized particular conduct before [creating]

immunity” from state consumer-protection law, id. at 29. As for the warranty claims, the

plaintiffs draw upon the proposition that “absent any indication of legislative intent that one

statutory scheme displace[s] the other, both statutes apply” and argue no such intent to displace

state warranty law exists. Id. at 26. Although we agree that the question of whether compliance

with § 7.71 protects Anheuser-Busch from more general state consumer-protection or warranty

law is a question of state law, we have no occasion to analyze the state safe-harbor provisions or

consider whether state labeling regulations preclude state consumer-protection or warranty law

because the plaintiffs failed to properly raise this argument in the district court.

The district court dismissed the plaintiffs’ action after holding that § 7.71 does not

prohibit the behavior in which Anheuser-Busch is allegedly involved. The court reasoned that

because each of the eight states has adopted the tolerance set forth in § 7.71(c)(1), and because

20 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

“universally accepted principles of statutory construction require courts to apply the more

specific provision of la[w] whenever a specific provision and general provision of the law are in

conflict,” those eight states would not “enforce general legislation that would prohibit conduct

specifically permitted under this tolerance provision.” The court observed that Anheuser-Busch

“has asserted, and Plaintiffs have not contested, that if the Court finds that Anheuser-Busch’s

alleged over-reporting of alcohol content is permitted under 27 C.F.R. § 7.71(c), this action must

be dismissed.” After reviewing the parties’ submissions to the district court, we agree.

The question of whether a litigant has forfeited an argument is a mixed question of law

and fact. Karam v. Sagemark Consulting, Inc., 383 F.3d 421, 426 (6th Cir. 2004). We review

any determination of underlying facts for clear error and then “make a de novo determination of

whether those facts constitute legal [forfeiture].” Ibid. If we conclude that a party has forfeited

an argument in a civil case, we do not review the argument except in “exceptional”

circumstances where our failure to review the argument “would produce a plain miscarriage of

justice.” In re Morris, 260 F.3d 654, 664 (6th Cir. 2001) (quoting Pinney Dock & Transp. Co. v.

Penn Cent. Corp., 838 F.2d 1445, 1461 (6th Cir. 1988)); see also Singleton v. Wulff, 428 U.S.

106, 121 (1976).

We “have not ‘articulated precisely’ what a party must do (or how much it must say) in

the district court to ‘raise’ an argument.” United States v. Huntington Nat’l Bank, 574 F.3d 329,

332 (6th Cir. 2009) (quoting Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 553 (6th Cir. 2008)).

Nevertheless, our decisions shed some light on what is required. At a bare minimum, a litigant

must give the court and opposing parties notice of his position, along with “some minimal level

of argumentation in support” of that position. Ibid. In other words, “[i]ssues adverted to in a

21 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed

[forfeited]. It is not sufficient for a party to mention a possible argument in the most skeletal

way, leaving the court to . . . put flesh on its bones.” McPherson v. Kelsey, 125 F.3d 989, 995–

96 (6th Cir. 1997) (third alteration in original) (quoting Citizens Awareness Network, Inc. v. U.S.

Nuclear Regulatory Comm’n, 59 F.3d 284, 293–94 (1st Cir. 1995)). With this in mind, we turn

to the parties’ briefing below.

Throughout the course of the litigation in the district court, Anheuser-Busch

unambiguously took the position that if the district court were to conclude that § 7.71 permits

Anheuser-Busch to target the lower end of the tolerance set forth in Paragraph (c)(1), the rule

that specific provisions take precedence over more general ones required the court to dismiss all

of the plaintiffs’ claims. In a memorandum of law accompanying its motion to dismiss,

Anheuser-Busch argued that “Plaintiffs’ general consumer protection and warranty claims

conflict with the specific regulations that govern beer labels that permit a 0.3% variance. This

conflict must be resolved in favor of the regulations specific to alcohol content labeling. . . . Any

contrary holding is proscribed by this basic tenet of statutory construction.” Likewise, in its

reply to the plaintiffs’ memorandum in opposition, Anheuser-Busch argued that the “entire

Complaint should be dismissed” for the “globally dispositive reaso[n]” that “[Anheuser-Busch’s]

labeling complies with Section 7.71 and therefore cannot form the basis of any claim for false

labeling or breach of warranty.” And in its supplemental briefing, Anheuser-Busch observed

that “Plaintiffs’ counsel conceded (again) at oral argument that 27 C.F.R. § 7.71 governs

disposition of these cases. . . . Accordingly, if the Court concludes that Section 7.71 does not

include an intent exception, then this case is over.”

22 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

If the plaintiffs felt otherwise, one would have expected them to vigorously contest

Anheuser-Busch’s claims by informing the district court of their disagreement. But the plaintiffs

never did so in any of their written submissions to the district court. If anything, the plaintiffs’

briefing suggested that they agreed with Anheuser-Busch’s position: In their response to

Anheuser-Busch’s motion to dismiss, the plaintiffs opened by observing that “the relationship

between [§ 7.29(a)(1) and § 7.71] is a key issue in this case.” Later in that response, the

plaintiffs wrote that “[t]he principal issue to be resolved in this motion is the proper construction

of [§ 7.71]; in particular, what is the meaning to be assigned the word ‘tolerance’ in the context

of this provision and the overall regulatory scheme.”

To be sure, the plaintiffs did argue that they sufficiently pleaded state-law claims and

stated that their warranty claims created a matter for a jury. But given that Anheuser-Busch

raised a litany of arguments that the plaintiffs’ state-law claims would fail for a variety of

reasons even if § 7.71 were to forbid intentionally targeting the lower end of the regulatory

tolerance, the district court reasonably assumed that the relevance of the plaintiffs’ arguments

about those claims necessarily depended upon an antecedent ruling that Anheuser-Busch violated

§ 7.71. Nothing alerted Anheuser-Busch or the district court that the plaintiffs meant anything

else, even after Anheuser-Busch so explicitly stated that “Plaintiffs’ counsel conceded . . . that

27 C.F.R. § 7.71 governs disposition of these cases.” In other words, what was missing from the

plaintiffs’ briefing was the argument that they make on appeal, namely, that even if Anheuser-

Busch complied with § 7.71, the plaintiffs’ state-law and MMWA claims would survive.

The plaintiffs came close to making this argument twice. First, in their memorandum in

opposition to Anheuser-Busch’s motion for summary judgment, the plaintiffs argued that “[a]t

least two courts have relied on the NIST Handbook to conclude that intentional manipulation or

23 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

misstatement, even if within a permitted ‘tolerance,’ is not allowed.” Second, in a footnote in

their supplemental briefing, the plaintiffs wrote: “Even assuming arguendo that Section 7.71(c)

permits [Anheuser-Busch] to intentionally label its products 0.3% above the actual ABV, that

would just mean that the labels are not ‘false’ within that specific regulation.” The plaintiffs

contend on appeal that these excerpts clearly show that they argued that their claims would

survive an intent-neutral interpretation of § 7.71.

Context reveals that the plaintiffs included the first statement—which references the

NIST Handbook—as part of their argument for an intent-based reading of the regulation, not as

part of an argument that their state-law claims would survive irrespective of how the court might

interpret § 7.71. That first statement is taken from a part of the plaintiffs’ memorandum in

opposition that argued that the word “tolerance” in § 7.71(c) is a term of art that does not provide

safe harbor to brewers where the variance from the stated alcohol content is intentional.

The second statement—from the plaintiffs’ supplemental briefing—is more equivocal. It

could plausibly be interpreted as an argument that even if § 7.71 allows Anheuser-Busch’s

conduct, compliance with § 7.71 does not resolve the issue of whether the manufacturer’s labels

are misleading as a matter of state law. But this is doubtful, since the plaintiffs offered no

response to Anheuser-Busch’s conspicuous allegation that they expressly waived that argument

in an oral hearing before the district court. Such an interpretation is also hard to square with the

plaintiffs’ claim that “[t]he principal issue to be resolved in this motion is the proper construction

of [§ 7.71].” Because the footnote relies on Lopez v. Nissan North America, Inc., 135 Cal. Rptr.

3d 116 (Cal. Ct. App. 2011), which sets forth an intent-based reading of a tolerance provision in

California law, see id. at 122–26, it is more likely that the plaintiffs sought to argue that whatever

§ 7.71(c) means at the federal level, it took on an intent-based gloss when incorporated into state

24 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

law, a proposition that they allude to on appeal. See Appellant Br. 23 (“[T]he States’ adoption of

[Handbook 44]’s provisions provides critical insight into the States’ view of the intentional abuse

of ‘tolerances’ . . . .”). That claim, which we reject, see supra § III.B, would not have preserved

the plaintiffs’ consumer-protection and warranty claims for appeal, since the claim is entirely

consistent with Anheuser-Busch’s position that compliance with the relevant “state regulations

cannot provide the basis for liability” in this case due to “basic rules of statutory construction.”

Where, as here, a litigant has failed to clearly raise an argument in the district court, we

have concluded that the argument is forfeited. See, e.g., Bldg. Serv. Local 47 Cleaning

Contractors Pension Plan v. Grandview Raceway, 46 F.3d 1392, 1398–99 (6th Cir. 1995);

Sigmon Fuel Co. v. Tenn. Valley Auth., 754 F.2d 162, 164 (6th Cir. 1985). Nor would a different

result obtain even if we were to interpret the plaintiffs’ footnote as raising the argument they

seek to make on appeal. We have repeatedly held that “the perfunctory manner in which [an]

argument was presented below” may constitute a forfeiture of that argument. Moorer v. Baptist

Mem’l Health Care Sys., 398 F.3d 469, 487 (6th Cir. 2005). An observation in a footnote, for

example, is not sufficient. See Noble v. Chrysler Motors Corp., 32 F.3d 997, 1002 (6th Cir.

1994). And as a “matter of litigation fairness,” we have considered arguments raised for the first

time in reply briefs to be forfeited, since “the [opposing] party ordinarily has no right to respond

to the reply.” Scottsdale Ins. Co., 513 F.3d at 553 (quoting Novosteel SA v. United States,

284 F.3d 1261, 1274 (Fed. Cir. 2002)). We see no reason, then, why an argument raised for the

first time in a footnote in a supplemental brief should be considered properly raised.

The plaintiffs argue that we should nevertheless consider the argument that their state-law

claims survive our construction of § 7.71 because the “‘rule’ against appellate consideration of

25 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

arguments presented for the first time on appeal is not jurisdictional.” Appellant Reply Br. 7.

The plaintiffs are correct that our prohibition against raising new arguments on appeal in civil

cases is not without exception. In re Morris, 260 F.3d at 664. Invoking what we have dubbed

the Pinney Dock exception, see Pinney Dock, 838 F.2d at 1461, we have very rarely excused a

litigant’s failure to raise an argument in the district court when the interests of justice so

required. See In re Morris, 260 F.3d at 664. However, we have taken care not to make a habit of

invoking the exception, since our “function is to review the case presented to the district court,

rather than a better case fashioned after a district court’s unfavorable order.” Hall v. Warden,

662 F.3d 745, 753 (6th Cir. 2011) (quoting DaimlerChrysler Corp. Healthcare Benefits Plan v.

Durden, 448 F.3d 918, 922 (6th Cir. 2006)).

As the plaintiffs point out, we have invoked the Pinney Dock exception and found

“extraordinary circumstances” where the question “present[ed] a purely legal issue not

available . . . below, and failure to consider it could result in a miscarriage of justice.” United

States v. Real Property Known & Numbered as 429 S. Main St., 52 F.3d 1416, 1419 (6th Cir.

1995); see also, e.g., United States v. Chesney, 86 F.3d 564, 567–68 (6th Cir. 1996). Drawing on

these cases, the plaintiffs argue that we should use our discretion to consider their forfeited

argument on appeal because the Supreme Court’s opinion in POM Wonderful was not available

to them when they argued their case to the district court.

In POM Wonderful, the Supreme Court considered whether Coca-Cola’s compliance with

regulations adopted pursuant to the Federal Food, Drug, and Comestic Act (“FDCA”)—which

forbids the misbranding of food, 21 U.S.C. §§ 331(a), 343—prevented POM Wonderful from

pursuing a claim against Coca-Cola under Section 43 of the Lanham Act—which authorizes one

competitor to sue another if the plaintiff competitor alleges unfair competition arising from the

26 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

defendant’s misleading product descriptions, 15 U.S.C. § 1125(a). Notably, the Court expressly

rejected Coca Cola’s argument that compliance with the specific regulations of the FDCA

precludes challenges under the Lanham Act. See POM Wonderful, 134 S. Ct. at 2237–38. The

Court had no occasion to apply the canon of lex specialis derogat legi generali because the

statutes, each of which “has its own scope and purpose,” do not cover the same regulatory field

and do not conflict. Id. at 2238. On the contrary, because “[t]he Lanham Act and the FDCA

complement each other in major respects,” the Court found no barrier to allowing POM

Wonderful’s Lanham Act claim to go forward. Ibid.

On the plaintiffs’ view, the methodology in POM Wonderful is obviously inconsistent

with the district court’s conclusion that, “[h]aving adopted the tolerance set forth in 27 C.F.R.

§ 7.71(c), th[e] states [whose law is at issue] cannot enforce the general legislation that would

prohibit conduct specifically permitted under this tolerance provision.” The plaintiffs contend

that because the Supreme Court decided POM Wonderful only after the district court ruled on

Anheuser-Busch’s motion to dismiss, and because POM Wonderful is inconsistent with the

district court’s reasoning, “extraordinary circumstances” exist that should excuse their failure to

properly raise their forfeited argument. But because ample appellate authority would have

supported the plaintiffs’ forfeited argument even before the Supreme Court decided POM

Wonderful, and because POM Wonderful’s relevance to this case is merely speculative, we

disagree.

In cases where we have excused a litigant’s failure to raise “a purely legal issue not

available . . . below,” 429 S. Main St., 52 F.3d at 1419, the litigants could not have easily made

the relevant arguments before the district court without an intervening statute or decision of

27 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

appellate authority. See, e.g., United States v. Henry, 429 F.3d 603, 618–19 (6th Cir. 2005);

Chesney, 86 F.3d at 568; 429 S. Main St., 52 F.3d at 1419. By contrast, nothing prevented the

plaintiffs in this case from making an argument that the interpretive principles of the Supreme

Court required the district court to consider the plaintiffs’ state-law claims even after concluding

that Anheuser-Busch did not violate § 7.71.

Interpretive rules are not binding law. Chickasaw Nation v. United States, 534 U.S. 84,

94 (2001). Instead, “[t]hey are guides that ‘need not be conclusive’” in every case where they

may apply. Ibid. (quoting Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 115 (2001)). What

this means is that the Supreme Court’s embrace of lex specialis in cases that the district court

cited, see, e.g., Morales, 504 U.S. at 384—and the Court’s subsequent holding that that principle

should not govern in POM Wonderful—was and is relevant to other cases involving other

statutes only insofar as that interpretive approach would “help courts better determine what

Congress intended.” Scheidler v. Nat’l Org. for Women, 547 U.S. 9, 23 (2006); see also, e.g.,

RadLAX Gateway Hotel, 132 S. Ct. at 2072 (“[T]he general/specific canon is not an absolute

rule . . . .”). As “the canons of construction are many and their interaction complex,” Xilinx, Inc.

v. Comm’r, 598 F.3d 1191, 1196 (9th Cir. 2010), it is no surprise that the plaintiffs could have

drawn on federal case law to make the argument that interpretive principles required the district

court to consider their claims even if Anheuser-Busch never violated § 7.71. See, e.g., Atchison,

Topeka & Santa Fe Ry. Co. v. Buell, 480 U.S. 557, 566–67 (1987) (“There is no basis for

assuming that allowing FELA actions for emotional injury will wreak havoc with the general

scheme of RLA arbitration, and absent an intolerable conflict between the two statutes, we are

unwilling to read the RLA as repealing any part of the FELA.” (footnote omitted)); Trollinger v.

Tyson Foods, Inc., 370 F.3d 602, 610 (6th Cir. 2004) (“Consistent with th[e] principle of

28 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

construction [announced in Atchison, Topeka & Santa Fe Railway Co.], federal district courts

may enforce congressional remedies created by a different federal statute so long as the statute

does not conflict with §§ 7 or 8 of the NLRA . . . .”).

While the plaintiffs chose not to invoke any of these precedents in the district court, they

are not correct that they could not have done so without POM Wonderful.

This leaves the plaintiffs to argue that even if they could have drawn on other principles

of interpretation, POM Wonderful announced a new canon of construction that would have been

determinative in their case. As the plaintiffs put it, “this appeal should be decided based on the

law as it is now understood (in light of POM Wonderful), not as it was understood at the time of

the District Court’s order and judgment.” Appellant Reply Br. 11. But even if we assume that

the interpretive principle in POM Wonderful was in fact novel, the plaintiffs’ argument is not

relevant here for yet another reason: POM Wonderful is a decision that instructs courts about

how to interpret the interaction between the Lanham Act and the FDCA, two federal statutes.

While we must pay close attention to the interpretive principles of the Supreme Court when

interpreting federal law, those principles are relevant to the plaintiffs’ state-law and derivative

MMWA claims only if the relevant state courts would find them persuasive as a matter of state

law.

It makes sense that state and federal courts interpreting federal law should look to federal

interpretive practices for insight into congressional intent. The Supreme Court, which exercises

the authority to correct any errors in how lower courts apply federal law, seeks to ensure “that

Congress [is] able to legislate against a background of clear interpretive rules, so that it may

know the effect of the language it adopts.” Finley v. United States, 490 U.S. 545, 556 (1989).

29 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

Accordingly, when called upon to analyze issues of federal statutory law analogous to the

interpretive question that the Court faced in POM Wonderful, it is no surprise that many state

courts have followed the Supreme Court’s interpretive methodology. See Fair v. BNSF Ry. Co.,

189 Cal. Rptr. 3d 150, 152–53 (Cal. Ct. App. 2015); Noice v. BNSF Ry. Co., 348 P.3d 1043,

1048–49 (N.M. Ct. App. 2015); Trout v. Grand Trunk W. R.R. Co., No. 312727, 2014 WL

4792201, at *10–11 (Mich. Ct. App. Sept. 25, 2014) (per curiam). But when it comes to issues

of state law, some state courts and legislatures have developed their own interpretive practices

that may differ from those of the federal courts. Compare, e.g., Bailey v. Lampert, 153 P.3d 95,

98 (Or. 2007) (“Assuming that the rule ever truly existed [in Oregon], . . . the legislature has

eliminated the availability of any ‘rule of lenity’ by statute.”), with, e.g., United States v. Millis,

621 F.3d 914, 916–17 (9th Cir. 2010) (“We begin by noting that the rule of lenity ‘requires

courts to limit the reach of criminal statutes to the clear import of their text and construe any

ambiguity against the government.’” (quoting United States v. Romm, 455 F.3d 990, 1001 (9th

Cir. 2006))). Because we assume that legislators legislate against the backdrop of a judicial

system’s interpretive principles, see In re Sanders, 551 F.3d 397, 404 (6th Cir. 2008), it follows

that we, too, should bear state interpretive practices in mind when interpreting state statutes and

regulations.

Since all of the plaintiffs’ claims in this case depend upon whether state beverage-

labeling law precludes state consumer-protection and warranty law, the interpretive methodology

set forth in POM Wonderful would be relevant only insofar as the relevant state courts would

find the case persuasive as a matter of state law. See Batterton v. Tex. Gen. Land Office,

783 F.2d 1220, 1222 (5th Cir. 1986) (“[I]n deriving a meaning from the [Texas] statute’s words,

we should approach them exactly as would a Texas court . . . . It would make little sense for us

30 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

to proceed to an aberrant construction by refusing to apply state canons, canons which will in all

probability govern any authoritative construction which the statute ever receives.”).

This reality has two implications for the plaintiffs’ forfeited argument, neither of which

militates in favor of considering that argument on appeal. Since state courts may employ

interpretive principles that diverge from federal ones, the plaintiffs’ contention that POM

Wonderful “changed the law” is speculative. The plaintiffs’ argument is particularly

questionable since some state high courts have employed interpretive principles that are arguably

at odds with the plaintiffs’ reading of POM Wonderful. See, e.g., Maggio v. Fla. Dep’t of Labor

& Emp’t Sec., 899 So. 2d 1074, 1079 (Fla. 2005) (“Given these specific presuit requirements, we

see no basis for concluding that the Legislature also intended a civil rights claimant to be bound

by . . . a broader provision applying to tort actions that requires notice within three years of the

date the claim accrues. Moreover, a ‘specific statute covering a particular subject area always

controls over a statute covering the same and other subjects in more general terms.’” (quoting

Stoletz v. State, 875 So. 2d 572, 575 (Fla. 2004))).

The upshot of this is that the plaintiffs could have drawn on state appellate authority to

argue that Anheuser-Busch’s compliance with § 7.71 does not preclude particular state-law

consumer-protection or warranty claims. Although we do not opine on the merits of such an

argument, we do point out that since at least some of the courts of the eight states in question

appear to have endorsed the very principle that the Supreme Court found conclusive on the facts

before it in POM Wonderful, see, e.g., People v. Price, 821 P.2d 610, 640 (Cal. 1991) (en banc)

(“Two statutes dealing with the same subject are given concurrent effect if they can be

harmonized, even though one is specific and the other general.”), this argument was certainly

available to the plaintiffs in the district court.

31 Case No. 14-3653 In re Anheuser-Busch Labeling Mktg. & Sales Practices Litig.

POM Wonderful did not change the law, except insofar as it determined how courts must

apply the Lanham Act as it interacts with the FDCA. Nothing prevented the plaintiffs from

raising in the district court the very argument that they seek to make for the first time on appeal.

On the contrary, ample appellate authority would have enabled them to make that argument.

Accordingly, no “extraordinary circumstances” exist that would warrant excusing the plaintiffs’

failure to properly raise their argument in the district court. We are not a “‘second shot’ forum, a

forum where secondary, back-up theories may be minted for the first time.” Estate of Quirk v.

Comm’r, 928 F.2d 751, 758 (6th Cir. 1991) (quoting Anschutz Land & Livestock Co. v. Union

Pac. R.R. Co., 820 F.2d 338, 344 n.5 (10th Cir. 1987)). Instead, we rely on the district courts’

“valued judgment,” which “adds much to the deliberative process and allows this court its proper

function—to determine if an erroneous decision was made as to the issues presented.” Taft

Broad. Co. v. United States, 929 F.2d 240, 245 (6th Cir. 1991). Because a contrary holding

would subvert the goal of finality in civil litigation and disrupt the orderly functioning of the

judicial process in future cases, cf. Foster, 6 F.3d at 407, we decline to consider the plaintiffs’

new argument on appeal.

V

We conclude that the district court properly determined that nothing in the FAAA or

corresponding regulations prohibits Anheuser-Busch from targeting the lower end of the

tolerance specified in 27 C.F.R. § 7.71(c)(1). Because the plaintiffs forfeited the argument that

their claims survive such an interpretation of § 7.71, we have no occasion to consider the merits

of that argument. Accordingly, the judgment of the district court is AFFIRMED.