SANTA MONICA, Calif. – Red Bull, the manufacturer and distributor of the well-known energy drink, has reached a negotiated settlement with San Diego, Calif.-based nightclub Moondoggies that resolves “passing off” and other claims alleged in a lawsuit filed by Red Bull against the establishment. The lawsuit, which was filed in a federal court in southern California, alleged, among other things, that customers visiting Moondoggies who requested Red Bull routinely received a substitute beverage instead of Red Bull without being notified of the substitution.
Red Bull alleged in the lawsuit that Moondoggies violated Red Bull’s rights and deceived consumers by substituting an alternative beverage for Red Bull without providing the customer with notice of the substitution and an
opportunity to reject the alternative beverage.
The terms of the settlement of the lawsuit involve the entry of a permanent injunction against the establishment and its employees that precludes them from “passing off” other beverages as Red Bull. In addition, pursuant to the settlement, Moodoggies has agreed to pay to Red Bull an undisclosed amount, some portion of which is to compensate Red Bull for the claims alleged in the lawsuit and some portion of which will compensate Red Bull for attorney’s fees incurred in pursuing its claims.
“Red Bull is looking out for its consumers so that they aren’t being misled by bartenders and restaurateurs who are passing off other beverages as Red Bull,” says Gary Smith, Red Bull’s Executive Vice President.
In fall 2003, Red Bull reached similar settlements with New York City restaurant/nightclub Centrofly, Las Vegas restaurant/nightclub Drai’s on the Strip and Philadelphia restaurant/nightclub M Restaurant and Lounge.
“When Red Bull became popular, there were a number of knock-offs that came onto the market. Our managers were approached by other energy drink companies who offered their product at a lower cost. I’m sure many bar owners have been tempted to pass off cheaper products as premium brands in order to reduce their costs,” said Paul Hennessey, owner of Hennessey’s Tavern, Inc. (13 locations throughout Southern California). “No one is ordering the other products by name. Our customers want Red Bull and that is what we give them.”
Red Bull prefers to resolve passing off issues whenever possible by educating restaurants, bars and nightclubs about complying with the law. However, Red Bull has made a decision to aggressively pursue those who persist in deceiving Red Bull consumers by serving them a substitute product.
“I myself have been in a position where I ordered a Red Bull and the bartender reached for the gun. I know Red Bull doesn’t come out of a soda gun, but other customers might not,” said George Nahas, managing partner, Los Angeles-based The Sunset Room. “People who want to make sure they really get Red Bull and not another product should order the can so they know what they’re getting.”