Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 1 of 14

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

ETHEL THOMAS, as an individual, and CASE NO.

on behalf of all others similarly situated,
Plaintiff,
CLASS ACTION COMPLAINT
vs.
PHUSION PROJECTS, LLC d/b/a DRINK
FOUR BREWING CO., DEMAND FOR JURY TRIAL

Defendant.

Plaintiff Ethel Thomas (“Plaintiff”), by and through her counsel, hereby files this Class

Action Complaint, individually, and on behalf of all others similarly situated, and alleges against

Defendant Phusion Projects, LLC d/b/a Drink Four Brewing Co. (“Phusion”), as follows:

NATURE OF THE ACTION

1. Phusion produces, markets, and sells a popular caffeinated alcoholic beverage

named Four Loko (“Four Loko”), which comes in a variety of fruity flavors.

2. When consumed, a single 23.5-ounce can of Four Loko can be as potent as

drinking six beers and two cups of coffee.

3. Due to this effect, Four Loko has gained significant popularity, particularly with

inexperienced users and college-aged students.

4. The fact is, since the caffeine in Four Loko masks the effects of alcohol, it tricks

users into believing they can keep drinking well past the point of drunkenness. As such, this

causes sickness and alcohol poisoning, and even death.

Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 2 of 14

5. In an effort to continue reaping large financial gains from the sale of Four Loko,

Phusion has omitted from its advertising and promoting of Four Loko these harmful effects.

Florida consumer protection laws prohibit this conduct.

VENUE AND JURISDICTION

6. This Court has jurisdiction over the subject matter presented by this Class Action

Complaint because it is a class action arising under the Class Action Fairness Act of 2005

(“CAFA”), Pub. L. No. 109-2, 119 Stat. 4 (2005), which explicitly provides for the original

jurisdiction of the Federal Courts of any class action in which any member of the plaintiff class

is a citizen of a state different from any defendant, and in which the matter in controversy

exceeds in the aggregate the sum of $5,000,000.00, exclusive of interest and costs. Plaintiff

alleges that the total claims of the individual members of the Plaintiff Class in this action are in

excess of $5,000,000.00 in the aggregate, exclusive of interest and costs, as required by 28

U.S.C. § 1332(d)(2), (5).

7. As set forth below, Plaintiff is a citizen of Florida, and Phusion can be considered

a citizen of Illinois. Therefore, diversity of citizenship exists under CAFA, as required by 28

U.S.C. § 1332(d)(2)(A). Furthermore, Plaintiff alleges on information and belief that more than

two-thirds of all of the members of the proposed Plaintiff Class in the aggregate are citizens of a

state other than Florida, where this action is originally being filed, and that the total number of

members of the proposed Plaintiff Class is greater than 100, pursuant to 28 U.S.C. §

1332(d)(5)(B).

8. Venue in this judicial district is proper pursuant to 28 U.S.C. §1391(a) because, as

set forth below, Phusion conducts business in, and may be found in, this district, and Plaintiff

purchased Four Loko subject to this litigation in this judicial district.

2
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 3 of 14

PARTIES

9. Plaintiff is an individual who is a citizen of Florida and resides in Miami-Dade

County, Florida.

10. Phusion is a corporation organized and existing under the laws of the state of

Delaware. It maintains its headquarters at 1658 Milwaukee Avenue, Suite 424, Chicago, IL

60647, and lists with the Delaware Division of Corporations an authorized agent for service as:

Jaisen Russell Freeman, 1658 Milwaukee Avenue, Suite 424, Chicago, IL 60647. Phusion

conducts business in this jurisdiction and in this judicial district by advertising and through the

distributors and retailers that deliver and sell its product to consumers.

11. Plaintiff alleges, on information and belief, that at all times relevant herein,

Phusion and its employees, subsidiaries, affiliates, and other related entities, were the agents,

servants and employees of each other, and at all times relevant herein, each was acting within the

purpose and scope of that agency and employment. Plaintiff further alleges, on information and

belief, that at all times relevant herein, the distributors and retailers who deliver and sell Four

Loko, the alcoholic beverage at issue, also were Phusion’s agents, servants and employees, and

at all times herein, each was acting within the purpose and scope of that agency and employment.

12. Whenever reference in this Class Action Complaint is made to any act of the

Phusion, such allegation shall be deemed to mean that the principals, officers, directors,

employees, agents, and/or representatives of Phusion committed, knew of, performed,

authorized, ratified and/or directed that act on behalf of Phusion while actively engaged in the

scope of their duties.

13. All allegations herein are based on information and belief and/or are likely to

have evidentiary support after reasonable opportunity for further investigation and discovery.

3
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 4 of 14

FACTUAL ALLEGATIONS

14. Phusion markets and sells through retailers various flavored caffeinated alcoholic

beverages, including the Four Loko alcoholic beverage.

15. Four Loko was created in 2005 by three Ohio State University students, who had

noticed that university students were mixing alcohol and caffeine. Between 2007 and 2009, Four

Loko became available in 46 American states and in Europe. The drink has been dubbed as

“blackout in a can.”

16. Four Loko contains 12% alcohol and comes in flavors such as fruit punch, orange

blend, grape, watermelon, blue raspberry, kiwi strawberry, lemonade, cranberry lemonade, and

lemon lime. It is sold in a 23.5-ounce can, which when consumed, can be as potent as drinking

four to six beers. According to experts, one can of Four Loko contains the equivalent of 6 cans

of beer and two cups of coffee.

17. Normally, when an individual consumes too much alcohol, he or she falls asleep.

When consuming Four Loko, however, an individual will stay awake from the caffeine, even

though he or she will have no recollection of what occurred.

18. Several studies have suggested that individuals become more intoxicated and

engage in riskier behavior when they drink the combination of alcohol and caffeine rather than

when they drink alcohol alone. 1 Caffeine masks the effects of alcohol, tricking users into

believing they can keep drinking well past the point of drunkenness, which in turn causes

sickness and alcohol poisoning. At the same time, caffeine does not change the level of blood

1. See EXHIBIT A, attached hereto and incorporated herein, FDA Press Release, dated November 17, 2010,
available at http://www.fda.gov/forconsumers/consumerupdates.

4
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 5 of 14

alcohol content, therefore it does nothing to reduce the deleterious effects associated with

drinking alcohol. 2

19. At least six states have already banned the drink, including New York,

Massachusetts, Michigan, Washington, Utah and Oklahoma because, inter alia, the colorful

packaging and fruitful flavors are designed to attract inexperienced and/or under-age drinkers.

20. The United States Food & Drug Administration (the “FDA”) recently stated that

Four Loko has “Serious concerns over alcoholic beverages with added caffeine.” 3

21. According to the FDA, “[r]eports in the scientific literature have raised concerns

regarding the formulation and packaging of pre-mixed products containing added caffeine and

alcohol. For example, these products, presented as fruity soft drinks in colorful single-serving

packages, seemingly target the young adult user. Furthermore, the marketing of the caffeinated

versions of this class of alcoholic beverage appears to be specifically directed to young

adults.”4

22. Moreover, the caffeine content of Four Loko “could result in central nervous

system effects if a consumer drank one or more containers of your product.”5

23. Furthermore, the consumption of Four Loko may result in adverse behavioral

outcomes because the caffeine is likely to counteract some, but not all, of the adverse effects of

alcohol. 6

2. Id.

3. Id.

4. Id. (emphasis added).

5. Id.

6. Id.

5
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 6 of 14

24. In fact, numerous incidents of hospitalization and several deaths have been

reported as a result of individuals consuming Four Loko. These include, but are not limited to,

the following:

a. In September 2010, Four Loko caused seventeen students at Ramapo College in

New Jersey to become sick. As such, the college banned the drink from its
property.

b. On September 17, 2010, a 20-year old college student fatally shot himself after a
30-hour partying binge consisting of consuming Four Loko.

c. In October 2010, nine college students at Central Washington University were

hospitalized as a result of consuming Four Loko.

d. On November 5, 2010, a 21-year old died after drinking two cans of Four Loko
and crashing her vehicle into a telephone pole. Her friends stated that after
consuming Four Loko, “[s]he was not the same person,” and “[s]he could not
remember people’s names. She was passed out within 30 minutes of having the
alcoholic beverage.”

25. Plaintiff purchased Phusion’s Blue Raspberry Four Loko, on October 31, 2010,

from a local convenience store in Miami, Florida.

6
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 7 of 14

26. The following image of the labeling of Four Loko is similar in all material

respects to the Four Loko product purchased by Plaintiff:

27. Plaintiff viewed the above labeling which was material to her decision to purchase

and drink Four Loko.

28. Given the harmful effects of Four Loko, as set forth in detail above, Plaintiff has

been misled by Phusion into purchasing and paying for a product that was not safe to consume,

and that she has, as a direct result, suffered actual damages in that she has been deprived of the

benefit of her bargain and has spent money purchasing Four Loko at a price premium when Four

Loko actually had less value than was reflected in that price she paid for Four Loko.

7
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 8 of 14

29. Almost immediately after consuming Four Loko, Plaintiff became ill and her

illness continued for several days. Had she known the harmful effects of consuming Four Loko,

she would not have purchased it and would not have consumed it.

30. Phusion has deceptively omitted the true nature of its Four Loko alcoholic

beverage and failed to warn consumers of the dangerousness of its product. Phusion has also

deceitfully packaged its product to appeal to inexperienced and/or under-age drinkers, who are

either trying to become rapidly intoxicated, or are unaware what they are getting themselves into.

Further, Phusion fails to warn and educate purchasers that the contents contain the equivalent of

six cans of beer and two cups of coffee.

31. As a result of its deceptive and unfair marketing of Four Loko, Phusion has been

able to charge a price premium for Four Loko.

32. On or about November 16, 2010, under heavy pressure from the FDA and state

governments across the country, Phusion announced its plan to remove caffeine and other

sources of the stimulant from its Four Loko beverage products. This announcement was made

just prior to the FDA’s warning letter, planning to ban the drink from the market.

33. Phusion released a statement stating that it planned to remove caffeine, guarana

and taurine nationwide and that Phusion will only produce non-caffeinated versions of Four

Loko, which happens to be the company’s most popular drink. 7

CLASS ALLEGATIONS

34. Plaintiff re-alleges and incorporates by reference the allegations set forth in each

of the preceding paragraphs of this Class Action Complaint.

7. Rob Stein & Jenna Johnson, Maker of Four Loko to Remove Caffeine From Alcoholic Drinks, WASH. POST,
November 17, 2010, available at http://www.washingtonpost.com/wp-
dyn/content/article/2010/11/16/AR2010111606149.html.

8
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 9 of 14

35. Pursuant to Fed. R. Civ. P. 23, Plaintiff brings this action on behalf of herself and

a Class of persons comprised of all consumers who purchased Four Loko for personal, family or

household purposes in the State of Florida during the past four years (the “Class”). Phusion’s

advertising and promotional practices as detailed above were applied uniformly to all members

of the Class throughout the relevant time period, so that the questions of law and fact detailed

herein are common to all members of the Class. All Class members were and are similarly

affected by purchasing Four Loko for its intended and foreseeable purpose as promoted,

advertised, packaged, and labeled by Phusion and as set forth in detail above.

36. Based on the annual sales of Four Loko and their popularity, the number of

purchasers of Four Loko would likely be in the many thousands, thereby making individual

joinder impossible. The Class is therefore so numerous that joinder of all members would be

impracticable. Questions of law and fact common to the Class exist and predominate over

questions affecting only individual members, including, inter alia:

(a) Whether Phusion’s practices and representations made in connection with the
labeling, advertising, marketing, promotion and sales of Four Loko were
deceptive, unlawful or unfair in any respect, thereby violating Florida’s Deceptive
and Unfair Trade Practices Act (“FDUTPA”), section 501.201, et seq. Florida
Statutes;

(b) Whether Phusion was unjustly enriched because of its unlawful conduct;;

(c) Whether Plaintiff and the Class was injured and, if so, the amount of damages or
other economic relief to be awarded; and

(d) Whether Phusion should be enjoined from engaging in the practices complained
of herein.

37. The claims asserted by Plaintiff in this action are typical of the claims of the

members of the Class, as the claims arise from the same course of conduct by Phusion, and the

relief sought is common. Plaintiff will fairly and adequately represent and protect the interests of

9
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 10 of 14

the members of the Class. Plaintiff has retained counsel competent and experienced in both

consumer protection and class action litigation.

38. Certification of this class action is appropriate under Fed. R. Civ. P. 23 because

the questions of law or fact common to the Class members as detailed above predominate over

questions of law or fact affecting only individual members. This predominance makes class

litigation superior to any other methods available for the fair and efficient group-wide

adjudication of these claims. Absent a class action remedy, it would be highly unlikely that other

Class members would be able to protect their own interests because the cost of litigation through

individual lawsuits would exceed any expected recovery.

39. Certification is also appropriate because Phusion has acted or refused to act, and

continues to act, on grounds generally applicable to the Class, thereby making appropriate final

injunctive relief with respect to the Class as a whole. Further, given the large number of

consumers of Four Loko, allowing individual actions to proceed in lieu of a class action would

run the risk of yielding inconsistent and conflicting adjudications.

40. A class action is a fair and appropriate method for the adjudication of the

controversy, in that it will permit a large number of claims to be resolved in a single forum

simultaneously, efficiently, and without the unnecessary hardship that would result from the

prosecution of numerous individual actions and the duplication of discovery, effort, expense and

burden on the courts that individual actions would engender.

41. The benefits of proceeding as a class action, including providing a method for

obtaining redress for claims that would not be practical to pursue individually, outweigh any

difficulties that might be argued with regard to the management of this class action.

10
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 11 of 14

COUNT I
FOR VIOLATIONS OF FLORIDA’S DECEPTIVE
AND UNFAIR TRADE PRACTICES ACT,
FLA. STAT. § 501.201, ET SEQ.

42. Plaintiff realleges and incorporates by reference the allegations contained in the

paragraphs above as if fully set forth herein.

43. Phusion violated and continue to violate Florida’s Deceptive and Unfair Trade

Practices Act by engaging in unfair methods of competition, unconscionable acts and practices,

and unfair and deceptive acts and practices in the conduct of their business.

44. The omissions alleged herein constitute deceptive and unfair trade practices, in

that they were intended to and did deceive Plaintiff and the general public into believing that

Phusion’s Four Loko product was safe to consume, when in fact, as set forth in detail above, it

has harmful effects, including, but not limited to, causing sickness and alcohol poisoning, and

even death.

45. Had Plaintiff known that Four Loko would cause such harmful effects, she would

not have purchased Four Loko.

46. As a result of Phusion’s deceptive and unfair acts, Plaintiff and Class members

have been damaged in the amount of the difference between the premium price paid for Four

Loko and the price they would have paid had they not been misled through Phusion’s omissions,

as set forth in detail above.

47. Phusion’s conduct offends established public policy, and is immoral, unethical,

oppressive, unscrupulous and substantially injurious to consumers.

48. Plaintiff and Class members are entitled to damages in an amount to be proven at

trial.

11
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 12 of 14

49. Phusion should also be ordered to cease their deceptive advertising, and should be

made to engage in a corrective advertising campaign, to inform consumers that Four Loko is

equivalent to six beers and two cups of coffee and moreover, that it causes harmful effects

including, but not limited to, sickness and alcohol poisoning, and even death.

COUNT II
UNJUST ENRICHMENT

50. Plaintiff realleges and incorporates by reference the allegations contained in the

paragraphs above as if fully set forth herein.

51. Phusion has benefited from its unlawful acts by receiving excessive revenue

derived from the sales of Four Loko herein alleged. Phusion appreciated and/or knew the

benefits of the receipt of such excessive revenue.

52. This excessive revenue has been received by Phusion at the expense of Plaintiff

and other members of the Class, under circumstances in which it would be unjust for Phusion to

be permitted to retain said benefits.

53. In this regard, Phusion did not provide Plaintiff or other members of the Class

what they bargained for. Four Loko is worth less than Plaintiff and other members of the Class

paid for it. Plaintiff has made a demand for the return of such monies, but that has been refused.

54. Therefore, Plaintiff and other members of the Class are entitled to the

establishment of a constructive trust consisting of the benefits conferred upon Phusion in the

form of its excessive revenue derived from the sale of Four Loko, from which Plaintiff and other

Class members may make claims on a pro rata basis for restitution.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff, individually and on behalf of all others similarly situated,

prays for relief pursuant to each cause of action set forth in this Complaint as follows:

12
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 13 of 14

1. For an order certifying the action may be maintained as a class action, certifying

Plaintiff as representative of the Class, and designating their counsel as counsel for the Class;

2. For an award of equitable relief as follows:

(a) Enjoining Phusion from making any claims for Four Loko found to violate
FDUTPA or that are otherwise deemed misbranded, as set forth above;

(b) Requiring Phusion to make full restitution of all monies wrongfully

obtained as a result of the conduct described in this Class Action
Complaint; and

(c) Requiring Phusion to disgorge all ill-gotten gains flowing from the
conduct described in this Class Action Complaint.

3. For the establishment of a constructive trust consisting of the benefits unjustly

conferring upon and enriching Phusion in the form of its excessive revenue derived from the sale

of Four Loko, from which Plaintiff and other Class members may make claims on a pro rata

basis for restitution.

4. For an award of attorney’s fees;

5. For actual damages in an amount to be determined at trial;

6. For an award of costs and any other award the Court might deem proper; and

7. For pre- and post-judgment interest on any amounts awarded.

JURY DEMAND

Plaintiff demands a trial by jury on all issues so triable.

DATED: November 24, 2010

/s/ Brian W. Smith
Brian W. Smith, Esq.
Florida Bar No.: 0470510
Smith, Vanture & Rivera, LLP
1615 Forum Place, Suite 4-C
West Palm Beach, FL 33401
Bws@smithvanture.com
(561) 684-6330 (ofc) (561) 688-0630 (fax)

13
Case 1:11-cv-20035-MGC Document 1 Entered on FLSD Docket 01/05/2011 Page 14 of 14

/s/ Howard W. Rubinstein

Howard Rubinstein, Esq. (Fla. SBN: 0104108)
Law Offices of Howard Rubinstein
P.O. Box 4839
Aspen, CO 81612
HowardR@pdq.net
(832) 715-2788 (o) (561) 688-0630 (f)

/s/ Joe R. Whatley, Jr.

WHATLEY DRAKE & KALLAS, LLC
Joe R. Whatley, Jr., Esq.
jwhatley@wdklaw.com
Patrick J. Sheehan, Esq.
psheehan@wdklaw.com
1540 Broadway, 37th Floor
New York, NY 10036
Tel: (212) 447-7070
Fax: (212) 447-7077

Attorneys for Plaintiff

14