John Kendrick, Summer Fellow, Washington Legal Foundation*
Class action lawsuits against food companies alleging false or misleading advertising are on the rise. The cause of this trend is subject to debate.
According to Tim Blood, a trial lawyer with Hurst & O’Reardon, “[the food companies] have gone far, far beyond what they have any substantiation to claim with regard to food products and their benefits. And it’s all to make a buck…”
Mr. Blood is right about one thing, it is “all to make a buck” – for trial lawyers like himself. With other lawsuit opportunities in areas like asbestos, tobacco, and drug cases running dry, class action lawyers are searching for somebody to sue. “Food-product labeling claims have been seen as a new opportunity for different segments of the plaintiffs’ bar,” according to industry lawyer Kenneth Odza.
Mr. Odza is right. The rise in class action suits against food companies for “misleading claims” is not product of overzealous marketing, but of plaintiffs’ lawyers shifting their attention to new defendants with deep pockets.
These suits usually involve a very insignificant (to the point of being comical) “harm” caused by a company’s “fraudulent” advertising of its products. For example, in a recent settlement with Wm. Wrigley Jr. Co. over false advertising of its gum’s germ killing benefits, a $7 million trust fund was set up to compensate “victims” up to $10 each.
Individually the plaintiffs don’t get that much. However, the fact that anybody who bought the product can be entitled to damages leads to a large class and a large settlement. These million dollar payments are a boon to trial lawyers, who often scoop up 30% in attorneys’ fees.
There are many recent examples of attorneys looking for the proverbial jackpot in false advertising claims.
Four New Jersey women have sued Campbell’s, claiming they were tricked into buying tomato soup labeled “25% less sodium” when it actually contained a comparable amount to regular Campbell’s soup. The company tried to get the case dismissed; arguing that the advertising claim refers (accurately) to its soup in comparison with the average sodium content of soup on the market. Their advertising was also perfectly in line with FDA regulations. However, the judge allowed the case to go forward anyway. He perplexingly stated that “the fact that the labels were literally true does not mean they cannot be misleading to the average consumer.” (Translation: “consumers are rubes who believe anything they see on TV.”)
A Florida woman sued General Mills after consuming 24 four-packs of” Yo-Plus” yogurt and not seeing any improvement of her digestive health. The company had marketed the yogurt on a digestive health platform, since it contains an ingredient that has been shown to help regulate digestion. Federal district and appeals court judges have both ruled that a class of plaintiffs can be certified based on her claim. This was over General Mills’ objections that shoppers purchased Yo-Plus for different reasons, at different places, different times, with different results, and could not be grouped together as a class with the same cause for complaint.
A suit has been filed against Dreyer’s in California by plaintiff Skye Astiana, alleging that their “all natural” label for ice cream is misleading. This is because it contains cocoa that is processed with one synthetic ingredient. She states that her causes of action are “fraud,” “false advertising,” “unlawful, unfair, and fraudulent business practices,” and “unjust enrichment.” Ms. Astiana is not new to ice cream fraud, having filed the same complaint against Ben & Jerry’s in 2010. That complaint was allowed by the judge, and is still moving forward.
Often, the end result of these cases is settlement. Most companies simply do a cost-benefit analysis and choose to settle rather than waste time and money litigating. For example, Dannon recently settled a case, providing $45 million to consumers over false advertising claims about digestive benefits. They did not admit to any fault, but wanted to prevent business disruptions.
These settlements impose immediate costs on the companies and encourage more frivolous lawsuits. This is in nobody’s best interest except for trial lawyers. Any arbitrary cost imposed on a company ultimately hurts all of us, in the form of higher prices.
Although none of these cases has been decided in the plaintiffs’ favor on the merits yet, if any did get to that point the floodgates would be opened and the consequences multiplied. We would end up having judges and juries around the country setting standards as to what food producers can and cannot say about their products, a less than ideal scenario for companies and consumers.
*John will be entering his senior year this fall at William & Mary.