Nathaniel Bodnar, a law clerk at Washington Legal Foundation, will be entering his second year at the George Mason University Antonin Scalia Law School this fall.
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Over the past decade, the WLF Legal Pulse has documented the rise of class actions alleging misleading or false label statements or packaging images on food or other consumer products. Initially, federal and state judges allowed such lawsuits to survive motions to dismiss. However, as filings have accelerated and repeat plaintiffs represented by the same law firms have become common, labeling lawsuits have taken on the distasteful air of serial litigation. As a result, judges have become far more skeptical of these lawsuits, are more likely to call out blatant factual and legal errors in plaintiffs’ filings, and are less likely to allow baseless litigation to drag on.
One law firm that has frequently inspired curt criticism for the cookie-cutter nature of its filings and unconvincing variations on the same legal theories is New York-based Sheehan & Associates, P.C. The firm recently filed a lawsuit against Dollar General for “misrepresenting” its fudge mint cookies as containing dairy products and natural mint flavor. Sheehan and Associates filed a very similar claim against Walmart in November of 2021 (Walmart is currently moving to dismiss for a failure to state a claim). The complaints’ similarities are apparent at first glance. The Walmart complaint cites three fudge recipes dated 1893, 1896, and 1902. The Dollar General complaint had the same musty scent, citing the same old recipes. This is just the first of many similarities; a copyleaks.com analysis of the two complaints revealed a 75% match.
Judges have also noticed the similarities between complaints filed in their court and complaints filed in previous cases. For example, in Yu v. Dreyer’s Grand Ice Cream, Southern District of New York Judge Ramos observed in a footnote that the case “is identical to at least two other cases brought by Plaintiff’s counsel in this District” except for the fact that the other cases involved vanilla ice cream, not coffee ice cream. Judge Ramos made the same substantive point in the body of an opinion dismissing a Sheehan ice-cream-bar complaint for a failure to state a claim 12 days before Yu.
In a January dismissal of a Sheehan and Associates case, Southern District of Illinois Judge McGlynn provided detailed reasoning in support of his conclusion that each claim failed for lack of adequate pleading. In May, when writing another opinion dismissing another Sheehan case, Judge McGlynn dramatically shortened the opinion by simply saying that all the claims failed because they relied upon the same flawed theory of deception as the lawsuit he dismissed in January. A different opinion in May joined “recent decisions issued by the Northern and Southern District Courts of Illinois, as well as the Southern District of New York, in rejecting other suits brought by [Sheehan and Associates] for advancing an interpretation of a product’s packaging that is ‘unreasonable and unactionable.’”
Half-Baked Legal Theories
The complaints’ incredible similarities are far from the only problem stemming from their cookie-cutter nature. Sheehan’s newest complaints show that the firm hasn’t learned anything from courts’ dismissals of earlier complaints.
The typical deceptive-labeling complaint contains a number of claims. The first is a violation of the forum state’s consumer protection law. The second is that the deception violates other states’ consumer protection laws. Next come claims of breaching the express warranty, implied warranty, and the Magnuson-Moss Warranty Act. Then the plaintiff tacks on the common law claims—negligent misrepresentation, fraud, and unjust enrichment.
The federal Food, Drug, and Cosmetic Act (FDCA) does not allow a private individual to sue for alleged violations, but that hasn’t stopped Sheehan and Associates, as well as other law firms, from relying upon the law when filing suit under state consumer protection laws. Courts have rejected plaintiffs’ reliance on alleged FDCA violations. For example, Southern District of New York Judge Ramos wrote, “A plaintiff may not circumvent a private right of action in one statute by incorporating allegations of its violations into claims pleaded under another statute that does not allow for a private right of action.” Mitchell v. Whole Foods. Under state consumer protection laws, plaintiffs generally must show a product claim is deceptive on its own, absent the existence of a federal regulation. Judge Ramos in his Yu decision did address the relevance of a federal regulation to a state-law claim of deception:
When a plaintiff argues that federal labeling regulations constitute evidence of what consumers expect a product’s label to communicate about its contents, courts have generally held that the complaint must adequately allege that ‘reasonable consumers are aware of these complex regulations,’ and that ‘they incorporate the regulations into their day-to-day marketplace expectations.’
Judge Ramos noted that Sheehan & Associates’ client failed to allege that she had intimate knowledge of federal food-labeling regulations and failed to plead that the “reasonable consumer” had such knowledge. It is fair to assume that no average consumer possesses such knowledge.
As noted above, the standard food-labeling lawsuit includes breach-of-warranty claims. Under most states’ warranty laws, plaintiffs must provide pre-suit notice to the manufacturer of the alleged violation. Pre-suit notice requirements encourage settlements and promote judicial economy. Courts have repeatedly held in Sheehan and Associates cases that pre-suit notice is necessary and that a defendant’s receipt of general complaints from third parties about the alleged defect is not sufficient pre-suit notice.
Despite numerous warranty-claim setbacks, Sheehan lawsuits filed in June and July state that both the complaint itself and third parties’ customer complaints constitute sufficient breach-of-warranty notice. Courts have explicitly rejected both of these avenues of “notice.” For example, in Rudy v. Family Dollar Stores, the plaintiff’s motion in opposition claimed the plaintiff had given notice by filing the lawsuit; the court correctly rejected the false claim that a lawsuit provides pre-suit notice.
Even if a plaintiff did provide pre-suit notice, courts have held that in food and beverage cases, the implied warranty of merchantability only involves whether products are fit for human consumption. A recent claim that the ingredients were not in the right proportion to receive the “health benefits” of mayonnaise does not come close to being unfit for human consumption.
When confronted with fraud claims, courts in food-labeling cases have regularly dismissed such allegations because the plaintiff pleaded the intent element of fraud as only a conclusory allegation. Sheehan and Associates’ recent complaints have run into this problem. The firm’s complaints routinely plead intent with identical wording: “Defendant’s fraudulent intent is evinced by its knowledge that the Product was not consistent with its representations.” This is functionally equivalent to “Defendant’s fraudulent intent is evinced by its failure to accurately identify the Product on the front label, when it knew its statements were neither true nor accurate”—the language deemed conclusory in previous cases. The fundamental legal flaw that the complaint only pleads conclusory intent remains.
Under Illinois common law, a plaintiff cannot recover for negligent misrepresentation if the loss is purely economic. However, this has not stopped Sheehan and Associates from claiming negligent misrepresentation when its clients only have potential economic harm. Illinois law has an exception to the economic loss doctrine for intangible work products. Still, that exception does not apply to food cases as they involve tangible objects.
Under New York common law, the plaintiff must show a “special relationship” between themselves and the defendant to support a negligent misrepresentation claim. This special relationship does not exist in an ordinary buyer-seller relationship or when the “misrepresentation” alleged was directed at a “faceless or unresolved group of persons.” Sheehan’s complaints attempt and fail to get around this by alleging the retailer or manufacturer is a “trusted brand.” “The status of a retailer as a ‘trusted brand … does not give rise to a duty to impart correct information as the plaintiffs comprise a faceless or unresolved class.’” despite this precedent, a recent complaint filed in New York tried to use the “trusted brand” or “trusted company” theory of a special relationship.
In cases alleging deception that gives rise to various common law claims, unjust enrichment is “duplicative” under New York law and not available as a claim. That has not discouraged Sheehan from tacking on the claim at the end of a recent complaint filed in the Eastern District of New York. Rewriting the fraud allegation in the language of unjust enrichment will not allow it to survive a motion to dismiss under New York state law.
Waste of Dough
Law firms like Sheehan & Associates follow a mass-production model that can churn out several complaints a week with relatively minimal financial investment. However, the costs are much higher for the lawsuits’ targets. Even if the defendant convinces a court to dismiss a complaint, a company could spend half a million dollars on legal fees.
Some companies have opted instead to settle privately for several thousand dollars with the plaintiff. A company that publicly settles later in the litigation process may pay a much higher settlement price. Much of this goes to lawyers’ fees and named plaintiffs. A public settlement typically grants class members a small voucher (sometimes even less than a dollar per item) while yielding hundreds of thousands of dollars in cash to the law firm representing them. If these lawsuits change the company’s behavior, more often than not the company will align its packaging with idiosyncratic interpretations that are not in line with the reasonable consumer’s interpretation. With such minimal benefits for anyone but the plaintiffs’ lawyers, these cases waste valuable time that courts, clerks, and judges could be using to work on more pressing matters.
Despite mounting losses and courts’ increasingly sharp rhetorical barbs, law firms like Sheehan & Associates keep cranking out cookie-cutter complaints. Perhaps the best way courts can stem the tide is to raise the specter of financial sanctions. In January, Southern District of Illinois Judge McGlynn allowed the plaintiff in Floyd v. Pepperidge Farm (represented by the Sheehan firm) to amend her complaint “if she can do so consistent with Rule 11 of the Federal Rules of Civil Procedure.” (emphasis added). In March, Northern District of Illinois Judge Aspen said the plaintiff in Chiappetta v. Kellogg Sales Company (represented by the Sheehan firm) could amend her complaint “if she can do so in accordance with this Opinion and Federal Rule of Civil Procedure 11.” (Emphasis added) (Judge Aspen also raised Rule 11 possibilities in a February dismissal of a Sheehan case). In May, Northern District of Illinois Judge Alonso said the plaintiff in Kinman v. The Kroger Co (represented by the Sheehan firm) could theoretically amend her complaint but “perhaps not within the bounds of Rule 11.” (Emphasis added).