In recent months, prominent plaintiffs' lawyers from Mississippi to California who once took on big tobacco companies have filed more than 25 multi-plaintiff and class action lawsuits against major food manufacturers including General Mills, Heinz, ConAgra Foods, Nabisco and more. The cases allege that food manufacturers have mislabeled their products in false or misleading ways. For example, one lawsuit involves the Greek yogurt giant Chobani, for labeling the sugar in its product line "evaporated cane juice." Plaintiffs' lawyers have alleged that the term "evaporated cane juice" is nothing more that plain sugar and to classify it otherwise is misleading.
So far, these cases have been filed in states with robust consumer protection laws, including California and New Jersey. In California, a plaintiff can be awarded unlimited compensatory damages, treble damages and substantial attorneys' fees. New Jersey has a six-year statute of limitations for this type of case, so plaintiffs' lawyers have a larger pool of potential plaintiffs to amass.
Recently, the Food and Drug Administration and Federal Trade Commission (FTC) have also stepped into the fray. The FTC forced settlements from a variety of companies including the pomegranate juice manufacturer POM Wonderful over misleading and unsubstantiated claims about the products' health benefits. Other recent plaintiffs' cases have also involved the use of words like "healthy," "nutritious" or "natural" in a product's packaging. One such lawsuit is against Nature Valley, a manufacturer of granola bars, for marketing its products as "natural," even though they contain artificial ingredients such as high fructose corn syrup, high maltose corn syrup and other processed ingredients.
In-house counsel should be especially wary of this type of class action if a product is advertised or labeled using less-than-soundly proven health benefits, or is described as organic, natural or pure. While it remains to be seen whether any of these cases will be successful, it is certain that the cost of defending this type of class action will be substantial. Moreover, it is not only food manufacturers that need to be concerned about this type of lawsuit. While they have been the primary target thus far because of their deep pockets, successful litigation on that front will inevitably lead to litigation against distributors, retail outlets, franchisors and franchisees.
Although many states do not have the same robust consumer protection laws as California and New Jersey, they often have a deceptive trade practices act that could subject manufacturers, distributors and purveyors of food to substantial liability if this type of lawsuit gains traction. For example, many state statues make it unlawful to represent that goods have qualities that they do not have. They also provide that food representations are subject to the interpretations of the FTC relating to Section 5(a)(1) of the Federal Trade Commission Act. This means that if the FTC continues vigorously pursuing food manufacturers and succeeding, plaintiff's lawyers may have success in following the FTC's actions. Moreover, several state laws provide that either a private party or the state attorney general may enforce the provisions of the individual state deceptive trade practices act. Accordingly, the food industry may face potential double liability for the same actions from both private parties as well as the state attorney general.
The public relations aspect of dealing with these types of lawsuits cannot be overstated. It is important to ensure that both legal counsel and public relations advisors (be they internal or external) are quickly brought up to speed in order to deal with the allegations.
In sum, in-house counsel now need to be especially wary in examining claims made on labels, menus, nutritional statements, and the like. Even seemingly innocuous missteps may now be the basis for costly, even if ultimately meritless, lawsuits.