In the past few years, food companies have found themselves enmeshed in a growing tide of class action lawsuits brought by consumers alleging that the label on the package, or the advertising for the product, was misleading. A couple of months ago, The New York Times reported that lawyers who made their fortunes suing tobacco companies are now turning their sights on the food industry.
What's going on here? How did food become the target du jour for consumer lawsuits? And how can food manufacturers and sellers minimize litigation risks in this environment?
This wave of consumer lawsuits comes from a number of directions. A warning letter from the FDA or the Federal Trade Commission often triggers a lawsuit. Foods labeled as "natural" have been an especially frequent target because basic ingredients such as corn or soy are alleged to be genetically modified or because some ingredients are processed in some way (e.g., "Dutch" cocoa).
Claims that suggest some health benefit are common targets. Plaintiffs have alleged that health benefits are unsubstantiated by clinical studies (e.g., probiotic foods), or the claimed benefits are unavailable because the product contains too little of the healthy ingredient to make a difference.
Other cases take the opposite tack, alleging that the food contains ingredients or combinations of ingredients that are supposedly unhealthy (e.g., high-fructose corn syrup and fats) but the manufacturer did not disclose that "fact." The manufacturer of a nut-flavored chocolate spread promoted as part of a breakfast meal was accused of deceiving parents into thinking this spread was the centerpiece of healthy breakfast.
Even a seemingly simple and straightforward claim is not always immune. A maker of "100 percent whole grain" crackers was sued because there was more to the cracker than whole grain. Cereal manufacturers who pictured fruit on the box were sued because there was no whole fruit in the product.
It is tempting to think — and it may be true — that no one would take most of these claims seriously. But courts tend to give complaining consumers the benefit of the doubt. So getting even frivolous cases thrown out quickly is not easy, and the cost in both legal expense and adverse publicity can be high.
So how can you design marketing messages to sell the product while limiting your litigation risk? Here are five steps to consider:
- First, take a hard, critical look at your promotional messages — on the package, in print and other advertising and on your website. Are the statements literally true? Could they be misconstrued? If they claim, or could be construed to claim, a health benefit, can you substantiate that claim? This is an exercise for the devil's advocate, bearing in mind that those looking to sue food manufacturers are very imaginative in finding deception claims.
- Second, regulations matter — a lot. The FDA, USDA and the FTC have intensified their enforcement activity in the food industry. Understanding the regulatory constraints, and complying with those standards clearly and consistently, is a key step in minimizing litigation in this industry. Don't venture into this arena without help. Consult regularly with knowledgeable regulatory counsel.
- Third, try to lace your claims with opinions, and try to vary the messages. Opinions are generally immune from lawsuits. Courts sometime call it "puffery." Weaving opinions into advertising without compromising the message is not easy, but it does reduce litigation risk. So does altering the words used over time and locale. Variety undermines the potential class action by making it harder to prove a common class experience.
- Fourth, a generous refund policy is a bulwark against consumer lawsuits. If "the customer is always right" and can get a refund if she complains that the product was not as advertised, courts are more likely to find no financial loss and no basis for a class action. Think of refunds as cheap insurance.
- Fifth, doing everything right does not mean you will not be sued. If you find yourself in a lawsuit over promotion claims, look for ways to end the case quickly. Consider these questions, among others:
- Should you counterattack if the lawsuit makes allegations that are objectively not true? One restaurant company adopted this very aggressive approach in a highly publicized case, with excellent results.
- Can you persuade the court to dismiss the case early, and thereby avoid the cost of discovery and protracted litigation?
- Should you try to settle early, before investing in legal fees that may be directed more productively to an inevitable settlement?
These steps do not assure protection from litigation. But they make your company a less attractive target.
The opinions expressed herein are those of the authors and do not necessarily reflect the views of their respective firms, clients, or any affiliates of any of the foregoing. This article has been prepared for informational purposes only and does not constitute legal advice.
This article originally appeared in the January 2013 issue of Food Processing Magazine.