A potent combination of lawyers on the make, a rise in activism from consumer lobby groups and food manufacturers pushing the envelope with more aggressive health claims is set to prompt an “explosion” in class action lawsuits in the coming years, according to legal experts.
Speaking to NutraIngredients-USA.com after General Mills lost its bid to derail a class action lawsuit over digestive health claims for Yo-Plus yogurts at the Eleventh Circuit Court of Appeals , Seattle-based attorney Ken Odza said lawyers that had made a fortune out of asbestos and pharmaceutical lawsuits were now turning their attention to the food industry.
Odza, who heads up the food liability practice at law firm Stoel Rives, added: “I think these kind of cases are going to explode.
“The Yo-Plus case is pretty unusual in that it wasn’t prompted by an investigation by the FDA (Food and Drug Administration) or the FTC (Federal Trade Commission). Usually you see a warning letter rapidly followed by a class action piggy-backing off of that as half of the work has already been done.”
Claims, immunity, kids ... and big pots of cash for lawyers?
Marc Ullman, a partner at New York-based firm Ullman, Shapiro & Ullman LLP, added: “Without commenting on the specifics of this case, I’d say class actions in this area are becoming more common.
“Firms that have some kind of interaction with the FTC or state regulators regarding claims almost inevitably then get a follow on from consumer actions like these, especially if they are high-profile companies making aggressive claims in areas such as immunity or kids.”
Meanwhile, it was “procedurally easier” to file such suits in certain states, he added. “California and New Jersey come to mind.”
And in many cases firms did a simple cost-benefit analysis and chose to settle, regardless of the merits of the suit, he said.
And the ultimate winners? Every case was different, stressed Ullman, but cynics might observe that “these cases often end up being resolved with relatively low value coupons going to supposedly injured consumers and big pots of cash going to lawyers.”
Blame the overzealous marketing department?
However, Timothy Blood, managing partner at San Diego-based law firm Blood Hurst & O'Reardon and co-lead counsel for the Yo-Plus class action against General Mills, argued that overzealous marketing departments at food companies were to blame for the rise in legal action by “pushing the envelope and making more aggressive claims than ever before.
“I’ve been involved with more food false claims cases in the last couple of years than I’ve ever had in my career,” said Blood, who has been involved in a clutch of high-profile prosecutions against food companies including Dannon and Wrigley.
“I don’t know whether it is the bad economy that’s making companies more aggressive or a lack of regulation by the FDA. General Mills claims Yo-Plus yogurts improve your digestive health but our contention is that the clinical studies it is citing to support this claim do not show that.”
FTC resources limited
He added: “The FDA has very little ability to do anything in this area, and they rarely exercise what little authority they have. The FTC has been more active in this area, however, because of resource limitations, they only handle a very small portion of false advertising matters.
“I don’t know if General Mills will settle but we’re preparing to go to trial,” added Blood, who said he was “actively investigating and prosecuting a number of cases against food manufacturers relating to false advertising of food and drink products”.
If things went according to plan, a trial date for the case – which was filed two years ago in Florida - was expected before the end of this year, he predicted.
General Mills, which is separately being prosecuted over cholesterol-lowering claims on its Cheerios breakfast cereals, said: “As a standing practice, we don’t comment on pending litigation.”
Making the case for a class certification
General Mills began marketing Yo-Plus –a yogurt supplemented with probiotic bacteria, inulin and vitamins A and D – on a digestive health platform in summer 2007.
The class action was filed in Florida in March 2009 on behalf of plaintiff Julie Fitzpatrick, who consumed 24 four-packs of Yo-Plus without discerning any improvement in her digestive health and argued that General Mills had violated the Florida Deceptive and Unfair Trade Practices Act by making false and misleading claims.
Her action noted that the National Advertising Division of the Council of Better Business Bureaus (NAD) had challenged some of General Mills’ claims about Yo-Plus in December 2008, although it did leave the firm “free to promote the fact that its product contains an ingredient which has been shown to help regulate digestive health”.
In January 2010, federal judge Paul Huck ruled that a class certification was merited.
General Mills immediately appealed on the grounds that shoppers all bought Yo-Plus for different reasons, at different times, at different prices, with different results, and could not be grouped together as a class.
However, the appeals court last week sided with Huck, marking an “important victory that allows consumers to hold companies accountable for false advertising through the use of a class action lawsuit”, claimed Blood.
Spate of class actions
Dannon recently agreed to a settlement in a class action lawsuit prosecuted by Blood Hurst & O'Reardon involving its probiotic yogurts Activia and DanActive, while Wrigley agreed to cough up a large sum to settle a class action challenging claims made about its Eclipse fresh breath gum.
Wrigley said it stood by its science but settled “to prevent further distraction to its business”, while Dannon also admitted no wrongdoing in its settlement.
It was possible that the FTC was looking into Yo-Plus, but this was not revealed until such investigations were pretty advanced, noted Blood. “By law they are forbidden from indicating whether they are investigating a company until very late in the process. So the FTC may be investigating General Mills, but we would not know that unless General Mills told us.”