KRISTEN POLOVOY, MONTGOMERY MCCRACKEN: Many more companies are deciding that the lightning-rod word ‘natural’ just isn’t worth the risk
Next we approached Kristen Polovoy, an attorney at Montgomery McCracken…
FNU: Is the threat of litigation putting food companies off using natural claims?
Polovoy: Yes. The fading fad of ‘natural’ labels that we saw beginning late last year is continuing. In late 2013, companies like Pepperidge Farms (with its Goldfish crackers), and PepsiCo started to pull 'natural' labeling from their products, and with the past three or four years’ uptick in consumer fraud ‘natural’ food labeling showing no signs of slowing down, many more companies are deciding that the lightning-rod word just isn’t worth the risk.
However, the litigation cost / marketing benefit analysis for ‘natural’ labels is just one piece of the pie for marketers’ pull-back from ‘natural’ labels.
Companies are also finding a point of diminishing returns from use of ‘natural’ labels. With a glut of ‘natural’-labeled products now in the marketplace these days, many companies are finding that consumer interest in ‘natural’ in the company’s particular product market has peaked. So, they’re moving on to find new language labels to catch consumers’ attention.
FNU: What can we learn from cases to date? And how can firms reduce their risk?
Polovoy: One of the lessons learned from food labeling cases that have proceeded through motion to dismiss and/or class certification stage is that for those food manufacturers for whom the concept of ‘natural’ (however undefined and non-specific) is critical to their sales and marketing success, they can lower their litigation risk by self-defining their particular use of ‘natural’.
For example, manufacturers could define on their package what they do and do not mean by ‘natural’ (or reference on the product package their website’s definition), such as ‘no artificial ingredients.’ When food target defendants have done this, we’ve seen an increasing number of judges side with the manufacturers, such as in one of the opinions that started this trend: Balser v. Hain Celestial Group, in which the plaintiff’s claims were dismissed because “defendant actively defines what its use of natural means, so that no reasonable consumer could be deceived”.
FNU: What kind of food & beverage companies are most likely to be targeted in all-natural lawsuits?
Polovoy: In deciding whether a possible target is worthwhile to pursue in a 'natural' food labeling class action, a plaintiff’s lawyer is, first and foremost, weighing the odds of achieving class certification, which brings the pay-day of attorneys’ fees either through settlement prior to class certification or through achieving certification and getting a fee award under the applicable consumer protection statute.
A company can become a target in all-natural litigation when it sells a product using uniform advertising and labeling across a significant time period to a segment of consumers who are ascertainable, who can be said to have reasonably regarded the ‘natural’ language as significant in making his/her purchase decision, and who arguably sustained a compensable loss of a type that could be redressed with a class-wide form of damages for all class members.
FNU: Is the number of lawsuits over natural claims rising, falling or leveling off?
Polovoy: Unless and until we see the FDA step in to not only define ‘natural’ for labeling on FDA-regulated foods but also clarify whether the presence of GMO ingredients disqualify a food for ‘natural’ labeling, consumers and the plaintiffs’ bar will continue to hedge their bets and take a gamble on paydays in ‘natural’ litigation. They have little costs in doing so, whereas targeted food companies face exorbitant defense costs, bad press, and loss of marketplace goodwill from these suits.
Kristen Polovoy will be weighing into this debate at FoodNavigator-USA’s Natural & Clean Label Trends live 60-minute online forum on September 30. Click HERE to register for free.
