'Some of them have no intention of filing a lawsuit. The only intention is to line their pockets...'
Food labeling litigation in focus at the ACI law conference: Making a buck or making a difference?
Almost no putative class action lawsuits filed over food labeling go to trial,* said Greenberg Traurig attorney Justin Prochnow at the recent American Conference Institute (ACI) food law conference in Chicago, where he argued that many plaintiff’s attorneys are instead asking defendants to do the math:
“Are we going to fight this for two years and spend $200,000+ with a 50:50, maybe a little bit better, chance of winning, or are we going to settle out with a plaintiff lawyer for 30, 40, 50,000 bucks and move on? It’s a numbers game. If you get 10 firms to settle out for $40,000 [before a complaint is filed], that’s $400,000.”
‘Some of them have no intention of filing a lawsuit. The only intention is to line their pockets’
Food brands on the receiving end of demand letters (sent out before complaints are filed in the courts) frequently choose to pay up whether they believe they are in the right or not, because it’s cheaper and easier than mounting a legal defense, added Winston & Strawn partner Ronald Rothstein, although settling with individual plaintiffs is a risky strategy as it will not insulate you from further lawsuits over the same issue.
(Should that individual settlement also result in changed labels, however, that will decrease the odds of follow-on litigation because judges are disinclined to certify a new case if the merits are moot, notes legal consultant Steve Gardner at Gardner Consulting.)
“Some of them have no intention of filing a lawsuit," claimed Rothstein."The only intention is to line their pockets. Some of these firms are just factories for sending out demand letters; they are looking for ways to shake you down for relatively small settlements. And through economies of scale, they are finding ways to make a living.
“Sometimes they don’t even have a named plaintiff yet, and they will say ‘We have a client,’ which raises all kinds of ethical issues. Sometimes, they name a plaintiff in the demand letter and then when the suit is filed, you’ll notice that the name is different, which is a relatively easy fix but it’s embarrassing for them.”
They will tell you that they have a line of soccer moms lined up outside their doors
Prochnow added: “Some of these plaintiff’s lawyers will go into Walmart or Kroger on a Friday, buy 50 products, take them back to their conference room, look through the labels, and decide the next 20 demand letters they are going to send out on Monday.”
Others will closely monitor National Advertising Division (NAD) rulings, FDA warning letters (which triggered a wave of lawsuits vs KIND Snacks), social media postings and news articles, and statements from international bodies such as the WTO (its IARC statement on glyphosate triggered a wave of lawsuits over whether foods containing glyphosate residue could be called ‘natural’), added Rothstein.
“They will tell you that they have a line of soccer moms lined up outside their doors complaining that Goldfish crackers aren’t natural,” said Prochnow. “The reality is somewhat different.”
“If they have success on one of these types of cases they go after every other company that is making that claim and cut and paste the lawsuit.”
Some of these firms are just looking for a quick hit
So how should companies at the receiving end respond?
If the case is “absolute nonsense” and easily disprovable, you can sometimes convince the plaintiff’s firms to go away by presenting the facts, he said, while in other cases, the demand letter might be over a claim you were planning to remove from packaging anyway, and you can simply agree to remove it. In other cases, firms will agree to a change of wording that doesn’t harm their brand.
As to how much money you may end up paying out, while a plaintiff’s lawyer may initially demand $40,000 or $100,000 to settle a case prior to filing a complaint, he said, “some of these firms are just looking for a quick hit and they are typically willing to go away for much less than $10,000. In some cases, you may get away with simply ignoring them.”
Whether you think this is extortion or a sensible way of resolving legitimate consumer concerns privately before the courts - and the media - get involved, depends on which side of the fence you’re sitting on of course, but it’s a fact of life in food litigation these days, said Rothstein.
How do most class action cases vs food companies play out?
As to what happens to most false advertising cases once they are filed, it depends on a multitude of technical factors, many of which might seem to the casual observer to have little to do with the actual merits (eg. is this label actually deceptive? Is stevia always ‘natural’?).
Few are thrown out completely after a motion to dismiss (especially on nebulous issues such as ‘natural’ claims), and many drag on for years as plaintiffs are given the opportunity to amend their complaints and tweak their arguments.
Many such cases are voluntarily dismissed “upon stipulation of the parties,” which might mean that the plaintiffs’ lawyer and the defendant reached an individual settlement (ie. the lawyer and the named plaintiff get paid, but other consumers don’t, although they may benefit if the food company has agreed to change its labels).
Some are dismissed on the merits, which means that the plaintiff’s attorney doesn’t get paid, but the food brand targeted has still spent time and money defending the case which it can’t reclaim, said Prochnow.
“Courts recently dismissed the General Mills glyphosate litigation [in July 2017 Judge Michael J. Davis tossed out a group of lawsuits against General Mills querying ‘natural’ claims on Nature Valley products containing trace levels of glyphosate, adding that it was “implausible that a reasonable consumer” would believe that the products “could not contain a trace amount of glyphosate that is far below the amount permitted for organic products”].
“But that doesn’t mean that it still didn’t cost an awful lot of money [to defend the cases]. These are winnable cases, but it takes a lot of time and money to get there.”
Some cases lead to a class-wide settlement, in which consumers will be eligible to obtain some form of nominal compensation, while the plaintiff’s attorneys will stand to receive a far bigger payout, he said.
Who pays?
For those wondering why the plaintiff’s bar keeps filing these claims when the chances of ultimate victory are slim, it doesn’t actually cost a whole lot of money to file a case, noted speakers at the ACI conference.
The costs ramp up as things progress, when customized consumer research is required, or experts are procured, and as defendants often throw in the towel and settle long before then, plaintiff’s attorneys are not necessarily making a huge gamble financially.
Consumers shouldn’t have to be lawyers or food scientists in order to go shopping
That said, defense attorneys are not gambling at all, as they make money from helping clients defend these lawsuits regardless of the outcome, observed food litigation consultant and former high-profile plaintiff’s attorney Steve Gardner at Gardner Consulting (who filed multiple cases vs large food brands while at the CSPI and Stanley Law Group).
There are undoubtedly some shakedown artists out there more interested in making a buck than making a difference, claimed Gardner. But shoppers, he argued, are tired of being duped by food companies peddling their products as healthy and natural when a closer inspection of the ingredients list suggests they are anything but.
Consumers, he added, shouldn’t have to be lawyers or food scientists in order to go shopping, and if most of them think that ‘natural’ products should not contain any pesticide residue, or a snack with pictures of fruit on it should contain fruit, that’s their prerogative.
"This has happened to me once or twice... where the defendant offers the plaintiff a large sum of money (large to the plaintiff at any rate) and the plaintiff chooses to take the money over the plaintiff lawyer’s objections. Until a case is certified by a court, the plaintiff has that right. Thus, there are also settlements that the lawyer opposes, but the client wants."
Steve Gardner, owner, Gardner Consulting
Defense lawyers get paid regardless of the outcome
He added: "First, and foremost, there wouldn’t be food lawsuits were it not for food companies repeatedly choosing to attract consumers - and steer them away from honest competitors - by tricking consumers about the benefits of their products. Which are usually unhealthy products—junk wrapped in glory—and all of them part of purely money-making exercises.
"Plaintiff lawyers—even those few who might want a quick settlement—are not going to risk sanctions by filing frivolous lawsuits."
In reality, he claimed, "There are far more frivolous defenses raised than there are settlements settled before a case is filed. All the frivolous defenses do is to raise the cost of settlement—plaintiff lawyers understandably want to get paid eventually, including for dealing with frivolous defenses filed by lawyers who are getting paid monthly, whether they win or lose."
*The only false advertising case FoodNavigator-USA has covered that went to trial was a lawsuit brought by a competitor, not a consumer (POM v Coca Cola), under the Lanham Act, which made it all the way to the Supreme Court, before going back to the lower courts, where Coca-Cola ultimately prevailed.
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