Are you at risk of a class action lawsuit? Perkins Coie outlines key areas of vulnerability for food & beverage brands

By Elaine Watson contact

- Last updated on GMT

Picture: GettyImages-zimmytws
Picture: GettyImages-zimmytws

Related tags: Perkins Coie, Class action, natural claims, Cbd, slack fill, Prop 65

The number of class action filings against food and beverage companies rose 8% to 177 in 2019, with firms vulnerable to legal action on a host of fronts, from animal welfare claims and CBD to vanilla labeling, says law firm Perkins Coie.

In an analysis of 2019 filings (Food Litigation 2019: Year in Review​), Perkins Coie said 2019 “saw a record number of filings against the food and beverage industry,” ​with New York overtaking California as the favored jurisdiction for the plaintiff’s bar.

“Plaintiffs’ lawyers continue to target the industry, relying on new theories and claims, and spurred on by some plaintiff-friendly rulings that have allowed classes to proceed to certification based on damages models once considered flawed or incomplete.”

So what are plaintiff's attorneys looking at when they scan supermarket shelves?

Vanilla: A new area of vulnerability?

One new area of vulnerability is vanilla labeling - on everything from ice cream to almondmilk and basked goods - with a surge of filings in 2019, mostly from prolific plaintiff’s attorney Spencer Sheehan in New York, alleging that brands’ representations regarding vanilla are false or misleading, said Perkins Coie.

"While several of the vanilla cases have been voluntarily dismissed, the vast majority of these cases continue to work their way through the courts. The coming year will reveal how courts wrestle with motions to dismiss on these claims."

Sheehan’s latest case, filed in February 2020 (Civello v Conopco Inc 1: 20-cv-01173) takes issue with Breyers Delights ‘vanilla bean’ ice cream labels: “Though the flavor is represented as being derived from vanilla and vanilla beans, the vanilla taste and flavor is not provided exclusively by vanilla and vanilla beans.”

Perkins Coie 2019 class actions
Source: Perkins Coie Food Litigation 2019: Year in Review​​
Perkins Coie 2019 filings
Source: Perkins Coie Food Litigation 2019: Year in Review​​

All-natural: When will the FDA weigh in?

While ‘all natural’ cases were down on the previous year, natural claims remain fertile ground for plaintiff’s attorneys, said Perkins Coie.

Complaints spanned everything from pesticide residues to malic acid and ascorbic acid in 2019, although some courts are staying such cases​ on primary jurisdiction grounds because the FDA has said it’s looking into this issue (although it hasn’t said much since 2015​).  

Healthy fat?

vanilla-bean
2019 saw a tidal wave of filings – mostly from prolific plaintiff’s attorney Spencer Sheehan in New York - alleging that brands’ representations regarding vanilla are false or misleading.

Lawsuits over health maintenance claims were also down in 2019, although healthy fats were a focus in several cases, with plaintiffs challenging health and wellness claims on coconut products, which are high in saturated fat.

Animal welfare: Just how happy are your cows?

Seven animal welfare cases were filed in 2019, up from five in 2018, said Perkins Coie. Some challenged ‘dolphin safe labels while others queried claims about the treatment of animals or related environmental practices.

Notably, cheese maker Tillamook​ was accused of misleading shoppers with bucolic images of cows grazing on local small farms when most of its milk allegedly came from industrial-scale factory farms; while Ben & Jerry’s​ was hit with a similar suit hinging upon whether reasonable consumers would assume that all​​ of the milk in its ice cream comes from happy cows raised on farms that participate in its Caring Dairy​​​ program.   

The most high-profile litigation in this field targeted high-protein milk brand Fairlife​, which was hit with a series of lawsuits over alleged animal abuse at its flagship dairy farm in Indiana.

(Fairlife is not being sued for animal cruelty, but for false advertising, in that consumers paid a premium for products in reliance on packaging claims that Fairlife provided 'extraordinary care' for its dairy cows, "but that these claims were false and they consequently suffered economic loss.")

Multifunction ingredients: What is the function of malic acid in your product?

At least eight new ‘multifunction’ ingredient cases were filed in 2019, focusing on malic acid and citric acid, which can serve multiple technical functions in foods and beverages.

Tillamook Dairy
Tillamook has been accused of misleading shoppers with bucolic images of cows grazing on local small farms when most of its milk allegedly comes from industrial-scale factory farms

For example, if malic acid – which is typically made from petrochemicals - is being used to “simulate, resemble, or reinforce​” a product’s characterizing flavor [as well as being used, as say, an acidulant], then the claim ‘no artificial flavors’ is false, argue plaintiffs. Similarly, if synthetic citric acid is serving as a preservative [as well as to add a sour taste], this would render a ‘no artificial preservatives’ claim false or misleading.

Ocean Spray​ settled one such case on a class-wide basis for $5.4m. However, a similar case vs Kraft Heinz was dismissed, “a rare early victory for a defendant in these challenging cases​,” noted Perkins Coie.

Courts give short shrift to glyphosate residue lawsuits

While more food companies​ are pressuring farmers to stop using glyphosate as a desiccant to dry crops such as oats, courts remain skeptical of class actions challenging trace residues of the herbicide in foods and beverages, said Perkins Coie.

Cases vs General Mills, Quaker Oats and Florida’s Natural Growers - or example - have all been tossed on the grounds that reasonable consumers would not be surprised to find trace levels of pesticides well below government thresholds in some foods.

CBD: On the radar

Brew Dr Kombucha new packaging 2019
Brew Dr Kombucha has been targeted for the second time in a proposed class action lawsuit alleging discrepancies between the amount of beneficial bacteria stated on pack and the amount found in the bottle.

While class action lawsuits over CBD have thus far focused on dietary supplement makers (alleging that CBD is an illegal dietary ingredient​ and challenging dosage claims on pack​), Perkins Coie expects “additional class action lawsuits in this space, especially as the regulatory environment continues to develop.”

False labeling: ‘Artisan’ and ‘homemade’?

False labeling claims saw a slight uptick in 2019, spanning everything from probiotic bacteria in kombucha​ to disputes over ‘real’ cocoa, ‘artisan’ and ‘homemade’ claims.  

Prop 65: Acrylamide, lead, cadmium

According to a review of Prop 65 notices filed with the California Office of Attorney General, plaintiffs served nearly 500 pre-litigation notices regarding food and beverage products in 2019, with a significant spike in the number involving acrylamide, lead, and cadmium, said Perkins Coie.

Plant based ‘meat’

Multiple states​ ​have attempted to impose restrictions on labeling of meat-alternative products that would hinder manufacturers from using meat-like descriptions for their goods, while the ‘REAL Meat Act​’ ​would provide similar restrictions at the federal level, noted Perkins Coie.

However, several state laws have faced legal challenges, with a lawsuit challenging one such law in Arkansas leading to a preliminary injunction banning the state’s enforcement of the law​. 

In Mississippi, meanwhile, the Plant Based Foods Association and Upton’s Naturals filed a lawsuit challenging a similar law and the state has since revised said law to permit ‘meaty’ terms on plant-based products as long as they're qualified by terms such as ‘plant-based’ or ‘vegan.’ The lawsuit was subsequently dismissed.

tofurky sausage
Several state laws restricting ‘meaty’ terms on plant-based products have faced legal challenges, with a lawsuit challenging one such law in Arkansas leading to a preliminary injunction banning the state’s enforcement of the law

“The coming year will see increased scrutiny of state and federal proposals to restrict labeling terms for meat alternative products.”

Slack fill lawsuits: Running out of steam

Slack fill​ class action filings slowed considerably in 2019, with defendants’ “consistent wins at the federal level in 2018 appearing to have had an impact on filing trends,​” as courts continued to reject such cases at the motion to dismiss phase, said Perkins Coie.

In one such case over Glutino Gluten Free Pretzels, the court said the plaintiff had failed to sufficiently allege that the slack fill was ‘non-functional’ (ie. that the empty space in the package did not serve a useful purpose, or was unavoidable due to the way the packaging is filled).

The ‘reasonable consumer’ defense and the application of ‘common sense’

On a positive note for food & beverage brands, the ‘reasonable consumer’ defense remains an important tool for defendants in class actions, said Perkins Coie, noting that judges had rejected lawsuits challenging the use of the term ‘diet’ on soda,​​​ concluding that no reasonable consumer would expect drinking Diet Coke, Diet Pepsi or Diet Dr Pepper would cause weight loss.

This application of 'common sense' was reflected in comments​ made by Judge Jay Bybee of the Court of Appeals for the Ninth Circuit last month:

Diet soft drinks are common in the marketplace and the prevalent understanding of the term in that context is that the ‘diet’ version of a soft drink has fewer calories than its ‘regular’ counterpart.

"Just because some consumers may unreasonably interpret the term differently​ does not render the use of ‘diet’ in a soda’s brand name false or deceptive.”​  [Emphasis added by FoodNavigator-USA.]

Dietary supplements: Is Amazon liable for products sold on its platform by third party sellers?

amazon-istockphoto-jahcottontail143

The number of putative class actions filed vs dietary supplement makers spiked to 39 in 2019, a 44% increase over 2018, driven in part by a flurry of CBD related lawsuits and health misrepresentation claims, says Perkins Coie.

As supplements are increasingly sold via websites such as Amazon, plaintiffs have sought to hold these marketplaces liable as ‘sellers’ or ‘suppliers.’

However, in a 2019 decision, the Ohio Court of Appeals affirmed summary judgment for Amazon in a case where a teen ingested a fatal dose of a dietary supplement (Stiner v. Amazon.com, Inc), concluding that Amazon was not a ‘supplier’ of the product under Ohio law.

In this case, a third-party seller, not Amazon, listed the product for sale; a third-party seller, not Amazon, provided product information, storage, and shipping; and the transaction at all times identified the third-party seller, not Amazon, as the seller.

As another court put it, said Perkins Coie, Stiner is part of “an ‘emerging consensus’ in the courts against construing marketplaces such as Amazon as a ‘seller,’ ‘distributor,’ or ‘supplier,’ and therefore against holding them liable for products sold on their websites.”

Forced labor

red cocoa bean-istock-David L Amsler

Several leading confectioners have been targeted by lawsuits asserting that their products should be accompanied by disclosures that they source cocoa beans from farms that may use child labor. However, a Massachusetts federal court dismissed duty to disclose cases against Hershey, Nestlé and Mars in January 2019, finding that they had not engaged in any deceptive conduct and noting that the defendants’ websites did explain the potential supply chain issues plaintiffs raised, said Perkins Coie.

These cases are now on appeal to the First Circuit, it says: “Hopefully the forthcoming opinion will provide some much-needed clarity on this topic.”

Nestlé and Cargill, meanwhile, have asked the Supreme Court to reconsider a Ninth Circuit decision holding that claims of forced labor on Ivory Coast cocoa farms fall within the scope of a statute granting US federal courts original jurisdiction over any civil action brought by a foreign national for a tort in violation of international law. 

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