September 26, 2012Newsletter

“The Next Asbestos” – False Advertising and Mislabeling Class Action Lawsuits Against the Agriculture, Food and Beverage Industry

Agribusiness, Food and Beverage Newsletter

Plaintiffs' lawyers are always looking to identify “the next asbestos.”  This is the next wave of litigation that will allow them to file multiple cases, all over the country, against defendants with deep-pockets, so they can obtain large recoveries over a long period of time – just like they did in asbestos cases (and still do, at least in some jurisdictions).  It turned out that litigation against tobacco companies also fit this description.  Litigation against lead paint/pigment companies and silica companies did not.


The new litigation candidate that the plaintiffs’ bar appears to be focused on as “the next asbestos,” targets the nation’s major food and beverage manufacturers.  The defendants in these cases are names we are all familiar with:  General Mills, Heinz, ConAgra Foods, Nabisco, among others.  The cases advance the theory that these companies have mislabeled and falsely advertised their products.  Because these products are marketed to a vast consuming public, they are filed as class actions. For example, one such lawsuit involved a claim against a manufacturer of Greek yogurt for labeling the sugar in its product "evaporated cane juice." The plaintiffs' lawyers say that "evaporated cane juice" is the same thing as ordinary sugar and, thus, the product’s label is false and misleading. 


While these cases are being filed all over the country, the majority are filed in states with robust consumer protection laws.  California, for example, has a law whereby a successful plaintiff can be awarded what amounts to unlimited compensatory damages, additional damages and attorneys' fees.  Another example is New Jersey, which has a longer statute of limitations for this type of case, so plaintiffs' lawyers can create a bigger pool of potential plaintiffs.  Even those states that do not have the same robust consumer protection laws as California and New Jersey often have a deceptive trade practices statute that provides a successful plaintiff with an award of attorney fees.  This creates the ultimate incentive for plaintiffs’ lawyers to pursue these types of cases. 


To date, the vast majority of the false advertising and mislabeling lawsuits brought against food and beverage manufacturers have failed.  That is because it is very difficult to get these cases certified as class actions.  As we all know, individual consumers buy food and beverage products for a myriad of reasons.  Those reasons may, or may not, include reliance on the allegedly false and misleading statements that are the focus of these lawsuits.  Thus, food and beverage defendants usually can convince the court that a class of consumers should not be certified because their purchasing decisions must be evaluated on an individual – rather than class-wide – basis.  And if a court agrees that a class should not be certified, there is little reason for the case to continue because the alleged damage suffered by each individual consumer is extremely small. 


Problems can arise, however, when the Food and Drug Administration (FDA) and Federal Trade Commission (FTC) get involved.  The FTC has actually forced settlements from certain companies over misleading and unsubstantiated claims about the products' health benefits.  It will only be a matter of time before the FDA does as well.


Companies in the agribusiness, food and beverage industry must be on the lookout for this type of class action.  If a product is advertised or labeled with words like "healthy," "nutritious," “organic,” "natural" or “pure,” a red-flag should go up.  If a product makes any sort of health benefit claim, the company must be sure it can be proven.  Because of their deep pockets, and their relationships with other potential defendants like distributors, retailers and franchisors, litigation against food and beverage companies is an appealing and potentially lucrative endeavor for plaintiffs’ lawyers.


And while it remains to be seen how many of these cases will be successful, the cost of defending this type of class action will be significant.  Indeed, the bad publicity from even an unsuccessful class action involving the alleged false labeling or advertising of a company’s product, can translate into worse “damages” than an award in favor of a plaintiff.

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