United States: Power Lunch: Overcoming Food And Beverage Labeling Lawsuits

Look for these errors by overzealous plaintiff's attorneys.

A new food labeling class action suit or settlement can be a David versus Goliath story that often generates splashy headlines and regular media coverage. Inspired by this publicity, many attorneys representing consumers as plaintiffs have been overreaching in their complaints, hoping to force the food and beverage companies into a quick settlement out of fear that they will have to pay major damages to millions of consumers.

While a lawsuit may be a frightening prospect, food and beverage companies should take full advantage of errors that overzealous plaintiff's attorneys are committing. Here are the major areas where some of these lawsuits have encountered problems, areas that food companies and their counsel can exploit to achieve an early, favorable result.

The Rational Consumer test: Courts do not have to take a plaintiff's labeling allegations at face value. Instead, courts will scrutinize pleadings to ensure they comply with a "facial plausibility" standard. One way courts scrutinize food class action claims is by applying the "rational consumer" test. The court will ask whether a rational consumer would actually be deceived by the alleged false advertising. Courts have used this test to throw out many implausible claims -- for example, the case in which consumers alleged that they believed Froot Loops contained actual fresh fruit. In many cases, the courts stop ridiculous claims dead in their tracks.

Personal injury claims are not class claims: Often, plaintiffs will seize on studies that claim eating or drinking a product may increase the risk of developing cancer or a serious disease. This is a classic overreach; personal injury suits are particularly ill-suited to class action treatment. Moreover, these plaintiffs often have problems proving that they have standing to sue. If the plaintiff can only allege an "increased risk" of harm, but has not actually suffered any harm, that plaintiff may lack standing, and the claim could be dismissed.

FDA can pre-empt state claims: Another recent trend in class action claims is on deceptive labeling practices, in which consumers challenge a product's label for failure to comply with state law labeling requirements, even if the offending label complies with FDA requirements. This type of claim may be ripe for a motion to dismiss, as some courts have found the FDA has pre-empted these kinds of claims. Assuming the FDA standard does preempt state actions, compliance with the FDA may protect companies from these frivolous suits.

Think about ascertainability: Members of a class action must be ascertainable with a feasible method to identify members. Consumers in retail stores who pay cash at the register (and do not save the package or the receipts) are often not ascertainable through hard evidence. It is difficult to come up with a reliable method to determine who actually purchased the product and how much of it was purchased.

Overbroad pleadings: Courts have been clear that class action complaints must have narrow definitions of the class of plaintiffs who are making the claim. They want all class members to have a common claim. The principle behind a class action is that one plaintiff can represent all class members with a common claim in court. If a complaint alleges the violation of different states' laws or alleges damages as a result of purchasing several different products, the court may not certify the class. The entire case may be dismissed, or at a minimum, the court may significantly curtail the breadth of the complaint.

But don't throw caution to the wind. When a class action complaint comes through the door, food and beverage companies and their counsel may express several emotions: anger, fear, doubt. The first reaction might be to fight the plaintiff at every turn. Resist this urge. Filing a blistering motion to dismiss may be satisfying, but it also may not be the right move in every case. Filing a motion to dismiss can be expensive and may show the adversary your hand. Also, the media may inaccurately report a denial of a motion to dismiss (which is merely a finding that the complaint satisfies basic legal standards) as decision on the merits.

Instead, take the complaint for what it is: a window into the plaintiff's thinking. The complaint will reveal how strong the case is, and a good lawyer will use it as a blueprint to build his plan of attack. Whether that plan includes filing a motion to dismiss is case specific, but keeping the above tips in mind will allow crafty counsel to most effectively use their limited resources in defending against consumer claims.

Previously published in the July 7, 2016 edition of Food Processing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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