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Food Law Suits Score Another Big Victory - The "Next Wave" // State Law Claims Are Not Preempted
A federal appeals court has ruled that law suits against food companies for misrepresentation are not preempted by federal law, opening the door even further to a growing wave of such suits,
In a case involving whether ConAgra should have included on its labeling the sodium content from sunflower seed shells, even though the shells were not edible, the 9th Circuit U.S. Court of Appeals ruled that federal statutes related to labeling do not preclude suits brought under state consumer protection statutes.
Such laws are increasingly being used because they usually do not require a plaintiff who suffered damages, and often provide incentives to encourage lawyers to challenge deceptive trade practices.
This latest victory comes at a time when corporate counsel are bracing for an "onslaught" of food-based class action law suits, according to a recent survey of in-house [corporate] lawyers.
Some 45% of the lawyers surveyed saw this as part of the "next wave" of class actions, up 15% in just one year, notes public interest law professor John Banzhaf.
As the lawyer who oversaw the survey of general counsels and chief legal officers at more than 300 companies pointed out, “there is a heightened awareness of food labeling and ingredients.”
Fortune magazine's prediction that food might become the "next tobacco" appears to be coming true, with litigators who helped wrest multi-billion dollar settlements from big tobacco having turned their guns on big food – including ConAgra, PepsiCo, McNeil Nutritionals, Heinz, General Mills, and Chobani – and are seeking to recover billions, says Banzhaf.
While some of the newly filed law suits charge – often in states with strong and permissive consumer protection laws – that customers are mislead when undefined terms like "healthy" or "natural" are used on products like a calorie-laden chocolate hazelnut spread for young children [Nutella], and others are based upon alleged violations of specific regulations, some of the suits involve especially serious hazards.
For example, one charges that, to avoid warning customers – including those with breathing difficulties as well as various allergies – Pam [a cooking spray] contains petroleum gas, propane, and butane, ConAgra said on the label only that it contained "propellant."
Both a court and the FDA held Chobani should have told consumers that its yogurts contain sugar, rather than hiding that fact by listing as an ingredient only “evaporated cane juice,” a term the Food and Drug Administration [FDA] has determined is both "false" and "misleading."
Indeed, not long ago, the FDA issued a warning that a food product labeled as "natural' or "all natural" may be "false and misleading, and therefore . . misbranded" if it contains anything "artificial or synthetic . . . [something] not normally to be expected to be in the food"; a move lending support to and encouraging an ever-growing number of major class action law suits being filed on these grounds.
Nutella settled out of court for $3 million, and its ad calling the food a healthy breakfast staple was ordered off the air, because the product contained as much as 21 grams of sugar and 11 grams of fat, 3.5g of which are saturated, in every two-tablespoon serving.
These class action law suits are being filed, and upheld by judges, against companies including PepsiCo Inc., Kellogg, Coca-Cola, ConAgra, Ben & Jerry, Breyers, and others over the allegedly deceptive use of words like “natural” and "all natural" to describe food products – a development likely to both increase transparency in food advertising, and ultimately to reduce obesity, predicts Banzhaf.
Recently, courts have upheld suits charging that Coke-Cola's very use of the name Vitaminwater is deceptive, that claims by both Ben & Jerry's and Breyers that their ice creams were "natural" were fraudulent because the products contained alkalinized cocoa powder, and suits alleging that ads by Cargill, Inc. and Archer-Daniels-
Suits were reportedly also pending against Trader Joe's over claims that some of its cookies aren't really "all natural" because they contain synthetic ingredients such as potassium carbonate, and against Kellogg's Bear Naked and Kashi brands, PepsiCo's Naked Juice Company, and ConAgra Food Inc.'s Pure Wesson Oil brand for their use of the term "natural."
As the American Lawyer magazine has noted, the exploding number of "all natural" food law suits seems to have grown out of the movement started by Prof. John Banzhaf several years ago to use legal action as a weapon against the problem of obesity, just as he had earlier done in leading the use of legal action as a weapon against smoking. In the article's words, "Spurred in part by the obesity epidemic, suits such as this one target some of the biggest producers . . ."
The movement which Banzhaf started has now resulted in at least ten successful fat law suits which have forced food companies to fork over more than $20 million, and make major changes in the way their products are formulated, advertised, promoted, and sold.
“The newer 'natural' law suits could force companies to think twice before simply slapping an 'all natural' label on their products and their advertising, seeking to take advantage of vagueness in the definition of the word 'natural,' and in the hope that people will be tricked into thinking that an 'all natural' product is safer or healthier," says Banzhaf.
GWU Law School
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