Volume 2, Issue 7 (Originally Published 3 September 2012)
Two weeks ago, De Minimis reported on the High Court’s plain packaging decision – the most recent legal defeat for tobacco companies, whose legal travails began in the US as long ago as the 1950s, when American litigants first started suing cigarette companies in regard to their tobacco-related health problems. The lawsuits multiplied and in 1998 the Tobacco Master Settlement Agreement (MSA) was reached between the Attorneys-General of 46 states and four major cigarette makers. Under the MSA, the states settled their Medicaid lawsuits against the tobacco industry for recovery of their tobacco-related health-care costs, and also exempted the companies from private tort liability regarding harm caused by tobacco use.
Since then, a number of American tort lawyers have been on the lookout for another industry to target that has the potential of providing the multi-million dollar payouts forked over by Big Tobacco. According to The New York Times, a number of lawyers are planning to hit the jackpot by taking on ‘Big Food’. Just as smokers with lung cancer went after tobacco companies, people suffering from obesity and diabetes, whose numbers increase every day, want redress from the suppliers of the products that caused their disorders. State governments are also becoming alarmed at the escalating costs of caring for people with food-related disorders and diseases and are putting pressure on food companies.
Currently, more than a dozen lawyers who took on the tobacco companies have filed 25 cases against industry players like ConAgra Foods, PepsiCo, Heinz, General Mills and Chobani that stock pantry shelves and refrigerators across America.
The lawsuits, filed over the last four months, assert that food makers are misleading consumers and violating federal regulations by wrongly labelling products and ingredients. While there has been a barrage of litigation against the industry in recent years, the tobacco lawyers are moving particularly aggressively. They are asking a federal court in California to halt ConAgra’s sales of Pam cooking spray, Swiss Miss cocoa products and some Hunt’s canned tomatoes.
But it might not be as simple as pointing to inaccurate or bamboozling food packaging labels. A federal judge in California in 2009 appeared to credit American consumers with a certain level of discernment and attentiveness when he threw out a case against PepsiCo which accused the company of false advertising because Cap’n Crunch’s Crunch Berries cereal does not contain real berries. He ruled that ‘a reasonable consumer would not be deceived into believing that the product in the instant case contained a fruit that does not exist’.
Yet the food-labelling lawsuits in California are not going away. (Since California laws are famously plaintiff-friendly, those inclined to forum-shop often opt for its courts.)
One suit is against Chobani, a yoghurt maker, for listing ‘evaporated cane juice’, rather than ‘sugar’, as an ingredient in its pomegranate-flavoured yogurt. The Food and Drug Administration has repeatedly warned companies not to use the term because it is ‘false and misleading’, according to the suit.
If it succeeds, the damages will flow, since they will be based on the money generated by product sales. Chobani’s revenues are expected to total $1.5 billion this year and the lawsuit cites 18 flavours of yogurt, more than half its line.
Earlier this year, Ferrero, the maker of Nutella, was sued in a class action suit in California after a misleading promotion led consumers to believe that the famously addictive spread carried nutritional and health benefits. (So much for the ‘reasonable consumer’.) Ferrero settled for three million dollars – nice for lawyers and litigants, but peanuts (hazelnuts?) for a conglomerate with annual revenue of several billions.