Shook Partner Cary Silverman, Partner Jim Muehlberger and Of Counsel Adriana Paris have authored a report on behalf of the U.S. Chamber Institute for Legal Reform on food and beverage marketing. The executive summary appears below, with permission from the Institute for Legal Reform. For additional reading on this subject, please see Muehlberger and Silverman’s August 10, 2021, Law360 article, “TransUnion Ruling Should Help Curb DC Consumer Claims” (PDF download also available).
Lawsuits targeting food and beverage labeling have reached record levels. The unrelenting surge of class actions results from imaginative, shakedown lawsuits generated by a relatively small group of attorneys. Four years ago, the U.S. Chamber Institute for Legal Reform (ILR) documented a dramatic rise in food and beverage marketing litigation. Since that time, the number of food class actions has continued to rise, and the COVID-19 pandemic did nothing to slow them down. This paper explores the latest trends, including the most popular jurisdictions for filing these lawsuits, the types of claims filed, and how courts and state legislatures are responding. It finds:
- The number of consumer class actions targeting food and beverage marketing has increased in each of the last four years and is likely to set another record in 2021.
- New York seized the title from California as the nation’s most popular “food court,” largely as a result of an extraordinary number of lawsuits filed by a single attorney. Three quarters of the nation’s consumer class actions targeting food and beverage marketing are filed in these two states alone.
- Claims targeting product flavoring or ingredients are driving the most recent litigation surge. These lawsuits are part of a larger trend of plaintiffs’ lawyers capitalizing on highly technical FDA labeling requirements. Overall, courts have not been receptive to these lawsuits, though some cases have resulted in settlements.
- Lawsuits alleging that products are not pure, natural, or generally safe as advertised because tests allegedly detected traces of chemicals or potentially harmful substances are on the rise, targeting products from baby food to oatmeal. These lawsuits do not claim anyone was actually harmed and may involve background levels of substances that regulators view as safe and that enter the product during the ordinary growing or manufacturing process. Courts have dismissed several of these lawsuits, but many are pending.
- Businesses that communicate to consumers their commitment to sourcing or making products in an environmentally responsible manner expose themselves to “greenwashing” lawsuits. These lawsuits allege that a company’s marketing of food or beverages as meeting eco-friendly standards or using responsibly-sourced materials are exaggerated, incomplete, or false.
- Advocacy groups are increasingly taking advantage of a unique provision in the District of Columbia’s consumer protection law that gives nonprofit and public interest organizations standing to sue. These groups often bring lawsuits to pursue their own policy agenda, rather than to remedy any actual deception or loss.
- Once popular “slack fill” litigation has nearly ended. Courts did not buy claims that consumers believe—based purely on the size of a product’s packaging—that the item would contain more than the amount accurately stated on the label.
- While it is relatively rare for food class actions to reach the appellate level given that most cases settle, a series of recent appellate court rulings may curb excessive and unwarranted litigation. These decisions recognize that food labeling must be read in context, that lawsuits must allege real, not speculative, losses, and that class action attorneys should not be the primary beneficiaries of the lawsuits they settle. Other appellate decisions, however, further incentivize litigation by not expecting reasonable consumers who are particularly concerned about a product’s content to simply read the ingredients.
- State legislatures are responding to excessive litigation. Missouri made clear that courts can dismiss cases at an early stage when a reasonable consumer would not be misled by the marketing at issue. Arkansas eliminated certain types of consumer class actions. And California offered businesses options for packaging products that provide a safe harbor from slack fill claims. Meanwhile, the New York legislature continues to consider proposals that would dramatically expand liability, despite litigation abuse.
- The paper concludes that food labeling litigation is likely to continue to climb so long as businesses find that it makes more economic sense to settle these lawsuits than fight them in court or until plaintiffs’ lawyers face consequences for bringing frivolous claims. The paper suggests that this lawsuit abuse should be addressed through courts dismissing ridiculous lawsuits before the expenses and risks of litigation mount and state legislatures adopting reforms.
Originally published August 2021. Reprinted by permission, instituteforlegalreform.com, August 2021, Copyright 2021 U.S. Chamber Institute for Legal Reform.