Putative class actions targeting the food and beverage industry show no signs of slowing down, though the focus of the claims is evolving. The initial flurry of claims against food and beverage companies were filed in the Northern District of California which became known as the “food court.” Many of the early cases challenged the description of food and beverages as “all natural” when the products contained additives allegedly rendering the “all natural” representation false and misleading. These suits were not universally met with great success and the claims now being filed by plaintiffs are now focusing on different representations. These new claims are based on a variety of theories, including the origin of the ingredients, the use of sweeteners and the fill of the packaging.
Trends in Recently Filed Class Actions
The following trends are emerging in class actions filed against food and beverage companies:
- Fewer “all natural” claims and more claims based on the term “organic”
- More claims based on origin of products (e.g. Italian olive oil, Australian beer, American Tabasco sauce)
- More claims based on representations regarding ingredients (e.g., extra virgin olive oil, pure honey)
- More suits focused on sweeteners (e.g. excess sugar, characteristics of artificial sweeteners, presence of artificial sweeteners)
- More slack fill and underfill claims for packaged and made-to-order products
- Application of the reasonable consumer standard to dispose of suits on motions to dismiss or on summary judgment
Increasing Number of Jurisdictions Where Food and Beverage Class Actions Are Being Filed
Like the factual basis of the putative class claims, the places where putative class actions are being filed are also expanding. While cases continue to be filed in the “food court,” suits in other California courts and in New York have proliferated. More than a third of all food class actions proceeding in federal court are in California. And, nationwide, the majority of federal suits are pending in California, New York, Florida and Illinois. Recently, a number of food class actions have been filed in Missouri, New Jersey and Pennsylvania, where the consumer protection statutes are similar to the statutes in the state of California.
Plaintiffs continue to file class action complaints against food and beverage companies because plaintiffs lawyers perceive that they have settlement value. Class actions arising from consumer products can have classes with hundreds of thousands, or perhaps millions, of putative class members. Accordingly, even settlements that offer very small monetary relief to each member of the class may be largely based on the number of class members. For example, tuna packer StarKist paid $12 million to settle an under-fill case in 2016.[i] However, only a small percentage of the cases have resulted in substantial payouts and a large number of settlements provided only declaratory or injunctive relief to the class members along with attorneys’ fees to the lawyers representing the class. These sorts of injunctive relief settlements may not always be approved. The Seventh Circuit recently reversed and remanded an injunctive-relief-only settlement arising from Subway’s “footlong” sandwich advertisements. [ii] The Seventh Circuit rejected the settlement concluding that the proposed actions by Subway called for in the settlement were insufficient to remedy any the misrepresentation, and that the settlement did not provide a benefit to the class members.
Courts Showing More Skepticism of False Advertising Class Actions
Because food law class actions are based on allegations that sometimes strain credibility, courts are applying common sense and judicial experience to dismiss some of these suits. Under the reasonable consumer standard, a plaintiff must show that members of the public are likely to be deceived. This requires more than a mere possibility that the product might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner. For example, in a recent case alleging that Coca-Cola misled consumers into thinking that Diet Coke would help them lose weight, the court ruled that “reasonable consumers would understand that Diet Coke merely deletes the calories usually present in regular Coke, and that the caloric reduction will lead to weight loss only as part of an overall sensible diet and exercise regimen dependent on individual metabolism.”[iii] This standard was also applied in a case alleging that lip balm was deceptively labeled because not all of the lip balm was accessible. Applying the reasonable consumer standard, the court held that not disclosing that 25 percent of the product remains in the tube and inaccessible is not deceptive since the consumer can see that product remains in the tube and cannot reasonably expect that 100 percent of the disclosed weight of the product is usable.[iv] These decisions show that courts are willing to dismiss claims even where plaintiffs have a subjective belief that they were misled where those beliefs are unreasonable.
While a significant number of class actions targeting food and beverage companies continue to be filed, application of the reasonable consumer standard may allow defendants to quickly dispose of suits on motions to dismiss. If not, and the claims survive an initial challenge, class certification has been successfully opposed based on failure to demonstrate uniform exposure to the alleged false advertising,[v] failure to show class-wide reliance on the alleged misrepresentation,[vi] lack of an adequate class representative,[vii] and failure to show class-wide entitlement to damages.[viii] Any or all of these arguments may be available to food and beverage companies facing class action claims. Without a class action mechanism, the risk that these sorts of claims present to food and beverage companies is substantially reduced.
[i] Hendricks v. StarKist Co., 2016 U.S. Dist. LEXIS 134872 (N.D. Cal. Sept. 29, 2016).
[ii] In re Subway Footlong Sandwich Mktg. & Sales Practices Litig., 869 F.3d 551 (7th Cir. 2017).
[iii] Becerra v. Coca-Cola Co., 2018 U.S. Dist. LEXIS 31870 (N.D. Cal. Feb. 27, 2018).
[iv] Ebner v. Fresh, Inc., 838 F.3d 958 (9th Cir. 2016).
[v] Espinosa v. Ahearn (In re Hyundai & Kia Fuel Econ. Litig.), 881 F.3d 679 (9th Cir. 2018).
[vi] In re 5-Hour Energy Marketing and Sales Practices Litig., Case No. 13-ml-02438 (C.D. Cal. June 7, 2017).
[vii] Backus v. ConAgra Foods, Inc., 2016 U.S. Dist. LEXIS 178227 (N.D. Cal. Dec. 22, 2016).
[viii] Morales v. Kraft Foods Group, Inc., 2017 U.S. Dist. LEXIS 97433 (C.D. Cal. June 9, 2017).