Consumer Products

In recent years, food labeling has become a target of civil lawsuits, especially class actions, and regulatory action. Every day we read about a new class action attacking words such as "natural," or a warning letter or other challenge to food labeling.

THE FIVE STAGES OF GRIEF

Since food class actions are a relatively recent phenomenon, many food companies have had little experience with such claims. Executives faced with their first class action case often go through the five stages of grief — which are typically associated with the grieving after a loved one passes away. Companies that get sued experience similar stages, including denial, anger, bargaining, depression and acceptance. Many times, the final stage involves a settlement and some payment.

Many companies can let denial, anger and bargaining last for years before they experience depression and acceptance. However, during those years, the defense attorneys will battle over the merits of the claims, and at the same time run up large legal bills.

ANGER AND DENIAL ARE NOT PRODUCTIVE

Food companies should recognize that anger, a common reaction to label challenges, may not go anywhere.

What the company needs to understand is that its sense of "wrong" is different from the plaintiff's lawyer's sense of "wrong," is different from the court's sense of "wrong" and is different from the public's sense of "wrong." The company may choose to take a stand, but needs to be ready for litigation costs and potential adverse publicity from the media which is often eager to challenge claims made by "Big Food."

Common corporate "denial" positions often do not make lawsuits disappear. These positions are logical, but the courts are reluctant to dismiss cases for these reasons:

— All of our competitors are making the same claims, so we are not going to be liable.
— We have always said it, so we are not going to be liable.
— It is just puffery, so we won't be liable.
— We are not charging more for the claim.

TRYING TO AVOID THE FIVE STAGES — BEST PRACTICES

Unlike death, food companies can avoid lawsuits over labels. Here is a "wish list" of five best practices:

1. Keep abreast of the changing landscape of food regulations. Numerous government agencies regulate food labeling. Anyone involved in drafting a label must know and understand the various regulations promulgated by the Food and Drug Administration, the Department of Agriculture, state and local authorities, and other regulatory bodies. Significantly, labeling rules are constantly evolving, and the company must be looking over the horizon. By the time the product hits the shelves, the rules could change.

2. Do not assume that the words in the label mean what you think they mean. A food manufacturer should not use words like "natural" and "healthy" on a label unless the company has studied the regulations and knows how courts are interpreting those words. Labeling rules can be ambiguous, and that ambiguity has spawned litigation. The manufacturer must acknowledge the risk it may undertake when it makes a claim on the label.

3. Look at the big picture when designing a label. Individual words or phrases may pass muster, but graphics or the combination of words on the label could become a problem. For example, pictures of fresh fruit on cereal boxes have been the target of claims.

4. Do not go "off the reservation" when advertising the product. A company's counsel may give a clean bill of health for the product label, but the company may engage in overselling the product, with "puffery," when it promotes the product in print, video or online advertisements. The Federal Trade Commission may start breathing down the company's neck claiming false advertising, or those advertisements may become one more item in the class action complaint.

5. Remember:, Every controversy is an opportunity. Do not despair if there is a challenge. In the face of a class action, Taco Bell embarked on the widely covered "Thank You For Suing Us, Here is the Truth About Our Beef" campaign., The company turned the class action litigation into an opportunity to educate the public about its taco beef and the positive qualities in its products. Any challenge to labeling could and should be met as a chance to provide the full picture about a product, and explain that there is another side to the story. Channel the anger in a positive direction.

CONCLUSION

Earning a profit in the food industry is difficult enough without having to deal with litigation costs. Death and taxes may be inevitable, but companies can avoid lawsuits or government actions by following best practices when designing a label and promoting a product.