New Year Brings Sugar, Spice And Everything Nice To Food Companies Defending Class Actions New Year Brings Sugar, Spice And Everything Nice To Food Companies Defending Class Actions

New Year Brings Sugar, Spice And Everything Nice To Food Companies Defending Class Actions

The new year brought good news to the food industry as three different courts issued opinions rejecting consumer claims that high fructose corn syrup and salt injured their wallets.

In DeBenedetto v. Denny's, the consumer complained that meals he purchased at Denny's – consisting of ham, bacon, sausage and hash browns – contained excessive levels of sodium, and that if he and other consumers had been aware of the high sodium content, they would not have purchased the meals. DeBenedetto alleged that excessive levels of sodium are dangerous and cause an increased risk of bodily harm, and that Denny's had failed to warn consumers of these risks.

DeBenedetto is part of a trend in products liability litigation that has been creeping into the food area. In these cases, a consumer files a class action based on an allegation that a product is dangerous and an assertion by the plaintiff that he, and other consumers like him, would not have purchased the product if the manufacturer and sellers of the product had disclosed its dangers. Because none of the consumers were injured by the product, the plaintiff cannot bring a products liability claim. Instead, he alleges that consumers have suffered an "economic injury" because they no longer have the money that they paid for the product, and that the company's failure to disclose the product's dangers violated his state's consumer fraud statute.

On January 11, 2011, New Jersey's appellate court effectively ended DeBenedetto's case. Although he had styled his case as a consumer fraud claim, the court held that his allegations were those of a products liability claim based on a failure to warn. The court then dismissed the case because the plaintiff had not alleged that he suffered a physical injury. The court's rejection of this common tactic for avoiding the injury requirement of a products liability claim and making the claim susceptible to treatment as a class action was a big win for food companies, which have increasingly become a target for these types of claims.

Another type of consumer class action that has become increasingly common in the food industry is based upon allegations that a product's labels and marketing misrepresented the product's quality or characteristics. The consumer asserts that he relied on the representation and would not have purchased the product, or would not have paid a premium, if he had known "the truth" about the product. Snapple Beverage Corporation has been hit with several of these class actions in the past few years based on its use of the phrase "all natural" in the marketing and labeling for its tea and juice drinks. The consumers claim that the term "all natural" was deceptive because the beverages contained high-fructose corn syrup, a processed sweetener, and seek to recover the premium they paid for a "natural" product.

On January 6, 2011, the U.S. District Court for the Eastern District of California dismissed all of the fraud claims in Von Koenig v. Snapple Beverage Corporation that were based on Snapple's advertising and other promotional materials for the beverages. The court determined that the allegations in the complaint were too vague and generalized to satisfy the requirements for a fraud claim. The only fraud claims allowed to proceed were those based on Snapple's labeling. The court concluded that the plaintiffs had provided sufficient details for those claims because they submitted labels from the bottles of each of the sixty products identified in the complaint. This ruling is significant because it is common in class action complaints for plaintiffs to assert only vague allegations regarding the defendant's marketing and advertising. The submission of actual labels by the plaintiffs in this case, and the court's dismissal of all of the fraud claims not based on those labels, provides strong support for challenges to these insufficient allegations.

The third favorable ruling issued within weeks of the new year was in another of the "all natural" class actions pending against Snapple. The U.S. District Court for the Southern District of New York, which had denied class certification in Weiner v. Snapple Beverage Corporation on August 5, 2010, delivered a final blow to plaintiffs' claims and ended that matter on January 21, 2011. The court determined that because the plaintiffs had not presented reliable evidence regarding their purchase price or the prices of comparable products available at the time they purchased the Snapple, they could not show that they had paid extra due to the "all natural" labeling. Absent this evidence, the plaintiffs could not prove that they had suffered any injury as a result of the allegedly misleading labeling, much less prove the amount of their damages with any degree of certainty. The court noted: "While the difficulty that the plaintiffs face in showing injury is great, it is nonetheless their burden to make such a showing, and they have failed to offer sufficient evidence to permit a jury to render an award in their favor." Without proof of injury, the plaintiffs could not succeed on any of their remaining claims. The court thus entered summary judgment in favor of Snapple and closed the case.

The pleading and proof issues that formed the basis for these rulings are present in most, if not all, of the consumer product class actions being asserted against the food industry.  The opinions are thus good news not only for the companies defending the actions, but for the industry at large.

If you have questions regarding these class action lawsuits, you can contact Judy Okenfuss at (317) 236–2115.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
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