Class Action Consumer Litigation: A Rising Enforcement Risk for Aggressive Food Labeling Claims

The number of class action lawsuits targeting food labeling claims has risen dramatically over the past few years. These are cases alleging that a food product’s labeling (and/or advertising) violates state consumer protection laws. As a result, when a food company now considers whether to include an aggressive claim in commercial marketing, it should consider not only the risk of enforcement action by a federal or state regulatory authority (i.e., the Food and Drug Administration (FDA), the Federal Trade Commission (FTC), state counterparts, state Attorneys General) and the possibility of proceedings instituted by competitors (i.e., Lanham Act lawsuits, challenges before the National Advertising Division (NAD)), but also the potential for a class action lawsuit by a consumer(s) and/or consumer group.

The Center for Science in the Public Interest (CSPI), a consumer group headquartered in Washington, DC, is involved in some, but not all, of these recent class action lawsuits. CSPI began its “litigation project” in 2004 to assist and supplement federal regulators in their enforcement activities at a time when it viewed federal consumer protection to be at a “shameful” low point. See generally https://www.cspinet.org.litigation. The director of CSPI’s litigation project, Stephen Gardner, formerly was an Assistant Attorney General in New York and Texas. The National Consumers League (NCL), founded in 1899 and America’s pioneer consumer organization, also has initiated litigation against major food companies. Consumer groups are not the only instigators of class action lawsuits against food companies, however. The plaintiffs bar, which a decade ago won record settlements from tobacco companies, now has a new focus—food labeling.

The Federal Food, Drug, and Cosmetic Act (FFDCA) provides no private right of action for its violation. This being the case, a private plaintiff cannot sue a food company for allegedly violating the FFDCA and/or FDA’s implementing food labeling regulations. Additionally, while not privately enforceable, the FFDCA nevertheless is federally preemptive of state and local laws with respect to certain aspects of food labeling, including common or usual names, ingredient declarations, Nutrition Facts labeling, nutrient content claims, health claims, and prominence of label information. Plaintiffs’ attorneys have gotten around this by alleging that non-preempted food labeling (and advertising) claims are false or deceptive in violation of state consumer protection laws.

Companies that decide to “push the envelope” with aggressive claims in labeling or advertising should consider the risk of litigation as part of their risk/benefit analysis before they proceed.

The overwhelming majority of states have consumer protection statutes intended to protect against false advertising and other unfair commercial practices. These laws can vary greatly from state to state. Certain states (e.g., California, New Jersey, and Massachusetts) have particularly broad consumer protection laws and, at times, sympathetic forums to hear subject cases and, therefore, tend to be the first choice for class action plaintiff attorneys. In California, a popular venue for recent class action lawsuits against food companies, consumer litigation has been premised on, for example, the alleged violation of state laws pertaining to unlawful, unfair, or fraudulent business acts and practices; misleading and deceptive advertising and methods of competition; unjust enrichment; and breach of an implied warranty of merchantability.

A class action consumer lawsuit against a food company can arise without any precedential enforcement activity by a federal regulatory authority. Nevertheless, it also may follow upon the heels of an FDA Warning Letter, an FTC consent decree, the filing of a Lanham Act lawsuit, or an NAD decision. It appears that class action plaintiff attorneys are monitoring these venues, looking for their next targets. A lawsuit filed by the NCL in the Superior Court of the District of Columbia (DC) for misleading claims about the drug-like benefits of Cheerios® toasted whole grain oat cereal followed a May 5, 2009 Warning Letter, issued by the FDA’s Minneapolis District Office, in response to a complaint that NCL itself had submitted. Similarly, NCL’s earlier lawsuit in the DC Superior Court about misleading claims for Frosted Mini-Wheats cereal followed an April 2009 FTC settlement of charges that ads for the cereal were false.

Class action lawsuits have been filed against major food companies, including, for example, Chobani Inc., Ferrero USA, Inc., Genral Mills, Inc., Kellogg Company, McNeil Nutritionals, LLC, and The Coca-Cola Company. Ferrero USA, for example, in January 2012, entered into settlement agreements, resolving class action lawsuits in the U.S. District Court for the Southern District of California and the U.S. District Court for the District of New Jersey, which alleged that promotional claims for its Nutella® chocolate-hazelnut spread were false or misleading. The company will pay approximately $3.05 million as part of the settlement.

This consumer class action lawsuit trend, albeit relatively new, is now so prevalent and significant that the food industry should not ignore it.

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