February 18, 2015
Authored by: James Smith
Recent food labeling class actions suggest that plaintiffs’ counsel are broadening the scope of these types of claims. Of course, we are familiar with the more typical food labeling class actions, such as those challenging “all natural” labels or disputing whether a food product complies with federal law when noting it has “no added sugar.” Those traditional claims focus on the ingredients. The recent complaints mentioned in this article, however, suggest that class counsel may now focus on subjective statements regarding the processes used to make foods or beverages.
Social Responsibility Statements.
Jablonowski v. Chiquita Brands, Inc., No. 3:15-cv-00262 (S.D. Cal.), is a complaint filed by the well-known class action firm of Hagens Berman Sobol Shapiro LLP. It alleges that Chiquita falsely advertises on its website that it requires ecologically friendly farming practices. In “truth,” a Guatemalan company from which Chiquita buys hundreds of millions of pounds of bananas each year allegedly has horrible environmental practices. That complaint largely relies on research by an environmental organization called Water & Sanitation Health Inc., which apparently traveled to Guatemala to observe and document practices there. Notably, that complaint does not base its allegations on labeling statements actually found on the bananas. Rather, it contends that the familiar Chiquita blue label indicates that the bananas meet Chiquita’s “strict standards,” which implicitly includes environmental responsibility. According to the complaint, Chiquita knows that the Guatemalan company it buys bananas from does not adhere to sound environmental practices. The complaint also points to statements on Chiquita’s website about environmental responsibility and contends that the named plaintiff relied on those statements.
Some observations come to mind after reviewing this complaint. First, although Hagens Berman certainly is a legitimate player in the class action field, it must recognize this case has little chance of being certified as a class action. The Chiquita blue label does not say anything about environmental practices. Moreover, even the complaint admits that the named plaintiff had to visit Chiquita’s website to read about its environmental commitment. Thus, it is impossible to suggest that every purchaser was exposed to the “misleading” statements merely by reviewing the product label. Instead, it would require the added step—wholly removed from buying the product—of visiting the website and reading information about environmental commitment. Other difficulties should include the near impossibility of establishing injury/damages. This plaintiff should have to prove that the Chiquita label misled a substantial percentage of consumers about environmental practices and that the misrepresentation somehow led to a price premium for Chiquita bananas. This is in contrast to any price premium attributable to advertising or brand recognition. Last, the notion that the blue label signifies that the produce complies with Chiquita’s “strict standards” really amounts to little more than puffery, which typically is not actionable.
Having said this, clients should be aware that the plaintiffs’ class action bar is looking at these types of environmental responsibility or social responsibility statements as targets for consumer class actions. While this particular suit seems more akin to a publicity stunt than litigation that plaintiffs’ counsel hopes will produce monetary returns, it almost invariably will not be the last claim based on social responsibility statements. If your clients’ product labels contain such statements, you may want to examine the bases for those statements with your clients.
Another recent development is litigation regarding the “handmade” nature of various spirits. The most recent case seems to be Welk v. Beam Suntory Import Co., No. 15-cv-0328 (S.D. Cal.). That plaintiff filed his putative class action on February 17, but similar cases challenging the “handmade” nature of Maker’s Mark bourbon and Tito’s vodka emerged toward the end of 2014. These lawsuits allege that the manufacturers deceived the public because their products are made using machines, as opposed to entirely by hand. These claims are more traditional than the Chiquita banana lawsuit because they rely on statements on each label of the product. They also point to undefined phrases (e.g., “handmade” or “hand crafted”), just like the “all natural” litigation. Like the banana litigation, however, these liquor claims point to the process to make the product rather than the ingredients. In the Chiquita case, the issue was whether the process was environmentally friendly. Here, it is whether the process is “handmade.”
As in more traditional food labeling class actions, these “handmade” plaintiffs should face some serious obstacles. First, establishing damages or any way to measure them seems quite difficult. They should need to establish that Jim Beam is a more expensive bourbon than a comparable brand because of the “handmade” statement. As anyone who has purchased liquor can attest, however, product pricing varies greatly based on advertising, ingredients, brand reputation, and a host of other factors. It should be very difficult to identify a sound methodology to isolate any supposed price premium attributable to the “handmade” statement (which is not prominent on the label) from other factors. We have also seen the implicit ascertainability requirement play a more prominent role in food/beverage labeling class actions in California courts lately; it should likewise be a valid defense to these latest processing claims.
A second difficulty is establishing that the “handmade” statement misleads a substantial portion of the consuming public. Even more so than with “all natural” label allegations, trying to establish that a named plaintiff’s understanding of “handmade” accurately represents the general public’s understanding seems nearly impossible. Do consumers purchasing a mass-market beverage truly believe that only human hands were involved in the process? Probably not. Facing these difficulties, I suspect these plaintiffs will try to settle early for nuisance values and, perhaps, labeling changes.
Despite the difficulties that these latest claims face, they also provide a reason for clients and their counsel to reexamine labels for statements regarding the processes used in making products. While many of the defenses in more traditional food labeling class actions will apply to these latest claims, the defendants should have more arrows in their quivers to attack these allegations.
James Smith is a partner in the Phoenix office of Bryan Cave LLP. He is a member of the firm’s Class & Derivative Actions Client Service Group and the Food and Beverage Team.