Companies & Industries

California's Food Court: Where Lawyers Never Go Hungry


California's Food Court: Where Lawyers Never Go Hungry

Photo Illustration by Alis Atwell; Sources: Alamy (8) Getty Images (3)

Over the past 18 months, a group of plaintiffs’ lawyers who got rich suing the tobacco industry have turned their litigious attention to what they hope will be the next big thing: challenges to healthy-sounding food labels they allege are misleading. Hailing from across the U.S., the lawyers decided to sue in federal courts in Northern California, where the consumer-protection laws are expansive and the jury pool nutrition-conscious. “Even the judges are calling this jurisdiction the Food Court,” says Pierce Gore, the San Jose attorney serving as local coordinator for plaintiffs’ firms in Mississippi, Texas, Tennessee, Illinois, and New York.

So far three dozen suits seeking class-action status are pending in the Bay Area. The grocery list of targets includes Unilever’s Ben & Jerry’s ice cream, Chobani yogurt, Kraft’s Trident gum, Hershey chocolates, Ocean Spray beverages, and Associated British Foods’ Twinings teas. Unlike suits over cigarettes, these food label cases don’t allege that anyone has been physically injured or addicted; nor do they suggest that the products in question are dangerous or defective. Instead they challenge the hawking of granola bars, fruit juice, and green tea as being good for you. Specifically, the suits say consumers are being tricked by such claims as “100 percent natural” and “no sugar added.”

“Hyper-technical does not begin to describe this litigation,” says William Stern, a partner with Morrison & Foerster, a San Francisco-based corporate law firm seeking to have several of the suits dismissed on behalf of Unilever and other clients. “Trivial,” Stern adds, “might be a better word.” Food companies say their labels, read in their entirety, are accurate. Stern attributes the surge in label litigation to a settlement in 2009 by Dannon, the U.S. unit of Danone of France. Without admitting liability, Dannon agreed to pay $35 million to resolve a class action alleging it made false claims about the digestive benefits of Activia probiotic yogurt. “That got everyone’s attention,” Stern says. Dannon said at the time it had settled to avoid open-ended legal fees. Other marketers, however, are pursuing their day in the Food Court—an expensive proposition. A pretrial fight alone over whether a judge should certify a class as appropriate can take 18 months to two years and cost a company $500,000 to $2 million, according to Stern.

Corporations could save on attorney bills by making their labels less boastful, Gore says. Dannon, for instance, agreed to modify some of its claims about the advantages of probiotic products. “These suits are technical in the same way that the speed limit is technical,” Gore says. “The rules are designed to protect everyone, and you have to follow them.” The U.S. Food and Drug Administration writes labeling regulations but doesn’t have sufficient resources to enforce them, he argues. So, plaintiffs’ lawyers, Gore says, have stepped in to serve as self-appointed cops. Working with Gore are such veterans of the 1990s tobacco wars as the Barrett Law Group of Lexington, Miss., and the Provost Umphrey Law Firm of Beaumont, Tex.

Corporate lobbyists in Washington have made the Food Court a centerpiece of their perennial campaign to rein in tort litigation. The business-funded American Tort Reform Association currently ranks the Northern District of California atop its list of “Judicial Hellholes”—jurisdictions it calls particularly hostile to corporate interests. West Virginia and Madison County, Ill., are Nos. 2 and 3. “In every competitive marketplace that’s ever existed, colorful and even exaggerated claims have been a largely harmless part of virtually every sales pitch,” says Darren McKinney, the association’s spokesman. The Food Court cases, he says, are the invention of plaintiffs’ attorneys who imply that their own clients “are imbeciles who can’t read the list of ingredients, which are right there on the label, along with the ‘all natural’ claims, or whatever the plaintiffs are all worked up about.”

Gore counters that the suits have cropped up “organically,” as consumers realize labels may be exaggerated. “I resent the accusation that these cases are lawyer-generated,” he says.

Depositions of some of the lead clients suggest otherwise. Leon Khasin, a corporate security guard who lives in San Jose, sued Hershey in 2012 over its cocoa and Special Dark Kisses. Labels said the products were “a natural source of flavonol antioxidants.” On its website, the candymaker states that “plant compounds, which act as antioxidants in foods, may reduce the risk of many kinds of illness, from heart disease to cancer.” The suit drafted on Khasin’s behalf by Gore and other plaintiffs’ lawyers asserts that the Hershey labels are “unlawful because the FDA has not defined the characterization ‘source’ by regulation and thus such characterization may not be used in nutrient content claims.”

Asked during a deposition in March how he came to file suit, Khasin said his wife, then a secretary at Gore’s law firm, Pratt & Associates, had recommended he talk to the attorney. “When you came to meet with Mr. Gore that day,” Khasin was asked by the company’s lawyer, Travis Tu of New York’s Patterson Belknap Webb & Tyler, “did you have any desire to sue the Hershey company?”

“No, I did not,” answered Khasin, who also said he could not recall ever looking at a Hershey’s label before filing the suit. Hershey has moved for pretrial summary judgment. A federal judge in San Jose has scheduled a hearing for November.

The bottom line: Food label class-action suits are proliferating. Pretrial skirmishing alone can cost a business $2 million in legal expenses.

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Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, which tells the story of the Chevron oil pollution case in Ecuador, will be published by Crown in September 2014.

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