2013 Foley & Lardner LLP Attorney Advertising Prior results do not guarantee a similar outcome Models used are not clients but may be representative of clients 321 N. Clark Street, Suite 2800,Chicago, IL 60654 312.832.4500 2 Discussion Leaders Jo E. Osborn, VP and Assistant General Counsel, TreeHouse Foods, Inc. Craig Fochler, Partner, IP Litigation, Foley & Lardner LLP Aaron Weinzierl, Associate, IP Litigation, Foley & Lardner LLP Jaclyne Wallace, Associate, IP Litigation, Foley & Lardner LLP December 11, 2013 1
THE GROWTH OF CLASS ACTION LITIGATION 3 Considered a growth industry for plaintiffs lawyers. Reasons for the Growth: Other types of class actions, such as asbestos and tobacco litigation, have dried up. Expansive consumer protection legislation. Plaintiff friendly interpretation of requirements for class certification. Some courts allow questionable practices in naming plaintiffs. FOOD AND BEVERAGE IS THE FAVORITE CLASS ACTION TARGET 4 Class Action lawsuits are increasingly directed at food and beverage companies. In 2008, 19 class actions were filed against food companies. By 2012, this number increased to 102. Nearly 150 cases since 2011. 2
FOOD AND BEVERAGE IS THE FAVORITE CLASS ACTION TARGET (Cont d) 5 This year more than a third of all class actions field against all businesses were brought against food companies. FOOD AND BEVERAGE IS THE FAVORITE CLASS ACTION TARGET (Cont d) 6 Every type of food and beverage company is a target: 5 Hour Energy 7 Eleven 7UP products with antioxidants Anheuser-Busch Cos. Beer Arizona iced tea Balance energy bars Bear Naked 100% natural products Bear Naked all natural products Ben & Jerry s ice cream Bigalow tea Breyer s ice cream Bumble Bee products Cambell s soup varieties Chobani Greek yogurts Clover Stornetta Farms yogurts Del Monte fruit/vegetable products Diamond Food walnuts Dole fruit products Dreyer s Grand ice cream Dreyer s Grand ice cream drumstick Ferrero Nutella Frito-Lay chips Frito-Lay snacks General Mill s Fruit Roll-Ups General Mill s Kix cereal General Mill s Yoplait YoPlus Grove Square coffee Hain Celestial products 3
FOOD AND BEVERAGE IS THE FAVORITE CLASS ACTION TARGET (Cont d) 7 Jamba Juice Do-It Yourself Smoothie Jason Natural products Johnson & Johnson Splenda Kashi all natural products Kellogg s Froot Loops, Pop-Tarts etc. Kellogg s Frosted Mini-Wheats King Arthur Flour Co. products Kraft cookie and cracker products Kraft/Cadbury numerous products McDonald s Happy Meals Nabisco Fruit Newton cookies Naked Juice Naked Juice all natural products Nature Valley granola bars Nature Valley snacks Nature Path organic products Nestle chocolate Hot/Lean Pockets Ocean Spray drinks One World Co. O.N.E. coconut water Quaker s Mother s Natural cereals Redline energy enhancers Smuckers all vegetable products Snapple acai mixed berry red tea SoBe s 0 Calories Lifewater Super Mario fruit snacks FOOD AND BEVERAGE IS THE FAVORITE CLASS ACTION TARGET (Cont d) 8 Taco Bell ground beef Tetley teas Trader Joe products Turtle Mountain dairy-free products Twinings tea Wholesoy yogurt products ZonePerfect energy bars 4
PLEAD 9 Use of Natural and terms implying Natural such as unpasteurized and raw have been widely attacked as deceptive based on: Synthetic ingredients GMO ingredients Methods of ingredient processing 10 5
11 Use of the terms No Artificial Ingredients or Nothing Artificial. 12 Natural class actions have become so prevalent many companies are ceasing use of Natural claims. 6
13 Use of terms relating to product health facts: Immunity Calories Fiber Metabolism 14 7
15 16 8
17 Misleading Product Composition or Condition Description: Soluble and microground coffee Fresh Butter Evaporated cane juice 18 9
19 20 10
21 22 Misleading Geographic Origin Description. Undisclosed Payment for Product Endorsement. Lack of Substantiation. 11
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COMPANY PRE-LITIGATION STRATEGIES 25 Keep abreast of class action claim trends. Encourage marketing to avoid using undefined hot button terminology, e.g., all natural. Conduct vigorous claim clearance. Consider all interpretations of label or advertising claims individually and in aggregate. Make sure there is solid substantiation. COMPANY PRE-LITIGATION STRATEGIES (Cont d) 26 Educate business personnel not to discuss liability risks or concerns, particularly those of counsel in writing to anyone outside of the company, or even to anyone inside unless counsel is present. If a risky claim is unavoidable, work with marketing to present in the most defensible manner. 13
COMPANY PRE-LITIGATION STRATEGIES (Cont d) 27 COMPANY PRE-LITIGATION STRATEGIES (Cont d) 28 14
ISSUES BEFORE CERTIFICATION IS REACHED 29 Standing Preemption Primary Jurisdiction Failure to State a Claim ISSUES BEFORE CERTIFICATION IS REACHED (Cont d) 30 Standing: Whether named plaintiff has standing to bring a claim against products he or she did not purchase. Conflict in Authority - Article III Standing vs. Class Standing: Article III Standing - Plaintiff must plead facts showing: (1) injury-in-fact; (2) causation; and (3) redressability. Class Standing Whether named representative will fairly and adequately protect the interests of the class. 15
ISSUES BEFORE CERTIFICATION IS REACHED (Cont d) 31 Preemption: Implied Preemption: Field Preemption has Congress expressed an intent to exclude state regulations from a particular field? Conflict Preemption does a state requirement conflict with a federal requirement making compliance with both requirements impossible? Express Preemption: Is claim based solely on use of specific FDA mandated or approved language? Use of other terms or material that are interpreted as impliedly deceptive when read in conjunction with FDA mandated or approved language on packaging or its advertising. ISSUES BEFORE CERTIFICATION IS REACHED (Cont d) 32 16
ISSUES BEFORE CERTIFICATION IS REACHED (Cont d) 33 Primary Jurisdiction Under doctrine, Court will stay or dismiss case and refer dispute to FDA for ruling. Reasons for Referral: Judges do not have experience with issue. Risks usurping the FDA s interpretive authority. Risks undermining the FDA s considered judgments. Reasons against Referral: Courts decide issue all the time. FDA ruling may not resolve issue. FDA may not rule/ruling may not be timely. ISSUES BEFORE CERTIFICATION IS REACHED (Cont d) 34 Failure to State a Claim: No Deception as a Matter of Law Pleading Fraud with Particularity Reliance Lack of Substantiation State Specific Statutory Requirements 17
ISSUES BEFORE CERTIFICATION IS REACHED (Cont d) 35 CLASS CERTIFICATION ISSUES 36 Class Certification Requirements: Numerosity Joinder must be impracticable. Class must be ascertainable by objective criteria. Commonality/Typicality/Predominance There must be questions of law or fact common to the class. Claims or defenses must be typical of the claims or defenses of the class. Common questions of law or fact predominate over individual questions. Adequacy of Representation Representative parties must fairly and adequately protect class interests. Superiority Class adjudication must be superior to other methods for fairly and efficiently adjudicating the controversy. 18
CLASS CERTIFICATION ISSUES (Cont d) 37 Individual Issues: Interpretations of product and advertising claims Causation/Reliance Materiality State laws CLASS CERTIFICATION ISSUES (Cont d) 38 Claims for Injunctive Relief Challenges to Nationwide Class Certification: Material Differences Between State Laws. States Interest in Having State Law Applied. 19
SUMMARY JUDGMENT ISSUES 39 Causation/Reliance Materiality Meaning of Implied Claims to Reasonable Consumers Direct Consumer Evidence Survey Evidence Daubert challenges to survey evidence Damages BREAK IN PRESENTATION 40 CLE CODE AND POLLING QUESTION 20
DEFENDANT LITIGATION STRATEGIES 41 Early defense review: Determine applicable primary agency law and regulations. If laws of multiple states alleged determine the differences in elements of claims under different state laws. Interview likely key witnesses to discover potential problems. Obtain early evaluation of problem documents. DEFENDANT LITIGATION STRATEGIES (Cont d) 42 Make an early evaluation of need for expert research. Consider the advantages of not moving to dismiss for failure to state a claim. If multiple actions consider trying to consolidate. Select counsel with experience litigating both cases in the substantive area of the law and class actions. 21
DEFENDANT LITIGATION STRATEGIES (Cont d) 43 Determine maximum possible exposure for both client and client s customers sales. If reasonable settlement appears unlikely at outset, conduct an aggressive defense. Are you prepared? Rising Advertising 44 and Labeling Class Action Suits Questions? To take the survey for this program, click on the link below: https://www.surveymonkey.com/s/ RisingAdvertisingLabelingClassActions 22