By Charles Sipos, Kristine Kruger and Thomas Tobin 

Law360 (August 4, 2020, 5:37 PM EDT) --

Charles Sipos

Kristine Kruger

Thomas Tobin

There is never a good time to defend a meritless lawsuit. Certain times, however, are worse than others — such as during a once-in-a-century economic disruption prompted by an unprecedented global pandemic.

Those are the circumstances facing the food and beverage industry. At a time when the safety and security of the food supply have never been more essential — and when the industry has demonstrably risen to the challenge — putative class action filings against the food and beverage industry have persisted.

And if you are guessing that these lawsuits have something to do with the COVID-19 pandemic itself, you would be wrong. Instead, these lawsuits continue to focus on often baseless allegations around food labeling that have nothing whatsoever to do with food safety and security.

Fortunately, even though filings against the industry have persisted during the pandemic, so, too, has the courts' scrutiny of such lawsuits. In recent months, courts have continued to dismiss these meritless food and beverage labeling cases based on a lack of any plausible theory of deception. The hope is that, in time, this consistent body of case law can turn back the steady stream of filings against the industry.

The Food and Beverage Industry Meets the Challenges of COVID-19

The COVID-19 pandemic has created disruption throughout the economy. Food and beverage companies are facing significantly modified consumer demand patterns, supply chains and pricing.

On the one hand, restaurant closures have caused a ripple effect across related industries such as food and beverage production, fishing and farming. At the same time, changes to consumer buying patterns have resulted in increased demand at the retail level.

These sudden and drastic changes have placed unprecedented pressure on already constrained supply chains. Demand for groceries has spiked as a result of government restrictions that limited or altogether shuttered restaurants.[1] Despite these substantial challenges, the U.S. food supply remains strong, stable and safe.

A U.S. Department of Agriculture analysis recently concluded that food in the U.S. "will remain well supplied and ... continue to be affordable."[2] The agency noted the stability of both supply and pricing — despite an initial increase in demand as the pandemic took hold in the spring.[3]

The USDA concluded that despite the pandemic, "we have a strong and resilient agricultural and food sector. Those farmers, food producers, and food suppliers will help continue the supply of safe, affordable, and healthy food for American consumers throughout the times to come."[4]

Moreover, the food and beverage industry has met the challenges of the pandemic with a food supply consistently deemed safe by federal authorities. The U.S. Food and Drug Administration has noted that the U.S. food supply remains safe, notwithstanding the difficulties posed by the COVID-19 pandemic.[5] The U.S. Centers for Disease Control and Prevention reached similar conclusions.

As to packaged foods in particular, the CDC has said:

The risk of infection by the [COVID-19] virus from food products, food packaging, or bags is thought to be very low. Currently, no cases of COVID-19 have been identified where infection was thought to have occurred by touching food, food packaging, or shopping bags.[6]

Yet at a time when stability of the food supply has never been more important, threatened class litigation over non-safety-related labeling issues persists. Fortunately, however, there have recently been a number of favorable and well-reasoned decisions that apply common sense to dismiss these cases.

Bad News: Food Labeling Litigation Persisting During COVID-19

Notwithstanding the heightened importance of the food and beverage industry during the COVID-19 pandemic, labeling class actions against the industry have persisted.

According to our firm's Food Litigation 2019 Year in Review, food and beverage class actions saw record filings last year.[7] Our most recent compilation of filing data, depicted in Figure 1 below, show that filings have not abated in 2020, and halfway through the calendar year, are on pace to exceed 2019's record numbers by approximately 18%.[8]


Notably, these trendlines occur amid a major decline in general commercial litigation. Overall litigation filings across all industries are down more than 20% compared to last year,[9] and courts are facing limited operations during a global pandemic. But food litigation filings are up, and projected to exceed those of last year.

The findings are particularly striking when you zero in on the time period when the COVID-19 pandemic was taking hold in the U.S. It is clear that the pandemic did not deter new filings. Figure 2 identifies the number and type of food and beverage class actions filed between March and May 2019 — as compared to the same time window in 2020 — and shows a steady pace of filings over the same period.


Good News: Courts Still Rigorously Scrutinizing Meritless Filings

One of the persistent hallmarks of cases filed against the food industry has been an advancement of theories that are both strained and implausible. These cases generally do not focus on issues of product safety or integrity, but instead often make allegations regarding deception over labeling claims where no reasonable consumer could possibly be misled.

An oft-cited example of the triviality of such claims is a lawsuit alleging that consumers were deceived into thinking that Froot Loops and Crunch Berries cereals were made from fruits and berries. These cases were promptly, and correctly, dismissed.[10]

For good reason, the steady persistence of filings against the industry continues to be met with skepticism by the courts, as demonstrated by a series of dismissals entered in recent months. These courts often rely on the fact that consumers have a lot more common sense than plaintiffs lawyers would otherwise give them credit for.

Courts appreciate that consumers do not interpret labeling terms in an illogical or idiosyncratic fashion. For example, on May 29, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of a lawsuit challenging an orange juice company's use of the word "natural" in its brand name.[11]

The plaintiff had alleged that this reference to "natural" communicated that the product was completely free of trace pesticides used during the agricultural process — even though there were no allegations whatsoever that these trace amounts either exceeded federal guidelines or were unsafe. The Second Circuit concluded that "no reasonable consumer would be misled into believing that Defendant's products did not contain any trace [pesticides]."[12]

Courts also continue to recognize that reasonable consumers are perfectly capable of reviewing food labels to see what is in a product. After all, ingredients are available for inspection on the back of the package.

On June 24, the U.S. District Court for the Northern District of California dismissed a case challenging the labeling of "white morsel" baking chips, explaining that a reasonable consumer reviewing the product's label could easily see that they were not made from white chocolate. The court explained: "No reasonable consumer could believe that a package of baking chips contains white chocolate simply because the product includes the word 'white' in its name or label."[13]

Similarly, on March 16, the U.S. District Court for the Eastern District of New York dismissed a complaint alleging that a claim of "1g sugar" on the label of a nutrition bar might confuse consumers about the products' calories or carbohydrates.[14] Once again, the court sensibly relied on the notion that consumers interested in the products' calories or carbohydrates act rationally and look at the label to see that information: "The [products] carbohydrate and caloric contents are contained in the mandatory nutrition facts panel, which is exactly the spot consumers are trained to look for such information."[15]

So, while filings against the food industry roll on unabated, the judiciary continues to scrutinize them carefully.

Conclusion

The food and beverage industry is providing much-needed goods to the market, despite challenging conditions. While doing so, it faces ongoing and unwelcome litigation.

Now more than ever, the industry's attention should be focused on what really matters to consumers: producing a stable supply of safe and healthy food. These cases continue to correctly face headwinds in the courts, as judges embrace the idea that reasonable consumers act logically and read food labels.

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Charles Sipos is a partner, Kristine Kruger is senior counsel and Thomas Tobin is an associate at Perkins Coie LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Nicholas Upton, Dark Grocery Expands, May Stick After COVID, Food On Demand (June 18, 2020), https://foodondemandnews.com/06182020/dark-grocery-expands-may-stick-after-covid/ (noting closure of restaurants during COVID-19 prompted shift to increased grocery shopping, pointing to USDA data showing at home consumption of food increased 18.8% year-over-year in March 2020); see also U.S. Food & Drug Admin., Shopping for Food During the COVID-19 Pandemic — Information for Consumers, https://www.fda.gov/food/food-safety-during-emergencies/shopping-food-during-covid-19-pandemic-information-consumers (last updated May 1, 2020) ("During this pandemic, consumers are getting most of their food from grocery stores, and many stores have modified their operating hours to allow for more time to restock shelves and clean").

[2] Robert Johansson, USDA Chief Economist, Will COVID-19 Threaten Availability and Affordability of our Food? U.S. Dep't of Agric. Blog (Apr. 16, 2020), https://www.usda.gov/media/blog/2020/04/16/will-covid-19-threaten-availability-and-affordability-our-food (analyzing stability of food supply with USDA data collected by agency).

[3] Id.

[4] Id.

[5] U.S. Food & Drug Admin., Food Safety and Availability During the Coronavirus Pandemic, https://www.fda.gov/consumers/consumer-updates/food-safety-and-availability-during-coronavirus-pandemic (last updated Apr. 1, 2020) (noting no evidence of COVID-19 transmission via food or food packaging and that supply chain remains stable, despite some instances of localized overpurchasing by consumers).

[6] Ctrs. for Disease Control & Prevention, Food and Coronavirus Disease 2019 (COVID-19), https://www.cdc.gov/coronavirus/2019-ncov/daily-life-coping/food-and-COVID-19.html (last updated June 25, 2020).

[7] See Perkins Coie, Food Litigation 2019 Year in Review (Feb. 2020), https://www.perkinscoie.com/images/content/2/2/229474/2019-Food-Litigation-YIR-v4.pdf.

[8] Data compiled by Perkins Coie LLP.

[9] Ben Hancock, Amid COVID-19 Pandemic, a Slump in Federal Commercial Litigation, Law.Com (April 23, 2020), https://www.law.com/2020/04/23/amid-covid-19-pandemic-a-slump-in-federal-commercial-litigation/.

[10] See Videtto v. Kellogg USA , No. 2:08-cv-01324-MCE-DAD, 2009 WL 1439086, at *3 (E.D. Cal. May 21, 2009).

[11] Axon v. Fla.'s Nat. Growers Inc. , — F. App'x —, 2020 WL 2787627, at *3 (2d Cir. May 29, 2020).

[12] Id.

[13] Prescott v. Nestle USA Inc. , No. 19-cv-07471-BLF, 2020 WL 3035798, at *4 (N.D. Cal. June 4, 2020).

[14] Melendez v. One Brands LLC , No. 18-CV-06650 (CBA) (SJB), 2020 WL 1283793, at *7 (E.D.N.Y. March 16, 2020).

[15] Id. (citations and internal quotation marks omitted).

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