Food-Related Liability

No one could really blame the food industry for being a little paranoid. Over the past two years, food producers, processors and restaurants have increasingly been in the cross-hairs with legislators, regulators, public health advocates and the plaintiffs' bar. The nation's obesity problem, consumer concern over the methods by which food is mass-produced and marketed, and recent widespread contamination incidents have made the industry vulnerable to a multi-pronged attack. Companies and their product liability counsel can expect an upward trend in both traditional and innovative food-based cases, as well as expanded civil and criminal statutory exposure. Individual product liability suits and incidents of contamination will unfold against this backdrop of litigation, legislation and regulation, making it imperative that food producers defend their products on many different levels. This article examines recent notable lawsuits involving packaged and restaurant food items. A companion article concerning food legislation and regulation will follow in an upcoming issue.

Contamination and Consumer Fraud Suits

The most numerous product-related litigations involving food arise out of incidents of contamination. Salmonella in eggs and peanut butter, E. coli in hamburger and a number of other incidents have generated significant “tainted food” class action litigation over the past two years. Plaintiffs' complaints generally rest on traditional product liability, negligence and consumer fraud grounds. Defenses revolve around avoiding class certification, defeating plaintiffs' causation theory and the validity of expert testimony.

While contamination cases proliferate, there can be problems inherent in demonstrating causation in many instances. As a result, consumer fraud claims increasingly have been plaintiffs' theory of choice in recent years. In many cases, plaintiffs try to capitalize on affirmative statements or graphics that allegedly mislead the consuming public. So, for example, Sheree Shepard sued Applebee's International for allegedly misrepresenting the amount of fat and calories contained in its meals. Valiente v. Dineequity, Inc., slip op., No. 08-2415-KHV (D. Kansas Apr. 7, 2010) (dismissing RICO claims asserting Applebee's intentionally underreported the calorie and fat content of its Weight Watchers' meals) (appeal voluntarily dismissed, Shepard v. Dineequity, Inc., No. 10-3110 (10th Cir. 2010)). Roy Werberl sued Pepsico over a purported lack of real berries in Cap'n Crunch's Crunch Berries cereal. Werberl v. Pepsico, Inc., slip op., 2010 WL 2673860 (N.D. Cal. July 2, 2010) (dismissing plaintiff's complaint without leave to amend because “no reasonable consumer would believe that Cap'n Crunch derives any nutritional value from berries”); and Mathew Ercoline complained that Breyer's Smooth & Dreamy ice cream did not contain one-third less calories than every flavor of Breyer's full-fat ice creams. Ercoline v. Unilever United States, Inc., Civ. A No. 2:10-cv-01747-SRC-MAS (D.N.J. Sept. 24, 2010) (proposed class settlement pending that, if accepted, will require Breyer's low-fat ice cream to bear a new label showing calorie and fat content compared with its full-fat ice creams).

'Failure to Disclose'

These garden-variety consumer fraud suits are joined by efforts to hold food producers liable on consumer fraud grounds for the inherent and often well-known qualities of their products. In a series of high-profile cases, plaintiffs have pressed consumer fraud actions based on a “failure to disclose” theory that looks a great deal like traditional failure-to-warn claims. By transforming strict product liability failure-to-warn claims into consumer fraud failure-to-disclose, plaintiffs avoid the necessity of pleading or proving an actual product defect, in favor of proving that a product advertisement is overly positive about allegedly “unhealthy” or “non-nutritious” food.

Fortunately, courts are generally not so easily misled. For example, in O'Donnell v. Kraft Foods, Inc., et al., slip op., No. 2:09-cv-04448-JLL-CCC (D.N.J. Mar. 18, 2010), the district court confronted a putative consumer fraud class action claim based on an alleged failure to disclose that hot dogs and other processed meat products “increase the risk of cancer if consumed in sufficient quantities.” The court dismissed this complaint, finding that:

Plaintiffs seek a warning label attached to processed meats and advertisements for same. They predicate this necessity upon the increased risk of cancer ' a form of physical illness or harm ' caused by the processed meats ' . Plaintiffs' attempt to tack a [Consumer Fraud Act] remedy onto the underlying products liability claim does not alter the analysis: their theory that they are entitled to recovery of their purchase price for the hot dogs depends upon Defendants' alleged failure to warn of their increased risk of cancer, a failure of 'adequate warnings or instructions' covered by the [Product Liability Act].

Slip op. at 5-6.

Similarly, in two class action complaints, plaintiffs sued Denny's Corporation claiming that its failure to disclose the sodium content of its sandwiches violated state consumer fraud acts. Ciszewski v. Denny's Corp., slip op., Case No. 09 C 5355 (N.D. Ill. Apr. 7, 2010), appeal pending, No. 10-2585 (7th Cir. July 1, 2010); DeBenedetto v. Denny's Corp., slip op., No. L 00625909 (N.J. Super. Ct. Apr. 23, 2010), affirmed, No. A-4135-09T1 (N.J. Super. Ct. App. Div. Jan. 1,11, 2011). In both suits, the plaintiffs alleged that Denny's committed deceptive and unconscionable commercial practices by selling meals containing “alarmingly large and undisclosed amounts of sodium.” Both complaints sought injunctions requiring Denny's to disclose the amount of sodium in its meals and to inform consumers of the risks of high sodium intake before they buy Denny's food.

Despite being framed as consumer fraud claims, the complaints actually pled factual allegations that read like elements of strict product liability. Plaintiffs alleged that sodium is a dangerous product that causes lasting and significant physical injury to individuals. They further charged that the amount of sodium in Denny's food is “extraordinarily high” and that Denny's knows this constitutes a dangerous condition in their food products. Despite knowledge of the potential harm to consumers, Denny's allegedly refused to lower the sodium content of its meals or to warn consumers about that sodium content. Denny's failure to warn exposed its customers, and plaintiffs in particular, to risks of hypertension, cardiac disease and other serious illnesses. Plaintiffs originally alleged that they had contracted such conditions or that pre-existing conditions had been aggravated, though personal injury claims were dropped when the complaints were amended.

Both DeBenedetto and Ciszewski were dismissed twice. In Ciszewski's first round, the court found that plaintiffs had not alleged that Denny's had communicated with them, whether or not misrepresenting material facts. Without an actual communication, there could be no misrepresentations or omissions. Slip op., No. 1:09-cv-05355 at 6 (N.D. Ill. Apr. 7, 2010). In the second round, the court dismissed plaintiffs' amended complaint because it failed to plead with specificity what advertisements, menus, or signage plaintiffs saw that misrepresented Denny's food through failure to disclose salt content. Slip op., No. 1:09-cv-05355 (N.D. Ill. June 2, 2010). The court also rejected the plaintiffs' theory that failing to disclose salt content was an unfair practice, finding that the omission did not offend public policy and was not immoral, unethical or unscrupulous under Illinois law. The DeBenedetto trial and appellate courts concluded that plaintiff's second amended complaint was governed by New Jersey's Product Liability Act despite its consumer fraud label.

Ultimately, DeBenedetto's strategic decision to exclude personal injury allegations from his Second Amended Complaint does not change the fact that his complaint, at its core, alleges that Denny's failed to warn him of the inherent dangers of consuming excessive amounts of sodium. Slip op. at 16.

'Negligence and Consumer Fraud'

The grandfather of this kind of claim, Pelman v. McDonald's Corp., No. 02 CV 7821 (RSW), 2003 WL 23474873, began with very similar claims. Putative class plaintiffs alleged that McDonald's committed negligence and consumer fraud by advertising its food as healthy when, in fact, it contained undisclosed and excessive amounts of salt, fat and cholesterol. These plaintiffs alleged a causal connection between McDonald's “failure to disclose” and their development of obesity, diabetes and other adverse conditions. Plaintiffs' negligence claims were dismissed on defendant's motion to dismiss because “[i]t is well-known that fast food in general, and McDonald's products in particular, contain high levels of cholesterol, fat, salt, and sugar, and that such attributes are bad for one.” Pelman I, 237 F. Supp. 2d 512 (S.D.N.Y. 2003. Plaintiff's consumer fraud claims were initially dismissed, but a small subset of claims against specific ads survived following amendment of the complaint. Pelman II, 452 F. Supp. 2d 320 (S.D.N.Y. 2006). Despite these limitations, plaintiffs persevered, but ultimately lost a bid to certify a class. Pelman III, No. 02 Civ. 07821 (DCP), 2010 WL 4261390 (S.D.N.Y. Oct. 27, 2010).

Despite this negative precedent, plaintiffs continue to bring thinly veiled product liability claims under consumer fraud theories. Recently, plaintiff Timothy Dahl sued Mott's LLP and Dr. Pepper Snapple Group “for misleading consumers about the nutritional and health qualities of their chocolate drink, Yoo-hoo,” by “targeting” advertising to children and failing to disclose that Yoo-hoo contains “a highly unhealthy, non-nutritious ingredient known as partially hydrogenated oil.” Dahl v. Mott's LLP, No. 1:10-cv-02976-SJ-JMA (E.D.N.Y. June 29, 2010). Repeating allegations found in a number of other suits, Mr. Dahl alleges that partially hydrogenated oil “is an artificial, man-made substance known to cause a number of health problems,” which makes defendant's advertisement that Yoo-hoo is “good for you” deceptive. See also Peviani v. Hostess Brands, Inc., slip op., No. 10-cv-2303 (C.D. Cal. Nov. 3, 2010) (dismissing on preemption grounds a complaint alleging that Hostess 100 Calorie Packs are deceptively marketed based on presence of partially hydrogenated oils).

Mr. Dahl claimed he purchased Yoo-hoo “at a premium price,” which he would not have paid had he known that Yoo-hoo was not “nutritious, healthy and better than similar products.” Complaint at par. 10. The complaint sought to compel defendant to destroy advertising that the plaintiff considers deceptive and misleading; to either compel disclosures and/or disclaimers of nutritious character on defendant's labels and/or to “redesign” the product by removing partially hydrogenated oil; to provide restitution and disgorgement of profits; to obtain compensatory and punitive damages; and more. The “redesign” remedy, in particular, reflected the product liability nature of this complaint. This complaint has now been voluntarily dismissed.

Childhood Obesity and 'Consumer Fraud'

Emboldened by public concern over childhood obesity, some are distorting the law of consumer fraud even further. For example, the Center for Science in the Public Interest (CSPI) threatened to bring, and apparently recruited an individual to bring, consumer fraud claims against McDonald's because including toys in its Happy Meals and advertising allegedly “lures” and “unfairly and deceptively markets” to children, a charge the company vigorously denies. Parham v. McDonald's Corporation, No. CGC-10-506178 (Ca. Super. Ct. San Francisco County Dec. 15, 2010); http://chicagobreakingbusiness.com/2010/07/mcdonalds-ceo-stands-up-for-happy-meal-toys.html (last accessed Feb. 4, 2011). Ms. Parham asserts that “McDonald's exploits very young California children and harms their health by advertising unhealthy Happy Meals with toys directly to them.” Complaint, ' 2. Plaintiff asserts that McDonald's advertising amounts to exploitation because children “eight years old and younger do not have the cognitive skills and developmental maturity to understand the persuasive intent of marketing and advertising.” Id. Anticipating the common-sense inquiry about the whereabouts of parents in this equation, plaintiff alleges that McDonald's intends to subvert parental authority over purchasing decisions by enticing children with toys. Id. at ' 10. This litigation and a concurrent San Francisco ordinance banning toys in children's quick-serve meals rest on the premise that parents are not responsible for what their children eat, if advertising allegedly causes their children to beg for certain kinds of food.

Conclusion

Companies facing food-based complaints, whether serial, mass, class or one-off, need to keep the larger picture of litigation trends in mind. The pressure to settle these kinds of suits quickly can be great, given the general economic climate and the cost of defense. Prudent companies will consider the long-term strategic impact of settlement on the overall product line, the likelihood that settlement will encourage further suits, and the public perception that the company has done something wrong.

Part Two of this article will discuss legislative and regulatory trends impacting food litigation and business in general.

Sarah (Sally) L. Olson, a member of this newsletter's Board of Editors, is a partner in the Litigation Department of Wildman, Harrold, Allen & Dixon, LLP, Chicago.

No one could really blame the food industry for being a little paranoid. Over the past two years, food producers, processors and restaurants have increasingly been in the cross-hairs with legislators, regulators, public health advocates and the plaintiffs' bar. The nation's obesity problem, consumer concern over the methods by which food is mass-produced and marketed, and recent widespread contamination incidents have made the industry vulnerable to a multi-pronged attack. Companies and their product liability counsel can expect an upward trend in both traditional and innovative food-based cases, as well as expanded civil and criminal statutory exposure. Individual product liability suits and incidents of contamination will unfold against this backdrop of litigation, legislation and regulation, making it imperative that food producers defend their products on many different levels. This article examines recent notable lawsuits involving packaged and restaurant food items. A companion article concerning food legislation and regulation will follow in an upcoming issue.

Contamination and Consumer Fraud Suits

The most numerous product-related litigations involving food arise out of incidents of contamination. Salmonella in eggs and peanut butter, E. coli in hamburger and a number of other incidents have generated significant “tainted food” class action litigation over the past two years. Plaintiffs' complaints generally rest on traditional product liability, negligence and consumer fraud grounds. Defenses revolve around avoiding class certification, defeating plaintiffs' causation theory and the validity of expert testimony.

While contamination cases proliferate, there can be problems inherent in demonstrating causation in many instances. As a result, consumer fraud claims increasingly have been plaintiffs' theory of choice in recent years. In many cases, plaintiffs try to capitalize on affirmative statements or graphics that allegedly mislead the consuming public. So, for example, Sheree Shepard sued Applebee's International for allegedly misrepresenting the amount of fat and calories contained in its meals. Valiente v. Dineequity, Inc., slip op., No. 08-2415-KHV (D. Kansas Apr. 7, 2010) (dismissing RICO claims asserting Applebee's intentionally underreported the calorie and fat content of its Weight Watchers' meals) (appeal voluntarily dismissed, Shepard v. Dineequity, Inc., No. 10-3110 (10th Cir. 2010)). Roy Werberl sued Pepsico over a purported lack of real berries in Cap'n Crunch's Crunch Berries cereal. Werberl v. Pepsico, Inc., slip op., 2010 WL 2673860 (N.D. Cal. July 2, 2010) (dismissing plaintiff's complaint without leave to amend because “no reasonable consumer would believe that Cap'n Crunch derives any nutritional value from berries”); and Mathew Ercoline complained that Breyer's Smooth & Dreamy ice cream did not contain one-third less calories than every flavor of Breyer's full-fat ice creams. Ercoline v. Unilever United States, Inc., Civ. A No. 2:10-cv-01747-SRC-MAS (D.N.J. Sept. 24, 2010) (proposed class settlement pending that, if accepted, will require Breyer's low-fat ice cream to bear a new label showing calorie and fat content compared with its full-fat ice creams).

'Failure to Disclose'

These garden-variety consumer fraud suits are joined by efforts to hold food producers liable on consumer fraud grounds for the inherent and often well-known qualities of their products. In a series of high-profile cases, plaintiffs have pressed consumer fraud actions based on a “failure to disclose” theory that looks a great deal like traditional failure-to-warn claims. By transforming strict product liability failure-to-warn claims into consumer fraud failure-to-disclose, plaintiffs avoid the necessity of pleading or proving an actual product defect, in favor of proving that a product advertisement is overly positive about allegedly “unhealthy” or “non-nutritious” food.

Fortunately, courts are generally not so easily misled. For example, in O'Donnell v. Kraft Foods, Inc., et al., slip op., No. 2:09-cv-04448-JLL-CCC (D.N.J. Mar. 18, 2010), the district court confronted a putative consumer fraud class action claim based on an alleged failure to disclose that hot dogs and other processed meat products “increase the risk of cancer if consumed in sufficient quantities.” The court dismissed this complaint, finding that:

Plaintiffs seek a warning label attached to processed meats and advertisements for same. They predicate this necessity upon the increased risk of cancer ' a form of physical illness or harm ' caused by the processed meats ' . Plaintiffs' attempt to tack a [Consumer Fraud Act] remedy onto the underlying products liability claim does not alter the analysis: their theory that they are entitled to recovery of their purchase price for the hot dogs depends upon Defendants' alleged failure to warn of their increased risk of cancer, a failure of 'adequate warnings or instructions' covered by the [Product Liability Act].

Slip op. at 5-6.

Similarly, in two class action complaints, plaintiffs sued Denny's Corporation claiming that its failure to disclose the sodium content of its sandwiches violated state consumer fraud acts. Ciszewski v. Denny's Corp., slip op., Case No. 09 C 5355 (N.D. Ill. Apr. 7, 2010), appeal pending, No. 10-2585 (7th Cir. July 1, 2010); DeBenedetto v. Denny's Corp., slip op., No. L 00625909 (N.J. Super. Ct. Apr. 23, 2010), affirmed, No. A-4135-09T1 (N.J. Super. Ct. App. Div. Jan. 1,11, 2011). In both suits, the plaintiffs alleged that Denny's committed deceptive and unconscionable commercial practices by selling meals containing “alarmingly large and undisclosed amounts of sodium.” Both complaints sought injunctions requiring Denny's to disclose the amount of sodium in its meals and to inform consumers of the risks of high sodium intake before they buy Denny's food.

Despite being framed as consumer fraud claims, the complaints actually pled factual allegations that read like elements of strict product liability. Plaintiffs alleged that sodium is a dangerous product that causes lasting and significant physical injury to individuals. They further charged that the amount of sodium in Denny's food is “extraordinarily high” and that Denny's knows this constitutes a dangerous condition in their food products. Despite knowledge of the potential harm to consumers, Denny's allegedly refused to lower the sodium content of its meals or to warn consumers about that sodium content. Denny's failure to warn exposed its customers, and plaintiffs in particular, to risks of hypertension, cardiac disease and other serious illnesses. Plaintiffs originally alleged that they had contracted such conditions or that pre-existing conditions had been aggravated, though personal injury claims were dropped when the complaints were amended.

Both DeBenedetto and Ciszewski were dismissed twice. In Ciszewski's first round, the court found that plaintiffs had not alleged that Denny's had communicated with them, whether or not misrepresenting material facts. Without an actual communication, there could be no misrepresentations or omissions. Slip op., No. 1:09-cv-05355 at 6 (N.D. Ill. Apr. 7, 2010). In the second round, the court dismissed plaintiffs' amended complaint because it failed to plead with specificity what advertisements, menus, or signage plaintiffs saw that misrepresented Denny's food through failure to disclose salt content. Slip op., No. 1:09-cv-05355 (N.D. Ill. June 2, 2010). The court also rejected the plaintiffs' theory that failing to disclose salt content was an unfair practice, finding that the omission did not offend public policy and was not immoral, unethical or unscrupulous under Illinois law. The DeBenedetto trial and appellate courts concluded that plaintiff's second amended complaint was governed by New Jersey's Product Liability Act despite its consumer fraud label.

Ultimately, DeBenedetto's strategic decision to exclude personal injury allegations from his Second Amended Complaint does not change the fact that his complaint, at its core, alleges that Denny's failed to warn him of the inherent dangers of consuming excessive amounts of sodium. Slip op. at 16.

'Negligence and Consumer Fraud'

The grandfather of this kind of claim, Pelman v. McDonald's Corp., No. 02 CV 7821 (RSW), 2003 WL 23474873, began with very similar claims. Putative class plaintiffs alleged that McDonald's committed negligence and consumer fraud by advertising its food as healthy when, in fact, it contained undisclosed and excessive amounts of salt, fat and cholesterol. These plaintiffs alleged a causal connection between McDonald's “failure to disclose” and their development of obesity, diabetes and other adverse conditions. Plaintiffs' negligence claims were dismissed on defendant's motion to dismiss because “[i]t is well-known that fast food in general, and McDonald's products in particular, contain high levels of cholesterol, fat, salt, and sugar, and that such attributes are bad for one.” Pelman I, 237 F. Supp. 2d 512 (S.D.N.Y. 2003. Plaintiff's consumer fraud claims were initially dismissed, but a small subset of claims against specific ads survived following amendment of the complaint. Pelman II, 452 F. Supp. 2d 320 (S.D.N.Y. 2006). Despite these limitations, plaintiffs persevered, but ultimately lost a bid to certify a class. Pelman III, No. 02 Civ. 07821 (DCP), 2010 WL 4261390 (S.D.N.Y. Oct. 27, 2010).

Despite this negative precedent, plaintiffs continue to bring thinly veiled product liability claims under consumer fraud theories. Recently, plaintiff Timothy Dahl sued Mott's LLP and Dr. Pepper Snapple Group “for misleading consumers about the nutritional and health qualities of their chocolate drink, Yoo-hoo,” by “targeting” advertising to children and failing to disclose that Yoo-hoo contains “a highly unhealthy, non-nutritious ingredient known as partially hydrogenated oil.” Dahl v. Mott's LLP, No. 1:10-cv-02976-SJ-JMA (E.D.N.Y. June 29, 2010). Repeating allegations found in a number of other suits, Mr. Dahl alleges that partially hydrogenated oil “is an artificial, man-made substance known to cause a number of health problems,” which makes defendant's advertisement that Yoo-hoo is “good for you” deceptive. See also Peviani v. Hostess Brands, Inc., slip op., No. 10-cv-2303 (C.D. Cal. Nov. 3, 2010) (dismissing on preemption grounds a complaint alleging that Hostess 100 Calorie Packs are deceptively marketed based on presence of partially hydrogenated oils).

Mr. Dahl claimed he purchased Yoo-hoo “at a premium price,” which he would not have paid had he known that Yoo-hoo was not “nutritious, healthy and better than similar products.” Complaint at par. 10. The complaint sought to compel defendant to destroy advertising that the plaintiff considers deceptive and misleading; to either compel disclosures and/or disclaimers of nutritious character on defendant's labels and/or to “redesign” the product by removing partially hydrogenated oil; to provide restitution and disgorgement of profits; to obtain compensatory and punitive damages; and more. The “redesign” remedy, in particular, reflected the product liability nature of this complaint. This complaint has now been voluntarily dismissed.

Childhood Obesity and 'Consumer Fraud'

Emboldened by public concern over childhood obesity, some are distorting the law of consumer fraud even further. For example, the Center for Science in the Public Interest (CSPI) threatened to bring, and apparently recruited an individual to bring, consumer fraud claims against McDonald's because including toys in its Happy Meals and advertising allegedly “lures” and “unfairly and deceptively markets” to children, a charge the company vigorously denies. Parham v. McDonald's Corporation, No. CGC-10-506178 (Ca. Super. Ct. San Francisco County Dec. 15, 2010); http://chicagobreakingbusiness.com/2010/07/mcdonalds-ceo-stands-up-for-happy-meal-toys.html (last accessed Feb. 4, 2011). Ms. Parham asserts that “McDonald's exploits very young California children and harms their health by advertising unhealthy Happy Meals with toys directly to them.” Complaint, ' 2. Plaintiff asserts that McDonald's advertising amounts to exploitation because children “eight years old and younger do not have the cognitive skills and developmental maturity to understand the persuasive intent of marketing and advertising.” Id. Anticipating the common-sense inquiry about the whereabouts of parents in this equation, plaintiff alleges that McDonald's intends to subvert parental authority over purchasing decisions by enticing children with toys. Id. at ' 10. This litigation and a concurrent San Francisco ordinance banning toys in children's quick-serve meals rest on the premise that parents are not responsible for what their children eat, if advertising allegedly causes their children to beg for certain kinds of food.

Conclusion

Companies facing food-based complaints, whether serial, mass, class or one-off, need to keep the larger picture of litigation trends in mind. The pressure to settle these kinds of suits quickly can be great, given the general economic climate and the cost of defense. Prudent companies will consider the long-term strategic impact of settlement on the overall product line, the likelihood that settlement will encourage further suits, and the public perception that the company has done something wrong.

Part Two of this article will discuss legislative and regulatory trends impacting food litigation and business in general.

Sarah (Sally) L. Olson, a member of this newsletter's Board of Editors, is a partner in the Litigation Department of Wildman, Harrold, Allen & Dixon, LLP, Chicago.