Class action lawsuits vs food and bev brands surged in 2021, but courts are "growing increasingly impatient" with some litigants, says Perkins Coie

30-Apr-2022 - Last updated on 30-Apr-2022 at 01:51 GMT

A record number of class action lawsuits were filed against food & beverage companies in 2021, according to an analysis by law firm Perkins Coie

Food & beverage class actions surged in 2021, driven in part by a tsunami of cases over heavy metals in baby food, but judges are wearying of cases that assume consumers have zero common sense, according to a review by law firm Perkins Coie.

In its review* - which the law firm conducts every year - Perkins Coie documented 325 class action lawsuits filed against food and beverage companies in 2021, compared with 221 suits in 2020, and 179 suits in 2019.

“Plaintiffs’ counsel continued to stalk and scrutinize the labels of CPG products for potential lawsuits, with 2021 once again setting record numbers for industry filings.”

Two key factors behind the sharp uptick in cases in 2021 were the prolific filings of ‘vanilla vigilante’ plaintiff’s attorney Spencer Sheehan (“whose cases continued to be dismissed at a steady pace by federal courts nationwide”), and the tsunami of cases filed in the wake of a Congressional Subcommittee report alleging ‘dangerously high’ levels of heavy metals in products from leading baby food brands, said the law firm.

However, there was still a steady stream of cases covering familiar territory, from natural claims to slack fill (empty space in a package that serves no clear function).

Lawsuits over ESG claims ‘skyrocketed’ in 2020 and 2021

One area attorneys at Perkins Coie are monitoring especially closely is litigation related to environmental, social, and governance (ESG) claims, lawsuits that challenge a company’s sustainability or environmental practices, they explained.

“As recently as 2017, this area would have been fairly characterized as a 'test case' area, with only three relevant filings that year. In the period between 2020 and 2021, however, that number has skyrocketed with 60+ filings over that two-year period.”

So what other issues should food and beverage manufacturers keep on the radar when it comes to food litigation in 2022?

FALSE LABELING: Cases challenging representations such as ‘made with real fruit,’ ‘slightly sweet’ are still popular, although 2021 saw several favorable appellate-level rulings on the reasonable consumer standard, a key defense in such cases, said Perkins Coie. (To paraphrase, courts are beginning to lose patience with cases that assume consumers are idiots.)

NATURAL: Cases arguing that ingredients such as xanthan gum, citric acid, ascorbic acid, acetic acid and powdered cellulose render ‘natural’ claims false or misleading are still being filed fairly regularly, while brands making claims such as ‘pure’ that are “merely evocative of a natural product” are also being sued, said Perkins Coie, “a trend we expect to continue in 2022.”

HEALTH MAINTENANCE: Sugar is still a hot topic for the plaintiff’s bar, said Perkins Coie, noting that different courts have adopted varying approaches to such cases (product X purports to be good for you but in fact has tons of sugar). However, some are recognizing that a reasonable consumer is “well-equipped to review a product’s label, see its sugar content, and decide for herself whether she would like to buy it.”

VANILLA: Federal courts are “growing increasingly impatient toward vanilla litigation,” claimed Perkins Coie. “Relying on common sense—and a coalescing body of consistent precedent—courts have repeatedly held that when consumers read vanilla on a product label, they understand it to mean the product has a certain taste, not that it is derived exclusively from vanilla beans.”

HEAVY METALS: There are now well over 100 consumer class action cases pending in jurisdictions throughout the country against baby food companies named in the Feb 2021 House Subcommittee Report, said Perkins Coie. The cases have been consolidated in several jurisdictions but it’s too early to say how litigants will fare.

PROTEIN: In 2021 several lawsuits alleged that food companies overstated the amount of protein in their products by using a total protein figure on the front-of-pack, rather than a figure adjusted for digestibility calculated using a PDCAAS (protein digestibility-corrected amino acid score). However, courts have now acknowledged that FDA regulations expressly permit food companies to declare total protein content (unadjusted for digestibility) on the front of pack, said Perkins Coie.

The ‘reasonable consumer’ defense and the application of ‘common sense’

On a positive note for food and beverage brands, the ‘reasonable consumer’ defense remains an important tool for defendants in class actions, said Perkins Coie, with the US Court of Appeals for the Ninth Circuit “issuing an important published opinion [in 2021] emphasizing the importance of commonsense reasoning and marketplace realities in such cases.”

The opinion in Moore v. Trader Joe’s Co, affirming a lower court’s dismissal of a case vs the retailer over manuka honey labels, “emphasizes that contextual cues beyond the label alone—consumer familiarity with the product, differences in products driven by price, and commonsense generally—all must be factored into the ‘reasonable consumer’ analysis” along with consideration of the ingredients list to provide clarity where a front of pack claim may be unclear.

“The United States Supreme Court likewise issued an important ruling in the class action context, further clarifying that named plaintiffs must have a real, non-speculative injury—often lacking in CPG putative class actions—to open the doors to federal courts.”

* The report is called: Food and consumer packaged goods litigation 2021: Year in Review.