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Lessons From The Food Industry Litigation Swarm

Lessons From The Food Industry Litigation Swarm. Benjamin P. Broderick, Senior Attorney Theodora Oringher PC. The Food Industry’s Experience Should Concern Every Company Because:. “litigation swarms.”.

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Lessons From The Food Industry Litigation Swarm

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  1. Lessons From The Food Industry Litigation Swarm Benjamin P. Broderick, Senior AttorneyTheodora Oringher PC

  2. The Food Industry’s Experience Should Concern Every Company Because: “litigation swarms.” The consumer fraud claims currently focused on the food industry can be readily transferred to other industries. The food industry’s experience offers clues as to how to avoid and defend against

  3. What is a “Litigation Swarm?” A series of similar lawsuits against a particular industry or practice Driven by theories of liability rather than individual injuries

  4. Where Have Litigation Swarms Occurred in the Past? asbestos pharmaceutical food tobacco

  5. ? Where Will The Next Swarm Strike? • 2) Special Risk Factors: • a) Careless or deceptive advertising practices • b) High jury identification with plaintiff/ low jury identification with defendants • c) Spotty regulation • d) Single-message marketing • e) Numerous competitors making similar claims • f) Deep pockets 1) Consumer fraud claims lend themselves to litigation swarming: a) Lenient state consumer fraud legislation b) Common marketing practices

  6. How Do Litigation Swarms Work? • Consumer false advertising litigation follows a simple formula: • Allege a “uniform” misrepresentation or omission as the basis for a putative class action • Bring suit in a favorable venue • Demand millions or tens of millions of dollars in “damages” AllegedInjury Legal Theory Lawsuit “Litigation swarms” reverse the dynamics of “stand-alone” suits

  7. The Food Industry's Experience Sugar Content Caloric Content “all natural” “healthy”

  8. How Has the Food Industry Defended Itself? • Emphasis on motion practice – few cases resolved by trial • Basic defenses • Preemption/primary jurisdiction • Failure to state a claim (Iqbal/ Twombly) • Challenge class certification: Attack common proof of exposure to ads, reliance, causation, and/or damages

  9. Results Growth in Consumer Fraud-related Food Industry Class Actions Many individual successes Failure to quell the swarm

  10. What’s Driving the Food Industry Swarm?

  11. Why So Many Settlements? (2011) -- $45 million (2011) -- $7 million (2013) -- $8.5 million (2012) -- $7.5 million Costs and distraction of litigation Fear of potential catastrophic liability Desire to avoid bad publicity Desire to avoid bad precedent

  12. Long Term Result Steady diet of juicy settlements multiplied the swarm of litigation 10 times in just 4 years Many defendants have been sued a dozen or more times:

  13. Long Term Result Other frequent FICA defendants include:

  14. Lessons From the Food Industry’s Experience • Individual victories won’t abate the swarm • Settlements may not protect you from a swarm

  15. What Can You Do To Protect Your Company From Litigation Swarms? 1. Develop More Rigorous Advertising Review Protocols a) Thorough consumer research b) Careful verification of claims c) Avoid pseudo-scientific claims d) Conduct regular proactive legal reviews

  16. What Can You Do To Protect Your Company From Litigation Swarms? 2. Develop a pro-active/long-term defense strategy a) Improve information collection b) Improve information dissemination • More information • More information sources

  17. What Can You Do To Protect Your Company From Litigation Swarms? d) Take account of long-term settlement costs. e) Devise methods for cost and risk sharing to counteract the extortionate impact of consumer fraud claims. c) Customize consumer contact • Avoid single-message advertising campaigns. • Communicate with customers through a variety of methods. • Offer customization, if appropriate • Offer refunds, trial periods, etc.

  18. Conclusions 2) To avoid and/or defeat a consumer fraud litigation swarm, businesses must spend the time and resources to: a) get the advertising right, and b) develop a forward-looking comprehensive defense strategy emphasizing i) better information collection and dissemination, ii) more individual customer contact, iii) fewer juicy settlements. 1) Success in individual cases through after-the-fact defenses and routine settlement approaches aren’t enough to combat a litigation swarm.

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