By Ronald J. Levine
Food labels are under attack. Every day new lawsuits are filed, often as class actions, as well as through regulatory actions. Legal actions concerning words such as “natural,” or “healthy” are all too common.
THE FIVE STAGES OF GRIEF
While some of the large food manufacturers have had significant experience defending these lawsuits, many companies have had little experience with such claims. I have found that executives facing their first class-action case often go through the five stages of grief — which has been associated with grieving after a loved one passes away. Companies that get sued experience a similar pattern of grief, including denial, anger, bargaining, depression and acceptance. Often, the final stage of acceptance involves a settlement and some payment.
For many companies, denial, anger and bargaining will persist for years before they experience depression and acceptance. However, during those years, the defense attorneys will battle over the merits of the claims, and at the same time run up huge legal fees.
GET PAST THE ANGER
Food companies should recognize that anger, a common reaction to label lawsuits, may not go anywhere. Food executives must understand that the company’s sense of “wrong” is different from the plaintiff’s lawyer’s sense of “wrong,” is different from the court’s sense of “wrong” and is different from the public’s sense of “wrong.” The company may choose to take a stand, but needs to be ready for litigation costs and potential adverse publicity from social media which will inevitably challenge claims made by “Big Food.”
Common corporate “denial” positions often do not make lawsuits disappear. These positions are logical, but the courts are reluctant to dismiss cases for these reasons:
- All of the companies in our industry are making similar claims, so we are not going to be liable.
- We have always said it, so why should it now become a problem?
- It is just puffery, so what’s the big deal?
- We are not charging consumers a premium because of the claim.
FIVE STEPS TO TRY TO AVOID THE FIVE STAGES
Unlike death, food companies can avoid lawsuits over labels. Here are five steps companies should follow to avoid the five stages of grief:
- Stay on top of the changing landscape of food regulations. Anyone involved in drafting a label must know and understand the various regulations promulgated by the Food and Drug Administration, the Department of Agriculture, state and local authorities, and other regulatory bodies. Labeling rules are constantly evolving, and the company must be looking over the horizon. By the time the product hits the shelves, the rules could change.
- Never assume that the words in the label will be interpreted by a court to mean what you think they mean. A food manufacturer should not use words like “natural” and “healthy” on a label unless the company has studied how courts are interpreting those words. Labeling rules can be ambiguous, and that ambiguity has spawned litigation.
- Look at the big picture when designing a label. Individual words or phrases may pass muster, but graphics or the combination of words on the label could become a problem.
- Do not go “off the reservation” when advertising the product. A company’s counsel may sign off on a product label, but the chief marketing officer may engage in overselling the product, with “puffery,” when promoting the product in print or online advertisements. The Federal Trade Commission may start breathing down the company’s neck claiming false advertising, or those advertisements may become one more item in the class action complaint.
- Remember: Every controversy is an opportunity. Do not despair if there is a challenge. The company may be able to turn a class action litigation into an opportunity to educate the public about the positive qualities in its products. Any challenge to labeling could and should be met as a chance to provide the full picture about a product, and explain that there is another side to the story. Channel the anger in a positive direction.
Earning a profit in the food industry is tough enough without having to deal with litigation costs. Death and taxes may be inevitable, but companies can avoid litigation by following these five points when designing a label and promoting a product.
Posted in Foods, Issue of the Month and tagged Ronald Levine.