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1
Lessons From The Food Industry Litigation Swarm
Benjamin P. Broderick, Senior Attorney
Theodora Oringher PC
2
The Food Industry’s Experience Should Concern Every Company Because:
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 “litigation
swarms.”
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
pharmaceutical
Where Have Litigation Swarms Occurred in the Past?
asbestos
tobacco
food
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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
Where Will The Next Swarm Strike?
1) Consumer fraud claims lend themselves to litigation swarming:
a) Lenient state consumer fraud legislation
b) Common marketing practices
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“Litigation swarms” reverse the dynamics of “stand-alone” suits
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”
How Do Litigation Swarms Work?
Alleged
InjuryLegal
TheoryLawsuit
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The Food Industry's Experience
Sugar Conten
t
Caloric Conten
t
“healthy”“all
natural”
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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
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Results
Many individual successes
Failure to quell the swarm
0
20
40
60
80
100
120
2007 2008 2009 2010 2011 2012
Year
Su
its
Fil
ed
Overall, the number of false advertising-based class actions complaints against food manufacturers and retailers multiplying more than 10 times in just four years.[1] --------------------------------------------------------------------------------[1] The statistics are based on information obtained through searches performed on the LexisNexis Courtlink service, which searches filings in both state and federal courts across the nation.
Growth in Consumer Fraud-related Food Industry
Class Actions
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What’s Driving the Food Industry Swarm?
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Why So Many Settlements?
Costs and distraction of litigation
Fear of potential catastrophic
liability
Desire to avoid bad publicity
Desire to avoid bad precedent
(2011) -- $45 million
(2013) -- $8.5 million
(2011) -- $7 million
(2012) -- $7.5 million
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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:
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Long Term Result Other frequent FICA defendants include:
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Lessons From the Food Industry’s Experience
Individual victories won’t abate the
swarm
Settlements may not protect you from a
swarm
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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
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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
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What Can You Do To Protect Your Company From Litigation Swarms?
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.
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.
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Conclusions
1) Success in individual cases through after-the-fact defenses and routine settlement approaches aren’t enough to combat a litigation swarm. 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.
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