Uptick in consumer suits over labeling

‘All-natural’ and good-for-you claims on food packages are fueling a growing number of class action suits.

Health claims on package labels constitute one of the most contentious areas of food packaging, particularly when nutritional and “all-natural” claims are made. While regulators and industry spar over where lines should be drawn, food companies deemed to go too far are subject to hefty penalties for what their packages say.

For instance, Group Danone, parent of Dannon Co. and its Activia and DanActive brands, recently settled a Canadian class action lawsuit related to digestive-aid claims on the labels and ads for those yogurt and probiotic-drink products. The settlement, which Danone estimates may cost up to $1.7 million, comes two years after a $21 million settlement with the Federal Trade Commission (FTC). The payment came from a $35 million fund Dannon created in September 2009 to settle a class action filed when FTC first objected to Activia’s label and ad claims.

A big uptick in consumer class actions over health and nutrition claims has occurred in recent years, notes attorney David Biderman of the firm Perkins Coie. Most fail to meet stringent class certification rules and are dismissed, but plaintiffs in a case involving POM Wonderful LLC won certification in late September in US District Court for Central California. The case, which seeks unspecified damages, centers on health claims for pomegranate juice products and consists of a national class of all purchasers of POM Wonderful 100% juice from October 2005 to September 2010.

The class action opens a new front for POM Wonderful. Two years ago, FDA issued a warning letter to Los Angeles-based POM Wonderful LLC, maintaining the therapeutic “claims made in the labeling for this product on your website” pushed the juice into the drug category. FTC has a suit pending against POM, which has claimed First Amendment protection against the action.

When FTC or FDA takes action over food-label claims, a slew of class actions often follows, Biderman points out. That was the case in 2009 with Group Danone. The Danone settlement allowed the use of the phrase “clinical studies show” on the label but not “clinically” or “scientifically proven.”

The best defense against label litigation exists when FDA has established regulations on label claims, Biderman says. “If you stray into areas where the FDA has only issued guidance, you have to be pretty careful about your claims, particularly health claims but also ingredient claims,” he concludes. In the absence of regulations involving genetically modified ingredients and all-natural claims, he predicts a continuing surge in consumer class actions.

For more information:

David Biderman, Perkins Coie LLP, 415-344-7003, dbiderman@perkinscoie.com