One of the most significant news stories I read in 2012 was an article published by The New York Times in August, which described the efforts of lawyers who took on the “Big Tobacco” companies to find a new target in the business community. As the news article explains, these lawyers have now set their sights on large food manufacturers, such as ConAgra, General Mills, Heinz and others.
The underlying theory behind many of these lawsuits is that the manufacturers are mislabeling and/or misleading the public through claims such as that the products are “healthy,” “all-natural,” etc. Unlike a classic product liability lawsuit where someone claims they were injured as a result of using a certain product, in these consumer fraud class actions, the situation is often quite different. A number of these plaintiffs have never even used the product, but rather, they are allowed to proceed simply because they made a purchase.
Why does this matter to me? I don’t manufacture food products.
Although the “Big Tobacco” lawyers are focused on food manufacturers, consumer fraud class actions are being filed across the country against manufacturers in other industries as well. If your company sells consumer products, you may want to review what was put on your labels and whether the claims made can be substantiated. Similarly, if you are a company that distributes consumer products, you may want to inquire with the manufacturers that you do business with.
Over the past few months, I have counseled several manufacturers on the risks associated with these types of consumer fraud class actions. I expect this trend to continue as more lawsuits are filed.
Depending upon your company’s specific situation, it may make sense (with the advice of legal counsel) to think about instituting some or all of the following steps in order to assess the risks to your business:
- Institute A Systematic Review of Your Labels and Label Claims
- Assess Whether Your Label Claims Are Substantiated (i.e., are they supported by testing (if applicable) or science?)
- Consider Whether to Document The Substantiation of Your Label Claims If Not Already Completed (typically, with the advice of legal counsel)
- Monitor Consumer Websites such as Amazon.com (often class action lawyers will troll these websites to find consumer complaints and new class action targets)
- Review Your Warranty Claims (i.e., are there are trends in the warranty claims that are being made by customers?)
In the end, there are no guarantees that you will not be sued by a plaintiff’s lawyer who believes that your company or product will be their next big conquest. However, there are proactive steps that can be taken to minimize these risks going forward.