The Suits Don’t Match

It’s hard to be the bearer of bad news, but it’s even harder to have to ask people to react to bad news on the record.

Still, that’s just what we’ve had to do a lot of lately here at BevNET, as we’ve been forced to write a series of stories on beverage companies that are being sued over alleged violations of a set of California consumer protection laws covering truth in advertising and unfair competition.

Typically, these stories have gone like this: we receive notice that a class action lawsuit has been filed against a beverage company alleging some kind of down-in-the-weeds violation of a functional or natural origin assertion that could, in any other part of the world, be called “marketing.”

We then call said beverage company’s CEO, who tells us “the lawsuit is baseless.” Or they say to us “no comment” on the record and then go off the record to tell us the lawsuit is baseless. Either way, they get pretty upset, mostly that they’re being sued, but also because having news out about a lawsuit – or at least a non-Kardashian related lawsuit – can be a drag on business. Investors don’t like them, customers don’t like them, retailers don’t like them. It’s another question that goes onto an already heavy load of questions that marketers need to address when they would rather be concentrating on their core business.

The hardest part about these lawsuits is that they tend to take forever, even when you win: they drain cash and creativity that could better be directed toward the brand. If you settle quickly, it’s like you’ve been mugged; if you battle it out, it’s a pyrrhic victory. There’s not a very well established regulatory framework for most of these cases: the notion of “all-natural” is a highly subjective one, particularly as compared with federally mandated rules concerning organic. While operating in less strenuous regulatory arenas allows suppliers some cost advantages when it comes to manufacturing their drinks, it also leaves them open to technical interpretations of how their products should be defined. Those definitions are then weighed against how they choose to define their products for consumers.

Here’s the rub, though: in most cases, consumers are capable of making that interpretation, themselves, at the store level. It’s the attorneys purporting to represent those consumers who are driving everyone nuts.

Now, I’m a big fan of lawyers, litigation, and the legal system’s ability to change, advance, and reshape society and government. Consumer protection is a big part of this. But the classes of consumers being formed to bring about these lawsuits don’t seem to be particularly aggrieved; in fact, many of them don’t even know they’re in the class, and the evidentiary revelations being pitched by the plaintiffs have had no impact on the lives of the members of the class. They certainly aren’t dreaming of winning free coconut water as part of their winning case.

I could understand it in the case of financial scams, or in the case of a product like ephedra, where there’s real deception or potential harm. (In those cases there’s also typically swift regulatory action that takes place ahead of any lawsuit). But lawsuits filed over whether or not vitamins are working better in one drink over another, or if pricing has been consistent across a concentrated line over a natural line, or if “with mango” means with mango flavor or with mango juice aren’t aimed at consumers, they are aimed squarely at the wallets of companies that aren’t built to carry the legal load imposed on them by cheap-shot litigators attempting to make a buck in the name of the consumers of the state of California.

For most of the companies we’ve called, the marketing materials they have been sued over clearly are not built on an attempt to deceive, but on an attempt to establish a brand proposition. Their mistakes, while avoidable, shouldn’t be making fortunes for bottom feeders. Trying to trip them up on technicalities in the hopes of a jackpot of fees isn’t proving a point of consumer protection: it actually creates a more hostile atmosphere in which those consumer protection statutes are receiving negative attention. The ultimate result may be new sets of laws that overreach in the other direction, diluting their real purpose, which is to prevent true harm from occurring.

Does that mean we’ll cease reporting on the bad news? No way. Bad news, like good news, needs to get out, particularly because we are serving constituencies that have a right to know about the stability of those companies whose products they carry. And those companies need to be careful and smart about the claims they make. Snake oil is snake oil, and should be called out. But that doesn’t mean we aren’t hoping that some of these new bottom feeding firms find better things to do with their time. Like suing each other.