Explosion of Consumer Fraud Lawsuits Has Industry on its Heels

Fueled by rising interest on issues regarding health and wellness, and a perfect storm in the legal and political landscape, the U.S. has seen a dramatic leap in the number of class action consumer fraud lawsuits brought against food and beverage companies, according to a recent Reuters article.

Based on data provided by Perkins Coie, a legal firm specializing in business law, the number of class action lawsuits filed against food and beverage companies has multiplied more than five-fold from 2008 to 2012, with the majority of lawsuits originating in California federal courts. As a result, food and beverage marketers and manufacturers have become increasingly wary of potential litigation launched by opportunistic plaintiffs and attorneys.

Speaking on a panel about the growing swell of class-action lawsuits, Ronald Levine, co-chair of the litigation department, at Herrick Feinstein, noted that the recent surge was unexpected, if not unprecedented, and compared it to the woes the tobacco industry faced in past decades.

“None of these companies would have predicted this wave of litigation even five years ago,” Levine said.

The impact of new litigation has some worried that there will be an uptick in the number of cases regarding products as labeled as “all-natural” and “organic,” particularly as consumers pay greater attention to consumption and diet. Others are concerned that, following the so-called “Bloomberg Ban” on large, high-calorie, sugary drinks, local governments will in greater numbers begin to wade into litigious matters concerning health and wellness.

Nevertheless, Levine said that despite the effort of some plaintiffs “trying hard to demonize an industry,” the groundswell of ligation affecting food and beverage companies will eventually dissipate with shifting focus, financial settlements and new labeling and marketing standards.

“We’ve seen this movie before,” Levine said. “Lawsuits come in waves, but eventually they peter out.”