At a time when a federal district court in California has been nicknamed “The Food Court” because of the number of consumer actions it has addressed, it’s become apparent that building a brand is about more than just growing sales, it’s about protecting those sales in the face of potential legal action.
A team of lawyers discussed the issue during a breakout session at the recently-completed BevNET Live Winter 2016 in Santa Monica, Calif. The session, Lessons from the Food Courts, used those jurisdictions in which consumer suits are commonplace to demonstrate the key ways companies who are building their brands also need to protect themselves from consumer and false advertising class actions.
“The bottom line is that companies now have to not only think about the competitive landscape when they’re growing their product and their brand, as well as thinking toward the future in terms of fundraising and exit, but they also need to be thinking about an an additional market that has developed that is specifically directed towards these products,” said Noah Hagey, a partner with Braun Hagey, LLC, who led the presentation. “In the last two to three years, our clients… have received an excess of 1,000 demand letters.”
Hagey was joined by fellow regulatory attorneys Justin Prochnow, of Greenberg, Traurig LLP and Ryan Kaiser, of Amin Talati & Upadhye, LLC.
The panel presented stark legal concerns. According to Hagey, in the past year, more than $100 million has been made in settlements to consumers over so-called “nuisance suits” that are done away with to avoid the expense of trial.
Even if class-action attorneys are filing specious claims, noted Prochnow, “Most companies are not going to be able to fight because fights based on principle are expensive.”
The panel noted that in both food and beverage, technical FDA or label violations make up 35 percent of demand letters, natural claims make up 35 percent of the alleged claim violations, and nutrient claims make up another 20 percent.
The panel’s biggest tip to brands was to make common sense judgements about how they market what’s in a product, how much of those ingredients they use and what documentation they have to support said claims.
“It’s the little mistakes on your label that can tip off that your house isn’t in order,” Kaiser said.
To view the entire Bevnet Live Winter 2016 Food Courts panel, please view the video below.
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