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Daily Dicta: Unnaturally Stupid Lawsuits

7 December 2017
The American Lawyer

Of all the failed would-be class actions, the ones targeting food labels for false advertising strike me as uniquely stupid.

There was the claim that Froot Loops cereal doesn’t contain real fruit, and that Cap’n Crunch with Crunch Berries cereal doesn’t contain crunch berries. Which are imaginary. Eight separate lawsuits made those claims.

There was also the one claiming Krispy Kreme “glazed raspberry filled” donuts don’t contain real raspberries. Which might be legit, except plaintiffs said the reason this is bad is because “raspberries help fight against cancer, heart and circulatory disease.” OR MAYBE JUST DON’T EAT DONUTS.

To this pantheon we add another—a suit against Dannon Co. for touting its yogurt as “all natural.”

“The cows that produce the milk in the products are fed GMO corn or GMO soy, neither of which are natural,” wrote lawyers from Reese LLP and Halunen Law in a complaint filed last year in Manhattan federal court. “Thus, the milk defendant uses to make the products is not All Natural, and the final yogurt products are not All Natural.”

OK, but that’s not how it works.

“Plaintiff does not allege that any ingredient used in the products is unnatural; her claim is that, several steps back in the food chain, there may have been something unnatural ingested by a cow,” wrote U.S. District Judge Katherine Forrest of the Southern District of New York.

Forrest dismissed the suit on Dec. 3, finding “no legal support for the idea that a cow that eats GMO feed or is subjected to hormones or various animal husbandry practices produces ‘unnatural’ products; furthermore Dannon does not specifically represent that its products are either GMO-free or not given hormones or antibiotics.”

Dannon was represented by Angel Garganta and Brian Featherstun of Venable.

The Food and Drug Administration is currently reviewing its longstanding refusal to formally define the term “natural” when used on food labeling, which may put the kibosh on some of these suits.

In the meantime, Mayer Brown partner Keri Borders, who was not involved in the case but followed the litigation, applauded the ruling by Forrest.

“It’s a terrific decision rejecting—at the very outset and before the court and parties spend significant time and resources—a lawyer-driven consumer class action against Dannon,” she said.

“These types of court decisions—that take a common-sense and careful look behind allegations of deception and find them legally baseless at the pleading stage—are all too rare, but this decision is consistent with a handful of decisions across the country rejecting far-flung false advertising theories built around the use of the word ‘natural’ to describe products.”

Shout Out: Simpson Thacher (Liability Limits? What Liability Limits?)

In other milk-related news (not a transition sentence I get to write every day)…

A team from Simpson Thacher & Bartlett won an international arbitration award of $125 million for French food group Danone after the company recalled infant milk products based on incorrect information from its supplier.

The recall came after New Zealand dairy giant Fonterra warned that its whey protein was potentially contaminated with botulism.

It turns out, it wasn’t. According to the Financial Times, the incorrect technical information came from a third party. Still, Danone spent $125 million to pull its products in eight countries including China.

What makes the Simpson team’s win especially noteworthy is that Fonterra’s contract with Danone stipulated a liability limitation of $7.6 million—and indeed, that’s all Fonterra in financial statements reported setting aside for the case.
The arbitrators apparently didn’t care, and socked the company with a penalty that was more than 16 times higher.

In a news release, Fonterra’s CEO, Theo Spierings, said, “We are disappointed that the arbitration tribunal did not fully recognize the terms of our supply agreement with Danone, including the agreed limitations of liability, which was the basis on which we had agreed to do business.” He also noted it was an arbitration, so the company has “limited options” (a.k.a. none) to challenge it.

The UNCITRAL international arbitration was conducted in Singapore and governed by English law.

The Simpson Thacher team for Danone included partner Tyler Robinson and retired partner Robert Smit; and associates Joshua Slocum, Alessia De Quincey and Lauren Brazier.

Fonterra was represented by Chapman Tripp, which bills itself as New Zealand’s largest commercial law firm.

Side note: Are runaway arbitrators a new trend? In August, I wrote about a $41 million arbitration award to an ex-employee of Kargo Global Inc. for gender discrimination, retaliation, breach of contract, equal pay and wage law violations. Her original demand: $3 million. So much for arbitrators being in the pocket of defendants.

A Remarkable Run

On Wednesday, Lambda Legal announced that Jon Davidson is stepping down as legal director after 13 years.

His legacy is truly impressive.

“Jon has led—with wisdom, with humility and with style—the largest LGBTQ legal team in the nation during the most thrilling and productive period in our movement’s history,” wrote acting legal director Camilla Taylor in a tribute essay. “During Jon’s tenure, Lambda Legal secured nationwide marriage equality, along with massive advances in the rights of LGBTQ and HIV+ people at work, at school, in health care, in immigration and criminal justice and beyond.”

*****

Reprinted with permission from the December 7, 2017 edition of The American Lawyer © 2017 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

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