Presentation on theme: "1 Lessons From The Food Industry Litigation Swarm Benjamin P. Broderick, Senior Attorney Theodora Oringher PC."— Presentation transcript:
1 Lessons From The Food Industry Litigation Swarm Benjamin P. Broderick, Senior Attorney Theodora Oringher PC
2 The Food Industrys Experience Should Concern Every Company Because: The consumer fraud claims currently focused on the food industry can be readily transferred to other industries. The food industrys experience offers clues as to how to avoid and defend against litigation swarms.
3 What is a Litigation Swarm? A series of similar lawsuits against a particular industry or practice Driven by theories of liability rather than individual injuries
4 pharmaceutical Where Have Litigation Swarms Occurred in the Past? asbestos tobacco food
5 2) Special Risk Factors: a) Careless or deceptive advertising practices b) High jury identification with plaintiff/ low jury identification with defendants c) Spotty regulation d) Single-message marketing e) Numerous competitors making similar claims f) Deep pockets Where Will The Next Swarm Strike? 1) Consumer fraud claims lend themselves to litigation swarming: a) Lenient state consumer fraud legislation b) Common marketing practices
6 Litigation swarms reverse the dynamics of stand-alone suits Consumer false advertising litigation follows a simple formula: Allege a uniform misrepresentation or omission as the basis for a putative class action Bring suit in a favorable venue Demand millions or tens of millions of dollars in damages How Do Litigation Swarms Work? Alleged Injury Legal Theory Lawsuit
8 How Has the Food Industry Defended Itself? Emphasis on motion practice – few cases resolved by trial Basic defenses Preemption/primary jurisdiction Failure to state a claim (Iqbal/ Twombly) Challenge class certification: Attack common proof of exposure to ads, reliance, causation, and/or damages
9 Results Many individual successes Failure to quell the swarm Growth in Consumer Fraud-related Food Industry Class Actions
11 Why So Many Settlements? Costs and distraction of litigation Fear of potential catastrophic liability Desire to avoid bad publicity Desire to avoid bad precedent (2011) -- $45 million (2013) -- $8.5 million (2011) -- $7 million (2012) -- $7.5 million
12 Long Term Result Steady diet of juicy settlements multiplied the swarm of litigation 10 times in just 4 years Many defendants have been sued a dozen or more times:
13 Long Term Result Other frequent FICA defendants include:
14 Lessons From the Food Industrys Experience Individual victories wont abate the swarm Settlements may not protect you from a swarm
15 What Can You Do To Protect Your Company From Litigation Swarms? 1. Develop More Rigorous Advertising Review Protocols a) Thorough consumer research b) Careful verification of claims c) Avoid pseudo-scientific claims d) Conduct regular proactive legal reviews
16 What Can You Do To Protect Your Company From Litigation Swarms? 2. Develop a pro-active/long-term defense strategy a) Improve information collection b) Improve information dissemination More information More information sources
17 What Can You Do To Protect Your Company From Litigation Swarms? c) Customize consumer contact Avoid single-message advertising campaigns. Communicate with customers through a variety of methods. Offer customization, if appropriate Offer refunds, trial periods, etc. d) Take account of long-term settlement costs. e) Devise methods for cost and risk sharing to counteract the extortionate impact of consumer fraud claims.
18 Conclusions 1) Success in individual cases through after-the-fact defenses and routine settlement approaches arent enough to combat a litigation swarm. 2) To avoid and/or defeat a consumer fraud litigation swarm, businesses must spend the time and resources to: a) get the advertising right, and b) develop a forward-looking comprehensive defense strategy emphasizing i) better information collection and dissemination, ii) more individual customer contact, iii) fewer juicy settlements.