By Correy Stephenson
The Daily Record Newswire
BOSTON -- A number of recent lawsuits filed by plaintiffs allege that companies are falsely advertising their products as "all natural" or "100 percent" natural when they in fact contain synthetic ingredients or genetically modified organisms.
Defendants include major brands such as Ben & Jerry's, ConAgra, Frito-Lay, Kashi, Naked Juice, Snapple and Trader Joe's.
"These cases are being filed every day," said Christopher A. Cole, a partner in the Washington office of Manatt, Phelps & Philips who defends advertisers against the suits.
There are a number of reasons for the rise in cases, he said.
First, with product liability cases harder to bring, plaintiffs' lawyers are turning to false advertising suits where individual claims may be of small value, but aggregated class actions can result in sizable damages with a minimal investment on the part of the attorneys.
Further, because neither the Food and Drug Administration nor the Federal Trade Commission, both of which regulate product advertising, have defined the term "natural," it is hard to get the suits dismissed outright, Cole explained.
Yvette Golan of the Golan Law Firm in Houston, who recently filed putative class actions against Naked Juice and Kashi on behalf of a Texas resident, said the increase in claims is being fueled by the increased value companies place on positioning their products as "natural."
"We've seen a lot more branding by companies based on their natural or environmentally friendly values," she said. "Companies are doing this because consumers value it and will pay more for it."
Stephen Gardner, litigation director at the Washington-based Center for Science in the Public Interest, agreed.
"Companies know consumers believe that 'natural' products are better for them and lie about what the product is to get them to buy it," he said.
His organization brought a false advertising suit against Kraft Foods, the maker of Capri-Sun, for labeling the drinks "all natural" when they contained high fructose corn syrup.
High fructose corn syrup is clearly a man-made ingredient and therefore unnatural, Gardner said. The group dropped the suit after Kraft agreed to label changes.
"These cases are about letting consumers make their own decisions about what products and ingredients they want to eat," he said.
In her complaint, Golan asserts that while Kashi promotes its entire brand of products as all natural and the company itself as "health and socially conscious," in reality it inserts "a spectacular array" of unnaturally processed and synthetic ingredients into its foods.
The suit alleges misrepresentation, consumer fraud and deceptive trade practices. It charges that the product line's cereals, fiber bars, crackers, waffles and pizza contain unnaturally processed and synthetic ingredients, including bromelain and sodium acid pyrophosphate. Bromelain, an enzyme derived from pineapple, requires acetone in its production, which is recognized as a hazardous synthetic substance by the National Library of Medicine's Hazardous Substances Data Bank. Sodium acid pyrophosphate is a synthetic substance, the production of which requires thermally-produced phosphoric acid, an environmental pollutant that increases toxic heavy metals in plants and marine life, according to the complaint.
The suit contends that the unnatural substances used by Kashi are not simply trace ingredients, but primary components of its products.
The product labels are also misleading, Golan asserts. For example, the label on Kashi's Heart to Heart products states that its oatmeal and cereals contain green tea, white tea and grape seed.
But according to the complaint, "these products contain the unnatural substances decaffeinated green tea extract, decaffeinated white tea extract, and grape seed extract, a chemical preservative that the FDA has expressly refused to declare as generally safe as a direct food ingredient."
Golan said she was "elbow deep in food chemistry for six months," working to understand the products at issue in the suit.
"This is not an area that reasonable consumers know about," she said.
Instead, consumers who are worried about allergies, concerned about genetically modified organisms, pregnant, have small children, or just don't like synthetic ingredients simply accept the products' claims.
The suit, which is still in the early stages of litigation, seeks damages as well as injunctive relief.
Some states provide for statutory damages for false advertising or deceptive marketing, Golan said, and plaintiffs can also seek punitive damages, disgorgement of profits earned by selling the products at issue or an award based on the differential between a "regular" product and the price of the challenged product.
She emphasized the importance of the injunction, however, which in the Kashi case would require label changes.
"To this day, the packaging still reads 'All Natural,'" said Golan, noting that these labels lead to continued consumer confusion.
Cole estimated that 95 percent of false advertising cases over "all natural" claims settle.
"Depending on who the plaintiffs are and how much credibility they have, companies try to make [the cases] go away very quietly," he said.
Recent deceptive advertising suits that have settled include $550,000 paid by the maker of Nutella over claims that its hazelnut spread was a "an example of a tasty yet balanced breakfast" to a $2.5 million fund for a class of consumers who alleged Kellogg's falsely advertised that its Rice Krispies and Cocoa Krispies cereals could support the immune system.
The defense will generally fight during the initial stages, attempting a preemption defense and arguing a class should not be certified. Defendants typically argue that the plaintiffs' claims should be preempted by FDA labeling regulations or, alternatively, that the court should decline to decide the case and refer the issue of what constitutes a "natural" product to the FDA.
But "the value of a settlement goes way up if a case survives the certification stage," Cole noted.
One difficulty in these cases is that drawing the line between what is natural and what isn't can be more complicated than it sounds.
Anything created in bulk requires some manufacturing or processing, said Cole. So if a product has entirely natural ingredients but is then industrially processed, does that mean it has it lost its natural characteristics?
"Defining what is 'natural' is exceedingly difficult conceptually," Cole said. "That's why the agencies (the FDA and FTC) have stayed away."
He said manufacturers would "welcome" some clarification from the FDA, but the agency has declined to take an official position despite requests from manufacturers and consumer groups alike.
Cole said that food manufacturers may try to defeat these suits by using a recent U.S. Supreme Court decision.
In AT&T Mobility v. Concepcion, the Court held that state laws requiring that classwide consumer arbitration proceedings be available are preempted by the Federal Arbitration Act.
If companies added an arbitration clause to their packaging, they could reap the benefits of Concepcion.
"We're not far from the day we see that on at least packaged foods," predicted Cole.
Published: Mon, Apr 9, 2012