United States: Labeling Risk Management – Five Step Plan
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Food labels are under attack. Every day new lawsuits are filed, often in the form of class actions, as well as through regulatory actions. Lawsuits over words like “natural” or “healthy” are all too common.
THE FIVE STEPS OF MOURNING
While some of the large food manufacturers have extensive experience defending these lawsuits, many companies have little experience with such claims. I have found that executives faced with their first class action lawsuit often go through the five stages of grief – which has been associated with grieving after the death of a loved one. Businesses that are the subject of lawsuits experience a similar pattern of grief, including denial, anger, bargaining, depression, and acceptance. Often the last step in acceptance involves a settlement and some payment.
For many businesses, denial, anger, and negotiation will linger for years before they experience depression and acceptance. However, during these years the defense lawyers will fight over the merits of the claims and at the same time accumulate huge legal costs.
PASS THE ANGER
Food companies should recognize that anger, a common reaction to lawsuits, may not go nowhere. Food executives need to understand that the company’s feeling of “wrong” is different from the plaintiff’s lawyer “feeling” of “wrong”, is different from the court’s “wrong” feeling, and is different from the court’s feeling. public of “false”. The company may choose to take a stand, but must be prepared to deal with litigation costs and potential negative social media publicity that will inevitably challenge âBig Foodâ claims.
Common corporate “denial” positions often do not make lawsuits go away. These positions make sense, but courts are reluctant to dismiss cases for the following reasons:
- All of the companies in our industry make similar claims, so we will not be responsible.
- We’ve always said it, so why is it now becoming a problem?
- It’s all buffoonery, so what’s the problem?
- We do not charge consumers a premium because of the claim.
FIVE STEPS TO TRY TO AVOID THE FIVE STEPS
Unlike death, food companies can avoid label lawsuits. Here are five steps businesses should take to avoid the five stages of grief:
- Stay on top of the changing food regulatory landscape. Anyone involved in writing a label should know and understand the various regulations promulgated by the Food and Drug Administration, the Department of Agriculture, state and local authorities, and other regulatory bodies. Labeling rules are constantly evolving and the company must look to the horizon. By the time the product hits the shelves, the rules could change.
- Never assume that the words on the label will be interpreted by a court to mean what you think they mean. A food manufacturer should not use words like “natural” and “healthy” on a label unless the company has studied how the courts interpret those words. Labeling rules can be ambiguous and this ambiguity has given rise to litigation.
- Look at the big picture when designing a label. Individual words or phrases can go wrong, but the graphics or the combination of words on the label can become a problem.
- Do not go outside the reservation when you are advertising the product. A company’s lawyer can sign a product’s label, but the marketing manager can commit to overselling the product, with “puffy”, when promoting the product in print or online advertisements. The Federal Trade Commission may start to blow the company’s necks by claiming false advertising, or these advertisements may become one more element in the class action complaint.
- Remember: every controversy is an opportunity. Don’t despair if there is a challenge. The company may be able to turn a litigation into a class action lawsuit into an opportunity to educate the public about the positive qualities of its products. Any labeling challenge could and should be taken up as a chance to provide a complete picture of a product and to explain that there is another side of the story. Channel the anger in a positive direction.
Earning a profit in the food industry is hard enough without having to face litigation costs. Death and taxes may be inevitable, but businesses can avoid litigation by following these five points when designing a label and promoting a product.
Originally posted by EAS consultation group the 27eJuly 2021.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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