Think there’s fruit in your Froot Loops?

By Martin Quinn

Martin Quinn is a JAMS neutral, based in San Francisco.  He specializes in resolving business and complex tort disputes and frequently acts as special master in complex federal and state actions.  He can be reached at mquinn@jamsadr.com.

Do Fruit Roll-Ups and Fruit by the Foot have to contain real fruit?  Mediation is a perfect vehicle for resolving food labeling cases involving claims of false advertising and violation of state consumer and unfair competition laws.  These cases present a myriad of different claims and defenses that create significant risk for both sides.

Class plaintiffs typically allege that a food product’s ingredients do not square with its advertised contents, that it does not convey the advertised health benefits, that its benefits are not “clinically proven” as represented, or that its claimed qualities do not exist.  Defendants raise issues such as preemption by federal law, misrepresentation of a product’s advertising claims, and the obviously fanciful nature of foods such as “crunchberries” or “fruit loops.”

Certifying a class in these cases presents special challenges.  Ascertainment of the class members is difficult:  who bought which product, who saw which label or advertisement, who is unable to show damage since they benefited from the product?  Therefore, class members can usually be identified only by a post-judgment or settlement claim process.  Defendants will argue that individual issues of injury and damage predominate.

Mediation provides a confidential and flexible forum for plaintiffs (often public interest groups) to obtain the non-cash remedies they principally want:  prompt enforceable changes to misleading labels, and possibly corrective advertising.  Defendants obtain quick resolution out of the public eye before damaging publicity emerges.  They may also obtain the benefit of a class settlement that provides statewide or nationwide protection against future attacks.  Damages are usually a secondary objective, but they too can be effectively negotiated in a mediation setting.

During negotiations over attorneys’ fees the mediator needs to tread delicately, since defendants want to know their total settlement cost including fees, while plaintiffs’ counsel will resist discussing fees until compensation to the class has been tentatively agreed.  A mediator can usually subtly give the defendant hints of the likely range of attorneys fees, to give defendant enough comfort to reach preliminary agreement on class remedies.

Since negotiations often hang-up over all parts of the discussions:  labeling changes, corrective advertising, reimbursement to the class, attorneys’ fees.  So the mediator must be ready at the right moment to offer a mediator’s proposal -- often a complicated multi-part proposal that the mediator will type and present to both sides.

Mr. Quinn’s original article was published in the Daily Journal in October.  For the full article, click here.