Class Action Shakedown Thwarted

Our client distributes its own brand of nuts that it imports from various countries in consumer sized packaging that is sold in drug stores, supermarkets, and convenience stores nationwide. Federal law requires the label on imported nuts to identify the foreign country where they were grown. Our client received a letter from an experienced plaintiffs' class action law firm saying they bought a bag of our cashews from a drug store in San Francisco that didn't have the country of origin identified on it. Since the product didn't identify a foreign country of origin, a consumer would reasonably believe the nuts were grown in the United States. The class action attorney knew that cashews are grown in foreign countries, and therefore, the labeling on the package misleadingly implied to consumers that the cashews were grown in the U.S. This plaintiffs' attorney had filed hundreds of these actions before. One of them involved a non-food item that actually went to trial. It cost the defendant $10 million to try a case that they lost. They had to pay their own attorneys and the plaintiffs' attorneys and refund some part of the goods' purchase price to consumers.

The plaintiffs' class action law firm said they would not file a class action if our client would agree to change its labeling and pay them $150,000 to "monitor compliance," -- -- translation: this was a class action shakedown. The plaintiffs' class action law firm figured they had our client "on the ropes" and wanted a response in one week. Our client asked us what they should do.

First Things First: We had the client go into their warehouse and see if other packages of cashews had country of origin labeling on them. They were all correctly labeled. The client concluded that some of the bags must have been misprinted, but there was no way to track how many were mislabeled or where they had been shipped. I told the client to have our San Francisco distributor go to the drug store that night and remove the improperly labeled product from the store shelf and stock room. Once that was done, I wrote to the plaintiffs' class action attorney as follows:

Our client's products bear country of origin labeling as illustrated in the attached photo of packaging. We believe that some labels must have been incorrectly printed and you purchased one of them. We have never received a report of incorrect labeling other than yours and we are not aware of any other of our client's labels that has not borne country of origin labeling beyond those discussed in the preceding sentence. Given that our client's products are correctly labeled, and we have removed from commerce all known examples of labels that inadvertently omitted country of origin information, we do not believe you have a viable class action claim, in part, because you cannot identify the members of the class. If you feel that you personally have somehow been harmed, please send us the image of the label from the bag you purchased which does not bear proper country of origin marking as well as the image of your purchase receipt. We will promptly refund you the full amount of your purchase (although we are not obligated to do so) while allowing you to keep the bag of cashews to enjoy.

That was the end of this matter. A class action was averted at minimal cost and the client was very happy with the result. The plaintiffs' class action law firm proposed that The Food Lawyers® become associated with them. We politely declined.


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