Post-NYAG class action wave more like a ripple, attorney says

By Hank Schultz contact

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Post-NYAG class action wave more like a ripple, attorney says

Related tags: Class action

The flood of class actions suits anticipated in the wake of the NYAG affair has for the most part failed to materialize, an attorney who specializes in the sector said.

Julie Hussey, who practices law in San Diego, CA with the firm Perkins Coie, said that the initiatives of New York Attorney General Eric Schneiderman certainly got the attention of the plaintiffs bar, as all such high-profile actions do. But with the exception of lawsuits directed at the firms named by him, such as GNC which said had 20 lawsuits to deal with in the wake of the affair, the episode has not proven to be as fruitful for the filers of such suits as originally feared.

A bridge too far

“Because of what the NYAG did, and because the investigation was unique, it became interesting to the plaintiffs bar,”​ Hussey told NutraIngredients-USA. But the nature of Schneiderman’s investigation, based as it was on DNA testing (whether correctly applied or not) and matters of ingredient identity and potency and the possible presence of extraneous material, made it less fruitful for these kinds of firms, Hussey said. The effort and expense to build a case along these lines seems to have been a bridge to far for most of these firms.

“It’s a more challenging case for the average plaintiffs’ firm to bring. They’d actually have to go out and pay for testing on ingredients,”​ she said.

Hussey, who has represented firms in a number of industries in such cases for more than a decade, said the overall number of cases hasn’t changed much in the past few years. 

“I think the overall number of class action suits being filed has increased slightly. The number in the food space peaked a few years ago and has remained flat. The number of cases in dietary supplements continues to climb,”​ Hussey said. 

But that’s not to say it was always this way, Hussey said. Viewed on a longer time scale, class action suits have risen sharply. These types of cases were rarely filed against dietary supplement firms before about 2005, she said. It has become a sad fact of life in this new landscape that potentially dealing with these types of action has become just another line item in a company’s financial plan.

Lessening exposure

Julie Hussey Perkins Coie

Hussey said that over the years companies have become more savvy in finding ways to stay off the radar of plaintiffs firms. One thing that gets a company noticed is if it makes very specific claims for the health benefits of its product. In the weight management sphere, such a claim might be something like, “lose 30 pounds in 30 days.”​ (Those types of claims make ears over at the Federal Trade Commission perk up, too.) Among the marketers of glucosamine products, Hussey said a claim she used to see was about promoting “mobility, flexibility and lubrication.”​ After getting burned too many times, companies are becoming more circumspect in their marketing and are backing off these kinds of statements.

Which is perhaps not entirely a bad thing. It seems that relatively few plaintiffs lawyers really have the best interests of consumers at heart, and in many cases might initiate a lawsuit by inducing a consumer to purchase a product and then act as a plaintiff without that person ever having been harmed or really misled. With that being said, it’s hard to argue strenuously that companies ought to have no check on their ability to make claims on their products that they can’t really back up.

Proof is the best defense

And being able to back up what you say about your product is the key to managing risk, Hussey said. The glucosamine marketers, for example, had to pull in their horns because the evidence did not unequivocally support what they were saying. Hussey advises companies to spend some money on a label review before going to market; it could avoid having to employ someone like her later on.

“Look to see what kind of claims are out there in the market, and look to see if there has been litigation on similar claims to what you are planning to make on your package. I’d advise companies to steer away from very specific claims about any benefit that would be provided. Of course you have to avoid any claim related to the treatment of disease, but I’d be careful even with structure function claims without bulletproof substantiation,” ​she said.

“It has become an unfortunate cost of business that can be borne if you are strategic about your claims and are aware of the pitfalls in advertising,”​ Hussey said.

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