The food industry is full of special legal considerations like contract manufacturing, FDA and USDA labeling, and intellectual property protection. Special legal considerations create challenging and novel legal issues for litigation. This firm has the ability to represent food businesses in complex litigation in any one of these areas.
What Are the Common Areas of Food Business Litigation?
- Regulatory. Small errors in product labeling can create massive litigation risks for businesses. A failure to abide by an obscure FDA labeling requirement creates a cause of action for class action litigation. The most popular cause of action lately is the “Sugar Free” or “No Added Sugar” labeling requirement. Depending on the calorie content of your food product, a “No Sugar” claim may trigger a disclosure statement on a food about the calories in the product. This seemingly simple error can create a six-figure liability – product that are missing the disclosure statement can trigger a suit under common law fraud doctrines. Class action suits are also commonly triggered by failures to properly disclose characterizing flavors in a product.
- Errors by Copackers and Contract Manufacturers. Contract manufacturers and copackers sometimes fail to make the product correctly. When a copacker does not manufacture a product to specification, it is time to assert and enforce the remedies available under a copacker agreement and/or the Uniform Commercial Code.
- Theft of Intellectual Property. Unless expertly defined and enforced through confidentiality agreements and copacking agreements, rights to trade secrets like product formulas can be tricky to enforce. Subtle changes can create “new recipes” that create complex matters of proof in litigation.
What Does Litigation Look Like?
Cases involving class action litigation firms that arise out of labeling issues usually settle out of court. The size of the settlement in these cases is usually related to the size of the food business named as the defendant. Other factors can
Cases involving copacker errors are the most common form of litigation. The most effective way to initiate a dispute with a copacker is to timely reject goods that are “out of spec” immediately or shortly after delivery of defective goods. “Rejection” of goods should be done in writing and should cite specifically to the product characteristics that deviate from the specification in the copacker agreement. If it is possible to begin the conflict this way, the marketer is in a good position to initiate litigation with the copacker.
Cases involving theft of intellectual property generally have no quick and easy path to resolution. These cases are usually not resolved until the discovery phase of litigation.
Preventative Law is the Best Approach
The best defensive strategy depends on the area of food business litigation. For most food business risks, preventative law is the best and cheapest way to defeat litigation.
- Regulatory. Label review can catch the common errors that plaintiff’s law firms and class action attorneys prey upon.
- Copacker Agreements. A great product specification, included-in and merged-with a copacker agreement, is the starting point for successful litigation with a copacker.
- Theft of Intellectual Property. Consider adding restrictive covenants to commercial deals, such as non-compete and non-circumvention clauses. These types of clauses remove just about all of the ambiguity from intellectual property cases and make favorable settlements much easier to pursue.
Because we have the transactional experience in food business deals, by extension, we can identify strengths and weaknesses in food business litigation. If you are in the midst of litigation, contact us to see how we can help.
Our subscription service
Clients realize the greatest value out of our services when they stack them together comprehensively. Our subscription-based service plans enable our clients to weave our services into the fabric of their businesses at affordable and predictable rates.
