'Clean label' brands leave themselves open to plaintiff’s attorney tactics'Clean label' brands leave themselves open to plaintiff’s attorney tactics
Clean label is a hit with consumers who are looking for short ingredient lists, but lawsuits are putting pressure on brands to be clearer about what’s in their products.
February 13, 2019
For food and beverage brands today, clean label is good business. Even though clean label is mainly an industry term, not something consumers drop into casual conversation, clean-label products are clearly what they want—or even expect. Having grown wary of nebulous front-of-label claims like natural, no added sugar and made with real fruit, shoppers are increasingly flipping over boxes and bottles, scanning ingredient decks and Nutrition Facts panels, and researching manufacturers. They want to see short lists of recognizable ingredients that sound like real food. They want organic, nutritious and allergen-free. They don’t want anything synthetic, highly processed or science-y-sounding. They want total transparency.
But more and more often, it’s not clear they are getting it.
Not surprisingly, more and more manufacturers are churning out clean-label products to meet these demands. Whether moved by market forces or guided by their own values—or both—brands are launching droves of new foods and drinks and “cleaning up” old ones. The goal is to be simple, straightforward, transparent.
In recent years, some companies have even built their branding and marketing entirely around these tenets. Take protein bar company RXBAR, for example. Its sleek, minimalist packaging eschews imagery for a small brand logo and a bold, easy-to-read list of the main ingredients in its bars, followed by the statement “No B.S.” Or consider another bar company, That’s It. The brand’s name alone conveys clean and simple, but so do its labels. The front of each package displays an image of the two to three fruits, vegetables and spices included in each bar and then lists the amounts of each, e.g., “1 apple + ¼ pineapple.”
This type of clear, concise branding has clearly resonated with retailers and consumers. In fact, as Inc. reported in 2017, RXBAR redesigning its packaging to its current ingredient-forward style is what “rescued this protein bar from obscurity.” The brand launched in 2012, but only after debuting the rebrand at Natural Products Expo East in 2015 did RXBAR score shelf space at Wegmans, Publix, Whole Foods and Trader Joe’s. By late 2017, Kellogg Company had come calling, buying the startup for $600 million.
While the direct, no-B.S. approach taken by RXBAR, That’s It and other brands may be catnip for clean-label-seeking shoppers, it does open these companies up to scrutiny. For example, a skeptic might wonder whether an ingredient deck truly tells the whole story. Is That’s It’s Apple + Pineapple bar really made with only one apple and a quarter of a pineapple—that’s it? Do the whole-food ingredients listed on the front of an RXBAR label reflect what’s actually in the product? Or, in attempting to be no-B.S., are these brands glossing over minute details about their ingredients, thereby misrepresenting their bars’ composition and misleading consumers?
Slapped with suits
Unfortunately for RXBAR and That’s It, misidentified ingredients and consumer deception is exactly what a few plaintiffs’ lawyers have alleged. In 2018, both companies were hit with class-action suits challenging the integrity and accuracy of their ingredients lists.
For RXBAR, the target was egg whites and blueberries. The front label of its bars state “egg whites” and “blueberries” and, ever since Kellogg’s bought the company, the ingredients list on the back reads the same. However, as Levin-Epstein P.C. and Sheehan & Associates PC claimed in their filing, the back label used to list “egg white protein powder” and “dried wild blueberries infused with apple juice concentrate.” The lawyers just assumed, without confirmation, that RXBAR hadn’t altered its formulas to merit the label change. Instead, they claimed the company must have opted to intentionally misname its ingredients in order to give its products more nutrition appeal.
The same two law firms also filed a class-action suit against That’s It. This time, they took issue with the brand stating “collective ingredients” such as apples or blueberries, alleging that it would be impossible to manufacture a bar without certain gelling agents, humectants and binders—unless the fruit ingredients had previously undergone “processing or transformation.” If that were the case, the lawyers stated, it would be erroneous for That’s It to leave out that information and list only the collective fruit name on its labels.
Reputation and refutation
Both of these lawsuits made headlines, mostly in the trade press but also in a few consumer outlets. The news certainly circulated on social media. In response, That’s It founder Lior Lewensztain was very vocal in defending his company, calling the claims “reckless” and “without merit.” RXBAR representatives stated, “We stand by our products and packaging.”
What did not make much news, however, was that, mere months after it was filed, each lawsuit was dismissed with prejudice by the plaintiff. “This means that these lawyers can never sue these brands over the same claims again,” says Evelyn Cadman, principal consultant at FDA Compliance Simplified. “But I believe both stated that the contentions they made are not frivolous, meaning there could have been some kind of settlement.”
Since neither company is now speaking about its case, we may never know whether they did make settlements or the lawyers backed off after realizing they did not have a case. Observers can only speculate, based in part on the perceived validity of these cases.
“I agree with the contentions in the That’s It lawsuit, that if a brand is using a fruit powder, it is not the same as using the whole fruit,” Cadman says. “But with RXBAR, the regulations say that egg white powder is in fact the same as egg white, so there are some differences between these two lawsuits. However, what’s OK from a regulatory perspective doesn’t always translate to what’s OK from a consumer perspective and certainly not from a plaintiffs’ lawyer perspective. This is probably great ground for plaintiffs’ lawyers to hoe.”
Only RXBAR and That’s It know for sure whether they were intentionally trying to bamboozle consumers. But, if they are like many clean-label brands, deliberate deception seems unlikely. “I think for the most part, these brands are trying to do the right thing and not consciously trying to mislead consumers,” says Becky Nelson, partner at Bex Brands, a branding and design firm that works with Suja, Once Upon a Farm and Temple Turmeric. “But when you rely heavily on nutritional claims to make your sale, that gets really sticky—you can open up the possibility of misleading consumers when you are trying to educate. In other words, I don’t think the intent is to mislead, but the result can be misleading.”
Along with the wording they choose, brands need to be mindful of the visual elements on their packaging, Nelson says. For instance, she thinks the way in which RXBAR lists and underlines its ingredients on the front of its labels resembles a recipe card, potentially leading consumers to believe that list is the complete, accurate roster of ingredients. “I look at RXBAR’s ingredient list and think it’s amazing, but I do think people could be easily confused,” she says.
Yadim Medore, founder and CEO of market research firm Pure Branding, believes that by shooting for simple, RXBAR forsook the level of detail on their labels that could’ve protected them from scrutiny. “The idea of simplicity and few ingredients is such a driver now that, from a marketing standpoint, RXBAR’s desire to drill down to that simplicity overrode the possibility of more clarity,” he says. “This is strange to me, because it seems they could have avoided the whole controversy. They could have had a simple statement like ‘egg whites’ on the front but kept the more descriptive information on the back.”
Cary Silverman, partner at Shook, Hardy and Bacon L.L.P., who coauthored the 2017 report The Food Court: Trends in Food and Beverage Class Action Litigation for the U.S. Chamber Institute for Legal Reform, agrees that while transparency is a noble goal, it can be difficult to market effectively and legally and without attracting skepticism. “I can only imagine the internal battles within food companies between marketing and legal,” he says. “I understand why a company would want information printed transparently on the front of the package, but on the other hand, there is a reason lawyers like fine print. When you remove the fine print from a label and go with the basics, it could be a plaintiffs’ lawyer’s dream.”
Class-action targets clean label
Indeed, plaintiffs’ lawyers are now coming hard at clean label. Food-marketing class-action lawsuits in general have skyrocketed over the past decade, according to The Food Court. While there were just 20 cases filed in federal courts in 2008, there were 425 active cases in 2015 and 2016, 31 percent of which alleged that a brand somehow wasn’t as “natural” as it claimed. “The original glut of cases focused on natural claims, but as the number of products launching explicitly using the word natural has declined—and as some courts have stayed those cases because of FDA’s pending rulemaking on the term—plaintiffs’ attorneys are looking for other targets,” says Ivan Wasserman, partner at Amin Talati Upadhye. “They are looking for anything and everything to form the basis of lawsuits, so with more and more clean labels, it’s only natural that we’d see these labels attracting their attention.”
Wasserman says class-action suits can target either what a brand does say or what it does not say on its labels. “However, claiming that a brand was deceptive about what they did say is an easier case to bring because it’s right there on their label or in the advertisement,” he explains. “A lawyer could argue that, based on what they said, the brand has a duty to supply additional information to consumers in order to make overall packaging not deceptive.”
While it may appear that these plaintiffs’ lawyers are merely looking out for consumers, Silverman insists that’s rarely the reality. “The vast majority of these types of class-action lawsuits don’t stem from consumers who feel misled,” he says. “They come from a very small number of plaintiffs’ lawyers who’ve developed an entire industry around [challenging] these types of claims. You’ll see the same law firms named over and over again, and they’ll often reuse the same person as class representative in multiple suits. They are taking a nitpicky look at product labels to try to find something.”
Typically, a firm will specialize in a few specific types of claims, and then, according to Silverman, the lawyers will shop the grocery aisles for potential lawsuits. “They may look for products that are labeled natural but contain citric acid and file 12 lawsuits in one day against those manufacturers,” Silverman says. “Or they might look for any products that list evaporated cane juice instead of evaporated cane sugar. And for slack-fill cases, lawyers are just shaking boxes in store aisles to see if there is space where there could be more food.”
Although there is occasionally merit behind these lawsuits, quite often there is not. “They can be ridiculous,” says Cadman. “Years ago, someone claimed consumers could be deceived because Cap’n Crunch’s Crunch Berries did not have real berries.”
So why go through all this effort to file a lawsuit, even if its premise is inane? Easy: “It’s all about the money,” says Silverman. “Their goal is a quick settlement. Rarely do these cases even get to class certified, let alone go to trial. These firms figure if they file 10 lawsuits, maybe six will be settled, two will be dismissed on merits, and the rest they’ll withdraw once they realize they are in a bad position.”
Almost always, these claims disappear within three months to a year, Silverman says. Forced to weigh whether the costs of defending the case on principle outweigh those of forking over some cash to settle the matter, many companies decide they’d rather pay up to make the problem go away. “When this happens, lawyers get most of the money,” Silverman says. “The class representative named as the plaintiff may get a few thousand dollars, and consumers don’t get a penny.” In fact, a legal dustup could even end up costing consumers, he adds, should a brand need to hike its prices in order to cover the legal costs.
“What’s sad is the few suits we are aware of are just the tip of the iceberg,” Cadman says. “There are many others where a lawyer has written the same letter to another company and that company paid the lawyer [to settle]. It’s usually cheaper to settle than to fight—we could be talking $50,000 versus $1 million. The lawsuit may be ridiculous, but from a business perspective, it is easier to settle.”
The court of public opinion
When it comes to consumer perception and trust, the parameters of a lawsuit and how it shakes out almost don’t matter. Even when a suit is withdrawn by the plaintiff, dismissed by a judge, or battled out in court and won by the accused manufacturer, news of the initial filing alone may have been enough to damage a brand’s reputation. After all, according to a Pure Branding survey, 61 percent of consumers already think that food companies lie to them at least some of the time—including the brands they purchase. Therefore, news of a lawsuit may shake consumers’ already shaky confidence in a company’s integrity.
“Because consumer expectations for transparency are so much higher now, whether or not these lawsuits have merit is irrelevant, because something that may impact public trust has been brought up as an issue,” Medore says. “Ultimately, these controversies, whether bogus or legitimate, begin to wear away consumer confidence and trust in the brands [being sued] and the entire CPG sector. There is even more disappointment when it involves a natural or organic brand, because consumers expect them not to fudge language or find ways to meet the minimum level of what is required.”
However, Nelson doesn’t believe that a lawsuit will always hurt a brand beyond repair. “Many consumers are just as cynical about lawyers as they are about brands,” she says. “I would hope [a lawsuit] would empower consumers to do their own research. Maybe the more these happen, the more they will come to understand what goes on behind the scenes.”
Lessons for clean-label brands
As long as there is money to be made, lawsuit-seeking plaintiffs’ lawyers won’t fade away. Clean-label brands must be exceedingly diligent about what they do and do not include on their labels. “As a general rule, less is more, and certainly there is a market for that,” Wasserman says. “But in some cases, we advise clients that less can be too little.”
When consulting with her clients on creating product labels, Cadman encourages them to consider not what they think something means, or even what most people would think it means, but what an unreasonable person may interpret it to mean. “This usually entails using more words to avoid causing consumers to be truly misled—or lawyers to claim consumers were misled—which means your marketing may not be as pithy or sexy as you want,” she says. To avoid interfering with concise branding, she says brands can direct consumers to their websites to read further information on why they included a controversial ingredient.
“To keep clean label clean, brands need to really look at how they talk to customers and share information with the public,” Medore says. “We know from our research that this has direct implications on trust, purchasing trends and consumers’ willingness to pay more for a product.” To garner more trust—and keep out of the crosshairs of lawyers—he suggests going beyond blanket transparency and prioritizing traceability.
“It’s important for food or beverage companies to put their money where their mouth is and demonstrate their transparency instead of just saying they are transparent,” Medore says. “When you get into traceability, the issues we’re talking about with RXBAR, That’s It and other brands would be moot. Because if I were to scan a code and see the history of RXBAR from seed to shelf, I’d see where the eggs came from and how they were processed into fractionated egg white powder. Traceability will keep clean label evolving into something with more depth.”
This content is republished from the Nutrition Business Journal Dark Issue IV. For information about purchasing a subscription, visit www.nutritionbusinessjournal.com.
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