From junk food to junk lawsuits

by Peter O'Donahoo and Mark Grasso

Introduction

Ever since Caesar Barber, a 270 pound maintenance worker who ate fast food meals on almost a daily basis, sued America's favourite fast food chains, the responsibility of food companies for the rising levels of obesity in the community has been vigorously debated. According to recent statistics, more than 60 per cent of Australians are now overweight, with 20 per cent ranking as obese, which is similar to the figures in the United States.

While Barber's case is currently dormant, and a subsequent class action in New York (Pelman & Ors v McDonald's Corporation & Ors) was recently dismissed, it is significant that obesity lawsuits are drawing not just the expected barrage of criticism, but also praise for the impact which they are likely to have on the practices of food companies and restaurants. Recent reactions of American food companies and regulators show that the threat of further lawsuits, irrespective of their merits, is having a noticeable effect on corporate conduct.

Pelman & Ors v McDonald's Corporation & Ors

In August 2002, a class action lawsuit was filed in the Supreme Court of New York on behalf of all New York State children and their parents who had eaten at McDonald's restaurants and become 'obese, overweight [and] developed diabetes ... and/or other detrimental and adverse health effects and/or diseases' as a result.

The Complaint (equivalent to a Statement of Claim) alleged that McDonald's was negligent, and acted in breach of consumer protection legislation, in failing to warn its customers that its products contain high levels of fat, sugar and cholesterol, which 'have been shown to cause' obesity and other adverse health effects and are physically and psychologically addictive. Not surprisingly, McDonald's applied to have the case dismissed. The company's application focused on defects in the pleadings, but also submitted that the case should be struck out as no jury would ever find in the plaintiffs' favour.

In January 2003, the US District Court granted the application, but gave the plaintiffs leave to re-plead their claim. In his judgment, Sweet DJ recognised that '[p]ublic health is one, if not the, critical issue in society', but held that:

[L]egal consequences should not attach to the consumption of hamburgers and other fast food fare unless consumers are unaware of the dangers of eating such food.

Sweet DJ struck out the Complaint on the ground that '[n]o reasonable person could find probable cause based on the facts in the Complaint without resorting to 'wild speculation'.' His Honour's thoughts were encapsulated in the following statement:

If a person knows or should know that eating copious orders of supersized McDonalds' products is unhealthy and may result in weight gain (and its concomitant problems) because of the high levels of cholesterol, fat, salt and sugar, it is not the place of the law to protect them from their own excesses. Nobody is forced to eat at McDonalds. (Except, perhaps, parents of small children who desire McDonalds' food, toy promotions or playgrounds and demand their parents' accompaniment.) Even more pertinent, nobody is forced to supersize their meal or choose less healthy options on the menu.

In addition, Sweet DJ noted that it would be difficult for any obesity suit to obtain class action certification due to the myriad of factors which contribute to obesity.

In February 2003, the plaintiffs filed an Amended Complaint which, while more detailed than the original Complaint, still contained numerous pleading defects and led to a further application by McDonald's to have the case dismissed. Sweet DJ ruled on that application on 4 September 2003, dismissing the Amended Complaint and denying the plaintiffs leave to re-plead. During the hearing of the application, the plaintiffs' lawyer undertook not to pursue one of the more sensational claims in the Amended Complaint that McDonald's products have been processed to such an extent that they constitute a hidden health hazard of which consumers are not aware. The remaining claims were struck out by the Judge because the plaintiffs had failed to properly plead any deceptive acts of substance on the part of McDonald's, let alone the causal link between their consumption of McDonald's food and their obesity. On this issue, Sweet DJ said:

Information about the frequency with which the plaintiffs ate at McDonald's is helpful, but only begins to address the issue of causation. Other pertinent, but unanswered questions include: What else did the plaintiffs eat? How much did they exercise? Is there a family history of the diseases which are alleged to have been caused by McDonald's products? Without this additional information, McDonald's does not have sufficient information to determine if its foods are the cause of plaintiffs' obesity, or if instead McDonald's foods are only a contributing factor.

Other developments in America

Further obesity lawsuits are inevitable. In June 2003, in a scene reminiscent of John Grisham's The King of Torts, a group of high profile American class action lawyers met in Boston to discuss tactics for pursuing coordinated lawsuits against the fast food industry. John Banzhaf, an ex-tobacco litigator, has been reported as saying:

We'll give them (fast food companies) six to nine months and see if they do put up the warnings. If they don't, then they may face a lawsuit.

Many food brands have announced their intentions to place greater emphasis on health and nutrition in response to 'consumer preferences'. In May, Kraft Foods was hit with a lawsuit, filed by a non-profit organisation known as BanTransFats.Com Inc, seeking an injunction restraining Kraft from marketing and selling its Oreo cookies to children because the biscuits contain harmful trans fats (discussed in our Focus: Food August publication). The lawsuit was abruptly withdrawn, but Kraft recently announced that it will remove trans fats from all of its products, cap the size of single-serve packages, eliminate marketing in schools and increase nutritional labelling.

On the regulatory side, the US Food and Drug Administration will require the amount of trans fats to be listed on all food nutrition labels, although not until 2006. The Bush Administration's 2004 budget will include USD$100 million to combat various health problems, including obesity.

At the same time, two bills prohibiting fast food lawsuits are currently before the US Congress. If passed, the Personal Responsibility in Consumption Act and the Commonsense Consumption Act will preclude any obesity claims against food companies whose products comply with food labelling regulations

Implications for Australia

To date, no obesity lawsuits have been commenced in Australia. An article in The Australian newspaper reported Maurice Blackburn Cashman and Slater & Gordon as saying that such lawsuits have no prospects of success in this country following recent tort law reforms. However, history shows that it is only a matter of time before obesity class actions will make their way from America to here.

Some Australian food companies are not taking any risks. Masterfoods Australia has promised to remove trans fats from Mars bars, and McDonald's has introduced its 'Salads Plus' menu with much publicity, even handing out apples at train stations. Also, the fast food industry has begun television campaigns promoting 'healthy eating'.

In addition, the Federal Minister for Children and Youth Affairs has threatened to regulate, and even ban, food and drink advertising aimed at children. Further Government action is likely after the Government's National Obesity Taskforce hands down its report on the problem of obesity in Australia, including child obesity, in November.

Conclusion

Although they sound far-fetched, the threat of obesity lawsuits may be real. There is no doubt that the public and government regulators are taking an active interest in the problem of obesity, including the role that advertising may play. The publicity which was given to the Pelman case has clearly had an impact on the conduct of food companies.

In the circumstances, Australian food companies would be wise to review their products, marketing practices and the extent to which nutritional information about their products is available. These actions will ensure that they are well placed to answer any allegations by class action lawyers should the fat suits reach our shores.


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