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California is Ground Zero for Food Lawsuits

For some time, the plaintiffs' bar has been looking for the next cash cow and the food industry seems to be it. Last year, a story on ABC laid out how the same guys who got rich by pummeling the tobacco industry have set their sights on a new target: those who make and sell food. That accusation that the U.S. Food and Drug Administration is in the pocket of the food industry combined with the fact that more than a third of Americans are obese make for the perfect storm for trial lawyers. Dr. David Katz, Director of the Yale University prevention Research Center stated, "The three major detriments of all our ills are tobacco, poor diet and lack of physical activity." He went on to add, "There is no question the problem of poor diet has been aided and abetted by those profiteering from the status quo."

Fast forward nearly a year and what is happening? Trial lawyers are swooping in to make a profit of their own. Food companies are seeing a dramatic uptick in the number of consumer fraud lawsuits. The number of consumer fraud class actions brought in federal court against food and beverage companies has skyrocketed in the last 5 years. In 2008, there were roughly 19 cases. That number jumped to 102 in 2012. Where are the vast majority of these cases being filed? California!

From 2008 until 2012, 186 class actions were filed in California court, many of them in the U.S. District Court for the Northern District of California. Ironically, this court has been dubbed, the "Food Court." This is compared to New Jersey, where there have been only 18 cases filed. Aided by political rhetoric and policy proposals from First Lady Michelle Obama and Mayor Michael Bloomberg, the focus of plaintiffs' attorneys has clearly shifted to health and safety concerns over food. One lawyer in Los Angeles, Matthew Kaplan, even predicted an increase in litigation from local government enforcement efforts. He even called it the "Bloomberg effect." Perhaps we'll need to change their moniker from "ambulance chasers" to "food truck chasers" soon.

As one lawyer said, we have seen this movie before. Ronald Levine stated, "Lawsuits come in waves, but eventually they peter out." The question is whether the industry can weather the wave of litigation. Trial lawyers are for profit. They are always looking for the next big avenue for revenue and it appears that the food industry is it and California is ground zero.

Is President Obama a Legal Reformer?

I will be honest: the title of this blog was a little hard to type. But I was reading an article in Reuters and it made me wonder: does the President believe in legal reform? On one level it would seem that he does. Just last week, he took steps intended to curb lawsuits brought by companies called "patent trolls." These companies do not make or sell anything; they specialize in suing others for patent infringement. He asked for new federal regulations and action from Congress.

Of course the timing was advantageous. This position was announced ahead of an Obama fundraising trip to the Silicon Valley and it came at a time when lawmakers and courts are  looking at ways to reduce the number of unwarranted patent lawsuits. These lawsuits have dramatically increased in recent years, particularly in the technology sector. Critics say those patent portfolios are assembled as a springboard to litigation; many firms argue that they are providing a service to inventors, or protecting against loss of licensing fees that users of patents should pay.

Big technology companies like Cisco, Apple and Google have been pushing for legislation that would reduce the number of times each year that they are sued for infringement. One of the proposals being pushed by the White House is legislation that would make it easier for a federal judge to award legal fees to the winner of a patent case if the judge deems the lawsuit abusive. Wow. Abusive lawsuits? The President actually recognizes that some lawsuits are abusive? Interesting.

Companies specializing in patent litigation filed 2,921 infringement lawsuits in 2011. According to Colleen Chien, a teacher of patent law at Santa Clara University of Law, the latest figures show that these companies initiated 62% of all patent litigation or 2,921 of 4,701 suits in 2012

There are already a couple of proposals in Congress. One is a bill put forward by Democratic Senator Patrick Leahy of Vermont and Republican Representative Robert Goodlatte of Virginia. Their measure would improve access to information about who owns patents, reduce discovery burdens in lawsuits, and make additional changes to enable judges to identify abusive cases early in the process and, presumably, dismiss them.

Another bill has been introduced by Democratic Representative Peter DeFazio of Oregon and Republican Representative Jason Chaffetz of Utah. Their bill would require certain plaintiffs to pay all legal fees if they sue for patent infringement and lose.

It is certainly refreshing to see bipartisan efforts in Congress to tackle these abusive lawsuits. Additionally, the President appears to see a  clear abuse and wants it stopped. This coming from a guy who took over $27 million dollars from trial lawyers during the 2011/12 election cycle and when you Google his name and “legal reform”, almost nothing comes up. Whether it comes about via regulation or legislation, the abuse must stop. The absurd amount of money being spent on frivolous lawsuits is only hurting the economy and job creation in California and across the country.