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Some of New Jersey’s most well-known consumer packaged goods companies are hitting the food court. Since the beginning of the year, proposed class action lawsuits have taken aim at several popular supermarket products linked to Garden State majors, like Ritz Bitz cracker sandwiches and Wakefern’s Bowl & Basket brand graham crackers. The spate of filings comes amid a continuing trend of class actions targeting the CPG industry over how products are made or marketed.

While most consumers who are less than satisfied with a food product or restaurant meal simply throw it out and call it a day, some are resorting to drastic measures. Lawsuits against CPG companies peaked in 2021, reaching an all-time high of 331 cases filed, according to a year-end analysis by Perkins Coie, a Seattle-based international law firm specializing in business law and litigation.

However, in 2022 and 2023, the number of suits fell to 214 and 187, respectively. Though, that’s still above the pre-pandemic average of around 150 cases annually.

Over the past two years, complaints against food and beverage makers dominated the U.S. Chamber of Commerce Institute for Legal Reform’s annual list of “Most Ridiculous Lawsuits.” Called out cases include a $5 million lawsuit against Kraft claiming its Velveeta mac and cheese cups took longer to cook than advertised. A federal judge dismissed the case.

A complaint against Texas Pete hot sauce also fizzled out. The company was accused of misleading consumers by suggesting the sauce was made in Texas when it’s produced in North Carolina. Another case that was tossed: a claim that Kellogg’s Strawberry Pop-Tarts’ pastry filling didn’t have enough strawberries.

While many of the complaints may seem amusing or trivial, ILR believes they “underscore the serious issue of lawsuit abuse, threatening American businesses and consumers.”

According to the group, food-related lawsuits jumped 52% since 2017. And, for every case dismissed by a judge, about 10 are settled by the company because it is faster and less expensive than fighting in court.

“It’s crucial for the legal system to strike a balance between protecting consumer rights and preventing abuse of the system to ensure a fair, efficient and thriving business environment,” ILR said. “Frivolous litigation drains resources, stifles innovation and inflates costs for the products and services we use every day,” the group wrote in a report. “When businesses must divert time, money and effort to defend against baseless claims, these costs are often passed down to consumers, resulting in higher prices and potentially fewer choices.”

“Moreover, the fear of litigation can discourage businesses from taking creative risks or introducing new products, ultimately hindering economic growth and innovation,” the group added.

It’s crucial for the legal system to strike a balance between protecting consumer rights and preventing abuse of the system to ensure a fair, efficient and thriving business environment.
– U.S. Chamber of Commerce Institute for Legal Reform

Regardless of whether the lawsuits are deemed ridiculous by the public or represent a serious complaint that many consumers have, ILR recommended companies continue to fight all cases instead of settling them. By presenting a well-reasoned defense of products, ingredients, labeling and how reasonable consumers understand all of those aspects, the group believes it will discourage attorneys from filing more class actions.

A cartload of complaints

Some recent noteworthy class action lawsuits against New Jersey-based companies include claims against Mondelez Global, Campbell Soup Co., Eggland’s Best and Wakefern Food Corp.

Mondelez – The company was hit with a putative class action in February accusing the snack food giant of falsely advertising that its Ritz Bits cracker sandwiches are made with real cheese. Filed in the U.S. District Court for the Eastern District of New York by a Long Island man, the suit claims the snack food giant misled consumers by marketing the product as having a “filling made with real cheese,” despite the cracker sandwiches containing lower-value, highly processed substitutes.

The complaint also accuses Mondelez – which maintains its North American headquarters in East Hanover – of marketing the products in such a way due to an increased demand for wholesome ingredients in shelf-stable packaged foods. In addition to an image of two wedges of cheddar cheese, the packaging shows crackers filled with cheese.

Campbell – A proposed class action accuses the Camden soup and snacks maker of improperly marketing its V8 Splash beverages as a “wholesome, naturally-flavored, healthful fruit-juice beverages for kids,” when the product is allegedly “almost entirely water and high fructose corn syrup, artificially flavored to taste like fruit juice.”

The suit – which was brought in U.S. District Court for the Central District of California and U.S. District Court for the District of New Jersey by two consumers – claims the beverage contains, at most, 2% of the fruit and berries listed on the labels. Similar complaints regarding V8 juices have been dismissed in the past.

Campbell is also facing a class action suit over allegations that it is misrepresenting its canned soup product “Beef with Country Vegetables” because the primary ingredient is not meat. Despite the packaging’s emphasis on the word “beef,” the soup is predominately made from vegetables, the lawsuit says. It also argues that the term “Country Vegetables” falsely suggests that the carrots and potatoes are prepared in pastoral areas before being combined with other ingredients but are prepared at an industrial scale.

The complaint was filed in February in the U.S. District for the Eastern Court of New York by a consumer being represented by Spencer Sheehan, a New York attorney who has filed nearly 500 consumer fraud lawsuits against food and beverage corporations since 2020 in federal courts across the country.

The majority of his claims allege deceptive and misleading packaging practices and, according to a written ruling last May by a federal judge “haven’t survived long.” The judge added: “Many of the complaints have suffered the judicial equivalent of a crash landing or perhaps an explosion on the launch pad,” as well as described Sheehan as a “wrecking ball” whose cases saddle others with attorney fees.

Eggland’s Best – The Cedar Knolls-based company – one of the largest U.S. egg producers – was accused of falsely claiming its eggs contain more nutritional benefits and less saturated fat than competing brands. A proposed class action suit filed by a consumer in U.S. District Court for the Northern District of Illinois last month takes issue with the company’s packaging claims, which say that its eggs contain “25% less saturated fat than regular eggs.”

In the complaint, plaintiffs allege that independent testing shows Eggland’s Best has more saturated fat than both regular eggs – which contain 1.5 grams of saturated fat per 50 gram serving. And while Eggland’s Best eggs are represented as having 1 gram of saturated fat per 50 gram serving, the product contains 2.84 grams per 50 gram serving, the suit says.

A spokesperson for Eggland’s Best told NJBIZ, “We fully stand behind our product claims, which are supported by rigorous quality control measures including approximately 75,000 laboratory tests per year. Eggland’s Best remains committed to providing a superior nutritional product for its consumers.”

Wakefern – A putative class action alleges that Wakefern’s Bowl & Basket graham cracker packaging suggests the product contains more whole grains than it does. Filed July 2022 by a consumer in the U.S. District Court for the Southern District of New York, the lawsuit alleges that the label misleads consumers into believing the cookies have more whole grain graham flour than non-whole grain flour

Last month, the court dismissed statutory claims brought under Connecticut, New Jersey and Delaware consumer fraud law, as well as state warranty claims. However, New York, Pennsylvania and New Hampshire claims will proceed against Wakefern, which is the nation’s largest grocery cooperative, the judge also ruled.

Mondelez and Wakefern did not respond to a request for comment. Campbell declined to comment, citing the litigation.

Wholesome approach

In recent years, consumer groups have ramped up litigation against the food and beverage industry as companies try to capitalize on growing demand for products that are healthier and more sustainable.

According to Perkins Coie’s 2023 analysis, claims involving use of the word “natural” remain a target for plaintiffs. Nearly half of the 40 filings in this category last year involved food and beverage products, but complaints were also lodged against manufacturers of supplements and pet food.

Preservative-related claims remain one of the most popular categories of class action filings, Perkins Coie found. The phrases “No Artificial Preservatives” and “No Preservatives” were targeted at a higher rate last year than 2022 over complaints of alleged deception.

There is also a steady rise in predominate ingredient claims like “made with real butter” or “made with whole grain” by plaintiffs who are unsatisfied with the quality of the highlighted ingredient on a package, according to Perkins Coie.

Another active area last year was environmental, social & governance, with 54 cases filed, highlighting the growing scrutiny on sustainability claims and supply chain ethics, Perkins Coie’s report said.

Damian Conforti, a partner at Mandelbaum Barrett PC in Roseland, pointed to the explosion of interest over the last 15 years that consumers have in “all natural ingredients, organic, whole grain, no artificial flavors and no additives.”

Conforti, who formed the firm’s hospitality practice and co-chairs its white collar and criminal defense group, said, “The natural food business is just absolutely booming. Whether you’re talking about different diets that are focused on that or the push toward reducing antibiotics in free range chickens and meats and things like that. It’s not only very popular in the health food nutritional space for that reason, but obviously because they can charge a premium.”

As consumers become more mindful about healthy eating, they’ve become better at reading labels and more aware of nutritional content of foods. That’s something that Conforti, a member of Mandelbaum Barrett’s commercial & corporate ligation group, said plaintiffs hope will work in their favor.

“The consumer knows what they’re doing when they’re opting for organic whole grain, all-natural, free range or whatever the description is. There’s a certain set of consumers who are focused on that,” he said. “So, a defense argument is going to include that this is a savvy consumer and someone who is looking for this product – which can cut both ways.

“The plaintiff is going to say ‘Exactly – the consumer who’s looking for a whole grain graham cracker and is willing to pay an extra dollar for it is being duped,’” he said. “And the defense could say, ‘Well, no, not really. They can read an ingredient label just like anyone else.’”

Opinions in recent years from the nation’s trial and appellate courts tend to agree with the reasonable consumer defense – which concludes that a “reasonable consumer” would not be deceived by a product’s claims, like “natural,” “sustainable,” “healthy” or “GMO-free,” especially in the context of the whole packaging, which may include disclaimers or an ingredients list.

In analyzing recent rulings, Perkins Coie explained that the decisions “drive home some critical components of the reasonable consumer defense – that consumers have ‘general knowledge and common sense,’ and ambiguity can be dispelled by fulsome and accurate disclaimers, whether indicated by an asterisk or in the ingredient list.”

Patrick McNamara, a partner at New Jersey-based business law firm Scarinci Hollenbeck LLC, said, “There’s a lot of ongoing debate over how you define natural over how you define healthy. There are a lot of products out there that are regulated. And then there are also a lot of products that aren’t FDA [U.S. Food and Drug Administration] regulated and fall under the dietary health supplements laws that were passed in the 80s.

“A lot of times you’ll see a product … and if you notice a lot of them will say that it has not been examined by the FDA, make no representations or warranties that it’s going to treat or cure a disease,” he said. “There’s a whole set of boilerplate or warranties they put on their labels to make sure people understand it is a dietary supplement of some type and not an FDA-regulated product.”

Place of origin claims are another way in which plaintiffs bring cases, especially for premium products that are represented as being imported, according to Conforti. “If you’re talking about pasta products, macaroni or sauces that are ‘From Italy’ or ‘Made In Italy’ but turns out to be manufactured in the U.S., is that something that is deceptive to the consumer?” he said.

“Savvy consumers are willing and have the means to spend for the best food products, whether it be Italian, Mexican, Spanish, Greek, whatever it is,” he said. “So, when a manufacturer puts out there that it’s the most authentic, the best, Italy’s number one or the most sought-after beans in Mexico, whatever it may be, they know what they’re doing because it’s a competitive market and they know the consumer will consider that and pay more for it as opposed to buying the competitor product.”

Driving the trend

“These lawsuits have been going on for several years,” said McNamara, who serves as general counsel for the National Association of Flavors and Food-Ingredient Systems, a Neptune-headquartered trade association. “And I’m not aware of anywhere a plaintiff has won. The handful of cases I’ve seen usually wind up at some point with motions to dismiss succeeding and the companies getting out of those particular pieces of litigation. I can’t think of one off the top of my head that there was a winner in terms of the plaintiff getting fees.

“I think most of the companies that are in the industry take a pretty hard line and say ‘Hey, we’re doing everything by the book. We’re following the laws. We’re following what the governments require us to put on a label and this borders on being frivolous litigation,” McNamara said.

I think most of the companies that are in the industry take a pretty hard line and say ‘Hey, we’re doing everything by the book. We’re following the laws. We’re following what the governments require us to put on a label and this borders on being frivolous litigation.
– Patrick McNamara, Scarinci Hollenbeck LLC

As for a motive, he believes some of the plaintiffs or law firms behind the cases “hope that, at some point, they’ll hit a winner – like a lottery ticket.”

“I’m sure there are a few out there who feel that these companies are cutting corners on their labeling and believe that if the government isn’t going to step up and do any type of enforcement action, then they’re going to take advantage of certain state and federal laws to do the same thing,” he added.

Conforti said, “Not to be cynical, but it’s about money, money and money. So, when you’re considering these class actions and whether or not you can pull together a putative class, you’re looking at it from that standpoint. They’re very expensive cases to navigate – on the plaintiff’s side, there’s a lot of analysis and a lot of workup that goes into the case before you decide you’re going to file. “

“Once you get past that initial pleading stage or initial motion to dismiss the pleading stage, then it becomes ‘are they going to mediate and try to resolve and settle the case?’ Otherwise, it’s a long discovery process. It’s a long road to fight this out to reach a trial,” he commented. “The outcome is going to depend upon what the plaintiffs are looking for and whether or not there’s going to be an analysis on the defense side on the reasonableness of trying to resolve it.

“That can include a lot of different factors to determine if it makes sense or if it’s reasonable to try and resolve,” Conforti said. “One is obviously – what do they want? What are the plaintiffs looking for money-wise? And another large concern is what sort of precedent is this going to set for us? Are we going to have to change our business practices?”

Some cases “that you think are a real shot in the dark wind up getting legs,” he said. “The key is getting past the initial pleading stage. Then, you’re in the game and the other side is going to have to seriously consider what they’re going to do, what their business interests are and how they’re going to approach a defense.”

“It’s part of the freedom to engage in interstate commerce, business and fair trade. That’s why we have advertising, marketing and you can freely market however you choose within reason … that’s what makes it a competitive capitalist society,” he said.

“On the same token, there is a need to check some of these companies and keep it within reason … a court is going to look at the plausibility that a significant number of consumers is going to be duped by claims that are being made on packaging or a bottle,” he said.

In the case against Wakefern, Conforti explained it’s “not about one particular person showing up and saying, ‘Well, I thought I was buying a whole grain graham cracker.’ It’s about the plausibility that it’s going to cut across a significant cross section of consumers.”

“The plaintiff is trying to claim that it’s reasonably plausible to believe that customers are being duped in a widespread manner that drives up the value of the claim,” said Conforti, who went on to say what’s happening with the graham cracker line could prompt Wakefern to “look at other similar products where they might face similar claims.”

When it comes to food and beverage class actions, California remained the most active jurisdiction last year with 65 filings. Other top venues include New York (42 filings) Illinois (17 filings) and Missouri (18 filings), according to Perkins Coie.

“Most of the lawsuits that are being filed in this space are being filed in court-friendly states – that’s New Jersey, New York, California and, to a lesser degree, Florida. There aren’t that many,” McNamara said.

When it comes to determining where to file, Conforti said there’s several factors to consider. “When you have someone like a Wakefern or a Mondelez where they’re putting products in the stream of commerce and they have contacts in multiple states, then you’re going to look to what’s precedent look like in those different jurisdictions where the products are being sold,” he said.

“If you are a plaintiff, you’re looking for plaintiff-friendly jurisdictions, which can mean a number of things – potential jury pool, prior verdicts or settlements achieved. Then, there’s choice of law. A number of these lawsuits are making claims under various states laws.”

“With Wakefern, they’re making claims under various states’ consumer fraud statutes … alleging various infractions,” he explained. “At the core, they’re all different variations of the same theme, but some are tougher to prevail on.”

Editor’s Note: This story was updated at 2:13 p.m. ET April 30, 2024, to include a statement from Eggland’s Best.