Litigation over labelling claims: will Canada become a target?
By Sara Zborovski
It’s hard to go one week these days without hearing about a new class action lawsuit in the U.S. against a food company relating to labeling claims. Most recently, two cases alleging that Nutella’s advertisements and labeling misled consumers into believing the chocolaty (and delicious!) spread was nutritious were settled for almost $7 million.
In the Nutella case and others, consumers have banded together to allege that the food’s labeling is false and/or misleading. In many cases, the poster-child for the class is a busy mom who wants to feed her children healthy and nutritious foods, but doesn’t have time to read all labels to determine if they are accurate.
In both Canada and the US, companies are allowed to make certain claims on food and beverage labels without pre-approval from the government. Companies are supposed to be in possession of scientific evidence backing the claims, but neither Health Canada nor the FDA has the resources to police all food labels. In the US at least, it seems this job is being done (at least in part) by class action lawyers.
In general terms, food and beverage labels contain the same or similar claims in Canada and the US. The question then, is why we aren’t seeing the same number of class action suits in Canada?
As I understand it, it has traditionally been easier in Canada than the US for classes to be certified (essentially the starting point to any class action) – a factor that would favour class action suits in this country.
I think the lack of suits in Canada are likely attributable to (a) our less-litigious nature, and (b) the fact that the Canadian market is smaller than the US, making class action suits less lucrative for lawyers. Consider that in the Nutella case, the company agreed to reimburse consumers the purchase price of each jar of Nutella. According to this article, the group of lawyers who brought the Nutella suit was awarded about 66%, or $4.6 million, of the total settlement funds.
I suspect far less Nutella is sold in Canada than in the US, reducing any possible settlement amount, and ultimately the cheque the plaintiffs’ lawyers would see at the end of the day. Result: too much risk without the possibility of enough reward for the lawyers to take on.
As these suits continue in the US, it will be interesting to what impact, if any, they will have on food and beverage labeling, and if there is any spill over into Canada.