A federal court in California has preliminarily approved the settlement of shareholder claims that Diamond Foods, Inc. “deliberately understated the costs of walnuts and improperly accounted for payments made to walnut growers to increase apparent profits and maintain higher share prices” in anticipation of the anticipated purchase of Pringles with company stock. In re Diamond Foods, Inc. Securities Litig., No. 11-5386 (N.D. Cal., order entered September 26, 2013). Additional details about the litigation appear in issues 464 and 482 of this Update. Under the terms of the agreement, the defendants will pay to the class $11 million and distribute 4.45 million shares of Diamond common stock—valued at $85.1 million as of August 2013. According to the court, while the maximum aggregated damages totaled some $430 million, the settlement is reasonable in light of “Diamond’s weakened financial condition.” It apparently has just $7.2 million in cash and cash equivalents and carries…
Category Archives Litigation
As the fiscal year came to a close and on the eve of the federal government shutdown, the Equal Employment Opportunity Commission (EEOC) filed nearly two dozen employment discrimination lawsuits including one against GMRI, Inc. alleging discrimination based on sex on behalf of a class of women employees at a Salisbury, Maryland, Red Lobster Restaurant. EEOC v. GMRI, Inc., No. 13-2860 (D. Md., filed September 30, 2013). According to the complaint, the defendant’s former culinary manager created a sexually hostile and offensive work environment for the two women who filed the complaint as well as “other similarly situated female employees” by engaging in frequent sexual touching, sexual comments, sexual advances, and vulgar sexual conduct. The conduct, which was allegedly “open and notorious and occurred on a frequent and routine basis,” was purportedly condoned by a former general manager who “himself had a history of making sexually charged and vulgar comments…
A federal court in California has denied the motion to dismiss filed in a putative nationwide class action alleging that Blue Diamond Growers misled consumers by labeling its almond milk products and snack foods as “all natural” and representing that they contain “evaporated cane juice,” (ECJ) in violation of federal labeling requirements incorporated into state law. Werdebaugh v. Blue Diamond Growers, No. 12-2724 (N.D. Cal., San Jose Div., order entered October 2, 2013). The court determined that the claims were not preempted by federal law or the primary jurisdiction doctrine, the plaintiff had standing to pursue claims regarding substantially similar products that he did not purchase, the claims were pleaded with sufficient particularity, and the defendant’s conflict-of-laws challenge was premature.
A federal court in California has dismissed with limited leave to amend the second amended complaint filed on behalf of a putative nationwide class against Welch Foods, alleging that the company’s juice, beverage, spread, and jelly labels and Website violate California labeling law by including “no sugar added,” “all natural,” “no artificial flavors,” and “high in antioxidants” statements. Park v. Welch Foods, Inc., No. 12-6449 (N.D. Cal., order entered September 26, 2013). Agreeing that the complaint sounded in fraud and must comply with the heightened pleading standard of Federal Rule of Civil Procedure 9, the court noted that “Welch is after the who, what, where, when, and how surrounding the circumstances in which Plaintiffs were misled.” The company apparently argued that “portions of the complaint are generously and blindly appropriated from similar complaints filed in this district,” and that a 15-page limit would be appropriate. Still, “Welch wants to know specifically…
A federal court in the District of Columbia has dismissed, for lack of standing, a lawsuit filed by the Humane Society of the United States and several other plaintiffs against the U.S. Department of Agriculture (USDA), challenging the secretary’s approval of the National Pork Board’s purchase of the slogan “Pork, The Other White Meat” from the National Pork Producers Council (NPPC). The Humane Soc’y of the U.S. v. Vilsack, No. 12-1582 (D.D.C., decided September 25, 2013). Details about the lawsuit appear in Issue 455 of this Update. According to the court, the individual pork farmer plaintiff lacked standing because he could not show that changes to the advertising funded by the pork checkoff program following the board’s purchase and retirement of the slogan affected him financially. In fact, since the board began advertising with the slogan “Pork: Be Inspired,” the net return on investment to pork producers rose from $13.8…
Calling it “ridiculous to say that consumers would expect snack food ‘made with real fruit’ to contain only ‘actual strawberries or raspberries,’ rather than these fruits in a form amenable to being squeezed inside a Newton,” a federal court in California has dismissed without leave to amend consumer fraud claims against the company that makes Nabisco strawberry and raspberry Newton cookies. Manchouck v. Mondeléz Int’l Inc., No. 13-2148 (N.D. Cal., decided September 26, 2013). The court determined that the plaintiff had Article III standing without alleging physical injury because this is not the sole measurement of injury-in-fact and the plaintiff alleged that she had paid a premium price for the products which she would not have purchased “at that price point absent the alleged misstatements.” The court agreed with the defendant, however, that the plaintiff had failed to meet the plausibility pleading standard set forth in Ashcroft v. Iqbal, 556 U.S.…
The U.S. Judicial Panel on Multidistrict Litigation (JPML) recently heard argument on the Center for Food Safety’s motion to transfer to a multidistrict litigation (MDL) court pending lawsuits against Monsanto Co. involving the genetically modified (GM) wheat that appeared in an Oregon farmer’s conventional wheat field and briefly disrupted exports to some of the nation’s trading partners. In re Monsanto Co. Genetically Engineered Wheat Litig., MDL No. 2473 (J.P.M.L., motion argued September 26, 2013). The center requested that suits filed in Idaho, Kansas, Oregon, and Washington be transferred to the Eastern District of Washington. Additional details about the Kansas litigation appear in Issue 486 of this Update.
On behalf of current and former Benihana chefs, a former chef has filed an action under the Fair Labor Standards Act (FLSA) alleging that the company forced chefs to work off the clock without compensation, illegally deducted from the chefs’ tips to provide tips to employees not entitled to share them and harassed or fired the chefs if they complained about the practices. Kim v. Benihana Nat’l Corp., No. 13-62061 (S.D. Fla., filed September 20, 2013). Alleging unpaid overtime or minimum wages in the alternative, illegal tip deductions and retaliation, the plaintiff seeks an order requiring notice to all Benihana chefs, declaratory relief, damages, interest, attorney’s fees, and costs.
A California resident has filed a putative class action on behalf of statewide and nationwide classes alleging that Safeway, Inc. labels and promotes its Open Nature waffle products as “100% Natural” while using the synthetic chemical preservative, alternatively referred to as sodium acid pyrophosphate and disodium dihydrogen pyrophosphate, as an ingredient. Richards v. Safeway, Inc., No. 13-4317 (N.D. Cal., filed September 18, 2013). According to the plaintiff, the chemical “has various applications—from its use in leather treatment to remove iron stains on hides during processing, to stabilizing hydrogen peroxide solutions against reduction, to facilitating hair removal in hog slaughter, to feather removal from birds in poultry slaughter, to use in petroleum production.” According to the plaintiff, the ingredient is not listed on the front of the package with the other ingredients. Claiming that he relied on the company’s “100% Natural” claims in purchasing products for which he paid a premium, the…
California residents have filed a putative nationwide class action against Late July Snacks LLC, alleging that the company’s snack products are misbranded because they include “organic evaporated cane juice” on their ingredient lists in violation of the state’s Sherman law, which incorporates the federal Food, Drug, and Cosmetic Act. Swearingen v. Late July Snacks LLC, No. 13-4324 (N.D. Cal., filed September 18, 2013). The plaintiffs contend that regardless whether the products actually contain sugar or dried sugar cane syrup as sweeteners, the Food and Drug Administration (FDA) requires that these terms, and not “evaporated cane juice,” be used on product labels. They cite a 2000 FDA guidance letter and warnings that FDA subsequently provided to companies using the prohibited term on food labels. They assert that the state’s unfair competition law does not require that they relied on the labels in making their purchasing decisions, just that they would not otherwise have purchased an unlawful product, “absent the Defendant’s failure to disclose…
