A California appeals court has determined that Starbucks did not violate state labor laws by allowing shift supervisors to share the tips left by customers in collective tip boxes and thus, overturned an $86 million award made to a class of current and former Starbucks’ baristas. Chau v. Starbucks Corp., No. D053491 (Cal. Ct. App., decided June 2, 2009). Because shift supervisors serve customers and rotate such duties with baristas, the appeals court determined that the shift supervisors were among those for whom the tips were intended. So ruling, the court distinguished Starbucks’ policy of equitably distributing collective tip-box proceeds from the prohibited practice of mandatory tip pooling.
Category Archives Litigation
The multitdistrict litigation (MDL) court in Missouri before which nearly 20 putative class actions against Aurora Dairy Corp., an accredited organic certifying agent and several retailers had been consolidated for pre-trial proceedings, has dismissed the lawsuits with prejudice finding that federal organic food laws preempt the claims. In re Aurora Dairy Corp. Organic Milk Mktg. & Sales Practices Litig., MDL NO. 08-1907 (E.D. Mo., decided June 3, 2009). Relying on a U.S. Department of Agriculture (USDA) investigation that found the dairy in violation of national organic program requirements relating to pasturing and organic management, the plaintiffs alleged violations of various state consumer protection laws, breaches of express and implied warrantees, negligence per se, negligent misrepresentation, and unjust enrichment. The court discusses at length the program under which Aurora Dairy conducted its operations with the overall supervision and control of USDA. While the court found that the litigation claims were not expressly…
The Federal Trade Commission (FTC) has announced its approval of a final consent order in its challenge to the merger of Whole Foods Market, Inc. and Wild Oats Markets, Inc. Under the agreement, Whole Foods will sell 32 of its supermarkets and give up unrestricted rights to the “Wild Oats” brand. When the agreement was announced in March 2009, FTC Chair Jon Leibowitz claimed, “As a result of this settlement, American consumers will see more choices and lower prices for organic foods.” Whole Foods and Wild Oats completed their merger before an appeals court finally agreed with the FTC that the merger could have anti-competitive effects and allowed it to move forward with administrative proceedings against the company. Thus, it was unclear until the consent order was filed what remedies could be ordered if the FTC proved its case. See FTC Press Release, May 29, 2009.
The British Court of Appeal has determined that “Regular Pringles,” a snack food made by Procter and Gamble, are subject to the value-added tax under a provision that applies to “potato crisps, potato sticks, potato puffs and similar products made from the potato, or from potato flour, or from potato starch.” Revenue & Customs v. Procter & Gamble UK, [2009] EWCA Civ 407 (Eng. & Wales Ct. App. (Civ. Div.), decided May 20, 2009). Foods are generally not taxed in Britain, but an exception has been carved out for “food not normally bought primarily for nutrition but eaten as snacks.” The question before the court was whether the Pringles chips, with just 42 percent potato flour content, are “similar to potato crisps and made from the potato.” The company apparently argued that products subject to the tax should be made from 100 percent potato or near 100 percent, to give the…
According to news sources, a bottled water industry trade association and several companies that produce bottled water have sued New York in federal court seeking to overturn an amendment to the state’s Returnable Container Act imposing a 5-cent deposit on water bottles. Int’l Bottled Water Ass’n v. Paterson, No. 09-4672 (S.D.N.Y., filed May 19, 2009). The original law, reportedly adopted in 1982, was intended to encourage recycling and reduce litter and waste. Currently applying to bottles and cans containing soft drinks, beer and wine coolers, the 5-cent-per-container charge can be recovered by consumers who return their empty cans and bottles to the retailer. The deposit for water bottles containing flavored water, vitamin water and artificial sweeteners becomes effective June 1, 2009. An exception is made for bottled water products with sugar. While the plaintiffs are not apparently challenging the law’s sustainability goals, their lawsuit takes issue with its new labeling…
A federal magistrate in Colorado has consolidated two lawsuits that address whether Aurora Dairy Corp.’s insurers are required to defend or indemnify the organic dairy in a host of consumer class actions alleging that the company falsely certified its milk as organic. ACE Am. Ins. Corp. v. Aurora Organic Dairy Corp., No. 08-1236 (D. Colo., order entered May 20, 2009). The putative class actions, consolidated before a multidistrict court in Missouri, claim that Aurora’s milk products do not conform to organic standards, citing a U.S. Department of Agriculture report that purportedly found shortcomings in Aurora’s organic operations. Among other matters, the claimants seek disgorgement for unjust enrichment. Aurora sued Nationwide Agribusiness Insurance Co. seeking a declaration that the insurer was required to defend it in at least one of the pending class actions. The dairy also sued for bad faith, breach of contract and related claims. A group of insurers…
Concerned that the United States does not plan to make any changes to its country-of-origin labeling (COOL) rules for meats, fresh produce and nuts, Canada has apparently decided to move forward with a complaint it originally filed in December 2008 with the World Trade Organization (WTO). According to Canada’s trade minister, “Recent instructions from the U.S. Secretary of Agriculture encouraging the U.S. industry to use very strict labeling practices have removed flexibility previously envisioned in the legislation and this affects the ability of our cattle and hog exporters to compete fairly in the U.S. market.” U.S. imports of Canadian cattle reportedly dropped 32 percent in the first two months of 2009 compared with the same period in 2008, and hog imports have fallen 40 percent. The reductions are apparently blamed, in part, on COOL requirements that U.S. plants segregate and separately label imported products. Canadian producers also claim that the…
As anticipated, federal prosecutors have reportedly filed a motion to dismiss a number of charges of aiding and abetting aggravated identity theft against a Postville, Iowa, slaughterhouse, its former executive and a former manager. The action was taken after the U.S. Supreme Court ruled that a conviction under the identity theft law requires a showing that those presenting false identification documents to employers knew they belonged to another real person. More information about the case and its effect on charges arising from the immigration raids that occurred in Iowa in 2008 appear in issue 303 of this Update. According to a news source, prosecutors knew they would be unable to prove that the undocumented immigrants who worked at an Agriprocessors, Inc. facility knowingly used identification papers belonging to others, and thus, they would be unable to prove that the managers and executives were guilty of aiding and abetting. After nearly…
The Vermont Supreme Court has refused to expand liability to allow the recovery of non-economic damages in litigation involving the death of pets. Goodby v. Vetpharm, Inc., No. 2009 VT 52 (Vt., decided May 8, 2009). While the issue arose in a case involving the alleged negligence of a veterinarian and pharmaceutical company, the question whether pain and suffering damages are available to pet owners also came to the fore when melamine-contaminated pet food injured or killed cats and dogs throughout the United States and Canada in 2007. Shook, Hardy & Bacon Public Policy Partner Victor Schwartz and Associate Phil Goldberg submitted an amicus curiae brief to the court on behalf of the Animal Health Institute, Federation of Dog Clubs, American Kennel Club, and Pet Industry Joint Advisory Council, analyzing the legal and public policy implications of allowing such damages. The brief explained to the court how this proposed liability would depart from hundreds…
The Tenth Circuit Court of Appeals has affirmed a lower court’s decision not to enjoin Tyson Foods, Inc. from using poultry litter as fertilizer. Oklahoma v. Tyson Foods, Inc., No. 08-5154 (10th Cir., decided May 13, 2009). Oklahoma’s attorney general sought a preliminary injunction to halt the practice, arguing that poultry litter contains E. coli, Salmonella and Campylobacter and that its use in the Illinois River Watershed in Arkansas and Oklahoma caused fecal bacterial contamination of the watershed’s waterways, which are popular for water recreation and supply drinking water for local residents. Tyson responded that the bacteria come from multiple sources including wildlife, various farm animals and humans. The company also noted that the way its farmers treat poultry litter kills any bacteria and that the watershed’s bacteria levels “do not correlate to poultry farming or litter application, but rather correspond to areas of cattle farming and human activity.” The…
