Unmitigated Chutzpah: The CSPI's Merchantability Claim Against Safeway
Ken posted about some general issues related to the Center for Science in the Public Interest’s claims against Safeway related to the decision not to use its Club Card data to publicize recalls. Hidden among the claims, however, is a claim for breach of the warranty of merchantability that is so breathtakingly extensive it requires a separate post.
The breadth of this claim is astounding. To see why, you must understand two things. First, this is a class action. CPSI and its lawyers seek to represent “All Customers who bought Recalled Products, and whom Safeway did not advise that they bought Recalled Products, for a period of four years prior to the date this complaint is filed until the date of class certification.” “Recalled Products” are those subject to a Class I recall from the FDA or the USDA. I presume the four years states the applicable statute of limitations. If the class were certified, these lawyers would represent everyone in the class.
Second, the count of the complaint that deals with the warranty of merchantability has nothing to do with the requested relief that has garnered so much publicity. It is unrelated entirely to the use of the Club Card to notify customers about recalls. It is a straight breach of contract action. Put simply, these lawyers purport to represent every single person who had a Safeway Club Card, for the value of their Recalled Products. The complaint expressly makes no claim for any injury other than the economic injury of a breach of contract; no one is alleged to have gotten sick, let alone died. Indeed, one of the named plaintiffs consumed some of the eggs subject to recall, apparently without adverse health effects.
Moreover, and this is important to understand, these are not Safeway’s recalls. They are in nearly every case recalls instituted by someone up the food chain. The class consists of everyone Safeway didn’t notify, but the named plaintiffs in fact became aware of both recalls through other means: news reports, a letter mailed by another retailer who had sold similar products, a “neighborhood listserv.” Upon becoming aware of the recalls, there was nothing stopping either plaintiff, who, according to the very complaint their lawyers have filed on their behalf, “frequently shops at her local Safeway store”, from asking for a refund. I suspect Safeway would have granted it without complaint or hassle.
But no. Instead, we need a class action. Who is in the class? Everyone who never got notice from Safeway of the recalls, even though they may have (like both named class plaintiffs) received notice from other means. The parties actually responsible for these recalls purposely put that information out onto the news channels; blogs like this one tend to spread the word gratis when recalls occur. Anyone concerned about the food they buy can check numerous news sources, including the FDA’s own website, for news about recalls. I often walk into the office in the morning to be asked, “did you hear about the latest recall?” This stuff isn’t hidden under a pillow somewhere.
By being subjected to the class action, though, Safeway may be in a dilemma. It really doesn’t want to pay consumers twice (nor should it have to). But how is Safeway, now that the class action has been filed, to know that it will not be required to pay twice, once when the consumer comes to the customer service desk at his or her local store and again when the class action is settled? The answer is that it can’t. Which may make Safeway less likely to pay the consumer at the customer service desk. Is that really the result that is in the best interests of the purported class?
My guess, however, is that this won’t happen. Both because Safeway doesn’t want to have a few thousand store managers explaining to real live customers that some lawyers in California make it impossible to refund your two dollars, and because Safeway’s lawyers, despite the unmitigated chutzpah of CSPI in claiming the right to represent all Safeway’s customers wherever located in connection with their refund rights, think the chance of class certification on this issue is of vanishingly low probability.
How Virgin is Your Olive Oil?
The Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture is finally revising its standards for olive oil, promulgated way back in 1948, to bring them in line with the International Olive Council (IOC), an organization established under United Nations auspices that represents 98% of the world’s olive oil production, nearly all in the Mediterranean basin (the U.S. is not a member). It is doing so at the behest of the California Olive Oil Council (COOC), which is the trade association of U.S. olive oil producers, essentially all of whom are in California.
The new regulations, which are effective on October 25, can be found here, and here is a release the AMS put out describing them. Pretty clearly, terms like "U.S. Fancy" are quaint and obsolete with respect to how olive oil is marketed, and standards for what the terms "Extra Virgin" and "Virgin" olive oil mean are important for olive oil producers, distributors, retailers and consumers.
COOC was also a funder of a study, which has received much press attention, about the accuracy of olive oils labeled as “extra virgin” in advance of the effectiveness of the new AMS regulations. The study has resulted in headlines like, “Olive Oil Study Questions ‘Extra Virgin’ Claims” and the even more provocative, “Olive Oil Study Questions Claims of Virginity.”
The study showed, among olive oils purchased by the researchers in three parts of California (the Bay Area, Sacramento and Los Angeles County) a difference in the accuracy of “extra virgin” labeling between domestic and imported olive oils. Using tests that are used by IOC and in the AMS regulations, as well as other tests used by the German Fat and Oil Society and Australian Olive Association (neither Germany nor Australia being IOC members), there was a distinct difference in the quality of the oils tested, with the domestic olive oil coming off better.
The study makes no claim to any statistical significance for its findings, which is not surprising considering they only examined 14 imported and five domestic brands, buying one of each imported brand in three different places in California and one of each domestic brand in two. Equally unsurprisingly, the North American Olive Oil Association (NAOOA), which represents olive oil importers, has questioned the study's conclusions, which they say are not in line with the results of their own periodic tests of their members' products. Both groups appear to be supportive, however, of the AMS regulatory action.
One thing in the NAOOA press release about the new regulations struck me, however.
But the practice of labeling lower-quality olive oil as top-end — and charging a premium for it — is technically legal in the U.S.
The reason is simple: There are no federal rules that define what is — or is not — "virgin" or "extra virgin" olive oil, said Vito S. Polito, professor of plant sciences at UC Davis and co-chairman of the school's Olive Center, a research group.
I suppose we can all have our own definition of "technically legal." Something could be thought of as technically legal if doing it does not result in criminal sanctions, or result in the product being forcibly recalled from store shelves. In those senses, I suppose selling something as "extra virgin" olive oil would be, until the AMS regulations come into effect in October, "technically legal." But if one took it to mean there are no adverse legal consequences, may I beg to differ? Readers of this blog will remember the implied warranty of merchantability contained in Section 2-314 of the Uniform Commercial Code. One key provision of that warranty is that the goods "conform to the promise or affirmations of fact made on the container or label if any." It doesn't require federal standards to say what extra virgin olive oil is; any form of evidence of a standard, such as, say, the IOC standards, would presumably be admissible into evidence to show what the common understanding of the term is. If the goods sold do not conform to the standard found by the court or jury, then damages under Article 2 will be available.
For consumers, it should be even easier. If you buy something labeled extra virgin olive oil and the bottle, when opened, smells rancid, take it back to your retailer. If it smells delicious, enjoy one of nature's true wonders.
The Ninth Circuit's iPod Opinion and the Warranty of Merchantability
The warranty of merchantability is a favorite tool of plaintiff's attorneys in food liability cases. We have blogged a good deal about it.
In a case that does not involve food at all, but is sure to get a lot of publicity, the Ninth Circuit yesterday ruled that the common iPod does not breach the warranty of merchantability even if it can be used to damage your ear while wearing ear buds. The decision in Birdsong v. Apple, Inc. will be very helpful in defending future claims of breach of the warranty in many areas, including in relation to food.
The plaintiffs in Birdsong did not allege any injury to themselves. Rather, they alleged that the iPod earbuds were capable of producing 115 decibels of sound, that consumers may listen at unsafe levels and that iPod batteries last 12 to 14 hours and may be recharged, meaning that a consumer may listen for a long time. The plaintiffs requested relief in the form of iPods being modified to have noise-reduction features, better warnings and a decibel meter. The court was having none of it.
The plaintiffs do not allege the iPods failed to do anything they were designed to do nor do they allege that they, or any others, have suffered or are substantially certain to suffer inevitable hearing loss or other injury from iPod use. Accordingly, the district court correctly determined that the plaintiffs failed to allege sufficiently the breach of an implied warranty of merchantability.
The court's analysis may apply equally well to many of the recent food liability cases we've examined where the plaintiffs allege no specific injury to themselves or any inevitable injury to someone consuming the food they have targetted. The warranty of merchantability does not work to protect a consumer from misuse of an item, or use of the item in an absurd, unnatural or harmful way. No one should play heavy metal music on an iPod for 14 hours straight at full volume, and should not claim a breach of the warranty of merchantability if they do. And no one who has been diagnosed with any particular health condition should expect to be able to order anything off the menu at a national chain restaurant, in any quantity, and assume it will not exacerbate that condition.
The noted New York restaurateur and curmudgeon Kenny Shopsin takes this attitude toward people who expect his restaurant to cater to their health needs:
Some people tell me they're deathly allergic to something and that I have to make sure it's not in their food. I kick them out. I don't want to be responsible for anyone's life-or-death situation. I tell them they should eat in a hospital.
Most restaurateurs, big and small, are more accommodating than Kenny (whose autobiography/cookbook has the title Eat Me for a reason). But ultimately, they are providers of food, not doctors, dieticians, the FDA or the Health Department.
Happy (and healthy) New Year, everyone.
