Why is Miami a hub for deceptive labeling class actions? Lawyer-driven litigation, ‘venue shopping’ contribute to rise in suits
Stephanie N. Grimoldby May 14, 2016, 8:18am
MIAMI - This city has a lot going for it.
The Miami Heat. Miami beaches. Miami food. Miami art, fashion and celebrities.
It also has Miami courts that, as of late, have seen their fair share of false advertising class action lawsuits filed against major brewing companies - particularly for alleged deceptive labels.
In a country full of interesting cities and well-established federal jurisdictions, this trend begs the questions: Why the increase in this type of litigation now, and why, specifically, is it being found in the U.S. District Court for the Southern District of Florida?
Leffe Beer of Anheuser-Busch Companies (AB InBev) is the latest to be accused of utilizing deceptive labels and wording. The beer’s alleged false advertisements caused plaintiff Dr. Henry Vazquez to believe it is still handcrafted by monks at the Abbey of Leffe in Belgium, which is not the case.
The plaintiffs could have filed in state court, but under the Class Action Fairness Act of 2005, AB InBev would have removed the case to federal court anyway, said Yvonne McKenzie, a partner with Pepper Hamilton LLP. The case met the requirements of CAFA, specifically that the putative class include 100 or more diverse members and the amount in controversy exceed $5 million.
That suit still is pending, but the Leffe case is not the only deceptive-labeling class action to hit AB InBev. The beverage giant has settled similar suits twice before in Miami, when its labels allegedly steered consumers into believing Beck’s Beer was brewed exclusively in Germany and Kirin Ichiban was brewed exclusively in Japan. Both beers also are brewed in the U.S.
AB InBev is not alone.
MillerCoors faced litigation in February in Miami by Joaquin Lorenzo, who claimed the Coors brands aren’t exclusively brewed in the Rocky Mountains with “pure Rock Mountain spring water,” as Coors Light labels allegedly suggest, but instead, have manufacturing locations throughout the U.S.
Florida seems to be a hotbed for this type of class action, with the same lawyers bringing the same kinds of action, McKenzie said.
Kozyak Tropin Throckmorton in Coral Gables, for instance, represented plaintiffs in both the Beck’s and Kirin Ichiban cases.
Part of Miami’s class action popularity could stem from the fact that the Florida Deceptive and Unfair Trade Practices Act - under which the Leffe case was filed - is a pro-plaintiff protection act, with plaintiffs able to recover attorneys’ fees in a settlement, McKenzie said.
“This is certainly lawyer-driven litigation,” she said. “Look who actually benefits in this litigation. Lawyers are kind of emboldened to bring these claims. Specifically in Florida, the laws are very plaintiff friendly … . It’s a low bar for consumers to bring these lawsuits.”
In the Beck’s case, AB InBev settled for $20 million, which it may never actually pay out, said Alva Mather, a partner with Pepper Hamilton and leading attorney in the alcoholic beverage industry. Individuals who had a receipt showing they had purchased Beck’s were entitled to recover up to $50; those without receipts could recover up to $12.
“The [$20 million] sticker shock for Anheuser-Busch is significant and drawing attention to them,” Mather said. “[What] the actual payout is, I would be very surprised if it actually got to that number.”
However, attorney’s fees added up to $3.5 million.
“That is the answer to why we’re seeing more of these cases,” Mather said. “If you can get past the motion to dismiss, that’s where the money is. It’s not worth it for the defendant to go through the entire litigation, so they end up settling.”
William Large, president of the Florida Justice Reform Institute, agrees.
“The problem is that most class action lawsuits tend to become about attorneys’ fees and the huge award in fees versus the nature of the controversy in question,” Large said. “How is the class in general being compensated? So often times at the end of litigation, you see a huge fee award and the members of the class get a miniscule settlement.”
Miami also has seen more class action litigation because the city’s litigators are more than capable of taking on these types of cases, said Ervin Gonzalez, a partner at Colson Hicks Eidson in Coral Gables who is representing Vazquez in the Leffe case.
“Miami, like other very large cities, have sophisticated attorneys that handle [these types of cases],” Gonzalez said. “Others may not have practitioners that are well versed in these areas.”
Trevor Brewer, a partner at BrewerLong in Maitland, agrees in theory.
“You have a bar of attorneys in Florida, particularly southern Florida, who have made a practice of bringing class action lawsuits on a number of claims … they have that experience level,” said Brewer, a business and beverage attorney who advises Florida breweries. “I can’t see any other reason other than their proximity to the courts to do that. Many of these cases, especially against larger corporations, end up settling in any event, so I don’t know that you can say there’s a particularly friendly jury pool.”
Some believe Miami has become a hub due to “venue shopping,” a technique used by entrepreneurial attorneys to file smaller test cases until they find a jurisdiction that is hospitable to their claims.
“Other types of litigation have been brought against [AB InBev] in Florida, and plaintiffs have had success in those litigations,” said Mather. “There may be a perception that those judges are more amenable to plaintiffs.”
“I don’t have first-hand knowledge of Miami judges, but it is very common for plaintiffs’ attorneys to file cases in venues that they think are more favorable for their case,” McKenzie said. “That is one of the reasons you’ll see high concentrations of litigation in certain venues. Philadelphia, for example, has been recognized as one of those plaintiff-friendly venues.”
McKenzie also has noticed there have been more suits filed by attorney generals, which seems to show that the states are pursuing more aggressive litigation to protect consumers.
“I think they’re trying to come from a place with more benevolence for their constituents and their consumers,” she said. “They want people to think twice about what they say and what they put out there. We can debate whether it’s appropriate … [but] I don’t think they’ll change [the current laws]. Politicians and lawmakers have no particular incentive to change them either. They’re coming from a place of protection, and being leaders, almost, in protecting their consumers - the people who live in those states. I would surmise they see this almost as a source of pride.”