Why is Miami a Hub for Deceptive Labeling Class Actions? Lawyer-driven Litigation, ‘Venue Shopping’ Contribute to Rise in Suits

May 14, 2016/in Florida Record

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.

Mather agreed.

“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.”

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Don’t Drop Florida Standard for Experts: Where We Stand

May 11, 2016/in Orlando Sentinel

Don’t drop Florida standard for experts: Where we stand

We agree with legislators who want to keep the higher standard for testimony from experts in Fla. courts.

May 11, 2016

It sounds like a technical issue that only lawyers would care about, but all Floridians — because any of us could wind up in court someday — have a stake in a dispute over what standard to apply to testimony from expert witnesses in state courts.

State legislators passed a bill in 2013 to raise the standard for admitting expert witness testimony to the same one, known as Daubert, used in federal courts. The House sponsor of the bill, Republican Rep. Larry Metz, is a Lake County lawyer. But leaders in The Florida Bar, the state lawyers’ organization, have recommended that the state Supreme Court bring back the previous standard, known as Frye. The court has fielded comments on both sides and is scheduled to hear oral arguments later this year.

Justice would be best served if the court upholds the will of the Legislature and keeps the more stringent standard.

This issue is widely viewed as a battle between businesses and plaintiffs’ lawyers. Businesses, often the target of lawsuits, favor Daubert to exclude “junk science” from expert witnesses for their opponents. Plaintiffs’ lawyers, on the other hand, contend that hearings associated with applying the higher standard delay cases and raise legal costs, which restricts access to the courts for their clients.

But many criminal defense lawyers and public defenders are on the same side as business in this battle. They argue testimony that could put their clients behind bars, or even on death row, should be held to a higher standard. It’s a compelling argument — especially in light of some notorious convictions in Florida, later overturned, based on the testimony of dubious “experts.”

Florida was among a minority of states still using Frye, which originated in 1923, when legislators replaced it with the newer Daubert standard in 2013. Daubert is not only used in federal courts, but also in some form in 35 states — which would make Florida an outlier if it reverted to Frye.

Daubert establishes a three-part test for judges to evaluate whether expert testimony is admissible in court. Is it “based upon sufficient facts or data”? It is the “product of reliable principles and methods”? Has the witness “applied the principles and methods reliably to the facts of the case”? The Frye standard, by contrast, essentially applies just one test: Does the testimony represent principles that have gained “general acceptance” in their field?

One of the principal arguments of Daubert opponents — that it would burden Florida courts with costly hearings over expert testimony — has not been borne out since the state adopted the standard, according to Metz. He’s well qualified to deliver that assessment as chairman of the House subcommittee that oversees court spending.

“In my conversations with trial judges, none of them reported an excessive number of Daubert motions filed in their courts since 2013,” Metz wrote in an April 1 comment filed with the Supreme Court. And neither he nor his staff received any requests for additional funding “related to the cost of implementing the Daubert standard,” he added.

The Legislature’s Republican leaders, frustrated by multiple setbacks in Florida’s courts, have made numerous attempts in recent years to retaliate. We strongly opposed those impulsive attacks on judicial independence.

The switch to Daubert doesn’t belong in the same category. Legislators debated it for several sessions before they voted to adopt the higher standard.

Raising the bar for testimony from expert witnesses is an achievement. It deserves the high court’s blessing.

http://www.orlandosentinel.com/opinion/os-ed-daubert-frye-expert-witnesses-20160511-story.html#

Property Carriers Seek Relief from ‘Assignment of Benefits’ Abuse; Claims have Jumped 46 Percent Since 2010

May 9, 2016/in Florida Record

Property carriers seek relief from ‘assignment of benefits’ abuse; Claims have jumped 46 percent since 2010

W.J. Kennedy May 9, 2016, 9:32am

TALLAHASSEE – Property carriers in Florida are appealing to state regulators to curb a recent explosion in home water loss claims, many unrelated to the cause of the damage or far beyond the extent of it.

Claims have jumped 46 percent since 2010 in a period with no major storms or hurricanes. The carriers are being hit by a storm of another kind: some contractors and attorneys are getting homeowners to assign policy benefits (AOB) to them, and then trumping up the claims.

“I can’t tell you the number of times that the first we hear of a claim is from a lawyer or contractor demanding payment for a job already completed,” said Michael Peltier, spokesman for Citizens Property Insurance Corp. “A lot of times the homeowner isn’t even aware of what’s going on because they assigned the benefits.”

In late March, Florida’s Office of Insurance Regulation (OIR) okayed a request from Citizens to alter its policies to require notification of damage before a job begins. The policy changes hold immediately for new insureds, and for existing insureds when their polices are renewed.

OIR says that other, voluntary insurers have requested the same changes, which also include limiting emergency repairs in most cases to $3,000.

Still, the industry says that rates will have to be increased significantly to accommodate all the past claims.

Created by the Legislature in 2002, Citizens is limited to a 10 percent increase in rates per year. But the company says that in some areas of the state rates should increase by as much as 189 percent if actuarial standards were followed.

Private carriers are permitted to raise rates as high as 15 percent, or even abandon an area with an excessive number of claims.

A good portion of the water loss claims are centered in southern Florida, but Peltier says the practice is rapidly expanding to other parts of the state.

Claims from water damage are easy to exaggerate and payment of a claim is nearly a sure thing without outside inspection.

“Water loss is very fact-based,” said Peltier. “And we don’t cover damage from lack of maintenance. So in a hypothetical case there is some damage from an old pipe and the next thing you know a floor or even entire kitchen has been replaced. Then we get the bill for it.”

The industry calls AOB the “accelerant” in water loss claims. More fuel on the fire comes from the way attorneys fees are structured in insurance disputes. They are called one-way fees because the claimant’s fees are covered by the insurer in any settlement of a claim. The carrier covers its attorneys fees even in cases it wins.

“It was set up so that if David takes on Goliath, David gets his fees covered,” said William W. Large, President of the Florida Justice Reform Institute (FJRI). “But it was clearly never designed to lead to this. We even have cases in the Orlando area where roofers have offered to replace undamaged roofs for free.”

Research by FJRI, and published in a white paper, “Restoring Balance in Insurance Litigation”, found that:

“Assignee plaintiffs—often those service providers repairing the insured damage—are increasingly becoming the plaintiffs in lawsuits filed against insurers; a third of all lawsuits filed against insurers are brought by apparent assignee-plaintiffs; lawyers filing cases on behalf of these litigants are concentrated in a relatively small subset of all lawyers, yet represent an overwhelming majority of the counsel in these cases; more qualitative data obtained from insurers suggests that insurers are reacting by settling these service provider-AOB claims out of court, often paying less than what the assignee originally demanded but paying comparatively high assignee’s attorney’s fees.”

The carriers began appealing to OIR when the 2016 state legislative session ended in early March with no action on AOB reform legislation.

Legislation sponsored by Sen. Dorothy Hukill and Rep. Matt Caldwell would have restricted the ability of some contractors and lawyers from gaining control of homeowners’ insurance policy rights.

Another bill was introduced as “compromise” legislation but no negotiations to reconcile the differences in the bills ever took place.

For their part, the courts have said AOB reform is an issue for the Legislature. Last October a three-judge panel of the 1st District Court of Appeal refused an insurer’s request to rehear a June case where homeowners signed over policy benefits to contractors. In the June decision, the appeals court backed a decision by OIR that rejected a request from Security First Insurance Co. to restrict the ability of policyholders to assign policy rights without the insurer’s approval.

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Increasing Number of False Advertising Cases Against Food and Drink Hard to Swallow, Critic Says

May 9, 2016/in Florida Record

Increasing number of false advertising cases against food and drink hard to swallow, critic says

Stephanie N. Grimoldby May 9, 2016, 10:01am

TALLAHASSEE – William Large, president of the Florida Justice Reform Institute, has a hard time understanding how multiple deceptive beer label class action lawsuits have been accepted in federal court.

In the latest example, Dr. Henry Vazquez of Miami-Dade County in April sued Anheuser-Busch Companies (AB InBev) in U.S. District Court for the Southern District of Florida, for allegedly using misleading labels and advertising that caused Vazquez to believe Leffe Beer is brewed by monks at the Abbey of Leffe in Belgium. The beer actually is brewed at the fully automated Stella Artois Brewery in Leuven, Belgium, court documents state.

Large believes the case isn’t right for class certification and should be dismissed.

“All beer companies are required to comply with comprehensive regulations from the federal government, and these regulations specify what must be stated on labels of domestic and imported beer,” Large said. “If some individual has a subjective misinterpretation of what that label means, that individual’s subjective interpretation needs to be tested against a reasonable consumer standard.”

In the Leffe case, Vazquez allegedly thought, after looking at the label, that Leffe beer was brewed in an abbey. But his expectations are unreasonable as compared to a reasonable consumer, Large argues. A reasonable purchaser of beer would purchase the beverage because of its taste – or for myriad other reasons.

“Even if that were the case, that there was one individual who was suffering from a misapprehension about the label, how do you prove that there were other individuals in the class that were suffering from the same misapprehension, in particular, when this label already complies with federal labeling laws?” he asked.

The lead plaintiff in a class action lawsuit is supposed to represent other members of the class who have an identical problem, Large said. Since the purchase of beer is very subjective in nature, it would be extremely difficult to prove that any other member of the class had the same subjective thought as the lead plaintiff.

Perhaps other potential members of the class bought Leffe beer because it was on sale, Large said. Or because they wanted to bring a different beer that no one else would bring to a party. Or because their favorite color is yellow, and Leffe’s yellow label caught their eye.

“To me, the law is very clear,” Large said. “The case should be dismissed. I don’t know how it’s possible to identify the subjective interpretations of other people who purchased this beer and why they purchased it. There’s no log of everyone who’s purchased this beer or a way to identify them and a way to test their subjective beliefs when they purchased the beer … so the proposed class is not ascertainable.”

“This is an abuse of our legal system and class action jurisprudence.”

Ervin Gonzalez, who is representing Vazquez in the Leffe case, stands by the claim, which maintains Vazquez and others paid premium foreign prices for a beer they believed was superior in quality because of its alleged origination in an abbey, but instead, is similar to other mass-produced products.

And the alleged deceptive labels that fed those purchases should be corrected, said Gonzalez, a partner at Colson Hicks Eidson in Coral Gables.

“If people enjoy being cheated and lied to, then it’s frivolous,” he said. “If people expect the product that they purchase to be correct and honest and not deceiving, it’s a very meritorious claim.”

Alva Mather, a partner with Pepper Hamilton LLP, said she can understand Large’s reaction.

“False advertising cases against beverage and food manufacturers concerning the location of where the products were made are on the rise,” she said. “And some of these cases are hard to swallow, so to speak. Leffe is just one in a long line of these types of cases.”

Her colleague, Yvonne McKenzie, a partner with Pepper Hamilton, agreed.

“There are state laws that allow these kind of claims, and plaintiffs have had varied success,” she said. “Some are dismissed early, and rightfully so. But there are some courts that say it’s up to a jury to decide whether the claims could deceive a reasonable consumer, and in those situations, the case is allowed to move to the costly and burdensome discovery phase. Those are the cases that provide motivation for plaintiffs’ attorneys to file these kind of cases, and drive more and more lawsuits of this nature.”

For its part, AB InBev feels its bottle labels accurately describe the beer it contains and where it was brewed.

“Leffe has a proud, Belgian brewing heritage and is still brewed today with care and tradition under an agreement with the Abbaye Notre-Dame de Leffe,” Felipe Szpigel, president of The High End, AB-InBev’s high end division, said in a statement. “The Union of Belgian Breweries provides guidance for certifying that a beer is a Belgian Abbey beer, and Leffe meets these criteria.”

Still, there is a lesson to be learned by other brewing companies, small and large alike, said Trevor Brewer, a business and beverage attorney and partner at BrewerLong in Maitland, just outside of Orlando, who provides legal advice to Florida breweries.

“It’s not enough to just pass muster with the TTB [Alcohol and Tobacco Tax and Trade Bureau],” said Brewer. “If the TTB approves your label, that isn’t the end of the analysis. It’s also important to consider what they’re saying and how they’re saying it and how that might be interpreted by the public at large.”

Brewer isn’t concerned that smaller breweries will face this type of litigation. While there are more than 4,000 breweries in the U.S., most are nowhere near the size of Anheuser-Busch, which means there is a small pool of defendants that make it worthwhile to file this type of class action lawsuit.

“That being said, I am very concerned about my breweries and the folks I work with, what they say on their beer labels,” he said. “One, the federal government has a say in that, and running into a problem with the federal or state government could very easily disrupt their business in a very large way. Two, they do need to be responsible about what they say on their own labels. Class action or not, it is something they should be responsible for.”

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Why is Miami a hub for deceptive labeling class actions? Lawyer-driven litigation, ‘venue shopping’ contribute to rise in suits

Property carriers seek relief from ‘assignment of benefits’ abuse; Claims have jumped 46 percent since 2010

Increasing number of false advertising cases against food and drink hard to swallow, critic says

Florida Justice Reform Institute

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