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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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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Bad faith laws are in desperate need of reform, expert says; Plaintiff attorneys seek to extract settlements from insurers

By Vimbai Chikomo | Mar 31, 2016

TALLAHASSEE – Florida has developed a reputation of having an unfair legal system that does not favor businesses, partly because of the state’s bad faith laws, which many legal experts agree need reform. 

This was highlighted in the 2015-2016 Judicial Hellholes report by the American Tort Reform Foundation (ATRF). 

“For years the Florida Legislature has failed to adopt reforms to address clear abuses of the state’s ‘bad faith’ insurance laws,” the report stated. “These laws were originally intended to protect insureds and the public from misconduct by insurers, but they have since been transformed by plaintiffs’ attorneys into a litigation tool for extracting money from insurers that act responsibly and in good faith while trying to settle claims fairly and efficiently.”

A third-party claim is filed when an insurer fails to settle a third party’s claim against the insured party within the applicable limits of the insurance policy, which leaves the insured susceptible to a judgment exceeding the policy limits.

“The third party bad faith reform issue is a problem that exists when there is low insurance policy limits, clear liability and extraordinary damages,” William Large, president of the Florida Justice Reform Institute, told the Florida Record recently. 

Large used an example of an insured individual who causes an accident, and as a result, severely injures or kills another motorist.

“In that case, there is clear liability; there (are) extraordinary damages,” he said. “But if that individual has a policy limit like $10,000 or $25,000, what often happens is the plaintiff attorney is incentivized to bring a lawsuit on the liability case, get a big verdict and then bring a third-party bad faith action against the insurance company for failing to quickly settle the liability case.”

Large said there are many cases where limits are offered very quickly and they are rejected because how quickly an insurance company tenders those limits can be used against the company in a bad faith lawsuit.

“So one of the things we are trying to do is to advocate for a clear time frame,” Large said. “If you offer the limits within 45 days, the insurance company cannot be held in bad faith.”

Florida is one of just a few states that allows an individual who is not a direct party to an insurance contract to sue another person’s insurer, alleging the insurer acted in bad faith by failing to settle a claim. A third-party claimant can initiate a lawsuit under state common law or statute, which can give a claimant a second opportunity to revive a failed lawsuit.

Unfortunately, some key reform legislation sponsored by state Rep. Kathleen Passidomo and introduced to the Florida Legislature with the hope of creating reform have been killed during the state’s legislative session year after year.

“(Passidomo) has been a strong advocate for civil justice reform and she is including the third party bad faith bill,” Large said. “She is an extraordinary leader. I cannot say enough good things about Rep. Kathleen Passidomo. She is brilliant. She is a hard worker; she understands these issues; she understands what this means for consumers in terms of increased costs, increased litigation. She has been a strong advocate for civil justice reform measures.”

Since Florida’s legislative session ended earlier this month without much action on legal reform, any hope of reform will have to wait until next year.

“I am disappointed that no meaningful civil justice reform measures passed in 2016,” Large said. “We’ll work again on these issues next year including assignment of benefit reform, accuracy in damages reform and third party bad faith reform.”

https://flarecord.com/stories/510704775-bad-faith-laws-are-in-desperate-need-of-reform-expert-says-plaintiff-attorneys-seek-to-extract-settlements-from-insurers