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Standing Up To Class Action Bullies Print E-mail
by John Browning    Thu, May 19, 2011, 08:07 AM

In a recent column, I discussed the often-outrageous attorney fee claims in class action lawsuits, where lawyers pocketed huge sums while achieving little, if anything, for the consumers in whose names they waged war in the legal trenches.  Sometimes, it’s not consumers who are taken advantage of, but corporations that are victimized by the devastating publicity that can accompany a class action lawsuit.  As I’ve bemoaned to my colleagues in the Fourth Estate on many occasions, the filing of a lawsuit seeking millions (if not billions) of dollars is front page news.  Allegations of defective products or tainted food can sink a company’s stock with the speed of a search engine.  But when the corporation is vindicated later with a victory in court or the revelation that there’s nothing to substantiate the allegations against it, that news is buried in the back pages or not even reported by the media at all.

 

When Montgomery, Alabama-based law firm Beasley Allen filed a high-profile lawsuit against Taco Bell in January of this year, alleging that the fast food giant’s tacos were made up mostly of filler—not real beef—many companies would’ve hunkered down for a lengthy legal battle.  Others might have pursued a quick, quiet settlement.  But not Taco Bell and its parent company, Yum Brands.

 

They went on the offensive, launching a calculated media blitz showcasing the faith they had in their product.  Taco Bell risked drawing even more consumer attention to the “mystery filler” allegations by flooding the airwaves with TV commercials, radio spots, and print advertising featuring restaurant employees talking about the composition of the taco filling.  One ad has a Taco Bell worker proudly proclaiming that “our seasoned beef is 88% premium ground beef and 12% signature recipe.  If you want to see that recipe, go to tacobell.com.  It’s right there.”  The transparency continued with a social media campaign, in which the company posted messages to Facebook and purchased adwords on Internet search engines to drive traffic to Taco Bell’s website.  The CEO of Taco Bell, Greg Creed, even appeared in YouTube videos pointing out that the 12% seasoning mixture is made up of “water, oats, spices, and cocoa powder to provide flavor, texture, and moisture.”  Taco Bell announced special sales offers to bring customers back as well.  They even basked in the harsh glare of the unwelcome allegations, taking out full-page newspaper ads that began “Thank you for suing us.”

 

The seemingly counterintuitive campaign of explaining to everyone that Taco Bell’s meat is, indeed, meat paid off.  Beasley Allen, the law firm that had sued for false advertising and alleged that the beef was not really beef, voluntarily dismissed the lawsuit in April, 2011, without any money being paid.  A statement from the law firm alluded to the dismissal being tied to Taco Bell making “certain changes regarding disclosure and marketing of its ‘seasoned beef’ product.”  Taco Bell, however, denied changing any of its food or advertising.  Calling the allegations “absolutely wrong,” Taco Bell’s CEO Creed said “We took great exception to the false claims made about our seasoned beef and wish the attorneys had contacted us before filing and publicizing a lawsuit that disparaged our brand.”  The suit was dropped, Taco Bell insists, despite “no changes to our products or ingredients, no changes to our advertising, no money exchanged, no settlement agreement.”

 

Taco Bell could have let the non-story die a quiet death at that point.  But it pressed forward, launching full-page ads in The Wall Street Journal, The New York Times, USA Today, and numerous other papers that began “Would it kill you to say you’re sorry?”  In 50-point type, the ads needled Beasley Allen about the “false claims,” saying “Sure, they could have just asked us if our recipe uses real beef.  Even easier, they could have gone to our website where the ingredients in every one of our products are listed for everyone to see.  But that’s not what they chose to do . . . .As for the lawyers who brought this suit: You got it wrong, and you’re probably feeling pretty bad right now.  But you know what always helps?  Saying to everyone, “I’m sorry.’”  In a dramatic turnaround from the explosive allegations that accompanied the filing of the lawsuit, the lawyers at Beasley Allen have gone silent.  As Greg Creed says, “They were very available and very outspoken when the lawsuit was filed.  Now you can’t find them; you can’t talk to anyone.  No one will return calls.”

 

Taco Bell is even considering filing a lawsuit against the Alabama law firm.  And who can blame the fast food giant?  According to company executives, Taco Bell’s earnings started the year strong but finished the first quarter “flat because of the consequences of the beef lawsuit.”  Lawyers enjoy unique power—a successful lawsuit can financially devastate a company and leave its reputation in tatters.  Attorneys can level all kinds of accusations against a corporate defendant, comfortably insulated from defamation claims because of the privilege attached to litigation proceedings.  But with great power comes great responsibility.  Lawyers owe it not only to the clients they serve, but to the targets of their barbs and also to society as a whole, to do their due diligence and get the facts straight before filing a suit.  A “shoot first, aim later” approach does a disservice to everyone involved.

 

And when lawyers—not to mention the media—get it wrong, “sorry” shouldn’t be a word that’s suddenly absent from their otherwise impressive lexicons.

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written by G S , May 20, 2011

I frequently get notification I am party to a class-action law suit invoving stocks. I spend 2 hours filling out paperwork. Six months later I get $4.90 and the lawyer gets $5 million.



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