Opponents of changes to New Jersey’s Consumer Fraud Act argue that amending the Act would cause irreparable harm to consumers, but a recently filed lawsuit brings to light one of the hidden facts about NJ’s CFA – consumers are not the only beneficiaries of the Act.
Unilever, the maker of the popular mayonnaise brand Hellmann’s, has filed a lawsuit in federal court in Newark against the popular start-up company Hampton Creek over its competing product, Just Mayo.
Unilever alleges that Hampton Creek is violating federal Lanham Act, because Just Mayo is a misleading product name with deceptive packaging. Apparently mayonnaise is a defined term under federal law – an emulsion of vegetable oil, an acidifying ingredient such as vinegar or lemon juice, and an ingredient containing egg yolks. One of Just Mayo’s main selling points is that it does not contain eggs, thus it is allegedly in violation of the law defining mayonnaise.
If this were just a lawsuit over ridiculous federal law it would not be of much interest (strange lawsuits are filed every day). What makes this suit really interesting is the choice of venue and the side claims that affords Unilever.
Unilever could have filed this lawsuit in virtually any federal courtroom across the country since Just Mayo is widely distributed, but they chose to file in New Jersey. Why? Because New Jersey invites food-based litigation with its overly broad Consumer Fraud Act (CFA). In fact, New Jersey is second only to California in the number of food-based lawsuits filed in its courts.
Plaintiffs are eager to file food-based CFA claims in New Jersey for several reasons:
- Plaintiffs do not have to prove that defendants actually defrauded or deceived them to recover damages – a technical violation of the law will suffice.
- Plaintiffs do not need to show out-of-pocket losses.
- Plaintiffs do not need to live in New Jersey to file a claim here.
- Prevailing plaintiffs are routinely awarded treble (aka triple) damages and reimbursement of their attorney fees and court costs.
It is this last point that is at the heart of this lawsuit. Should Unilever prevail on their CFA claim, they are seeking three times the amount of profit Hampton Creek has generated from the sale of Just Mayo as damages plus a reimbursement of their attorney fees from Hampton Creek. Unilever is clearly using New Jersey’s Consumer Fraud Act to seek retribution against its business competition. This should not be what the CFA is used for.
It is time to amend the CFA to put the focus back on protecting consumers against fraud.
Charles Toutant | New Jersey Law Journal
Multinational consumer goods maker Unilever has filed suit in federal court in Newark against an upstart maker of vegan mayonnaise, claiming its condiment is falsely labeled because it contains no eggs.
Annie Gasparro | Wall Street Journal
A legal fight over mayonnaise between Unilever PLC and a California startup is spotlighting the way shifting consumer tastes are roiling traditional food categories.
Lucian McMahon | Reason
Goliath fought with a javelin. Unilever, producer of Hellmann’s mayonnaise, fights with a decades-old Food and Drug Administration (FDA) definition.
Stephanie Strom | New York Times
Is mayo mayonnaise if it doesn’t contain eggs? The food giant Unilever thinks not. And it is suing Hampton Creek, a start-up company making an eggless spread that tastes like mayonnaise, accusing it of false advertising and fraud.