Printer Friendly

Food fright: potentially faced with a high tab for fast-food lawsuits, insurers crave information about current litigation. (Commercial Liability)(Cover Story).

About two out of every three Americans are overweight or obese, and fat-related illnesses such as heart disease have become the second-greatest cause of preventable deaths in the country behind tobacco-related illnesses. Some say the fast-food and snack-food industries are to blame for America's expanding waistline, and as with the tobacco industry, a number of lawsuits seeking class-action status have been filed against restaurants and snack-food makers. The lawsuits claim that the restaurants and food manufacturers should be held liable for the consequences of the consumption of their products, which may contain high amounts of fat.

As pundits, commentators and comedians weigh in on where the line between personal responsibility and corporate conduct should be drawn, comparisons to tobacco litigation are inevitable. And while insurance companies have not had to pay to defend or settle most of the myriad of cases facing the tobacco industry--because the tobacco companies themselves have been responsible for their own defense costs and settlements, and the large companies are often self-insured--insurers are keeping a wary eye on the food cases, which, if successful, may trigger not only general or product liability claims, but additional lawsuits.

Zurich North America is following the fast food lawsuits closely, said Steve Knutson, director of emerging issues for Zurich's underwriting management and technical services.

"We haven't seen any lawsuits ourselves, but that McDonald's suit got our attention," Knutson said. "We identified it as an emerging issue that we should track and develop."

Knutson singled the obesity issue out as one of 12 to 15 issues that could blossom into either an adversity or an opportunity for the company, which was the largest writer of product liability in 2002. "Sometimes things that look like they will be adverse for us will be an opportunity. We may be able to roll out a new product to meet that new risk," Knutson said.

Zurich is interested in the litigation itself and what changes it could spark to government regulation, Knutson said. The company is also following any self-imposed response food companies might take to go beyond current regulation, such as Kraft Foods' announcement that it plans to cap the portion size of single-serve packages and eliminate all in-school marketing, in response to rising obesity rates around the world.

"From a liability insurance standpoint, this is new ground. Like with any emerging exposure, insurers will review underwriting and coverage implications," Knutson said.

Knutson said it's a complex, but significant issue, because the food industry is so entwined in the economy. As a major multiline carrier, Zurich covers food manufacturers and restaurants of all sizes, from writing package commercial-liability and property policies for small "Mom and Pop" restaurants, to providing stand-alone liability policies to middle-market regional franchises and large national chains.

CNA, also a major player in the restaurant liability market, said it, too, is concerned about the lawsuits. "When you have an emerging issue, you look at what could be the potential financial impact, and what are the things you can do to mitigate that impact," said Henry Pippins Jr., of CNA Small Business. "We could introduce a special endorsement that may limit the impact of these types of lawsuits, or there may be particular risks that we'd want to stay away from. Nothing has been changed yet. Most carriers are looking at this ... but nothing happens to change coverage until there's a precedent-setting judgment or settlement."

CNA writes coverage for all types of food manufacturers and restaurants. It also writes about $30 million in annual premium for one of the large national fast-food chains, which the company declined to name specifically. The large national chains, like McDonald's, Burger King and Wendy's, tend to have individual stores that are locally or regionally owned. The local owners usually own several stores, and can own as many as dozens or a hundred. Pippins said a large corporate judgment against the parent company shouldn't trickle down to impact a locally held store, but if a judge rules a restaurant can be held liable for someone's obesity, more lawsuits may be directed at the locally held stores.

While most insurers have stopped writing liability for tobacco companies--sending the tobacco companies to use self-insurance or captives--insurers haven't backed away from writing liability, coverages for restaurants yet, Pippins said, adding they aren't likely to do so until an obesity case is successful in winning a judgment or settlement against a restaurant. "This is still an opportunity for us," Pippins said. "If we write the right ones in the right area, you can make money. It's been a profitable industry for us."

Not Just Big Writers

Small niche insurers also are following the lawsuits.

"We are definitely concerned. Precedents are set whenever someone wins a lawsuit," said Tom Hartmann, vice president of underwriting for Restaurant Coverage Associates Inc. The Clifton, N.J.-based company is a member of the RCA Insurance Group, which specializes in writing property/casualty insurance for "Main Street"-type restaurants and operates a managing general agent, an inspections and claims service and First Jersey Casualty Insurance Co. Inc. In addition to writing policies on First Jersey paper for the 900 restaurants it covers in New Jersey, RCA also writes coverage on Lloyd's and Royal & Sun Alliance paper, producing about $100 million in annual premium and covering 10,000 restaurants in 38 states.

Hartmann said RCA stopped writing coverage for fast-food restaurants about seven years ago, because the premiums were too low to be profitable. A business owners policy on a single McDonald's or Wendy's might be $4,000 to $6,000 for both property and liability, whereas RCA would charge about four or fives times that for the liability portion alone. He said premium rates for other types of restaurants are just now beginning to approach 1985 levels.

During the soft market, premiums for the food industry were close to or less than the actual cost of claims, said Dave Golden, director of commercial lines for the National Association of Independent Insurers. "It was insanely competitive. There was no way to make any money as an insurer on it," he said. During the hard market, premiums began to rise even before the class-action lawsuits began making headlines, be said.

"Twenty years ago, restaurants were mainly considered a property risk. Ten years ago, they were considered more of a liability risk, from slip-and-fall cases, and additional liability claims as restaurants started to add indoor and outdoor playgrounds. This has just added another new exposure, certainly one to be considered," Golden said. "I don't know that anyone could tell you how much of the increase they've been seeing has been coming directly from this exposure, but it would be natural for it to be part of the underwriting process?

Mary T. Makarski, executive vice president of claims for Risk Control Associates, a part of RCA Insurance, said the company faces mostly slip-and-fall claims, with an occasional food poisoning, broken tooth or gravy-spill-on-the-jacket claim. The company has never faced a lawsuit that seeks class-action status; however, Makarski said the class-action lawsuits that seek to blame food makers for making someone fat are frivolous and she doesn't think they'll impact her clients directly.

While RCA Insurance pays fair and reasonable claims, it investigates every claim and takes a hard-line approach to those it views as frivolous, Makarski said. "We don't believe in settling nuisance claims. We tend to think in the long term: once a company establishes a reputation for being tough on claims, they tend to see less frequency and less claims filed. The carriers that will pay $5,000 to make a frivolous claim go away only hurt themselves. More claims will be filed. You can get nickeled and dimed to death," she said.

Jim Henry, president of RCA Insurance--and also the owner of a restaurant in New Milford, Pa.--said attorneys filing these cases are seeking publicity. "It's like suing the beach because you got sunburn. They just want to get on television. If an insurance company pays on these [lawsuit claims], shame on them," Henry said. Carriers that settle frivolous cases, instead of fighting them, "create their own mess. It fosters this era of litigation," Henry said.

Fast-food chains may dominate television commercials, but individually owned restaurants represent seven of every 10 restaurants in the country. Americans love to dine out, and more than 54 billion meals were eaten in the more than 870,000 restaurants in the country in 2002, according to the National Restaurant Association. The average household expense for food away from home was $2,137 or $855 a person in 2000, according to the association. So like every other major industry, it's natural that restaurants would be targeted for lawsuits, some said.

"It's just another example of a runaway litigation system where litigation attempts to take the place of individual conduct," said Ken Scholman, Washington counsel for the Alliance of American Insurers. "I think we're looking at all lawsuits and all litigation similar to this."

A 'McFrankenstein Creation'

One lawsuit, Pelman vs. McDonald's, has probably garnered the most media attention and involves obese teens in New York who claim that the meals they ate regularly at McDonald's contributed to their obesity and subsequent health problems. The suit seeks class-action status and notes that obesity has reached epidemic proportions in the United States.

U.S. District Judge Robert W. Sweet tossed out the teens' original lawsuit in January, but in his opinion dismissing the suit, he gave suggestions for how the suit could be amended. It's since been refiled, and the case is still pending.

Filed by New York attorney Samuel Hirsh, the original stilt had three claims against McDonald's: that the restaurant used false advertising and misled consumers to think the foods are healthier than they are; that the restaurant failed to disclose the dangers of eating the food; and that the restaurant failed to warn that fatty food can be addictive.

In his opinion dismissing the original lawsuit, the judge said that legal consequences should not attach to the consumption of hamburgers and other fast-food fare unless consumers are unaware of the dangers of eating such food. However, Sweet said plaintiffs argue that McDonald's products have been so altered that "their unhealthy attributes are now outside the ken of the average reasonable consumer." For instance, Sweet called Chicken McNuggets a "McFrankenstein creation of various elements not utilized by the home cook."

Also, while some consumers believe that chicken is a less fatty meat than hamburger, McDonald's Chicken McNuggets--which are deep fried--actually contain twice the fat per ounce of a hamburger. "It is at least a question of fact as to whether a reasonable consumer would know--without recourse to the McDonald's Web site--that a Chicken McNugget contained so many ingredients other than chicken and provided twice the fat of a hamburger," Sweet said in the opinion.

In the amended suit, Hirsh has dropped the last two claims to focus on the false advertising component. The suit claims that McDonald's misled consumers to think its foods were healthier or "not as detrimental to one's health, when in fact, said products were hazardous or detrimental to an extent beyond which was contemplated or understood," according to the amended suit.

McDonald's is fighting the lawsuit. "This lawsuit's focus on only one food organization is a disservice to anyone who is looking for real answers and information about healthy lifestyles, energy balance and personal responsibility," McDonald's said in a statement.

The case is one of several filed against fast-food companies or snack makers related to the disclosure of fat in the foods they make. (See "My Big Fat Lawsuit," page 26.)

The lawsuit's other two claims--that McDonald's failed to disclose the potential dangers of consuming its food and that the restaurant failed to warn the food can be addictive--are being saved "for another day and another lawsuit," said John F. Banzhaf III, professor of law at George Washington University Law School.

"There is a developing movement to use legal action against the problem of obesity in the same way we are successful in using legal action as a weapon against smoking," Banzhaff said. "We are really just beginning to develop the theory. For smoking, it was misuse of the word 'light,' failure to disclose health risk, failure to disclose addiction, breach of expressed warranty, breach of implied warranty. What the fast-food companies are concerned about is that the legal theory is very, similar."

Deja Vu All Over Again

The lawsuits against the fast-food industry come as no surprise to some in the tobacco industry. "People for a long time talked about how fast food--or the gaming industry--could be next," said Mark Smith, director of public affairs tot Brown & Williamson Tobacco Corp. The company, which makes cigarettes including Kool, Pall Mall, Capri and Lucky Strike, was involved in the 1998 landmark $206 billion class-action settlement between 46 states and tour of the largest tobacco companies. "Plaintiffs' attorneys are thirsty for any nickel, dime, dollar or million-dollar pay day they can get and will stop at nothing, common sense be damned," Smith said.

Smith predicts the plaintiffs' bar will target "Big Fat" using the same legal strategy it used against "Big Tobacco": demonize the fast-food and snack industry; say the lawsuits are filed to protect children; then prove that even people who aren't obese have a stake in the argument.

"They couldn't convince smokers to quit so they came up with smoke from your cigarette is bad for me, and that smokers use more health care," Smith said. In the lawsuits against the fast-food industry, the plaintiffs' attorneys "will shift this argument to become your unhealthy lifestyle is costing me a lot of money in healthcare costs, and the fast-food industry should be punished for this."

The fast-food lawsuits are not identical to those facing the tobacco industry, but there are many similarities and familiar faces.

"After tobacco, you can never say never," Banzhaf said. Banzhaf, who was a pioneer in taking the tobacco industry to task--and to court--thinks the "fat" suits can be successful. He was involved in one of the first lawsuits against the tobacco industry when he backed the suit against the airlines to demand no smoking on airplanes. Banzhaf has since been an advocate for suing the tobacco industry to engineer social change, and has now turned his attentions to the food industry.

Banzhaf was not the attorney of record in any tobacco case or fast-food case, but has helped the plaintiffs with legal theories. As a professor, he leads his classes to identify a social wrong or public issue that could be remedied through litigation. The students prepare the legal information that can then be turned over to an attorney.

Banzhaf's classes haven't been involved in Pelman vs. McDonald's, but have had a hand in other cases. For example, Banzhaf's students found McDonald's failed to disclose its french fries contained beef fat, even though the fast-food giant touted that the fries were vegetarian and cooked in 100% vegetable oil. The lawsuit, which was taken up by Seattle attorney Harish Bharti, ended with a $12.5 million settlement and an apology from McDonald's. Bharti is working on a similar suit against Pizza Hut, claiming the company has animal fat in its "Veggie Delight" pizza, Banzhaf said.

Several other lawsuits against fastfood companies and manufacturers are pending, and more may be on the way. Many of the larger food manufacturers and restaurant chains are self-insured, but if the lawsuits continue and are filed against the makers of individual components of food, smaller companies that make ingredients for larger companies may be called into the fray. "Small manufacturers will want to make sure they are adequately prepared with adequate insurance if the inevitable happens," said Robert Hartwig, chief economist of the Insurance Information Institute.

Experts expect the first few suits to fan, but said that ultimately, some may be successful. "Is it a siren dunk? Obviously not," Banzhaf" said. But the smoking lawsuits weren't easy, either, he said. "Most people didn't regard smoking as a public health problem. It took us about 10 years until we proved it was something that affects everyone: second-hand smoke, higher taxes to cover medical care."

The public's views on tobacco shifted after documents revealed during the court's discovery process showed that tobacco makers had intentionally altered the cigarettes to make them more addicting and targeted specific groups, including children, through marketing.

"Where these companies tend to get into the biggest trouble, and where the biggest liability lies, is where you misrepresent or hide information," said Brendan D. Cook, a product liability attorney with the Houston office of Baker & McKenzie." Americans are very unforgiving about fraud. I don't think anyone thinks a Big Mac or Whopper is inherently dangerous, but if people lie about ingredients or misrepresent ingredients, then the consumer is denied the opportunity to make an informed decision. Everyone knew cigarettes were dangerous, and the tobacco companies successfully defended themselves until [the plaintiffs] found out information was concealed and companies lied. The companies have been hammered ever since."

Retired U.S. Judge Louis Bechtle, who is now with the law firm of Conrad O'Brien Gellman & Rohn, said cases like Pelman will be difficult to prove. "The manufacturer isn't responsible to take the place of a parent or guardian. In the class-action context, because there are so many individual decisions made by the class members about the product, I can't imagine many class actions would survive application for class certification."

Try, Try Again

Plaintiffs' attorneys are likely to try several different approaches to suing the food industry, experts said.

"It's the spaghetti theory of liability They will throw everything against the wall and hope something sticks," Hartwig said.

It may take several years before the cases are successful, Cook said. "It's going to be an uphill battle. You've got to knock at the door a few times, and some of the first few cases will result in legal theories being polished. But at some point, when the community is ripe for it, and the facts are right, I think someone is going to get hit on this," Cook said. "They're just playing the odds. If you throw enough darts at the board one of them is likely to hit, even by accident."

That's the approach the plaintiffs' bar took in the fight against Big Tobacco, Banzhaf said. "When you start in a new area, you start with the easiest, most compelling cases. Right now, compelling cases are very young children that are grossly overweight and have health problems."

If those cases are successful, the bar will move to harder cases, such as adults, or children who aren't obese, Banzhaf said. "When we started to fight for nonsmokers, we started with airplanes," Banzhaf said. "No one then thought we'd be successful at banning smoking in bars, banning smoking outdoors. We took the easier ones first. Each step builds on the one that comes before."

While tobacco companies were accused of targeting their marketing to children, there is "no law that forbids McDonald's from selling a Happy Meal to a child, or a law that forbids Kraft from selling Oreo cookies," said attorney Rob Scott, a product liability attorney with Scott & Scott in Dallas. "I don't think that anyone can credibly say that someone who eats McDonald's in moderation is going to be sick or that the addictive nature of a Big Mac is anywhere near the danger of nicotine and tobacco."

But would-be juries may already be warming up to the notion that fastfood companies should bear some of the blame for the increase in obesity, Banzhaf said.

A 2002 survey by The National Law Journal found that 28% of potential jurors said they'd side with a smoker who sued a tobacco company, while 53% said they'd side with the company. But a March 2003 survey of potential jurors by the litigation research firm Bowne DecisionQuest found 24.4% would award damages to an obese plaintiff who sued a fast-food chain, and 56.4% would side with the company.

"I think there is a growing public recognition that the fast-food companies bear some responsibility for the epidemic of obesity, in particular, where the plaintiffs are children" Banzhaf said. "We have supersized America. We are eating ourselves to death."

A Healthy Defense

Diane Sullivan, a Princeton, N.J., attorney for Dechert LLP who specializes in defending mass torts and product liability claims, said fast-food companies can defend themselves against such lawsuits.

"It's an issue facing all manufacturers," Sullivan said. "We have a litigious society and even if you do all the right things, make a good product and follow regulations, you can still get sued. It's almost to the point where just to protect yourself you end up putting warring levels on everything."

She said if you ask lawyers what companies should do to protect themselves against litigation, they'll tell you "that the more information you provide, even if it's obvious, the less likely you are to face suits."That's why every stepladder has a warning on its top step that it's not safe to step on it.

Cook, the product liability lawyer, suggested fast-food companies modify their marketing, improve the availability of nutritional information, and add healthier options to the menu.

For instance, McDonald's in France has published advertisements suggesting that parents not take their children to eat at the restaurants more than once a week. In the United States, the company is also promoting a new line of salads, plus food that is grilled instead of fried.

"Perhaps the most important of all of this is truth in advertising for the dissemination of accurate facts," Cook said.

Banzhaf said the fast-food companies have more options than tobacco companies. "The tobacco companies can't produce a safe cigarette. But fast-food companies can largely immunize themselves by issuing appropriate warnings, such as people shouldn't eat at McDonald's more than once a week, and making sure there is clear and conspicuous information available. The third prong of their defense is having healthier alternatives available."

Makarski, the head of claims for the Restaurant Coverage Associates, disagreed that restaurants should be strong-armed into posting warnings or offering low-fat products. "If they choose to do so, it should be a business decision, because they think it will increase their profit margin. It's ridiculous for them to do so because of these lawsuits. It's not their fault [that obesity rates are rising]. Restaurants can not act like social workers."

Tort Reform and Just Desserts

The problem of obesity is better addressed through legislation and regulation, not litigation, said Sherman Joyce, president of the American Tort Reform Association.

"Our work centers on steering litigation back to its honorable and traditional moorings to compensate people when they've been injured, not to legislate and regulate--which, in our view, is what the tobacco litigation did," Joyce said. "It made a lot of lawyers rich ... but how many smokers who died as a result of smoking have been compensated through the state government lawsuits? The answer is none. If you are overpaying as a taxpayer for Medicaid, where is your rebate? You didn't get one."

Hartwig said there's a movement toward tort reform that would incorporate a "state of the art" defense. "So if you complied with all government rules and regulations regarding a product, and it's safe to consume and you fully disclose the nutritional value, then you shouldn't be able to be held liable," he said.

Banzhaf agrees that legislation and regulation are preferable to litigation, but said sometimes litigation is necessary to get change started.

"I can't sue people to make them exercise. But we can require by law or through taxes or litigation to get change," Banzhaf said. He suggested health companies "be persuaded or required" to charge different rates for obesity. Holding obesity directly responsible for the additional costs of a person's treatment is more fair, "and would also provide a tremendous financial incentive for people to lose weight."

Banzhaf said higher taxes on junk food could be used to raise money to educate people about nutrition and to care for the obese. As of June 2000, 18 states and one city have taxes on soft drinks or snack foods, although the tax money raised isn't typically used specifically for nutritional programs, according to an article published in the American Journal of Public Health.

In New York, Assemblyman Felix Ortiz, D-Brooklyn, has proposed a 1% state tax on junk food and soft drinks, with the revenues designated for a fund to prevent obesity in children. What foods would be considered "junk" hasn't been ironed out yet.

At the federal level, U.S. Rep. Ric Keller, R-Fla., has introduced the Personal Responsibility in Food Consumption Act, which would stop restaurants and food manufacturers from being held liable for consumers' health problems. The bill wouldn't protect restaurants or food makers if they failed to comply with federal regulations and caused illnesses such as E. coli.

Golden, of the NAII, said these cases point to the need for federal tort reform. Congress is also currently considering a bill that would require all class-action cases above a certain dollar-damage threshold to be heard in federal, not state, court. "Because you are talking about lawsuits that are essentially saying 'you made me come into your business, you made me spend money, you made me eat this food, it's your fault I got fat' ... that is the kind of abuse to the civil justice system that has brought about the need for the class-action reform bill," Golden said.

In addition to government, a group of more than 160 large employers--including Aetna Inc.--that are members of the Washington Business Group on Health have launched a nonprofit Institute on the Costs and Health Effects of Obesity to help corporate America reduce the impact of obesity and weight-related conditions in the work place. The institute estimates the cost of obesity to be $12 billion annually, including higher health costs, lower productivity, increased absenteeism, elevated health and disability insurance premiums and other consequences.

The institute has designed a tool kit to help employers encourage and facilitate their employees' weight management and offered low-cost tips for employers, including offering on-site classes related to nutrition and exercise and creating safe walking paths.

"We are strategizing how best to approach the issue and a lot depends on the developments on three fronts, which are future litigation, legislative initiatives such as Rep. Keller's [bill], and the food industry's moves toward voluntary standards in labeling, marketing, etc.," said Zurich's Knutson. He said Zurich would like to see the insurance industry and its associations working together toward resolutions to the obesity health problem in ways that can avoid costly and unnecessary litigation.

No matter what happens with these first few fat-related lawsuits, more are on the way, experts said. "The success of the tobacco causes will continue to push and encourage lawyers to examine the outer boundaries of personal responsibility and public health, and you will continue to see cases that push that question," said Scott, an attorney who represented plaintiffs in cases against Big Tobacco. "The closer you come to the tobacco facts, the better your case will be. The further away, the more likely the case will crumble like the Oreo cookie case."

A Typical Restaurant Liability Policy

From small, individually owned restaurants buying package policies that include general liability, product liability, liquor liability and property coverage to larger regional and national franchises or chains that purchase stand-alone general liability policies, which also include product liability, most restaurant policies are similar in many ways. The following describes a typical policy:

Premium cost: Based on a restaurant's annual revenue or square-footage in size. CNA, which writes national fast-food chains, said the average premium runs one mil (0.001) cent per $1,000 of annual revenue, but can be higher in urban areas. For a restaurant with $10 million in revenue, that would mean $10,000 a year.

Deductible: Small, if at all.

Limits: Up to $1 million per occurrence.

Liabilities Covered: Premises (with claims such as vandalism, slip-and-fall) and Operations (with claims such as food spoilage, food poisoning, damage from spilled food).

Source: CNA, Zurich North America, RCA Insurance Group

My Big Fat Lawsuit

The food industry is currently facing several fat-related lawsuits, some of which have received or are seeking class-action status. Experts say it could be a taste of things to come. Here's a sampling of the fat suits:

Defendant: DeConna Ice Cream of Orange Lake, Fla., maker of Big Daddy ice cream

Claim: The ice cream contained about three times the 100 calories and 2 grams of fat per container that the label stated.

Status: Certified class-action, lawsuit still pending

Jurisdiction: Broward County Circuit Court, Fla.

Company action: DeConna acknowledged label was flawed and relabeled the product to show the containers each held three servings, not one.

Defendant: Robert's Gourmet of America of New York City, maker of snack food Pirate Booty

Claim: A 1-ounce serving had 8.5 grams of fat and 147 calories, instead of the 2.5 grams of fat and 120 calories per serving stated on the label.

Status: Settled in 2002 for $790,000 for attorney fees and $3.5 million in coupons for consumers

Jurisdiction: New York Supreme Court, Nassau County

Defendant: Kraft Foods, the maker of Oreo cookies

Claim: Trans fats, or hydrogenated and partially hydrogenated oils, aren't safe to consume and that the company should be prevented from marketing and selling the cookies to children in California.

Status: Plaintiff BanTransFats.com Inc., a nonprofit group, withdrew the suit in May 2003, saying the publicity the suit had brought to the dangers of trans fat made the lawsuit unnecessary.

Jurisdiction: Marin County Supreme Court, Calif.

Plaintiff's attorney: Stephen Joseph of San Francisco

Defendant: McDonald's

Claim: The company failed to disclose its french fries were precooked in beef fat while promoting them as "vegetarian."

Status: Settled in 2002 for $12.5 million; McDonald's offered an apology on its Web site to Hindus and vegetarians.

Jurisdiction: Circuit Court of Cook County, Ill.

Plaintiff's attorney: Harish Bharti of Seattle

Defendants: McDonald's, Wendy's, Burger King and KFC

Claim: The restaurants failed to warn plaintiff, Caesar Barber, a 57-year-old Bronx maintenance worker who weighs 270 pounds, that a steady diet of fast food would lead to health problems, including heart attacks and diabetes.

Status: Dormant

Jurisdiction: New York County, New York State Supreme Court

Plaintiff's attorney: Samuel Hirsh of New York

Defendant: McDonald's

Claim: McDonald's contributed to the obesity of minors. It was filed on the behalf of a group of obese teens, and seeks class-action status.

Status: Court dismissed case with suggestions for it to be raffled. It was amended and refiled February 2003.

Jurisdiction: U.S. District Court, Southern District of New York

Plaintiff's attorney: Samuel Hirsh of New York

Source: Court documents and various news reports.
Body Mass Index (BMI)
Vs. Total Medical Costs *

Body Mass Index

Under 25 $15,583
25-29.9 $18,484
Over 30 $21,711

* Includes pharmacy, outpatient service and
inpatient care expenses, spent by Kaiser
Permanente Northwest members, 1990-1998.

BMI is a measure taking into account
a person's weight and height
to gauge total body fat in adults.

Source: Policy Analysis Inc.


Who is obese?

Obesity and overweight are usually judged by a person's body mass index, or BMI. BMI is calculated by dividing a person's weight by the square of his or her height. An appropriate BMI is between 18.5 and 25. People with BMIs less than 18.5 are underweight. People with BMIs between 25 and 30 are overweight, and people with BMIs of 30 or greater are considered obese.

Someone who is 5 feet 5 inches tall weighing 150 pounds would have a BMI of 25. At 180 pounds, this person's BMI would be 30.

The Centers for Disease Control has an online BMI calculator: http://www.cdc.gov/nccdphp/dnpa/ bmi/calc-bmi.htm.

Unsafe in Any Amount?

While opponents of food lawsuits say there are no bad foods, only bad diets, at least one group believes that is not simply a black-and-white issue.

Stephen J. Joseph, a San Francisco attorney, filed a lawsuit in May against Kraft Foods, the maker of Oreos, on behalf of a nonprofit group BanTransFat.com Inc. Oreos are one of many products that contain hydrogenated and partially hydrogenated oils, or "trans fats; which should not be consumed at all, Joseph said.

The U.S. Food and Drug Administration recently said the consumption of trans fats should be as low as possible and that the only safe level is zero, Joseph said in the lawsuit. Trans fats are made through a process that includes bubbling hydrogen gas through an edible oil at a temperature of 250 to 400 degrees Fahrenheit. Through this process, the molecular structure of the oil is changed. The oil, once liquid at room temperature, becomes a solid at room temperature, which gives it a longer shelf life.

Trans fats are often found in processed foods and deep-fried foods, Consumer Reports said. Trans fat is the worst of tour kinds of fats, which also include saturated fat, monoun-saturated fat and polyunsaturated fat, the group said. Trans fats lower the HDL (good) cholesterol and increase the LDL (bad) cholesterol and contribute to clogged arteries.

A 1999 study by Harvard University's Department of Nutrition estimated that replacing trans fat with unhydrogenated vegetable oils in the U.S. diet would prevent about 30,000 to 100,000 premature coronary deaths a year.

A new U.S. government regulation, which takes effect as of January 2006, requires all packaged foods sold across America to state on their labels the amount of trans fat they contain. The Harvard study said that while labeling changes are important, they may not be enough. Many products, including fast food, are high in trans fat but are exempt from labeling requirements. Also, some products can "carry deceptive labels such as 'cholesterol-free' or 'cooked in vegetable oil,'" the study said.

A person eating one doughnut for breakfast would consume about 3.2 grams of trans fat. Add a large order of french fries, another 6.8 grams, and fills person would have consumed a total of 10 grams of trans fatty acids in a day.

"Trans fats are placed into food to increase shelf life, but they decrease human life," BanTransFat.com says on its Web site. "If the hydrogenation process were discovered today, it could not be adopted by the oil food industry,"

While there are currently no regulations prohibiting the use of trans fats Frito-Lay said it's eliminating trans fats from Doritos, Tostitos and Cheetos by converting to corn oil, a trans-fat-free oil. McDonald's is also switching to an oil that will reduce the trans fats in its french fries by 47%.

Kraft, which also makes Kraft cheese, Maxwell House coffee, Oscar Mayer meats, Philadelphia cream cheese, Post cereals and Milka chocolates, has announced that in response to rising obesity rates around the world, it is forming a global council of advisers to help it address the issue. It is also taking steps including capping the portion size on single-serve packages; improving existing products and providing alternative choices; and eliminating all in-school marketing. It also plans to form guidelines for advertising and marketing to children to encourage "appropriate eating behaviors and active lifestyles," Kraft said in a statement.

"The purpose of the lawsuit was to get Kraft to remove trans fat from the Oreo, or stop marketing the Oreo to children," Joseph said. He dropped the lawsuit a few weeks after filing it. "As a result of the publicity, the legal premise for the lawsuit disappeared:'Joseph said."The legal premise was that the existence and danger of trans fat was not common knowledge. After three days of enormous national and international publicity resulting from the lawsuit, we could no longer tell a court that the existence and danger of trans fat was not common knowledge. It wasn't the purpose of the lawsuit, but the outcome."

On its Web site, Kraft said it was exploring ways to reduce the trans fat in Oreo cookies, and said it offers a reduced-fat Oreo which has less than half of the trans fat of a regular Oreo cookie. It also said it supports listing trans fat on the nutrition facts panel and would comply with FDA regulations.

"In the meantime, if people see 'hydrogenated' or 'partially hydrogenated oil' in the list of a food's ingredients, that means the food contains some level of trans fat," Kraft said on its Web site.

Joseph said BanTransFat.com would still consider filing additional lawsuits. "If we feel we are better informed, and being told by food manufacturers what is in the food, then it's up to people to decide what to eat. But if we feel we are not being informed and not being told what is in food, then we have a problem, and we will react."

Behold the Power of Cheese--and Chocolate and Meat

Americans' fascination with "unhealthy" foods--cheese, meat, sugar and chocolate--could be a result of a physical addiction rather than a lack of willpower, one group of doctors says.

The Physicians Committee for Responsible Medicine, a nonprofit group, said there's mounting evidence that certain foods are biochemically addictive.

"Willpower always plays a role in any choice, but no one is a slave to raspberries. No one is a slave to bananas. There is no one who can't go a week without a banana. These are foods that are healthy, tasty, and delicious but they aren't addicting" said Neal Barnard, M.D., president of PCRM and author of "Breaking the Food Seduction"

"But there are people who are slaves to cigarettes, alcohol, drugs, and to the list we should now be adding certain foods for which we have compelling evidence of addictive potential," Barnard said. That evidence includes the following four foods: sugar, chocolate, cheese and meat.

"People don't feel chemically addicted to broccoli or asparagus, but there are some foods that people feel they can't give up," said Brie Turner-McGrievy, a nutritionist and research coordinator for the committee.

She said the group isn't advocating lawsuits against the fast-food industry. "We tend not to take sides, but appreciate that [the lawsuits] keep food in the news and alert people to the unhealthy effects of eating fast food, and we think that's important" Turner-McGrievy said.

In a study involving people switching to a low-fat diet, the committee was surprised to hear what food was hardest to give up.

"The most strongly craved food was cheese," Barnard said." What is it about cheese?"

In 1981, Eli Hazum, a researcher at Wellcome Research Laboratories in Research Triangle Park, N.C., found traces of an opiate in dairy products, that tested and looked exactly like morphine. "Further tests showed that it was morphine. This sounds insane; how can there be morphine in milk? There's not much, but it's there," Barnard said. "But that's not why cheese is addicting"

Researchers found that the same enzyme in poppies that produces opiates--which are used to make drugs including morphine, heroin and codeine--exists in cows. "But the amounts are very small. What seems to be more important is a protein in dairy products that breaks down into an opiate," Barnard said.

Several scientific studies have shown that the principal protein in milk, casein, breaks down during digestion to release "morphine-like" compounds called casomorphins. These opiates help calm and soothe the baby during breast feeding, which helps to build the mother-infant bond, Turner-McGrievy said. Casein is present in all dairy products, but is more concentrated in cheese.

Known opiates, such ms Demerol and codeine, are known to cause constipation, and so does cheese, Barnard said.

Cheese consumption in the United States grew to 30 pounds a person per year in 1999 from 15 pounds a year in 1975. Cheese holds other drug-like compounds--an "amphetamine-like" chemical, phenylethylamine, or PEA, which is also found in chocolate and sausage.

"I'm saying that since the mid-1970s, cheese consumption has more than doubled. We are booked on it. People haven't figured out why yet, but I think to say it's not a chemical effect is denying reality," Barnard said.

Other research conducted by the University of Michigan has found naxolone, an opiate-blocker used to treat morphine and heroin overdoses, helps reduce cravings for chocolate, cheese, meat and sugar, Barnard said.

"It doesn't affect everyone, in the same way that not everyone who drinks is an alcoholic and not everyone who has a cigarette goes far down that road [to addiction]. Some people are more vulnerable than others" he said.

For the Love of Meat

Carnivorous Americans love their meat. An April 2000 survey of 1,244 adults found one in four refused to give up meat for a week even if they were paid $1,000 to do it. The reason may also be physical, Barnard said. British researchers found that opiate-blocking drugs cut the appetite for ham by 10%; reduced the desire for salami by 25%, and cut tuna consumption nearly in half.

A person might still eat some of these foods to quell hunger or simply out of habit, but blocking an opiate response knocks out the added chemical appeal a food may have, reducing the tendency to choose it, Barnard said.

"Some of this comes as no surprise. A person who has a pack of M&Ms once a week is not an addict. But there are people who feel out of control of their chocolate cravings, especially during certain times of the month. It's not that they make better chocolate during that week; it's that hormones change the way we react to food," Barnard said.

Even if these foods have properties that can make them addicting, that doesn't necessarily mean they are inherently "dangerous, Barnard said.

"We know caffeine is addicting, but is it harmful? Not really. In small quantities, people can withstand any insult. But when you have these foods become a part of your daily life, you are at least eating empty calories and at worst, they are packing you with enough saturated fat and cholesterol to give you a heart attack--which is the fate of about half of Americans," he said.

While fast food companies and snack makers try to distance themselves from tobacco companies by saying they haven't altered the food, Barnard said it's too late to make that argument. Cattle ranchers know how to feed cows so they'll grow fat. Cheese is milk that's been manipulated. And chocolate makers have worked for years to concoct the most attractive blend of fat and sugar, he said.

"There are a lot of lawsuits already, and more to come. I don't take a position on whether they should be successful, but their net effect is positive," Barnard said. He has agreed to testify for free as an expert witness in Pelman vs. McDonald,, the case in which New York teens claim McDonald's is liable for causing their obesity and subsequent health problems.

John F. Banzhaf III, professor of law at George Washington University Law School, has sent letters to six fast-food chains--Burger King, KFC, McDonald's, Pizza Hut, Taco Bell and Wendy's--demanding that the restaurants post signs to warn customers that studies on animals have shown eating fatty foods causes addiction-like reactions. The Center for Consumer Freedom--a nonprofit group funded in part by restaurants--called the letters a "publicity stunt."

David Martosko, director of research for the center, said there's no scientific evidence that food is addicting, and said none of the studies referenced by Barnard have been published in peer-review journals. He also said the PCRM is a front group for the People for the Ethical Treatment of Animals.

Barnard said PETA gave PCRM $200,000 in 1999 and 2000 toward a specific effort to stop a federal program that involved animal testing. Both PETA and the PCRM contract with the same foundation for bookkeeping, but the two are not linked, Barnard said. As to the accusation that the studies he referenced haven't been published in peer-review journals, he said they have been and were done under the auspices of several universities. He himself has received federal grants for his research.

Barnard said the Center for Consumer Freedom is a front group for the tobacco, distilled spirits and restaurant industry.

Barnard said he supports die fast-food lawsuits to meet three specific alms:

* Stop companies from pretending that the fatty food they produce is healthy: "There's calcium in cheese, sure, but there are a lot of sources of calcium that aren't 70% fat," Barnard said.

* Force companies to issue health warnings. "I know this sounds silly to say we need warnings, but we do," Barnard said. He said some recent diets claim that it's sugar, not fat, that makes people fat and a lot of people are confused about what to eat. For instance, people can lose weight on a popular protein-only diet because they've reduced their overall daily caloric intake. But that diet can cause serious problems including kidney damage and osteoporosis.

* Order companies to offer healthier choices. "There's no reason they can't offer a vegetarian hot dog in addition to a regular hot dog," he said.

If there's any lesson food companies can learn from the tobacco industry, "It's that you don't win by pretending your product doesn't have health consequences," Barnard said.

The Fat of the Land

Only tobacco use causes more preventable deaths in the United States than physical inactivity and obesity, which kill 300,000 people a year, according to the Centers for Disease Control. In 1960, about 31% of Americans were overweight, and 13% were obese. By 1999, 35% of Americans were overweight and 26% were obese, according to the American College of Physicians. Today, the number of overweight children has almost doubled and the number of overweight adolescents has tripled since 1980.

Being overweight increases the risk of health problems, such as heart disease and diabetes. Like tobacco users, overweight and obese people tend to require more health care, and so consume more health-care spending. About $117 billion per year went to treat health problems of people who were overweight or obese in 2000, according to the federal government. The journal Health Affairs estimated the cost to be $93 billion a year in 1998, and said the average increase in spending for an obese person vs. a person of normal weight is $732 a year, or 37.4% more. About half of America's health-care spending is picked up by taxpayers through Medicare and Medicaid, which provide coverage for the elderly and the poor.

But the fast-food industry is not to blame for the increase in obesity, said Steven C. Anderson, president and chief executive officer of the National Restaurant Association.

"These lawsuits give the term 'frivolous' a bad name," Anderson said. "The lawsuits targeted at restaurants for causing this issue are baseless and totally ridiculous, and are actually a distraction of what are the broader issues that we need to be talking about to solve this issue of obesity in America. There are no good foods or bad foods. There may be good or bad diets, but all foods can fit into a balanced lifestyle."

He noted that 76% of all meals are eaten at home, not in restaurants. Although Americans have slowly adopted healthier diets in recent years, 77% still do not eat the recommended five or more servings of fruits and vegetables each day, according to the Centers for Disease Control.

Americans' obesity problem isn't simply about eating. The Centers for Disease Control said 60% of adults don't get enough physical activity, and more than one in four are not physically active at all in their leisure time. More than a third of children in grades 9 to 12 do not engage regularly in physical activity, and daily participation in high school physical education classes dropped from 42% in 1991 to 29% in 1999.

A recent study by the University of North Carolina found that from 1980 through 2000, the obesity rate among adolescents had increased 10%, but the amount of calories they consumed had only risen 1%. The study found that physical activity, which decreased by 13% over the 20 years, was the main cause of the increase in obesity among the adolescents, not their diets.

"This is about energy in, and energy out," Anderson said. "It's a function of our much more sedentary society. We're spending all of our lives looking at boxes--video screens, computers, televisions."

McDonald's, which offers nutritional information on its Web site and is fighting the lawsuits against it, said in a statement that "weight issues are all about the totality of an individual's daily choices about exercise, sedentary lifestyle, diet and everything else involved in personal decision making."

Some advocates have called on restaurants to improve the nutritional information they provide, but Anderson said it's impractical for restaurants to have to label their products. Restaurants are exempt from the 1992 law that required food products to carry a nutritional label.

Seventy percent of all restaurant meals are customized, Anderson said. Even if there's a choice of only 10 items, that means there are more than 3.6 million possible combinations. With 15 items, there are 1.31 trillion combinations. "No restaurant I know of will have that many labels," Anderson said.

"Many nutrition professionals agree that McDonald's food can be part of a healthy diet based on the sound nutritional principles of balance, variety and moderation," the company said in a statement.
COPYRIGHT 2003 A.M. Best Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2003, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Comment:Food fright: potentially faced with a high tab for fast-food lawsuits, insurers crave information about current litigation. (Commercial Liability)(Cover Story).
Author:Green, Meg
Publication:Best's Review
Geographic Code:1USA
Date:Aug 1, 2003
Words:8248
Previous Article:Best's rating changes. (Ratings).
Next Article:Maximum exposure: rocked by the combination punch of corporate accounting scandals and the bear market following the major hit from Sept. 11,...
Topics:


Related Articles
Altered Risks.
Minding the Store.
Prognosis: Unknown; insurers' liability for losses caused by bioterrorism or the threat of bioterrorism is too new to be clear cut....
Your greatest liability. (Editorial).
Expect the best; prepare for the worst. (Editor's Prologue).
Big Mac attack: Super Size Me asks the question: is McDonald's unappealing--or irresistible?
Eateries lean on reputation covers.

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters