Chipotle Must Face Class Trial Over ‘GMO-Free’ Deception Claims

By Julie Steinberg

Chipotle Mexican Grill, Inc. customers in Maryland, California, and New York head for trial in a class suit alleging the fast-casual restaurant chain deceptively markets food as GMO-free.

A ruling by the U.S. District Court for the Northern District of California, which certified three separate classes and denied the company’s motion to throw out the case, was notable in important areas of class action and consumer law.

The ruling “was without a doubt a victory for Chipotle consumers,” Laurence D, King of Kaplan Fox & Kilsheimer LLP in San Francisco., one of their attorneys, told Bloomberg Law.

“Plaintiffs have maintained from the outset that Chipotle’s ‘non-GMO’ campaign was false and misleading, he said.

The customers allege Chipotle serves products such as beef, chicken, and pork from poultry and livestock raised on GMO feed, and dairy products such as cheese and sour cream produced by milk from such animals.

Consumers would think the chain doesn’t serve food sourced from animals that eat genetically engineered feed, Martin Schneider and the others alleged.

Chipotle said it doesn’t comment on pending litigation.

Uncommon Outcome

Only a few food and beverage false advertising suits have been certified as class actions. Class actions rarely go to trial, and class certification increases settlement pressure.

This suit. which raises concerns about the food production chain, differs from other suits over marketing food that’s allegedly made with genetically modified ingredients, one defense attorney.

“This theory of liability is an extreme, outlier position,” said Dale J. Giali of Mayer Brown in Los Angeles.

“Other cases with this theory of liability, that GMO seed in the supply chain is incompatible with a ‘no GMO ingredients’ advertising claim, have not obtained this type of result,” said Giali.

Giali defends food and beverage companies in consumer cases.

‘Could be Misleading’

The customers provided evidence, including consumer surveys and market research, that the “non-GMO” representations could be misleading, the court said in its decision that denied summary judgment.

That raised a fact question for a jury as to whether they would have bought the food were it not for the allegedly misleading marketing, the court said.

In addition to money damages, the customers may seek injunctive relief, or marketing changes, the court said in reversing an earlier ruling that said the plaintiffs lacked standing to pursue those claims.

Attorneys who represent consumers have said such damages, aimed at stopping allegedly misleading marketing practices, is more valuable than financial damages in consumer suits.

In certifying the three state classes, the court said the plaintiffs demonstrated common exposure to the alleged misrepresentations on display signs and in-store menus.

They also offered a damages model that’s sufficient to show that the alleged price premium traceable to the “non-GMO” claims can be measured in some way on a class-wide basis.

Earlier dismissals of similar suits over GMO ingredients include a win for Danone SA’s Dannon unit in a proposed class suit that alleged yogurt produced with milk from cows that may have eaten genetically modified feed was deceptively termed “natural.”

Chipotle also has won dismissal of other suits challenging its non-GMO representations.

Kaplan Fox & Kilsheimer LLP represented the plaintiffs and was appointed class counsel. Messner Reeves, LLP and Sheppard Mullin Richter & Hampton LLP represented Chipotle.

The case is Schneider v. Chipotle Mexican Grill, Inc., 2018 BL 361012, N.D. Cal., 16-02200, 9/29/18.