Chipotle Wraps Up False Ad Suit With $6.5M Settlement (subscription to Law360 required)

  • As previously covered on this blog, a plaintiffs’ class action lawsuit was filed against Chipotle in the “Food Court” (Northern District of California) in connection with the chain’s nationwide advertising campaign premised on a pledge to serve only “non-GMO” foods.  On October 1, 2018, the court certified three classes of consumers, in California, Maryland, and New York, who claim to have purchased food at Chipotle advertised as “non-GMO,” but which contained meat and dairy ingredients from animals that had consumed genetically modified (GM) feed.  The issue is whether reasonable consumers would have been deceived by such advertising.
  • On September 11, 2019, just days before the scheduled trial date of September 16, 2019, the plaintiffs asked the court to approve a deal in which Chipotle has agreed to pay $6.5 million to settle the false advertising claims.  As part of the settlement, the three classes, in California, Maryland, and New York, would be consolidated into a single class consisting of all U.S. residents who purchased Chipotle food during the class period from April 27, 2015 to June 30, 2016.  Class members would receive refunds of $2 per meal for up to 5 meals without documentation and up to 10 meals with documentation, for a total limit of 15 meals per household.  The four class representatives would receive $5,000 each.  The attorneys would receive fees of $1.96 million and out-of-pocket expenses of up to $650,000.
  • While Chipotle has discontinued the advertising at issue, the debate over the meaning of “non-GMO” is certain to continue.  As discussed here, the Non-GMO Project sponsors labels certifying adherence to standards that define the meaning of “non-GMO,” which would clear up the potential for consumer misunderstanding of the scope of the “non-GMO” claim, as was at issue in the Chipotle lawsuit. However, according to a Citizen Petition to the Food and Drug Administration (FDA) dated September 24, 2018 by the Information Technology & Innovation Foundation (ITIF), even a “non-GMO” label that is clear on the scope of the claim may mislead and deceive consumers about non-existent differences in health and safety of the labeled food and should, therefore, be prohibited.  FDA has not yet taken substantive action on the Citizen Petition and is unlikely to do so in the near future.