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Wednesday
Mar292017

Food Fight: Two Sides to Every Chicken Filler Story

Craft Beer LawyerChair, Franchise & Distribution Practice Group

 

by Barry Kurtz
818.907.3006

 

The Canadian Broadcasting Corporation (CBC) recently aired a segment reporting that real chicken content in Subway sandwiches amounted to a lot less than what the average consumer would expect. The network commissioned DNA testing through Trent University of chicken-based menu items from six restaurant chains.

The results of the testing are depicted here (Trent University says ratios of actual chicken to plant fillers are "rough estimates"):

Chicken Filler Fiasco

Remaining ingredients in Subway’s chicken items turned out to be mostly plant-based or soy fillers, according to a researcher at Trent. But the CBC report, called “The Ultimate Chicken Challenge” also contended there were many other ingredients. According to the segment, Subway initially didn't respond regarding Trent's test results other than to say the chain would check with suppliers regarding quality standards.

The network then sought follow-up testing from the University of Guelph's Metabolic Test Kitchen. A dietitian explained the ingredients found by this lab were varieties of starches, salts and sugars. Guelph's processed meat specialist says all ingredients found are safe and approved by the Canadian government. 

Subway asked for a full retraction from the broadcaster. A restaurant spokesman stated:

The accusations made by CBC Marketplace about the content of our chicken are absolutely false and misleading. Our chicken is 100 percent white meat with seasonings, marinated and delivered to our stores as a finished, cooked product.

The franchisor notified CBC of its intent to sue, and reports say the sandwich chain will demand $210 Million in damages. The network says it has not yet been served.

So what does this mean for restaurateurs and other franchises facing similar situations? What are Subway's chances of winning?

Franchise Defamation Suits

Restaurant and other franchise defamation lawsuits are not uncommon, particularly in the world of online reviews. Yelp! for example, has been sued numerous times because of user-generated negative ratings and comments, though typically, consumer-aggregated review sites are protected from legal action by free speech rights.

California even has a Yelp Law – Assembly Bill 2365 was signed by the governor in 2014 to protect consumers stating opinions about a business. Establishments attempting to thwart negative reviewers by putting certain clauses waiving a customer's right to comment publicly in their contracts may find themselves fined when threatening to enforce those clauses.

Then there's this case from the Supreme Court of Nevada in which restaurant owners sued the Reno Gazette-Journal for a negative review. A freelance journalist visited the restaurant and made several defamatory statements, including:

1.  I scooped out guacamole with my fork and dug in.  One taste told me what I had feared:  this pale green stuff was definitely not the real deal.

2.  At this point my spouse pointed out what I was beginning to realize: “All this came out of some sort of package.”

3.  The cost cutting measure applied to the ornamentation had spilled into the kitchen.  The can of name-brand beans we spy while paying our check confirms this.

One of the questions considered here by the court revolved around the nature of protected statements of opinion in published food reviews, and concluded that:

"Defamation is a publication of a false statement of fact. Statements of opinion cannot be defamatory because 'there is no such thing as a false idea'. . . "

The Supreme Court of Nevada found that reasonable persons would conclude the journalist's statements regarding freshness of the food were merely the writer's opinions. It found the same regarding the canned beans – the restaurant owners admitted they kept canned beans on the premises in case of supply emergencies – therefore the writer's statement was substantially true.

Subway's Chicken Kerfuffle: "Let It Go"

Negative Restaurant Reviews DefamationGenerally speaking, a franchise system or individual restaurant doesn't have much in the way of legal recourse when bringing defamation lawsuits. Defendants will almost always claim they stated opinion and assert first amendment rights.

In this case, CBC Marketplace relied on lab tests to make their claims, which most would consider "truth".

The best option for this franchise was already taken: that of asking the network for a retraction. Failing that, the chain may want to consider commissioning other labs with different testing methods to analyze their menu ingredients. Should Subway find more positive data from other labs, they could counter the bad publicity by publicizing these better results.

Or, they can find different suppliers.

 

Barry Kurtz is the Chair of our Franchise & Distribution Practice Group.

 

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