TACO BELL: HELP I’M BEING SUED

Posted in Business Crises We Create, Crisis Communication Response, Liability Communications, Litigation Communications, RETAIL FOOD CHAINS, Taco Bell, What to do when you are sued on February 16th, 2011 by mnayor

Ouch! On January 25th it was reported that Taco Bell had been hit with a class action suit asserting that the company’s claim that it uses seasoned beef or seasoned ground beef in its products is false. Plaintiffs allege that the Company’s beef mixture is only 35% beef with the rest a mixture of oats, soy, maltodrextrin and soy lecithin and water. Monetary damages are not claimed. The plaintiffs want to compel Taco Bell to be honest in its advertising.

After a couple of weeks we have not heard from Taco Bell other than it will “vigorously defend the suit”. No damage control here.

Perhaps the Company feels the public will soon forget all about the suit. And maybe it will. After all, not too many people expect ground fillet mignon in their $1.00 wraps. But then again, not too many people expect adulterated food either. Time will tell whether sales are negatively impacted. So what’s a company to do?

Honesty. It’s a difficult concept to play with sometimes. The public likes your product the way you make it. You actually disclose some information on your website (how many people research product ingredients on a website before purchasing?). No harm has apparently been done (although some of the additives are common allergens).

How about some real facts. Instead of ducking down and waiting for the shots to subside (along with the jokes), why not deal with the issue head on. Research carefully. Analyze your products and make full disclosure. Publicize the nutrition value of each product as well.

Most companies and their attorneys play it very close to the chest when they are being sued. But it is not always necessary to be 100% tight-lipped. The goal of any company in this type of circumstance should be to be as up-front as possible without exposing itself to greater liability. In this instance Taco Bell isn’t even being sued for monetary damages. And as for potential suits in the future, any good laboratory can discover the ingredients in Taco Bell products. There are no secret formulas.

After analysis, the Company should make a determination whether it wants to change its recipes or not. It is conceivable that TB may announce that it is retaining its recipes because of their good nutritional values. It may change the wording of its “beef” content. It may upgrade its recipes (with great fanfare). Or it may just let the marketplace decide and let the chips fall where they may. If it chooses the latter it takes a risk (that may be justified in its mind) but it has not taken advantage of the opportunity to sell itself and burnish its image if it can inform the public about some positive information.

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PREEMPTION: THE TWO EDGED SWORD IN CRISIS MANAGEMENT

Posted in Business Crises of our own making, Business Crises We Create, Crisis Communication Strategy, Crisis Litigation, Crisis Management, Crisis Mitigation, Liability Communications, Litigation Communications on November 3rd, 2010 by mnayor

 Crisis management and product liability are inextricably linked. Whenever a product fails and causes injury or damage to buyers, a crisis can erupt. The liability of manufacturers and vendors have tightened dramatically over the last hundred years, from the theory of caveat emptor or let the buyer beware, to today, in some cases, strict liability. State laws on matters of health (including the environment) and safety have provided consumers with greater and greater protections over the years.

Businesses of all kinds must be more diligent than ever. Even if negligence and/or misrepresentation are not at issue, a company can still find itself in a great deal of trouble. Accusations concerning causation, erroneous manufacturers’ claims, and customer-product incompatibility can raise the specter of liability and place a company at risk.

Not all products are 100% safe for all people at all times. Thus the concept of warning labels has taken on greater importance, especially in those situations where use may be abused, inappropriate or be accompanied by additional risks. We see this more and more in such industries as pharmaceuticals, foods, toys, automobiles and cosmetics. In today’s world some warnings may not be deemed sufficient because they are either not perceived as strong enough or not evident enough on packaging.

In recent years some companies and even whole industries have looked to preemption as a form of product liability protection from individual and class action suits. Federal preemption is the trumping of federal law over state law when that is the express or implied intention of Congress. Most product liability law is state law through a state’s police powers, and ultimately its state statutes, its common law and court decisions. Oftentimes, federal laws are not as tough as state laws and therefore afford more protection to business. Federal legislation, and even federal regulations, sometimes takes precedence. In fact several agencies of the federal government such as the U.S. Food and Drug Administration, The Federal Trade Commission and its Bureau of Consumer Protection, the Consumer Product Safety Commission, and the National Highway Traffic Safety Administration have declared that some of their specific regulations preempt state law and bar or limit consumer redress. 

Federal court decisions have been mixed. In one recent Supreme Court decision the Court ruled that a medical device manufacturer could not be sued by a consumer because the manufacturer had won FDA approval. But in another, the Court held that a patient was not barred from suing a pharmaceutical company for damages just because the product displayed an FDA-approved label.

Preemption may create a dilemma for a company. Certainly, successful preemption can provide the type of protection that can avoid financial calamity. On the other hand, combative and bellicose pursuit of a safe harbor can have an extremely negative effect on a company’s reputation. It is quite easy to appear as consumer-be-damned if preemption coverage is not handled discretely. Reputation management is equally as important, and a company must strike a balance between finding that safe harbor and doing the right thing, between securing financial escape and retaining and developing public support, respect and even admiration.

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GOLDMAN SACHS PART II

Posted in Crisis Communication Failures, Crisis Communication Strategy, Crisis Litigation, Legislative Advocacy, Liability Communications, Litigation Communications on April 29th, 2010 by admin

Being sued is one thing. Hopefully you can defend yourself. Proving your or your company’s innocence can be a full-time job. A good defense not only saves you money – damages, including punitive damages – it also saves your reputation. In fact, the costs of litigation, as high as they are, can, in part, be chalked up to the cost of good public relations. Guilty parties, however, pay the price.

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GOLDMAN SACHS PINSTRIPES TO PRISON STRIPES

Posted in Crisis Communication Failures, Crisis Communication Response, Crisis Litigation, Liability Communications, Litigation Communications on April 29th, 2010 by admin

I’m only kidding. I don’t think any of them will go to jail. They are smart. And they are wily. They did terrible things, low down and scurrilous, greedy, selfish, un-American, with the best interests of themselves at heart – but NOT ILLEGAL.

Years ago capitalism meant something. Something constructive and creative. Today the meaning has been reduced to “getting yours”, no matter what the cost is to others. Getting yours often means selling thin air, creating nothing and selling it for a premium. And that is what Wall Street often does. It creates “products” – financial products that create nothing. The products are nothing more than new casino games people can bet on. And Goldman created many, especially ones that let some of their clients bet against the U.S.A. Now Goldman says it gave its clients what they wanted. I doubt it. It’s hard to envision clients coming up with these schemes and asking Goldman to create the vehicles. Easier to envision is a group of Goldman players sitting around a conference table kicking ideas back and forth about what they think they can sell.

But, I digress. The point is that Goldman is in crisis mode. The players have been severely criticized for bobbing and weaving before the Senate and not being forthright and not admitting their culpability. But hold on. Individual members of the firm and the firm itself have been sued. This situation perfectly demonstrates the conflict that often arises between a company’s legal counsel and its PR people.

Wouldn’t it be nice and perhaps even productive if Goldman threw itself on the mercy of public opinion. We are a forgiving nation. We love it when someone or some thing is brought to its knees. We then go on to the next biggest thing on the national agenda. We have short memories. But what’s a company, individual or non-profit to do when litigation or administrative sanctions are staring them in the face. There are a few things: deny outright, regret the situation but make no admission, blame someone else, plead ignorance, admit some unintentional mistakes were made, etc. None of the options are particularly pleasing. Two were in plain sight at the Goldman hearings: outright denial that anything wrong was done, and secondly, admit fuzzily that some mistakes may have been made. But certainly no one wanted to get his you-know-what caught in the wringer, or be responsible for the downfall of his employer or former employer.

The moral of the story for crisis management is that, depending on the circumstances, one must be very careful. Legal advice that is tantamount to “No Comment” or “I can’t discuss this because it is in the courts” may at times have its place in crisis management. P.R. and marketing types are not always right and neither are the lawyers who are protecting a client’s interests. But there are often ways to take advantage of situations – to explain, to be contrite, to regret situations, all without admitting liability. It’s up to you, the individual client, to weigh the advise and find the intelligent path that both protects you and your company’s interests and at the same time deals constructively with the crisis and public perception.

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