Court Watch

Obesity 'McLawsuit' Partially Reinstated Against McDonald's

The Second Circuit U.S. Court of Appeals has reinstated a portion of the obesity lawsuit against McDonald's Corporation. Pelman v. McDonald's Corporation, 2005 U.S. App. LEXIS 1229 (2005). The action formerly involved multiple claims regarding alleged damages to children and their parents from consuming McDonald's products, but has been reduced to a single count under the New York deceptive business practices statute, New York General Business Law Section 349.

Initial Complaint and Lower Court Rulings

The action involves typical franchise litigation procedural issues, but some atypical substantive issues. The original complaint centered on myriad causes of action regarding the making and marketing of McDonald's products, and when it was filed received widespread media coverage. The causes of action included products liability and negligence counts, and false advertising and deceptive practices claims under New York statutes. The action, which sought class action status, was filed by two parents both on their own behalf and on behalf of their minor children who allegedly suffered ill health effects, including obesity, high blood pressure, and diabetes, from eating McDonald's products.

The procedural issues raised are not uncommon. First, the plaintiffs filed the action in state court, but the defendants removed the action on diversity grounds alleging “fraudulent” joinder of non-diverse parties. The Federal District Court for the Southern District of New York agreed that the essential parties were diverse and that federal jurisdiction was proper. Then McDonald's filed a Federal Rule of Civil Procedure Rule 12(b)(6) motion, a procedural motion that requires the court to decide if the plaintiffs' complaint, on its face and accepted as true, had sufficient allegations to constitute a valid claim for relief. Not once, but twice, the federal district court held that the complaint allegations were insufficient to proceed and dismissed the complaint. Pelman v. McDonald's Corp. 237 F. Supp. 2d 512 (S.D.N.Y. 2003) The second ruling was not atypical since often a court will allow plaintiffs a second attempt at pleading their claims before final dismissal. Pelman v. McDonald's Corp. 2003 U.S. Dist. LEXIS 15202 (S.D.N.Y. 2003).

The initial dismissal of the complaint was framed by the court as involving ”(q)uestions of personal responsibility, common knowledge and public health,” as well as “the role of society and the courts in addressing such issues.” The court noted that the products liability claim is atypical because it involves the “over-consumption of products created, manufactured and advertised at a national level. McDonald's Big Mac is the same at every outlet in the Bronx, New York … and … throughout the United States.”

The opinion discusses complaint allegations about salt, fat, and cholesterol in the diet and childhood obesity, but notes that under products liability law not all products are safe for consumption and many products are dangerous if overconsumed. In a unifying statement for its opinion, the district court concludes: “This opinion is guided by the principle 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.” After re-pleading, as noted above, the complaint was again dismissed by the court.

A Potential Intervenor

In the midst of the above proceedings, Rivka Robin Freeman, a 43-year-old woman with a history of breast cancer, sought to intervene as an additional plaintiff in the putative class action still pending. Freeman claimed that her breast cancer was caused by her prior eating habits, including frequenting McDonald's. Earlier Freeman had, via an affadavit filed in the action, offered to serve as an “Independent Nutritionist” on balanced meals, training at a base salary of $500,000 at McDonald's with stock options and bonuses. The federal district court denied her motion to intervene. Pelman v. McDonald's Corp., 215 F.R.D. 96 (2003).

Current Status Under the Second Circuit Court of Appeals Decision

The Second Circuit Court of Appeals decision centered on the marketing representations rather than the ill-fated products liability and negligence claims. Although not mentioned extensively in the appellate decision, the earlier trial court decisions mention some of McDonald's advertising. McDonald's ran a series of advertisements beginning in 1987 stating that its food was “nutritious” and “leaner than you think.” One ad touted that McDonald's had “Good basic nutritious food. Food that's been the foundation of well-balanced diets for generations.” See, Pelman v. McDonald's Corp. 2003 U.S. Dist. Corp. 15202 (S.D.N.Y. 2003).

The Second Circuit found that a claim was stated under the New York deceptive practices law, '349 of the New York General Business Law. This statute, like many state deceptive practices laws or “Little FTC Acts,” prohibits deceptive acts or business practices. While similar to a fraud claim statute, the deceptive practices statute does not require proof of actual reliance. The trial court decided that questions about the eating and exercising habits of the plaintiffs were not required in the pleading stage and that allegations of deception were sufficient under the general pleading rules of civil procedure. The false advertising claim under '350 of the New York General Business Law was, however, dismissed by the court of appeals. Unlike the New York deceptive practices claim (and deceptive practices claims under California statutes, to cite another example), false advertising claims under the New York statute require reliance. In re-pleading, the plaintiffs failed to allege the requisite reliance element required under the New York statute for false advertising. A single count under the New York deceptive business practices statute, New York General Business Law '349, is what remains before the court.

An important side issue not directly addressed is whether the McDonald's franchisees should be liable for the alleged misconduct and, if so, indemnified by their franchisor. The Court of Appeals noted that the original complaint appeared to name several local franchisees (McDonald's Restaurants of New York, Inc. and two locations in the Bronx), but found that the notice of appeal named only McDonald's Corporation. Thus, the issue of whether franchisees simply selling products the franchisor mandates should be able to be indemnified was not addressed.

Obesity 'McLawsuit' Partially Reinstated Against McDonald's

The Second Circuit U.S. Court of Appeals has reinstated a portion of the obesity lawsuit against McDonald's Corporation. Pelman v. McDonald's Corporation, 2005 U.S. App. LEXIS 1229 (2005). The action formerly involved multiple claims regarding alleged damages to children and their parents from consuming McDonald's products, but has been reduced to a single count under the New York deceptive business practices statute, New York General Business Law Section 349.

Initial Complaint and Lower Court Rulings

The action involves typical franchise litigation procedural issues, but some atypical substantive issues. The original complaint centered on myriad causes of action regarding the making and marketing of McDonald's products, and when it was filed received widespread media coverage. The causes of action included products liability and negligence counts, and false advertising and deceptive practices claims under New York statutes. The action, which sought class action status, was filed by two parents both on their own behalf and on behalf of their minor children who allegedly suffered ill health effects, including obesity, high blood pressure, and diabetes, from eating McDonald's products.

The procedural issues raised are not uncommon. First, the plaintiffs filed the action in state court, but the defendants removed the action on diversity grounds alleging “fraudulent” joinder of non-diverse parties. The Federal District Court for the Southern District of New York agreed that the essential parties were diverse and that federal jurisdiction was proper. Then McDonald's filed a Federal Rule of Civil Procedure Rule 12(b)(6) motion, a procedural motion that requires the court to decide if the plaintiffs' complaint, on its face and accepted as true, had sufficient allegations to constitute a valid claim for relief. Not once, but twice, the federal district court held that the complaint allegations were insufficient to proceed and dismissed the complaint. Pelman v. McDonald's Corp . 237 F. Supp. 2d 512 (S.D.N.Y. 2003) The second ruling was not atypical since often a court will allow plaintiffs a second attempt at pleading their claims before final dismissal. Pelman v. McDonald's Corp. 2003 U.S. Dist. LEXIS 15202 (S.D.N.Y. 2003).

The initial dismissal of the complaint was framed by the court as involving ”(q)uestions of personal responsibility, common knowledge and public health,” as well as “the role of society and the courts in addressing such issues.” The court noted that the products liability claim is atypical because it involves the “over-consumption of products created, manufactured and advertised at a national level. McDonald's Big Mac is the same at every outlet in the Bronx, New York … and … throughout the United States.”

The opinion discusses complaint allegations about salt, fat, and cholesterol in the diet and childhood obesity, but notes that under products liability law not all products are safe for consumption and many products are dangerous if overconsumed. In a unifying statement for its opinion, the district court concludes: “This opinion is guided by the principle 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.” After re-pleading, as noted above, the complaint was again dismissed by the court.

A Potential Intervenor

In the midst of the above proceedings, Rivka Robin Freeman, a 43-year-old woman with a history of breast cancer, sought to intervene as an additional plaintiff in the putative class action still pending. Freeman claimed that her breast cancer was caused by her prior eating habits, including frequenting McDonald's. Earlier Freeman had, via an affadavit filed in the action, offered to serve as an “Independent Nutritionist” on balanced meals, training at a base salary of $500,000 at McDonald's with stock options and bonuses. The federal district court denied her motion to intervene. Pelman v. McDonald's Corp., 215 F.R.D. 96 (2003).

Current Status Under the Second Circuit Court of Appeals Decision

The Second Circuit Court of Appeals decision centered on the marketing representations rather than the ill-fated products liability and negligence claims. Although not mentioned extensively in the appellate decision, the earlier trial court decisions mention some of McDonald's advertising. McDonald's ran a series of advertisements beginning in 1987 stating that its food was “nutritious” and “leaner than you think.” One ad touted that McDonald's had “Good basic nutritious food. Food that's been the foundation of well-balanced diets for generations.” See, Pelman v. McDonald's Corp. 2003 U.S. Dist. Corp. 15202 (S.D.N.Y. 2003).

The Second Circuit found that a claim was stated under the New York deceptive practices law, '349 of the New York General Business Law. This statute, like many state deceptive practices laws or “Little FTC Acts,” prohibits deceptive acts or business practices. While similar to a fraud claim statute, the deceptive practices statute does not require proof of actual reliance. The trial court decided that questions about the eating and exercising habits of the plaintiffs were not required in the pleading stage and that allegations of deception were sufficient under the general pleading rules of civil procedure. The false advertising claim under '350 of the New York General Business Law was, however, dismissed by the court of appeals. Unlike the New York deceptive practices claim (and deceptive practices claims under California statutes, to cite another example), false advertising claims under the New York statute require reliance. In re-pleading, the plaintiffs failed to allege the requisite reliance element required under the New York statute for false advertising. A single count under the New York deceptive business practices statute, New York General Business Law '349, is what remains before the court.

An important side issue not directly addressed is whether the McDonald's franchisees should be liable for the alleged misconduct and, if so, indemnified by their franchisor. The Court of Appeals noted that the original complaint appeared to name several local franchisees (McDonald's Restaurants of New York, Inc. and two locations in the Bronx), but found that the notice of appeal named only McDonald's Corporation. Thus, the issue of whether franchisees simply selling products the franchisor mandates should be able to be indemnified was not addressed.