This Is Getting Nutty

In my last post, "Where's The Beef?" I chronicled how, after an initially tepid response, Taco Bell eventually presented a strong and effective response to a lawsuit alleging that there is very little beef in the fast food chain's tacos, and therefore it should be prohibited from advertising the tacos as containing "seasoned ground beef or seasoned beef."

Lawsuits claiming a consumer product is falsely advertised threaten damage to the brand and its reputation. This is even more true when the lawsuit involves a food product, as many consumers have become more discerning of the ingredients in the products they eat. I believe that a company's response to such lawsuits cannot await the litigation process; instead the company is best served if it responds swiftly and directly in the court of public opinion.

A number of companies have taken a "wait and see" attitude towards these lawsuits, seeking to calibrate their response to the amount of publicity. However, as I have previously noted in "Reputation Management in the Digital Age," hoping a controversy will quiet down can lead to disastrous results.

Notwithstanding the foregoing, it does appear that Ferrero USA Inc., the company that produces Ferrero Chocolates and Tic-Tac breath mints, has initially weathered the publicity concerning a lawsuit over the ingredients in its hazelnut spread, Nutella. Earlier this month, a San Diego solo practitioner filed a consumer class action in U.S. District Court for the Southern District of California, alleging that Ferrero USA is in violation of California consumer protection laws by representing that Nutella is a healthy, nutritious and balanced breakfast for children. The lawsuit alleges that the name plaintiff, Athena Hohenberg, the mother of a four-year-old child, bought Nutella after she saw advertisements showing mothers serving their children the product and declaring that the spread was a healthy and nutritious breakfast. According to the complaint: "Nutella, however, contains 70% saturated fat and processed sugar by weight. Both of these ingredients significantly contribute to America's alarming increases in childhood obesity, which can lead to life-long health problems." The complaint alleges that Ms. Hohenberg was "shocked" when she learned that Nutella was not healthy and "was the next best thing to a candy bar."

Ferrero USA's first official response to the lawsuit was exceedingly tepid. According to a story on AFP, when asked for comment, Elise Titan, a spokesperson for Ferrero USA, said the company stands by the wholesomeness of its product:

"What we can say right now is that we stand behind the quality of ingredients in Nutella hazelnut spread and advertising for our product," she said.

"It's really early in the case and we are really not in position to discuss the case any further," she said.

Fortunately for Ferrero USA, numerous bloggers have ridiculed the lawsuit, likening it more to the mother who sued McDonald's over its Happy Meal than to the lawsuit concerning the amount of beef in a Taco Bell taco. However, there may be some merit in the lawsuit. As reported in the Washington Post, ads touting Nutella as part of a healthful breakfast were challenged on similar grounds and withdrawn in the United Kingdom in 2008. Therefore, Ferrero USA may not be totally out of the woods yet, and further proceedings in the lawsuit may put more pressure on the company to defend its product and its advertising in the court of public opinion.

Where's The Beef?

Last year, in a post entitled "Reputation Management In The Digital Age," I presented some examples on how a slow response to a crisis can do serious damage to a company's brand and reputation. For much of the past week I thought history was repeating itself as I observed Taco Bell's evolving response to the "Where's the Beef" lawsuit. It took multiple attempts, but Taco Bell eventually presented a strong and effective response to a lawsuit's allegations that there's very little beef in the fast food chain's tacos, and therefore it should be prohibited from advertising the tacos as containing "seasoned ground beef or seasoned beef."

The class action lawsuit was filed January 19, 2011 in federal court in California by Montgomery, Alabama attorney W. Daniel "Dee" Miles. The lead plaintiff is Amanda Obney of California. The suit alleges that the meat mixture in Taco Bell's burritos and tacos contain binders and extenders and does not meet requirements set by the USDA to be labeled beef. Specifically, the suit alleges that the taco filling is made of components such as water, isolated oat product, wheat oats, soy lecithin, maltodextrin, anti-dusting agent, autolyzed yeast extract, modified corn starch, sodium phosphate, as well as some beef and seasonings. When contacted for a comment on the lawsuit, attorney Miles said that just 35 percent of the taco filling was a solid, and just 15 percent overall was protein. "You can't call it beef by definition," Miles said. "It's junk. I wouldn't eat it."

When Taco Bell was asked for its comment on Monday, January 24, I do not think that it handled it well. It told Alabama television station, WSFA, in a prepared statement that: "Taco Bell prides itself on serving high quality Mexican inspired food with great value. We're happy that the millions of customers we serve every week agree. We deny our advertising is misleading in any way and we intend to vigorously defend the suit."

In my opinion, the statement fails because while Taco Bell is "vigorously defend[ing] the suit," its customers are asking "What's in the tacos?"

I suspect that Taco Bell realized the weakness of its initial response and the danger to its brand presented by the lawsuit and the attendant publicity, because the next day,Tuesday, January 25, it tried again. The following statement from Taco Bell's president, Greg Creed, appeared on Taco Bell's website and was released to the media:

"At Taco, Bell, we buy our beef from the same trusted brands you find in the supermarket, like Tyson Foods. We start with 100 percent USDA-inspected beef. Then we simmer it in our proprietary blend of seasonings and spices to give our seasoned beef its signature Taco Bell taste and texture. We are proud of the quality of our beef and identify all the seasoning and spice ingredients on our website. Unfortunately the lawyers in this case elected to sue first and ask questions later -- and got their "facts" absolutely wrong. We plan to take legal action for the false statements being made about our food."

Although this statement began to address the primary issue of "What's in the tacos?" it erred in mentioning the lawsuit and discussing Taco Bell's contemplated legal response. When the media reported the statement, the lead was not Creed's defense of the product, but that Taco Bell was going to sue. For example, Reuters lead was "Taco Bell Plans Countersuit Over Ground Beef" and Creed's statement that Taco Bell uses "100 percent USDA-inspected beef" did not appear until the fifth paragraph of the story. Another problem with the statement was the second sentence: "We start with 100 percent USDA-inspected beef." The issue isn't what Taco Bell "starts" with, since the lawsuit acknowledges there is meat in the taco, just not enough to be labeled "beef." The issue is what is in the "end" product the consumer purchases and eats.

On Wednesday, January 26, Taco Bell put another statement on its website and released it to the media, "Statement Regarding Class Action Lawsuit." This is a much stronger and detailed statement that finally tells the consumer everything that is in the taco, with the approximate percentage of each ingredient. However at this point, three days into the crisis, Taco Bell was probably advised that releasing statements is not sufficient to address the issue or the potential damage to its brand. Therefore, this statement was followed-up on Thursday, January 27, with a YouTube video entitled, "Of Course We Use Real Beef!" and featuring Taco Bell president Creed. Although the content is similar to the January 26th statement, Creed makes no reference to the lawsuit or any Taco Bell legal action. Instead he addresses the issue head-on in a very convincing manner:

In addition, today, Taco Bell launched an advertising campaign about the taco filling, placing full-page print ads in the New York Times, USA Today, and The Wall Street Journal. The print ads say, in huge letters, "Thank you for suing us. Here's the truth about our seasoned beef." Here's a link to the ad. Although I think "Thank you for suing us" is inappropriate, the ad, in conjunction with the YouTube video, is a very strong defense that addresses the real issue. Time well tell whether Taco Bell's evolving response has been successful in protecting its brand and reputation.

Foretelling the Tragedy in Arizona?

I was trying to clean up some old emails today, and was looking at this one dated December 27, 2010 from the National Law Journal titled The Year in Review. There was one article, “They Said It”, which is a slide show of "memorable remarks" for 2010. I do not know what made me stop and look at it, but I almost fell off my chair when I got to the eighteenth slide. It has to be seen to be believed.

UPDATE: The New York Times leads with Giffords in article published today. "In Tucson, Guns Have a Broad Constituency."

Covington & Burling Starts Crisis Management Practice

Covington & Burling is joining the ranks of law firms that have initiated a crisis management practice. Former D.C. Attorney General Peter Nickles, who was a Covington partner before joining the administration of D.C. Mayor Adrian Fenty, will chair the new crisis management practice.

In addition to Nickles, the crisis management team assembles some of the firm’s most high-profile attorneys, including former Homeland Security Secretary Michael Chertoff; Stuart Eizenstat, who served as President Clinton’s ambassador to the European Union; former NFL Commissioner Paul Tagliabue; and Thomas Williamson, former U.S. solicitor of labor.

Covington Brings Back Former DC AG Nickles, Launches Crisis Management Practice

Fitting The Pieces Together

In August I blogged about how legal and public relations counsel for BP failed to work in harmony in helping BP deal with the fallout of the Gulf oil spill. Getting The Communications Professionals And Lawyers To Work Together In A Crisis. A few weeks later Larry Kamer, managing director ofThe Glover Park Group, wrote an opinion piece in PRWeek emphasizing that a crisis like the Gulf oil spill should create a shared opportunity for legal and public relations counsel. Here is a link to Kamer's piece:

Crisis can create shared opportunity for PR and legal teams - PRWeek US

A Sea Change

As I have frequently written in my blog posts, social media represents a sea change in the way corporations and other business entities communicate with the public, especially in a crisis. Therefore it should be no surprise that according to a recent article in PRWeek, social media was a key channel for Carnival Cruise Lines in its crisis communications response to the fire aboard its Splendor cruise ship earlier this month. In addition to proactively distributing news updates to conventional media, Carnival also communicated updates by posting them on carnival.com, Facebook, Twitter and carnival-news.com. Jennifer de la Cruz, director of public relations for Carnival, told PRWeek that, "Our key messages . . . focused on providing assurances that everyone was safe, the status of the situation on board and any updates to the plan for returning the ship to port and, of paramount importance, communicating our apologies and acknowledging the difficult environment on board."

The day before the Splendor was towed into San Diego, the ship's cruise director, John Heald, made a post about the conditions aboard ship on his popular personal blog. Heald's blog post was picked up by major media outlets such as USA Today, which commented:

The ship's famously saucy cruise director, John Heald, has just posted a lengthy, startlingly candid account of the first few minutes of the crisis on his personal blog, which is widely followed by cruise fans. . . . In an account that mixes both seriousness and Heald's trademark humor, the longtime Carnival staffer goes on to explain both the severity of the situation that he witnessed on the ship's bridge and the crew's heroic response.

My colleague, Chris Gidez, was interviewed by PRWeek about Carnival's crisis communications response and provided the following analysis:

Chris Gidez, head of US crisis/issues management group for Hill & Knowlton, calls the early blog post by Heald "brilliant. The first rule in crisis management is to regain control of the agenda and conversation." [Gidez] says that's especially important in a situation like this, where passengers are now starting to talk to media and no doubt will share their own detailed accounts online. "The cruise community is very engaged and active online. There will probably be video shared too, and it will likely go viral," says Gidez. "While we can expect to hear stories of long lines, no air conditioning, rude crew members, etc., there will be just as many who applaud the performance of the line."

Halloween 2010