Published on: August 21, 2012
Yesterday, MNB took note of a New York Times
story about how lawyers who were instrumental in winning major lawsuits against Big Tobacco companies have been searching for their next big payday, and apparently have decided that Big Food manufacturers are both vulnerable and wealthy enough to be targeted.
I commented, in part:It seems to me that it is possible - maybe even necessary - to hold two seemingly opposite ideas in this scenario.
Yes, it is fair to say that the lawyers looking to equate Big Food with Big Tobacco are motivated entirely by money and greed, and are willing to use whatever legal means are at their disposal to get that next big payday.
But it also could be fair to say that Big Food companies are going to have to do a better job about being transparent and accurate in their claims and labels, and that a resistance to total accuracy and transparency has left them vulnerable. (For example, I believe that "frozen blueberry waffles" should actually have blueberries in them; this seems like a reasonable bar to me.)
There are going to be cases where the vampire-like lawyers are actually going to have a legitimate point - not every case, not every instance, but sometimes. And there are going to be cases where the Big Food companies are actually going to be wrong. (Conversely, there will be cases where the lawyers will be wrong and Big Food will be right.)
The hard part will be separating the wheat from the chaff, and not making generalizations. And, as much as it sometimes will hurt, it will be critical to accept the notion that Big Food can do better, should do better, and needs to be better about transparency and accuracy.
MNB user Debra K.W. Topham wrote:Truly appreciated your story of the growing, bottom-feeding sharks of our business world. You are right on target with the need for each food AND supplement company to keep their doorsteps clean. Your blueberry waffles may start to have real berries in them, but if they are labeled “wild blueberries”, it may refer to the berry variety and not a collection method. It is truthful by agricultural practices but will a consumer consider it misleading?
I would say yes.
Another MNB user wrote:I agree with you that Big Food could do better and transparency is becoming more and more important. I also believe that value is very important to consumers and Big Food is important for a lot of jobs, both directly and indirectly, through manufacturing , sales, marketing and big pockets to support retailers. No excuses, or a defenses, just observation. My concern is the cost and distraction the ‘vampires’ will drive for personal gain, which again will get transferred to the end consumer. Additionally, there are a million food items in the store that are not manufactured by Big Food, so how will that be addressed? If the end game is transparency on all labels and it improves consumers ability to make good or bad choices knowingly, then this will add value. My concern is that this is not the mission.
From another reader:These are the same law firms that proudly run TV ads which show a victim (“Hi, my name is Doug and I have mesothelioma”) that suffers from some condition, hoping that large numbers of viewers will call their 1-800 number and join a class action lawsuit. These cases almost never make it to trial. They simply get settled, out of court, and victims get a small sum of money individually. The law firms get the larger piece of the settlement, which is usually in the millions of dollars.
What is sad about mass tort strategy put forth by law firms across the country is that in the end, the consumer is going to pay more at the register for food products from suppliers that are sued. Suppliers have margin requirements for the products/brands they sell. When the margin requirements go up because the company needs additional profit to pay for their settlement costs, suppliers will raise their prices to the retailer that distributes/sells their products/brands. And the retailer has margin requirements too, so the result is a higher price at the shelf. More appalling is that a large number of these upcoming, class action lawsuits against food companies will be without merit. This is where judges will push both sides into settling. And as the law firms know, once there are a number of substantial case studies to put in front of judges, momentum takes over.
“Hi, my name is Doug and I have diabetes from eating Apple Jacks”…
I absolutely agree that lawsuits do not create the optimum environment in which to make decisions about transparency and accuracy. And I know that there are lots of so-called extenuating circumstances that manufacturers can cite as reasons that things have been done one way or another.
But I also believe that almost none of this matters at this point. Market and technological realities mean that companies have to be accurate and transparent about virtually everything - they simply have no choice.
Arguing about it just delays the inevitable.
Got a number of emails regarding our story about how Restoration Hardware Holdings has ousted Gary Friedman, the company's co-CEO, after the board learned that Friedman, 54, was having a romantic relationship with a 26-year-old female employee. The female in question reportedly had left the company before the relationship became public knowledge, and the romance is said to be both consensual and continuing.
I commented:I'm not entirely sure that the Restoration Hardware board did the right thing here. As far as we know, the woman in question is single. Friedman reportedly has been divorced for years. The relationship is consensual. There have been no charges of sexual harassment, no allegations that Friedman did anything improper, immoral or illegal. Nobody was married, nobody was cheating.
Certainly, if a senior executive is dating someone who works for his or her company, that executive has to be careful not to be involved in decisions about that person's compensation, and cannot have that person as a direct report. And I get that such relationships can have implications through an organization; in a previous life, I used to have a woman who was married to the company CEO reporting to me, and it certainly affected how one talked and acted in her presence. Not that she ever would have reported back to her husband, but it was better to be careful and not to put her in an awkward position. It would have been better, truth be told, if she had worked somewhere else.
But I'm just not sure this rises to the level of being a firing offense.
MNB user Mike Franklin wrote:With astounding amounts of relative truth on both sides of any issue…it is becoming very difficult to determine what is right or wrong anymore…this is of course, after you move outside of your core values; which tend to be very black and white.
I personally read about his situation and couldn’t see the harm, but then I don’t have access to the morals clause or personal conduct requirements in his contract.
Another MNB user chimed in:I agree with you that it does seem a bit harsh. I am wondering if there is a code of ethics or company policy that was violated thus causing the BOD to make the decision they made. If not, I believe that the BOD over reacted.
From another reader:I understand what you are saying, but as CEO Mr. Friedman needs or needed in this case, to be very careful about appearances. It is too easy for underlings to believe that if Mr. Friedman can have a relationship with a subordinate employee, than it is okay for them also, which could lead to sexual harassment, etc. It could also be that he violated one of the company’s rules about workplace relationships. Many companies, in an effort to reduce the likelihood of sexual harassment allegations, have mandated that relationships between employees at different pay grades is grounds for firing, marital status and consent notwithstanding. Workplace relationships are a minefield and should be carefully considered before the first date ever takes place.
To be fair, we don't know everything about this case. There well could be details that, if we knew them, would make us think that the board was absolutely justified in its decision.
But I thought it was worth pointing out that maybe we're letting political correctness go too far in cases like these.
On another subject, an MNB user wrote:I'd like to provide some personal feedback on the recent and ongoing transformations taking place @ JCP since Ron Johnson has taken the helm.
My wife and I took our 4 kids to JCP yesterday for the free kids haircut promotion in August. To be honest, we fully intended to go get the free cuts and quickly be on our way due to our impression of JCP being an 'old school' department store with nothing fresh and exciting to offer to anyone under the age of 65. Surprisingly we received impressive service from the salon and decided to wonder through the store for some back to school perusing. We were overwhelmingly surprised by a new format, merchandise presentation and pricing strategy. Low and behold we ended up making a purchase in a store where we've bought nothing but window treatment for at least the past 10 years. BTW...we only purchased window treatments when JCP would hold one of it's aggressive promotions once or twice a year.
The layout was much less cluttered, there were fewer floor displays and confusing signage and the kids apparel actually appealed to our children...which in turn draws the $$'s out of the parents wallet. The checkout process was friendly, speedy and left a great impression on the way out(2 hours after we arrived). Heck, I might even go back sometime with an intention of buying something and that's proof that Ron Johnson's strategy is working.
Keep up the good work Ron...it's showing already!
One customer down. Several million to go.
MNB re-posted yesterday a piece from FoodPolitics.com
in which Cornell University student Daniel Green and Dr. Margaret Yufera-Leitch assessed the views held by Rep. Paul Ryan, the presumptive GOP vice presidential nominee, about various food issues:"Ryan, who has voted against every Affordable Care Act related bill, takes the stance that what you eat and what you weigh are both matters of personal responsibility," the report says. "In 2005, he voted for H.R. 554 'The Personal Responsibility in Food Consumption Act' also known as the cheeseburger bill, which aimed to ‘prohibit weight gain-related or obesity-related lawsuits from being brought in federal or state courts against the food industry.’ The bill was passed by the House but failed to even go up for vote in the Senate."
In addition, the story says that Ryan is pro-Country of Origin Labeling (COOL) legislation, against the Farm Bill, against the Food Safety Modernization Act, and for School Lunch reform.
The authors conclude that while Ryan is a highly motivated exercise enthusiast who does not eat dessert or fried foods, his political decisions seem to put fiscal health over physical health:
"One of the most important programs available to lower income Americans is the Supplemental Nutritional Assistance Program (SNAP), commonly referred to as Food Stamps, which provides access to fresh foods for low-income families. Given that increased fruit and vegetable consumption are cornerstone habits of the Preventative Medicine conversation, why has Mr. Ryan argued to cut SNAP by $33 billion over the next ten years?
"Paul Ryan’s choices to repeal $6.2 trillion dollars of support from the Affordable Care Act and obesity-related provisions, demonstrates a lesser degree of support for preventative care than his widely publicized exercise regime suggests. Perhaps with unemployment still high and unsure economy, America has bigger fish to fry than fixing the food system and reversing obesity but at least for now, Paul Ryan will take his fish broiled."
MNB user Mark Heckman wrote:Keep the "nanny state" out of our personal lives Before the Feds embark on extending their abundance of "wisdom", guidance and subsidies to control our eating habits, they should take 15 minutes and remind themselves they are out of money. In fact, if they were a supermarket chain or any other business, they would have been closed years ago! Ryan has it right. If we as citizens do not posses enough common sense not to kill ourselves with consumption of sugary sodas and fried chicken, all the bureaucrats and money (that we don't have) will not matter.
MNB user Ben Ball objected to the phrase “…his political decisions seem to put fiscal health over physical health:…”:Couldn’t that just as easily have read: his political decisions seem to put personal responsibility over government responsibility?
MNB user Tom Geissler wrote:Do we really need the government telling us what to eat and how to cook it? I’m a supporter of Paul Ryan. He has the same beliefs I do when it comes to government staying out of the decisions that should be made by parents and families. So what if he doesn’t support the Affordable Care Act (aka Obamacare); he is with 60% of America on that matter.
Imagine, a candidate who favors personal responsibility! What a controversy.
MNB user Denis Zegar had a different perspective:The SNAP program has always been on the budget reducing "hit list". However, this is a classic example where ideology stands in the way of facts. Economists consider SNAP one of the most effective forms of economic stimulus. Moody’s Analytics estimates that in a weak economy, every dollar increase in SNAP benefits generates $1.72 in economic activity. Similarly, CBO rated an increase in SNAP benefits as one of the two most cost-effective of all spending and tax options it examined for boosting growth and jobs in a weak economy. According to the National Academy of Science poverty measures, which count SNAP as income, SNAP kept about 4 million people out of poverty in 2010 and lessened the severity of poverty for millions of others. Just ask any grocer what impact the loss of food stamps would have on their business and communities.
Now SNAP benefits to individual tax cuts that presumably stimulate economy activity and, therefore, pay for themselves. Here is an epic example of facts getting in the way of ideology or what I like to call wishful thinking. There isn't a credible economist today who believes tax cuts pay for themselves. A 2005 Congressional Budget Office study during the time that Republican economist Doug Holtz-Eakin was director concluded that a 10 percent cut in federal income tax rates would recoup at most 28 percent of the static revenue loss over 10 years. Harvard economist Greg Mankiw, who chaired the CEA during President George Bush’s first term, further confirmed this in 2006. And for the record, the non-partisan CBO recently concluded that the Bush tax cuts reduced federal revenues $2.8 trillion between 2002 and 2011. The non-partisan Center on Budget and Policy Priorities concluded, the Bush tax cuts accounted for half of the deficits during his tenure, and if made permanent, over the next decade would cost the U.S. Treasury more than Iraq, Afghanistan, the recession, TARP and the stimulus - combined.
Fighting obesity is another no-brainer. Obesity costs according to Reuters is $190 billion annually and rising. Lost productivity adds billions more. It costs $5 billion more in jet fuel to fly heavier individuals and $4 billion more in gasoline. Once again ideology trumps the cost-benefit of fighting obesity and encouraging a healthy lifestyle. The grocery industry has taken a progressive stand in its fight to reduce obesity nationwide, but there must also be a national effort, if we want sustainable results.
As an economist, my first reaction to anything that sounds too good to be true is that it probably isn’t. The Romney-Ryan plan for America is nothing more than more than an updated version of feel good Voo-Doo economics.
I was intrigued by the fact that Ryan was pro-Country of Origin labeling, and against the Farm Bill reauthorization ... which I think would put him at odds with a lot of folks in the food industry.
Also got a number of emails about our mention of the passing of actor William Windom of congestive heart failure at age 88.
One MNB user wrote:Thank you for sharing the passing of William Windom with the Morning Newsbeat community. I'm not sure I would have heard about his death otherwise. While a great character actor throughout the years, I remember him best when he starred in one of my all time favorite shows - the long forgotten "My World and Welcome to it" which brought to life the writings of James Thurber. Though I was a very young child when the show aired (yes, that's my story and I'm sticking to it) I found the wit and wisdom to be profound. I was pleasantly surprised to IMDB his name and see his the long list of shows he was on from the 60's into the 2000's.
He will be missed.
MNB user Daniel McQuade wrote:Does anyone just die of "old age" anymore? 88 years, that was a good run I'd say.
I would have just said old age, but the obits were specific, so I saw no reason not to be.
As for 88 years, I used to say the same thing about it being a good run. But as I get older, I've changed my mind - 88 may seem like a good run to me at 57, but I suspect I'll feel differently when I'm 87...
And MNB user Steve Sullivan wrote:How could your only role reference for William Windom be a Star Trek episode? If it’s TV you want, look at "My World and Welcome To It," the James Thurber based series. Or even "Murder, She Wrote." Also, I’m sure he has many movie credits, but the one that springs to mind for me was in To Kill A Mockingbird.
Point taken. I meant to note To Kill A Mockingbird
, but forgot.