1 00:00:00,120 --> 00:00:03,680 Speaker 1: The attacks on soda and sugary drinks are not fizzing 2 00:00:03,680 --> 00:00:06,720 Speaker 1: out in the new year. Far from it. On Day four, 3 00:00:06,800 --> 00:00:10,600 Speaker 1: Coca Cola was staring at a new lawsuit activists alleged 4 00:00:10,640 --> 00:00:14,120 Speaker 1: that Coke's advertising tactics have deceived the public about the 5 00:00:14,160 --> 00:00:17,759 Speaker 1: health risks of sugary drinks. The lawsuit compares the beverage 6 00:00:17,800 --> 00:00:21,480 Speaker 1: giants tactics to the tobacco industries past efforts at minimizing 7 00:00:21,520 --> 00:00:24,520 Speaker 1: the health effects of its products. The lawsuit comes as 8 00:00:24,600 --> 00:00:28,920 Speaker 1: drink manufacturers try to fend off regulatory assaults on multiple fronts, 9 00:00:28,960 --> 00:00:34,040 Speaker 1: including taxes on sugary drinks and cities such as Chicago, Philadelphia, 10 00:00:34,080 --> 00:00:37,720 Speaker 1: and San Francisco. Harold Goldstein is the executive director of 11 00:00:37,800 --> 00:00:43,360 Speaker 1: the California based Public Health Advocates. We now have overwhelming 12 00:00:43,560 --> 00:00:48,559 Speaker 1: evidence that sugary beverages are leaving cause of diabetes and 13 00:00:48,640 --> 00:00:52,400 Speaker 1: this new epidemic of fatty liver disease. We've got kids 14 00:00:52,479 --> 00:00:57,320 Speaker 1: who have livers as if they're alcoholic. Fatty liver disease 15 00:00:57,640 --> 00:01:01,760 Speaker 1: that due directly to the consumption. A spokesman for Coke 16 00:01:01,880 --> 00:01:04,960 Speaker 1: dismissed the lawsuit as merit list, saying it remains committed 17 00:01:04,959 --> 00:01:08,480 Speaker 1: to playing a meaningful role in the fight against obesity. 18 00:01:08,480 --> 00:01:11,200 Speaker 1: Our guests are Eric Gordon, professor at the University of 19 00:01:11,240 --> 00:01:14,319 Speaker 1: Michigan Law School and the Stern School of Business, and 20 00:01:14,440 --> 00:01:19,679 Speaker 1: Victor Schwartz, General counsel to the American tort Reform Association. Eric, 21 00:01:19,840 --> 00:01:22,800 Speaker 1: soda consumption is down and the public has heard a 22 00:01:22,840 --> 00:01:26,880 Speaker 1: lot about the health effects of sugary drinks. Does this 23 00:01:26,959 --> 00:01:32,280 Speaker 1: lawsuit add new allegations, No, it's it adds a couple 24 00:01:32,680 --> 00:01:35,400 Speaker 1: I don't think it adds any allegations that will influence 25 00:01:35,440 --> 00:01:38,480 Speaker 1: the public. You know, they have some details about who 26 00:01:38,640 --> 00:01:43,520 Speaker 1: said what, who Coke financed to produce some research, But 27 00:01:43,640 --> 00:01:46,640 Speaker 1: it's it's I think it's the it's the long told 28 00:01:46,760 --> 00:01:50,560 Speaker 1: story that sugary drinks. If you drink a lot of 29 00:01:50,560 --> 00:01:54,760 Speaker 1: the stuff, you're probably gonna get fat. What about the 30 00:01:54,760 --> 00:01:58,320 Speaker 1: comparisons to the tobacco industry. Yeah, so it's a good 31 00:01:58,320 --> 00:02:02,920 Speaker 1: comparison in some ways. Some of the conduct is quite similar, 32 00:02:03,440 --> 00:02:07,920 Speaker 1: using you know, other groups to get your message out. Um, 33 00:02:07,960 --> 00:02:13,960 Speaker 1: but the comparison falls apart in some important ways. Victor, 34 00:02:14,120 --> 00:02:16,720 Speaker 1: I read this complaint, and, as often happens when you 35 00:02:16,760 --> 00:02:20,040 Speaker 1: read a complaint, it sounds pretty bad. Sounds like Coca 36 00:02:20,080 --> 00:02:23,760 Speaker 1: cola mislead. The public knew that sugary drinks were you know, 37 00:02:23,800 --> 00:02:28,400 Speaker 1: caused diabetes obesity and has been misleading the public. Uh 38 00:02:29,560 --> 00:02:33,640 Speaker 1: is that the Uh if those allegations are true, Uh 39 00:02:34,040 --> 00:02:38,960 Speaker 1: is Coca cola liabel? Well that's like asking when did 40 00:02:39,000 --> 00:02:42,440 Speaker 1: you stop beating your spouse? If they are true, I 41 00:02:42,480 --> 00:02:45,000 Speaker 1: can put anything or for fifty years, I can put 42 00:02:45,000 --> 00:02:49,320 Speaker 1: anything in a complaint. And uh so it's answering your 43 00:02:49,400 --> 00:02:52,760 Speaker 1: high pathetical. I agree with what the professor says, that 44 00:02:52,960 --> 00:02:57,960 Speaker 1: this information is in the public realm. Food is regulated 45 00:02:58,960 --> 00:03:02,079 Speaker 1: by the government. To bacco was not regulated now it's 46 00:03:02,160 --> 00:03:06,640 Speaker 1: under the Food and Drug Administration and the only purposive 47 00:03:07,080 --> 00:03:11,120 Speaker 1: cigarettes who was smoking? But food has value and the 48 00:03:11,160 --> 00:03:15,840 Speaker 1: public knows about this, And from our group's perspective, it's 49 00:03:15,960 --> 00:03:19,960 Speaker 1: public choice. And if the government wants to regulate through 50 00:03:20,440 --> 00:03:24,720 Speaker 1: elected officials, let it proceed. But the courts shouldn't engage 51 00:03:24,720 --> 00:03:27,680 Speaker 1: in regulations through litigation. And the reason I came on 52 00:03:27,760 --> 00:03:31,120 Speaker 1: the show is this is a classic of what actor 53 00:03:31,200 --> 00:03:36,560 Speaker 1: the American Tort Reform Association believes is improper public policy. Eric, 54 00:03:36,600 --> 00:03:40,080 Speaker 1: do you agree with that that that this group shouldn't 55 00:03:40,080 --> 00:03:44,640 Speaker 1: be able to sue over what soda manufacturers are saying 56 00:03:44,680 --> 00:03:48,200 Speaker 1: to the public and advertising. So the Grahoman, the point 57 00:03:48,280 --> 00:03:50,640 Speaker 1: of this suit is not whether you have the choice 58 00:03:50,720 --> 00:03:53,240 Speaker 1: to drink a Coca Cola or eat a bag of 59 00:03:53,240 --> 00:03:56,760 Speaker 1: French fries, which has even more calories. The point of 60 00:03:56,760 --> 00:04:01,840 Speaker 1: this suit is uh that the allegation is that Coca 61 00:04:01,880 --> 00:04:07,720 Speaker 1: Cola and a trade association deliberately mislead people. So that 62 00:04:07,720 --> 00:04:09,600 Speaker 1: that's what this case is going to rise and fall on. 63 00:04:09,800 --> 00:04:13,520 Speaker 1: And while even if you believe as I as I believe, 64 00:04:13,600 --> 00:04:16,400 Speaker 1: I mean, people should within reason be free to choose 65 00:04:16,400 --> 00:04:21,280 Speaker 1: whether they want a soda or French fries or whatever, um, 66 00:04:21,360 --> 00:04:24,080 Speaker 1: that's not the same as is it okay for a 67 00:04:24,120 --> 00:04:29,280 Speaker 1: company to mislead people about its products. So if to 68 00:04:29,320 --> 00:04:32,320 Speaker 1: the extent the suit focuses on that, I think it's 69 00:04:32,320 --> 00:04:34,920 Speaker 1: going to be litigated. Now. The complaint also talks about 70 00:04:34,920 --> 00:04:37,279 Speaker 1: all kinds of other things. It's almost a political complaint. 71 00:04:37,320 --> 00:04:41,239 Speaker 1: It complains that coke makes huge profits. When you strip 72 00:04:41,279 --> 00:04:43,159 Speaker 1: out all of the sort of the kind of almost 73 00:04:43,160 --> 00:04:47,719 Speaker 1: social political rhetoric, you have a fraud suit. Victor what 74 00:04:47,800 --> 00:04:53,160 Speaker 1: about this idea that Coca Cola has been uh misleading 75 00:04:53,200 --> 00:04:56,720 Speaker 1: people by saying that you can balance out your your 76 00:04:56,800 --> 00:05:01,880 Speaker 1: soda consumption, that just by uh you exercising, you can 77 00:05:01,880 --> 00:05:05,560 Speaker 1: sort of eliminate any harm caused by a sugary drink. 78 00:05:05,600 --> 00:05:09,440 Speaker 1: The allegation is, look, too much sugar can lead to 79 00:05:09,560 --> 00:05:13,960 Speaker 1: diabetes regardless of how much you you exercise, and Coca 80 00:05:14,000 --> 00:05:17,040 Speaker 1: Cola knew that. So what's the defense to that allegation. 81 00:05:17,200 --> 00:05:21,320 Speaker 1: It was a suit brought against fruit loops and saying 82 00:05:21,320 --> 00:05:24,039 Speaker 1: that people thought that there was fruit and fruit loops 83 00:05:25,720 --> 00:05:28,479 Speaker 1: and it was put on the market as fruit loops. 84 00:05:28,800 --> 00:05:33,120 Speaker 1: It was thrown out because people have the information in 85 00:05:33,160 --> 00:05:36,120 Speaker 1: the public and they made decisions. And I agree with 86 00:05:36,120 --> 00:05:39,880 Speaker 1: the professor with respect to a lot of this complaint, 87 00:05:39,920 --> 00:05:43,760 Speaker 1: with all this political rhetoric. Never filed a complaint like 88 00:05:43,800 --> 00:05:45,800 Speaker 1: that in my life. I hope I never will. You 89 00:05:45,920 --> 00:05:49,200 Speaker 1: stick to the facts. So trying to pick out what 90 00:05:49,279 --> 00:05:53,200 Speaker 1: the relevant facts are the salient facts in this complaint 91 00:05:53,760 --> 00:05:55,920 Speaker 1: is a daunting job. I try to do it last 92 00:05:56,000 --> 00:05:58,720 Speaker 1: night in actually I did fall asleep because it's kind 93 00:05:58,760 --> 00:06:02,120 Speaker 1: of boring complaint. But um, the I just think that 94 00:06:02,160 --> 00:06:05,160 Speaker 1: this is something in the public realm. It's not like 95 00:06:05,360 --> 00:06:10,240 Speaker 1: tobacco and again, the whole purpose, the real purpose behind 96 00:06:10,279 --> 00:06:15,400 Speaker 1: this is people at the Center for Science and Public Interests. 97 00:06:15,520 --> 00:06:18,720 Speaker 1: They have an agenda, which is fine. I actually subscribe 98 00:06:18,760 --> 00:06:21,640 Speaker 1: to their newsletter for once in a while. Um, and 99 00:06:21,680 --> 00:06:25,360 Speaker 1: I'm now three pounds. I don't need a lot of stuff. Um. 100 00:06:25,400 --> 00:06:28,080 Speaker 1: But that's something they should have newsletters. They should talk 101 00:06:28,120 --> 00:06:33,600 Speaker 1: in the public, not use the courts. Well, Eric, a 102 00:06:33,640 --> 00:06:35,920 Speaker 1: lot of people use the courts for this reason. And 103 00:06:36,120 --> 00:06:39,760 Speaker 1: what they're saying is that the public is not getting 104 00:06:39,800 --> 00:06:43,480 Speaker 1: the right information out there. And aren't you allowed to 105 00:06:43,600 --> 00:06:47,000 Speaker 1: use the courts if you see false advertising? In about 106 00:06:47,040 --> 00:06:52,520 Speaker 1: thirty seconds? Yeah, I mean false advertising is illegal. Um. 107 00:06:52,560 --> 00:06:55,960 Speaker 1: Misleading the public to sell your goods is illegal. Whether 108 00:06:56,200 --> 00:06:59,479 Speaker 1: or not the facts in the soda case will bear 109 00:06:59,520 --> 00:07:02,880 Speaker 1: out that happened, that's for the court to decide. But 110 00:07:02,960 --> 00:07:06,440 Speaker 1: if you think a company has misled the public to 111 00:07:06,520 --> 00:07:09,560 Speaker 1: sell its goods, that's what courts are there for, and 112 00:07:09,680 --> 00:07:12,880 Speaker 1: that's why they're anti fraud and consumer protection laws. We're 113 00:07:12,920 --> 00:07:17,080 Speaker 1: talking about a suit by activists against Coca Cola alleging 114 00:07:17,080 --> 00:07:20,559 Speaker 1: its advertising tactics have deceived the public about the health 115 00:07:20,680 --> 00:07:23,960 Speaker 1: risks of sugary drinks and comparing it to the tobacco 116 00:07:24,080 --> 00:07:27,720 Speaker 1: industries efforts in the past that minimizing the health effects 117 00:07:27,720 --> 00:07:31,040 Speaker 1: of its products. Our guests are Eric Gordon, professor at 118 00:07:31,040 --> 00:07:33,600 Speaker 1: the University of Michigan Law School and the Stern School 119 00:07:33,600 --> 00:07:36,960 Speaker 1: of Business, and Victor Schwartz, General counsel to the American 120 00:07:37,040 --> 00:07:42,480 Speaker 1: Tort Reform Association. Victor, you've you've mentioned that you don't 121 00:07:42,480 --> 00:07:44,640 Speaker 1: think this is a kind of a lawsuit that even 122 00:07:44,680 --> 00:07:49,200 Speaker 1: should be in the courts. But will. What are the 123 00:07:49,280 --> 00:07:53,280 Speaker 1: plaintiffs hoping to accomplish here? What are they asking the 124 00:07:53,320 --> 00:07:59,440 Speaker 1: court for. Well, they want to have an injunction against advertising, 125 00:07:59,560 --> 00:08:05,080 Speaker 1: stopping it advertising that they believe it is inappropriate, and 126 00:08:05,120 --> 00:08:09,760 Speaker 1: they want to have damages that they believe resulted in 127 00:08:10,040 --> 00:08:14,680 Speaker 1: adverse effects on people's health. Eric, I want to return 128 00:08:14,720 --> 00:08:18,200 Speaker 1: to the subject of the tobacco industry and the comparison there. So, 129 00:08:18,200 --> 00:08:20,040 Speaker 1: so let me make the case for the other. For 130 00:08:20,040 --> 00:08:22,800 Speaker 1: for the plaintiffs here, they say, um, this is just 131 00:08:22,920 --> 00:08:25,720 Speaker 1: like tobacco. You've got a product that you know, sugar water, 132 00:08:25,800 --> 00:08:29,280 Speaker 1: that has no nutritional value. It's it's addictive, it has 133 00:08:29,360 --> 00:08:33,000 Speaker 1: detrimental health consequences, and you have a company that has 134 00:08:33,000 --> 00:08:37,360 Speaker 1: been misleading the public about those consequences. Where does that 135 00:08:38,040 --> 00:08:43,480 Speaker 1: comparison go wrong in your view? Here's here's one difference. 136 00:08:44,240 --> 00:08:47,920 Speaker 1: If you smoked cigarettes, you you couldn't say, well, I'm 137 00:08:47,960 --> 00:08:52,440 Speaker 1: smoking a cigarette instead of something else, or you know, 138 00:08:52,760 --> 00:08:55,400 Speaker 1: if I smoke the cigarette, I can give something else 139 00:08:55,520 --> 00:08:58,920 Speaker 1: up and still be healthy. You can drink a can 140 00:08:58,960 --> 00:09:02,559 Speaker 1: of Coca Cola, give up a bag of French fries 141 00:09:02,720 --> 00:09:06,839 Speaker 1: and probably be actually probably be better off. Um So 142 00:09:07,120 --> 00:09:09,160 Speaker 1: in the tobacco thing that there was just sort of 143 00:09:09,240 --> 00:09:12,760 Speaker 1: no way. If you smoke cigarettes, you're probably gonna get 144 00:09:12,880 --> 00:09:17,319 Speaker 1: lung cancer. Here the here, the consumers have more choices, 145 00:09:18,120 --> 00:09:22,520 Speaker 1: but it's a really dangerous comparison because if it holds up, 146 00:09:23,240 --> 00:09:29,080 Speaker 1: it could put Coca Cola out of business. Victor is 147 00:09:29,160 --> 00:09:32,520 Speaker 1: Coke being singled out here for some reason as opposed 148 00:09:32,559 --> 00:09:37,240 Speaker 1: to the other giant soda companies. Well, I don't know. 149 00:09:37,360 --> 00:09:40,840 Speaker 1: I didn't follow this complaint, and so I don't know 150 00:09:40,960 --> 00:09:45,960 Speaker 1: their motivation at all as to why Coca Cola versus 151 00:09:46,000 --> 00:09:50,880 Speaker 1: anybody else, But it's big. And in general, when lossuits 152 00:09:50,920 --> 00:09:54,000 Speaker 1: of this kind or brought, they try to go after 153 00:09:54,320 --> 00:09:59,800 Speaker 1: the biggest what I call deep pocket jurisprudence, and that 154 00:10:00,120 --> 00:10:04,679 Speaker 1: support the motivation, and it's expensive to defend these things, 155 00:10:04,760 --> 00:10:07,520 Speaker 1: so I don't know what the motivation is, but I 156 00:10:07,559 --> 00:10:10,199 Speaker 1: do agree with what the professor said about the difference 157 00:10:10,200 --> 00:10:14,319 Speaker 1: between the tobacco cases. Tobacco was not regulated, there was 158 00:10:14,360 --> 00:10:18,160 Speaker 1: a long history. There's no real alternative to a smoker. 159 00:10:18,880 --> 00:10:22,520 Speaker 1: We have so much information now, we're blessed in this age. 160 00:10:23,440 --> 00:10:26,480 Speaker 1: This isn't the thirties or forties or even the sixties. 161 00:10:26,520 --> 00:10:30,199 Speaker 1: We have so much information and it's in the public realm, 162 00:10:30,480 --> 00:10:32,839 Speaker 1: and the public is not stupid, and they can make 163 00:10:32,880 --> 00:10:36,400 Speaker 1: their choices, and that's what society is about. We have 164 00:10:36,480 --> 00:10:40,760 Speaker 1: a government that regulates food highly. I'm in Washington, goodness me. 165 00:10:40,880 --> 00:10:44,400 Speaker 1: You see regulations every week. They pour out and the 166 00:10:44,440 --> 00:10:47,600 Speaker 1: courts are not the place to do this. And some 167 00:10:47,679 --> 00:10:50,800 Speaker 1: of these suits, they're almost funny. They sued uh and 168 00:10:50,880 --> 00:10:55,760 Speaker 1: claimed there was misleading activity by Staunched, misleading by a 169 00:10:55,800 --> 00:10:59,760 Speaker 1: serial company that made Captain Crunch's berries because the berries 170 00:10:59,800 --> 00:11:03,360 Speaker 1: were real berries. Well everybody knew that. So the case 171 00:11:03,440 --> 00:11:07,040 Speaker 1: was tossed, and I think ultimately that will happen with 172 00:11:07,080 --> 00:11:10,160 Speaker 1: this suit. Nobody can predict the future, as the professor knows, 173 00:11:10,200 --> 00:11:12,960 Speaker 1: but at least based on my stoff dealing with tourt 174 00:11:13,040 --> 00:11:16,200 Speaker 1: law for now fifty years. UM. I don't think this 175 00:11:16,240 --> 00:11:18,200 Speaker 1: one will last, but it'll get a lot of headlines 176 00:11:18,360 --> 00:11:20,560 Speaker 1: and it'll get a lot of publicity, which is doing 177 00:11:20,679 --> 00:11:22,800 Speaker 1: right now. Eric, We've only got about thirty seconds. But 178 00:11:22,840 --> 00:11:25,000 Speaker 1: I'm wondering would this be a stronger lawsuit if it 179 00:11:25,040 --> 00:11:27,920 Speaker 1: were filed by consumers who could say I was actually 180 00:11:28,000 --> 00:11:31,360 Speaker 1: misled by Coca Cola and I suffered these health consequences. 181 00:11:31,520 --> 00:11:34,360 Speaker 1: I think so making that link would have been stronger. 182 00:11:34,760 --> 00:11:37,920 Speaker 1: It's interesting that the government didn't file the suit, you know, 183 00:11:38,040 --> 00:11:40,640 Speaker 1: in the end, in the tobacco suits, it was filed 184 00:11:40,679 --> 00:11:46,000 Speaker 1: by the government. This is filed by two nonprofit organizations, UM, 185 00:11:47,000 --> 00:11:49,920 Speaker 1: who had to use their own resources to file this suit. 186 00:11:49,960 --> 00:11:52,480 Speaker 1: So I don't think they've done it trivially. They they've 187 00:11:52,520 --> 00:11:55,080 Speaker 1: spent some money to make this happen. Thank you both 188 00:11:55,120 --> 00:11:58,120 Speaker 1: for being on Bloomberg Law. That's Eric Gordon, professor at 189 00:11:58,160 --> 00:12:00,760 Speaker 1: the University of Michigan Law School on this Stern School 190 00:12:00,760 --> 00:12:04,079 Speaker 1: of Business, and Victor Schwartz, general counsel to the American 191 00:12:04,120 --> 00:12:08,360 Speaker 1: Tort Reform Association, coming up on Bloomberg Law. Class actions 192 00:12:08,400 --> 00:12:11,600 Speaker 1: are often a controversial area, and now the Ninth Circuit 193 00:12:11,960 --> 00:12:15,240 Speaker 1: has widened the split among the circuit courts over one 194 00:12:15,360 --> 00:12:18,120 Speaker 1: aspect of starting a class action. We're going to be 195 00:12:18,200 --> 00:12:22,079 Speaker 1: talking about that coming up on Bloomberg Law. It involves 196 00:12:22,160 --> 00:12:27,600 Speaker 1: the one natural labels on Western cooking oils. That's coming 197 00:12:27,679 --> 00:12:31,000 Speaker 1: up on Bloomberg Law. I'm June Grosslo with Greg Stoor. 198 00:12:31,280 --> 00:12:32,319 Speaker 1: This is Bloomberg