(Taco Bell 'meat' lawsuit dropped report updated with news of ad campaign launched by Taco Bell.)
NEW YORK (TheStreet) -- Yum! Brands' (YUM) - Get Report Taco Bell no longer faces a false-advertising class-action lawsuit alleging the fast-food chain's taco meat filling did not contain enough real beef after the law firm voluntarily withdrew the suit.
Taco Bell said Tuesday that Alabama-based Beasley Allen law firm voluntarily dropped the class-action lawsuit against it.
The suit was first filed on Jan. 19, claiming that the Mexican-style fast-food chain does not put enough real beef in its tacos to accurately call the filling beef.
The law firm said it withdrew the lawsuit after Taco Bell altered its marketing and product disclosure.
Taco Bell CEO Greg Creed argued that the chain made no such changes to its marketing nor products, and that Beasley's claims against it were "absolutely wrong," leading the firm to withdraw its allegations.
On Wednesday Taco Bell announced it would launch a national ad campaign to let consumers know it had not changed its products, ingredients or advertising as a result of the lawsuit.
"We stand behind the quality of every single one of our ingredients, including our seasoned beef, and we want consumers to know that we didn't change our marketing or product because we've always been completely transparent," Creed said in the announcement.
Taco Bell said it would place full-page ads in national publications including the
Wall Street Journal
New York Times
and 8 local market newspapers. A campaign to reach Hispanic customers will also be launched, as well as a YouTube video placed on the company's YouTube channel, Facebook page and company Web site.
The ad's headline reads: "Would it kill you to say you're sorry?"
On Tuesday, Creed declared that the withdrawn lawsuit "is a victory for truth over fiction and we're glad the lawyers voluntarily withdrew their case once they learned the truth."
When the suit was first filed in January, Taco Bell fought back aggressively, threatening to take legal action against what it called "false statements" regarding the food it serves. The company called the lawsuit "bogus and filled with completely inaccurate facts."
Ahead of the suit, Taco Bell had already listed the ingredients of its products on the company Web site, and claimed that 88% of its taco filling contained USDA-inspected beef, which is substantially more than the 35% the lawsuit's plaintiffs claimed.
Taco Bell also launched an advertising campaign to "set the record straight," placing full-page ads in the
Wall Street Journal
The New York Times
and other newspapers, along with online ads as well.
"Thank you for suing us. Here's the truth about our seasoned beef," the print ads read, following with an outline of their beef tacos' ingredients.
The advertising campaign cost Taco Bell between $3 million and $4 million.
Creed could not comment on any specific financial losses the company may have faced as a result of the lawsuit because it was in a mandatory quiet period ahead of owner Yum! Brands' earnings release, due out on Wednesday.
Yum! is also the parent company of Pizza Hut and KFC chains. Taco Bell sales make up about 60% of all of Yum's! U.S.-based profits.
In early February Yum! CEO David C. Novak conceded that the lawsuit had a "negative, short-term impact" on Taco Bell, but that it had "turned the tide" following its aggressive response to the allegations.
Class-action lawsuits based on false advertising and misrepresentation are increasingly common, said attorney Marc E. Williams, a partner at Huntington, W. Va.-based firm Nelson Mullins, who views the suit brought against Taco Bell as a classic example of this sort of litigation.
Even so, Williams told
earlier this year that despite most states' consumer statute protections that tend to favor the plaintiffs, the plaintiffs in this case had "an uphill battle unless they can show an actual misrepresentation as to the amount of beef involved" in Taco Bell's meat tacos.
Taco Bell's Creed said then that the fast-food chain cooks only beef that is inspected by the USDA, simmering it in a "proprietary blend of seasonings and spices."
Nelson Mullins' Williams, a past president of
DRI - The Voice of the Defense Bar, said that Taco Bell "took an extremely aggressive approach in their response, which they should, if they've determined that they're right. Class-action litigation is high-stakes litigation."
He added that if Taco Bell hadn't forcefully responded to the allegations brought against it, the company ran the risk of allowing the accusations to become part of a harmful conventional wisdom about their product, a scenario that brings to mind the similar -- and false -- urban myth that Kentucky Fried Chicken, also owned by Yum!, changed its name to KFC because it served genetically engineered meat that didn't qualify as chicken.
Not too long ago fast-food chain
faced allegations -- also false -- that a woman had found part of a human finger in her chili.
"The last thing you want is to become part of that kind of common lexicon," Williams said. "We can assume that if
Taco Bell takes that kind of response they analyzed the case and determined they can prevail."
The suit said Taco Bell's ground beef includes ingredients such as water, isolated oat product, an anti-dusting agent, an anti-caking agent and modified corn starch, as well as beef and seasonings.
The U.S. Department of Agriculture defines beef as "flesh of cattle." It says that "ground beef can have seasonings, but no water, phosphates, extenders or binders added."
Just 35% of what Taco Bell calls its "taco meat filling's" ingredient list was a solid and just 15% of it qualified as protein, according to attorney W. Daniel "Dee" Miles III of the Montgomery, Ala., law firm Beasley Allen, which filed the suit.
The Taco Bell Web site says that its taco meat "is made from USDA-inspected beef and is subjected to quality check points. It tastes great because it's simmered in 12 authentic seasonings and spices and is never frozen. Moreover, our taco meat is leaner than what you'll find in a restaurant-cooked hamburger because of the unique way that we prepare our taco meat and remove fat."
The site does list water, soybean oil (the anti-dusting agent), oats, isolated oat product, cocoa powder (processed with alkali) and modified corn starch, among other things, in the ingredients of its seasoned ground beef.
Taco Bell's Creed argued that "our seasoned beef recipe contains 88% quality USDA-inspected beef and 12% seasonings, spices, water and other ingredients that provide taste, texture and moisture. The lawyers got their facts wrong. We take this attack on our quality very seriously and plan to take legal action against them for making false statements about our products. There is no basis in fact or reality for this suit and we will vigorously defend the quality of our products from frivolous and misleading claims such as this."
Moreover, those USDA rules are meant for the meat processors from whom Taco Bell and other restaurateurs and food outlets get their meat. Taco Bell sources its meat from
Yum!'s Taco Bell unit operates, manages or franchises at least 5,600 restaurants in the U.S.
-- Written by Miriam Marcus Reimer in New York.
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