Yum!'s Taco Bell 'Meat' Prompts Lawsuit

(Taco Bell "taco meat filling" lawsuit report updated with further comment from Taco Bell president Greg Creed.)
LOUISVILLE, Ky. (TheStreet) -- Yum! Brands' (YUM) Taco Bell is facing a false-advertising lawsuit, and the fast-food chain is fighting back.


Taco Bell came under scrutiny after a class-action lawsuit was filed against it on Jan. 19, alleging that the Mexican-style fast-food chain does not put enough real beef in its tacos to accurately call the filling beef. The U.S. Department of Agriculture defines beef as "flesh of cattle."

The class-action lawsuit, filed last week on behalf of Amanda Obney of California and which does not seek monetary compensation save for attorneys' fees and costs, claims that Taco Bell calls its products "seasoned ground beef or seasoned beef, when in fact a substantial amount of the filling contains substances other than beef."

Taco Bell responded to the suit Tuesday, saying it plans to take legal action against what it called "false statements" regarding the food it serves. The company later updated its statement on Wednesday, calling the lawsuit "bogus and filled with completely inaccurate facts."

Then on Friday Taco Bell launched an advertising campaign to "set the record straight," placing full-page ads in the Wall Street Journal, USA Today, 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.

**Taco Bell president and chief concept officer, Greg Creed, said "we've been falsely accused and our reputation has been tarnished. And we're going to aggressively defend ourselves. The facts in this case are clear."

Creed insisted Taco Bell's taco meat filling contains 88% beef, which is substantially more than the 35% the lawsuit's plaintiffs claimed.

Those claims were "ludicrously low and so far from the truth," Creed said in an appearance on CNBC Friday morning. "The difference is so huge and...our customers deserve to know that our seasoned beef is of the highest quality."

Creed wouldn't talk to specifics about whether Taco Bell sales have suffered since the claim was filed last week, but spoke of customers, employees, store managers and Facebook fans rallying around the brand and supporting its counter-claims.

The Taco Bell president said he was "humbled by the support."

Creed told CNNMoney that he plans to meet with outside counsel to discuss the possibility of taking legal action on the "egregious" claims being brought against Taco Bell.**

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 TheStreet that despite most states' consumer statute protections that tend to favor the plaintiffs, the plaintiffs in this case "have 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 the fast-food chain cooks only beef that is inspected by the USDA, simmering it in a "proprietary blend of seasonings and spices" to create the signature taste and texture its customers love.

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 Wendy's ( WEN) 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," he said. "We can assume that if Taco Bell takes that kind of response they analyzed the case and determined they can prevail."

Williams said he would advise his corporate clients to take a similarly aggressively response as Taco Bell did, though he conceded that a lot of companies are reluctant to engage in forceful, hardball responses to such allegations. Considering the potential damage to Taco Bell's brand image, it was the right move, he said, as long as the company is right.

"The worst thing that could happen for Taco Bell would be if the plaintiff's allegations were true," Williams told TheStreet.

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 USDA 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.

Taco Bell's Creed countered 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 Tyson Foods ( TSN).

Williams said it would be difficult to show that Taco Bell misrepresented the facts. Just because an ingredient list shows preservatives and other fillers as well as beef, he said, it likely doesn't change consumers' opinions that they're purchasing and eating beef tacos.

Williams said FDA requirements may not translate to what should or should not be stated in an advertisement for beef tacos. "We don't require Taco Bell to list all the ingredients in their commercial," he said. "If you're selling ground beef tacos as a finished processed product, it's a dangerous assumption that the FDA definition of ground beef necessarily translates."

The lawsuit argued that "Taco Bell's definition of 'seasoned beef' does not conform to consumers' reasonable expectation or ordinary meaning of seasoned beef, which is beef and seasonings."

"Unfortunately, the lawyers in this case elected to sue first and ask questions later -- and got their 'facts' absolutely wrong," Taco Bell's Creed said.

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 latest statement regarding the lawsuit said its seasoned beef includes ingredients found in home kitchens and supermarkets:

  • 88% USDA-inspected quality beef
  • 3-5% water for moisture
  • 3-5% spices (including salt, chili pepper, onion powder, tomato powder, sugar, garlic powder, cocoa powder and a proprietary blend of Mexican spices and natural flavors)
  • 3-5% oats, starch, sugar, yeast, citric acid, and other ingredients that "contribute to the quality of our product"
  • "You can't call it beef by definition," Miles, the suit's litigator, said. "It's junk. I wouldn't eat it."

    "We're going to move forward and I believe we're going to be successful," he said.

    In order for the plaintiffs to win the case, Nelson Mullins' Williams said, they would have to prove material misrepresentation on the part of Taco Bell -- that the food chain made false statements for the purpose of persuading consumers to purchase beef tacos that they wouldn't otherwise have bought if they knew the reality -- and that consumers were damaged in some way by that misrepresentation.

    The complaint said that: "During the relevant time period plaintiff was exposed in California to defendant's advertising and labeling claims that the subject "beef" food items were filled with "seasoned ground beef" or "seasoned beef." Based on these representations, as well as the reasonable belief that defendant would accurately and honestly describe its products, plaintiff believed the taco meat filling was seasoned beef and, in reliance thereon, purchased the food items, thereby suffering injury in fact and losing money as a result of the alleged conduct. Plaintiff wanted to purchase beef-filled food items from Taco Bell, but did not receive what she believed she was purchasing."

    Taco Bell told Alabama television station WSFA-TV 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."

    Several Taco Bell menu items offer customers the choice of chicken, beef or carne asada steak. The lawsuit claimed that "the 'chicken' and 'carne asada steak' served by Taco Bell is, in fact, chicken and carne asada steak. The 'seasoned beef,' however, is not beef."

    Williams concluded that "most class-action lawsuits filed in this country are manufactured by lawyers who recruit plaintiffs," referencing the fact that the plaintiffs made no financial claims for compensation. He said that often in class actions, lawyers spot the potential for a claim against a company and then go out and actively recruit plaintiffs, all in the pursuit of generating fees for the lawyers.

    "Anytime class actions have no monetary claims except for fees and costs I get suspicious," Williams said, and "Alabama has been a hot bed for this sort of litigation for years."

    Yum! shares fell 4% to close at $47.59 on Thursday, and were 1.9% lower at $46.68 on Friday.

    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.

    >To contact the writer of this article, click here: Miriam Reimer.

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