Every citric acid labeling case forces a business decision. The factors driving the decision can easily be sketched out on a simple graph with two lines. On one line, graph the costs of substantively defending a characterizing-flavor lawsuit—motions, discovery, experts, attorney hours. That line rises steeply and quickly. On the second line, plot the cost of settlement. This line is usually flat, often pegged almost entirely to the number of units sold. For products with thousands of units sold, not tens of thousands or millions, the two lines cross very early in the graph. That crossover point is where the cost of defense outpaces the economic value of the product at risk. The fewer the number of units sold, the smaller the damages. When defending citric acid lawsuits, make the settlement opportunity by curating high- fidelity sales data.
The Psychology of Settlement
There isn’t a CEO in the food business who doesn’t hate settling these suits. It feels to them like they are paying a meritless claim. But this can’t be about ego. It’s just a business decision. Early settlement caps exposure in a way litigation cannot. When sales are in the low thousands of units, settlement is almost always the economically sound choice.
How to Make the Settlement Opportunity
Settling actually returns a measure of control to the food manufacturer. With the right data, the food business can “make” the settlement figure during the negotiation. Open negotiations with plaintiffs’ counsel by presenting a credible count of units actually sold at retail. In most unfair practices laws, each sale constitutes the potential “violation”. A smaller, defensible sales count drives a lower opening demand.
The food manufacturer originates all of the data. The farther the products get from the factory floor, the harder it becomes to track sales with granularity. The key consideration is to count what sold, not what merely exists in the pipeline:
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Do not state units produced—that number is largest and does not reflect sales.
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Do not include distributor warehouse inventory. These products have not sold yet. No sale, no “violation.”
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Aim to report units actually sold at retail; where feasible, exclude on-shelf inventory that has not crossed the scanner.
When defending citric acid lawsuits, make the sensible settlement opportunity for yourself with accurate sales data. The final figure must carry a good-faith rationale (e.g., POS reports, retailer deducts/returns, shipment-to-sale conversion, or audited sell-through). A tight, well-supported sales count anchors settlement and keeps exposure grounded in reality. We do not lie or misrepresent to plaintiff’s counsel, but we do not need to give them the opportunity to inflate sales.
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