Defending Citric Acid Lawsuits: Make the Settlement Opportunity
Every citric acid labeling case forces a business decision. The factors driving the decision can be sketched out on a simple graph with two lines. On one line, plot 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. That crossover point is where the cost of defense outpaces the economic value of the product at risk. The fewer the units sold, the smaller the damages. When defending citric acid lawsuits, make the settlement opportunity by curating high-fidelity retail-sales data.
The Psychology of Settlement
There isn’t a CEO in the food business who doesn’t hate settling these suits. It feels like paying a meritless claim. But this cannot be about ego — it is 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 products get from the factory floor, the harder it becomes to track sales with granularity. The key is to count what sold, not what merely exists in the pipeline:
- Do not state units produced — that number is largest and does not reflect sales.
- Do not include distributor warehouse inventory. These products have not sold yet. No sale, no “violation.”
- Aim to report units actually sold at retail; where feasible, exclude on-shelf inventory that has not crossed the scanner.
What a credible retail-sales count looks like (anonymized sample)
| Data layer | Units | Use in negotiation |
|---|---|---|
| Units produced (factory) | 250,000 | Do not offer — overstates exposure |
| Shipped to distributors | 180,000 | Not yet “sold” — exclude warehouse inventory |
| Shipped to retailers | 120,000 | Closer, but still includes on-shelf stock |
| Sold at retail (POS / scanner) | 74,300 | The defensible count — anchors the demand |
| Less retailer returns / deducts | (3,100) | Documented sell-through adjustment |
| Net units sold (settlement basis) | 71,200 | Good-faith figure with POS support |
Illustrative only; real numbers come from the client’s POS reports, retailer deducts/returns, and shipment-to-sale conversion. 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.
Served with a complaint or a demand letter? These notices carry hard response deadlines. Request same-day intake — call (800) 559-4628 or schedule a consultation with one of our attorneys.
Better than settling at all: the next article explains how to prevent citric acid lawsuits with a General Counsel before a complaint ever lands.
Jason Foscolo
Founder of The Food Law Firm — fractional general counsel for food & beverage businesses nationwide.