Tuesday, April 26, 2011
Taco Bell Might Sue the Law Firm That Sued It
Taco Bell might sue the Alabama law firm that filed a lawsuit against it, claiming the company's meat products do not meet the definition of beef as spelled out in federal guidelines.
The Beasley Allen law firm, of Montgomery, announced last week that it had dropped the lawsuit because Taco Bell had made "changes in marketing and product disclosure." But Taco Bell officials said they had changed nothing as a result of the lawsuit, emphasizing that no money was exchanged and no settlement agreement was reached.
Greg Creed, CEO of Taco Bell, said the company could sue Beasley Allen, and it probably has several viable legal avenues to pursue. "I'm definitely sure that we could sue them for the damage they have caused to our brand," Creed told CNN.
News reports indicate the lawsuit indeed caused damage. Christian Science Monitor reports that Taco Bell spent $3 to $4 million for a nationwide advertising campaign to combat charges raised in the lawsuit. Associated Press reports that Taco Bell's first-quarter operating profit declined 13 percent.
Beasley Allen has pretty much gone into hiding since dropping the lawsuit. Dee Miles, chief attorney on the case, has not been available for interviews. I sent an e-mail last Thursday to partner Jere Beasley, requesting an interview about the Taco Bell lawsuit. He has not responded.
What grounds does Taco Bell have for a lawsuit against Beasley Allen? I don't pretend to be an expert on business torts, but I suspect some form of tortious interference might be one route. The company probably has a case for malicious prosecution and abuse of process. Both of those torts involve misuse of the legal process to intentionally cause harm to an individual or entity.
From Taco Bell's perspective, the best part of a lawsuit might be the opportunity to expose some embarrassing information about the Beasley Allen firm. And we know that such information exists.
As we reported last week, the firm has worked several times with Birmingham lawyer Rob Riley, the son of former Governor Bob Riley. According to a federal whistleblower lawsuit, filed in the Northern District of Alabama, Rob Riley has engaged in Medicare fraud and other unlawful activities through a company he owns called Performance Group LLC.
U.S. District Judge William M. Acker, an 83-year-old Reagan appointee, dismissed the whistleblower case without prejudice after refusing to give the government an extension of time to investigate the claims. Such extensions routinely are granted in cases brought under the U.S. False Claims Act, so Acker's actions appear to be an effort to protect a member of a prominent Republican family.
A dismissal without prejudice means the claims can be refiled, and Rob Riley might be in serious trouble if the case ever lands with a legitimate judge who isn't trying to cover up for him.
Meanwhile, a Taco Bell lawsuit might give the company an opportunity to look into Beasley Allen's dirty laundry, especially its ties to Rob Riley. That definitely would make me want to think outside the bun.
Below is CNN's report about dismissal of the lawsuit, and Taco Bell's Greg Creed makes it clear he is not real happy with a certain Alabama law firm.
Update (10:15 p.m. CDT, April 26)--Rob Poetsch, a spokesperson for Taco Bell, contacted us this evening and said the company has not made a decision about suing the Beasley Allen firm. Poetsch said CEO Greg Creed's statement to CNN was that the company definitely "could" sue the law firm, and our post has been updated to include that correction. States Poetsch: "To clarify, Taco Bell has not announced that it will sue the law firm, however we have said that we are meeting with our franchisees to discuss all legal options. Right now we are focused on communicating that the suit has been voluntarily dismissed, and that this sets the record straight about the high quality of our seasoned beef."