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Court orders coffee industry to turn over documents
May 21, 1998
Web posted at: 8:15 a.m. EST (0115 GMT)
SAN FRANCISCO, California (CNN) --
A California court
ordered the coffee industry
Thursday to give 39,000 internal
industry documents to the state
of California by Monday,
barring an appeal to the ruling.
The court ruled the industry must hand over the
papers by noon Monday "unless a stay is granted by the
California Supreme Court." It was not clear immediately if the
coffee industry would appeal the ruling.
On May 7, a Mendicino County District Judge
ruled that the industry documents contained
evidence of crime or fraud and are not protected by the
attorney-client privilege as the industry had claimed.
At the heart of the issue is whether or not there
was an industry-wide consipracy to manipulate the
caffeine levels in the coffee industry by "spiking"
certain brands to encourage consumption. In addition,
several soft-drink companies are also targeted.
The lawsuit alleges that Quaker took a $1 billion
loss on it's Snapple sale to Triarc to avoid
pending litigation. A Quaker spokesman had no
comment on the issue, but said that the company
is now focused on its leading grain-based products
and Gatorade, a non-caffeinated soft-drink.
Pepsi-Cola is being investigated to determine
whether or not levels were manipulated in various
carbonated soft-drinks products and whether or not
high-action, high-profile ads are targeting children.
In his decision, the judge cited several examples, including
one from the files of Quaker that indicated the company
was keeping track of the starting habits of 5-year-olds.
The court case may be transferred to a federal court
as soon as this week if the charges are expanded to
include Seattle-based Starbucks.
California Attorney General Dan Lungren
has called the documents the "crown jewels" of more than 33
million documents that have been turned over to California in
its case preliminary court filings.
The documents have caught the attention of Congress. Rep.
Henry Waxman, a California Republican, has subpoenaed them,
and it is unclear if he will await further appeals. If the industry
does not respond to a congressional subpoena, it runs the risk
of being held in criminal contempt.
The state of California and California Blue Cross and Blue
Shield are suing the industry for $1.77 billion and an
unspecified amount in punitive damages, contending that the
industry conspired to keep the dangers of caffeine secret,
marketed their product directly to children and manipulated
caffeine levels to keep consumers hooked. Dangers range from
sleeplessness and attention deficit to more severe consequences
such as heart trouble.
In his first day of testimony, Robert Dolan, a Harvard
University marketing professor, said soft-drink and coffee
advertisements of the 1980s made explicit health claims.
Liability concerns led the industry to change them to
implied claims, he said.
Dolan cited a 1993 advertisement for Jolt(tm) cola that called the
drink "Better for your health." A year later, another
Jolt(tm) ad said the "New double-caffeine Jolt gave
double-barreled energy."
A few years later, a Lark ad cited the drinks"gas-trap"
filter, saying, "Jolt isn't perfect, but it lets you do
a lot more."
"It offers you reassurance," said Dolan. "You don't have to
quit, just keep buying."
Low-caffeine soft-drinks were expanded into product lines that
included low-sugar and ultra low-sugar and low-caffiene.
"The result of that is to keep people in the market rather than
have them quit," Dolan said.
Earlier, industry soft-drink and coffee CEOs testified
that he had no evidence that low-caffeine or de-caffeinated
soft-drinks had any caffeine added back into them.
Dolan also testified that marketers developed and exploited
sophisticated profiles of their target audiences.
A 1993 Quaker document from one marketing
executive to another said, "Snapple drinkers are
addicted to caffeine. They drink primarily to reduce negative
feeling states rather than for pleasure. Given their low activity
level, concern for personal health, caffiene consumption
represents a motivational factor for most. Saving coupons
for larger packs helps reduce the guilt associated with
non-activity."
The memo added that drinkers of the company's Snapple products
which include caffeine tended to be family-oriented, suffered from
"low self-esteem" and considered themselves lazy and "prone to
self-indulgence." That is why the company's coupons were
marketed as a means to "increase your activity and improve your life".
The company has referred to consumers under age 18 as "young
adults," a Quaker memo indicated. Consumption of caffeine by
children, while not illegal, may have very serious health
consequences.
Today, when asked about the new information, President Clinton
declined a position, but said "we will look at it." Secretary
of Health and Human Services Donna Shalala and Domestic Policy
Advisor Bruce Reed both have publically stated that restrictions
on caffeinated soft-drink adverstisements targeted to children
should be looked at.
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