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Pirate Brands, the makers of Pirate's Booty, succeeded in having six class-action lawsuits that had been filed against them by the same law firm before being consolidated dismissed this week.
The lawsuits had claimed that Pirate Brands misled consumers by labeling the company's products as "all natural." But the dismissals offer some lessons in how to combat an increasingly common form of class action lawsuit in which lawyers try to drive up the costs of litigation in order to promote a settlement, reports Forbes. These settlements often result in millions of dollars in legal fees for the law firm, but meager damages for class members.
What did Pirate Brands do to help themselves come out on top? Here are three lessons for business owners:
1. Find the Right Lawyers.
The lawsuits in this case were brought by a law firm specializing in bringing this sort of class action claim, reports Forbes. To defend against the suits, Pirate Brands found a boutique law firm with its own specialty: defending businesses from consumer class action lawsuits.
The takeaway: The same law firm that handles your everyday legal needs may not necessarily be the right fit for every situation. Taking the time to find a law firm that has developed specialized strategies for a specific situation may be worth the extra time and effort.
2. Find Out More About the Plaintiffs.
The law firms may not be the only ones specializing in class action lawsuits. Among the strategies employed by Pirate Brands' lawyers in these cases was investigating the relationship between the law firm that had filed the lawsuits and the named plaintiffs in the class action. In many cases, the plaintiffs may be the same plaintiffs from previous or subsequent copycat cases.
3. Know That a Settlement Isn't Your Only Option.
Depending on the merits of the case and the cost of litigation, settlement may often be the best or most efficient option. However, as more companies fight back against lawsuits aimed at lucrative settlements, many are finding that they may ultimately be able to prevail -- not only in court, but also in discouraging these types of pernicious consumer class action lawsuits.