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WeeklySEpTEmbEr 14, 2012
Four Ways Plaintiffs’ Lawyers Leverage Google to Stir Food-Safety Fears
Michael Volkov & Julie Grohovsky: Two Views on Whistleblowers, Dodd-Frank, & the False Claims Act
Game-Changer: Qatar Plays Historic Role in Glencore’s Bid for Xstrata
Fred Krebs on the Role of General Counsel
richard S. Levick, Esq.Originally Published on Fastcompany.com
Despite the fact that America’s food safety
infrastructure is the most efficient and ef-
fective in the world, the International Food
Information Council Foundation’s 2012 Food
and Health Survey found that only 20 per-
cent of Americans are “very confident” in
food supply safety. At the same time, one
in six U.S. consumers has stopped buying a
particular food or beverage brand because
of safety concerns in the last twelve months.
Given the rash of high-profile food recalls
we’ve seen since 2007, the figure is under-
standable, even if it isn’t backed up by hard
facts. Spinach, tomatoes, peanuts, lettuce,
ground beef, and a host of other kitchen table
staples all experienced significant incidence of
contamination in the last five years. The result-
ing consumer anxiety got so bad in 2009 that
Americans actually put their food safety fears
on par with worries about the War on Terror.
That’s a compelling statistic—and it ought to
make farmers and food manufacturers won-
der if there’s something else that is contrib-
uting to Americans’ fear of food. Even at the
2010 height of salmonella, listeria, and E. coli
outbreaks, the U.S. Centers for Disease Control
and Prevention released data showing that
only one in every 125 million meals served in
the U.S. had the potential to make a consumer
Four Ways PlaintiFFs’ laWyers leverage google to stir
Food-saFety Fears
Weekly
fatally ill. Science supports a conclusion that
the food we eat every day is, indeed, safe. So
why don’t Americans feel that way?
The answer lies in the fact that statistics can’t
compete with emotion when it comes to as-
suaging anxiety. Numbers don’t move people
the way that human drama does—and there
are no more dramatic events in the food
industry than when a person dies after eating
something she believed was safe.
This facet of human nature explains a large
part of the equation; but not all of it. There is
another factor at play, and it manifests itself in
the efforts of those with skin in the food-fear
game. Food industry adversaries—the plain-
tiffs’ bar chief among them—understand how
emotion impacts the marketplace. Even more
troubling for the food industry, they under-
stand how to manipulate digital and social
media strategies to ensure their emotional ap-
peals ring out in the marketplace.
By way of example, when we look at the
circumstances surrounding the recent salmo-
nella outbreak that killed two people, sickened
150, and originated at an Indiana cantaloupe
farm, we see just how effective their efforts
are at controlling the flow of information on
food safety issues. In other words, we see just
how good they’ve gotten at controlling search
results on Google, the venue more people turn
to for information than any other (digital
or otherwise).
Plaintiffs control the keywords. As of this writing, a Google search for
the term “cantaloupe outbreak” lists a law firm
as the top sponsored link. A search for “canta-
loupe lawsuit” returns six plaintiffs’ firm sites
on the first page. Industry messaging on safety
issues is nowhere to be found on the first page
of either of these searches. Bottom line—on
virtually every food outbreak issue, the plain-
tiff’s bar is masterfully controlling the dialogue
on Google.
Plaintiffs dominate the blogo-sphere. When users click those links
mentioned above, they are most often directed
to blog posts that outline how the industry
failed to keep cantaloupe consumers safe.
While the posts provide plaintiffs with an im-
portant messaging venue, the blogs themselves
ensure high search rank for the posts because
they are sources of the frequently-updated
content that attracts the Google spiders.
Plaintiffs use online video. A Google
Video search for “cantaloupe listeria
lawsuit” features two plaintiff-produced videos
in the top three results. Just like the blog posts
mentioned above, these videos don’t paint the
industry as a responsible steward of public
health. And as Google increasingly emphasizes
the spoken word over the written one, these
videos further optimize plaintiffs’ messaging.
Plaintiffs geo-target. As mentioned
above, a Google search for “cantaloupe
lawsuit” returns one plaintiff-maintained link.
At the same time, a Google search for “canta-
loupe lawsuit Kentucky” (one of the hardest hit
states during the outbreak) returns two spon-
sored links. That tells us that at least one firm
is targeting its efforts to the geographic areas
where its messages will resonate most.
What all of this means is that the plaintiffs’ bar
is operating in a virtual information vacuum
when contamination strikes the food and bev-
erage industry. “Within the legal community,
they are simply outworking and outsmarting
the other side when it comes to online com-
munication,” says Bob Hibbert, a partner at
Morgan Lewis & Bockius who has worked on
number of high-profile food safety issues. “It’s
clearly in the best interest of the food industry,
and of the people who represent it, to mount a
more effective response to this challenge.”
Fortunately, leveling the playing field doesn’t
require any great strategic leap. Food manu-
facturers need to understand that the same
tactics driving high levels of consumer anxiety
can be employed to diminish it as well. Specifi-
cally, food companies should:
own their risk terms and keywords. Plaintiffs’ keyword dominance exists
because food manufacturers don’t own the risk
terms that their consumers use to find infor-
mation on the latest safety crises. While they
likely optimize their Web properties for terms
related to their products (“tomato,” “spinach,”
”cantaloupe,” etc.), they don’t do the same for
terms such as “foodborne illness,” “recall,”
“lawsuit,” or “outbreak”—and that enables the
plaintiffs’ bar and other adversarial voices to
dominate the conversation. At the moment an
instance of contamination is discovered, food
companies need to engage in Search Engine
Optimization (SEO) and Marketing (SEM)
campaigns that rank their response messages
at the top of the list when their risk terms are
queried. Even better, food manufacturers that
do the same in peacetime not only eliminate
the need to scramble when trouble arises; they
create a compelling safety narrative that plain-
tiffs will have to overcome.
address the blogosphere. Plaintiffs’
attorneys maintain blogs as a means to
provide a steady stream of optimized content
that keeps their messages front and center on
search engines. They know that if they are ac-
tive all the time, the Google spiders will elevate
their sites when a food recall hits and it comes
time to troll for class action clients. By blogging
about all the ways they work to diminish the
possibility of contamination, food manufac-
turers can also create the salient, frequently-
updated content that ranks on Google when
consumers seek information on food safety.
Engage via video. Food manufacturers
that reach out to consumers with engag-
ing video content not only provide themselves
a leg up on the SEO front; they establish the
emotional connections needed to bridge the
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safety perception gap. Articulating food safety
statistics such as those cited above merely tells
people their food is safe. Video shows them why
they should consume with confidence. With
video content that highlights safety procedures
and the men and women charged with carrying
them out, food manufacturers can powerfully
articulate a commitment to safety that sticks
with their audience. By going a step further
with how-to videos that outline healthy food
preparation steps, they can themselves take on
the identity of true consumer advocates.
Be where the fear is. When an
outbreak does occur, the companies at
the center the problem—as well as those whose
brands may be tarnished by mere association—
need to target their messages to affected popu-
lations. Not only does geo-targeting streamline
their optimization efforts by focusing resources
where they are need most; it enables compa-
nies to directly reach the very consumers most
likely to change their buying and eating habits
as a result of a contamination incident.
Google is the portal by which consumers gain
or lose confidence in products and services.
As such, it is too important a venue for food
manufacturers to cede to their adversaries.
At a time when more than half of Americans
are concerned about the foodborne illness,
the industry has a compelling safety story to
share. With strategies that enhance Web opti-
mization, they can help ensure that a captive
audience is there to hear it.
Richard S. Levick, Esq., President and CEO of LEVICK,
represents countries and companies in the highest-stakes
global communications matters—from the Wall Street
crisis and the Gulf oil spill to Guantanamo Bay and the
Catholic Church.
L3.
Weekly
Michael Volkov, a shareholder in LeClairRyan, discusses the tough whistleblower laws that were
passed as part of the Dodd-Frank financial reform package. Whistleblowers that meet certain cri-
teria are now entitled to as much as 30 percent of all recoveries that result from their cooperation
with the government. That’s a powerful incentiveand it dictates an urgent need for companies to
ensure that employees report problems internally, before turning to regulators.
Michael volkov & Julie grohovsky:two views on Whistleblowers, dodd-Frank, & the False claims act
Julie Grohovsky, partner at Wu, Grohovsky & Whipple, discusses the importance of the False
Claims Act for combating fraud and protecting American tax dollars. Ms. Grohovsky particularly
stresses the significant impact of whistleblowers and the rewards that motivate them on exposing
fraud against the national treasury.
Weekly
Qatar Plays historic role in glencore’s Bid For Xstrata
gaMe- changer:richard S. Levick, Esq.Originally Published on Forbes.com
It is no doubt a matter of historical inter-
est when two companies like Glencore and
Xstrata engage in a high-profile yearlong
back-and-forth negotiation to create the
world’s largest mining concern. If the deal
gets done, the marketplace and shareholder
impact will be significant as it would
create a global commodities giant that
can compete with the likes of Rio Tinto
and Vale. The merger, worth around
$36 billion, would be the year’s biggest
corporate transaction.
Not just the wrangling over sale price, the
story is further vivified by the power struggle
over who will run the reconstituted entity. The
fact that Glencore was originally founded by
Marc Rich in 1974 and that its IPO set records
last year in London certainly adds more spice
to the stew.
All that said, the real historical significance of
this saga may have less to do with mining, or
even with corporate takeovers in general, than
with a portentous next chapter in the history
Weekly
of sovereign wealth funds, and how these
massive investment entities must now position
themselves in the global community.
Of course there’s been no dearth of blow-by-
blow media coverage of Glencore’s bid for
Xstrata, the world’s fourth-largest diversified
miner. Glencore, which already owns 34% of
Xstrata, was rebuffed in June and a revised
offer, including a reported 27% premium, was
formally made on Monday, September 10. Ivan
Glasenberg, Glencore’s chief executive, had
previously insisted that he would not budge
from his original terms. Glencore now similarly
avers that it will not increase this current offer.
Glencore’s options may still include a hostile
position that would only require a majority
rather than 75% shareholder approval, al-
though the company seems to have backed off
from that strategy. The revised offer calls for
Xstrata Chief Executive Mick Davis to stay at
the helm for only six months, then be replaced
by Glasenberg while Xstrata Chairman John
Bond would remain chairman. The market
seems confident the deal will now go forward
as shares increased by 2.4% on Monday. Yet
the leadership issue remains a question mark.
As of this writing, Davis is reportedly ready to
quit and so is CFO Trevor Reid along with 20
other senior executives.
The institutional investors were fairly split in
their response to the revised deal. Standard
Life supports it, but Knight Vinke, an activ-
ist shareholder, now wants Xstrata’s board to
look for a third party. Knight Vinke is one of
Xstrata’s 20 largest holders.
But let’s back up for a minute. The spark that
really set this fire was struck by Qatar Holding
LLC (QH), established in 2006 by Qatar Invest-
ment Authority (QIA), the sovereign wealth
fund (SWF) that owns about 12 percent of
Xstrata. After QH rejected Glencore’s initial
offer in June, no less a personage than former
UK Prime Minister Tony Blair, a good friend
of Qatari prime minister Sheikh Hamad bin
Jassim, was recruited to keep both Glasenberg
and Ahmad Mohamed Al-Sayed, the managing
director and chief executive of Qatar Holdings,
at the bargaining table.
More than any other Xstrata shareholder, Qa-
tar Holding seems to be the linchpin. Not sur-
prisingly, there was no small interest in how it
would respond to Glencore’s revised offer. In
fact, not just the content, but the style of that
response, reported on Tuesday, is significant.
First of all, it is the first statement of any sort
that QH has made in response to Glencore’s
proposals. Heretofore, SWFs have typically
been cautious passive investors, a judicious
strategy in the past considering the potential
in both the U.S. and Europe for intensified
regulatory interest in how the investment
arms of foreign governments buy up
domestic properties.
It is therefore something of a watershed
moment when an SWF acts like an activist
shareholder, which is precisely what Qatar did
when it rejected Glencore’s offer. “The trans-
formation was likely inevitable once the sov-
ereign wealth funds began to invest directly
in companies,” says Leonard Schneidman,
Managing Director of WTAS, a tax, valuation
and financial advisory firm. “They can no lon-
ger work solely behind the scenes or pursue
their objectives via intermediary entities,”
adds Schneidman, editor of Sovereign Wealth
Funds: A Legal, Tax and Economic Perspective
(Practising Law Institute).
Further heightening its profile in this deal, QH
is holding back approval, saying that it will
make its decision “in due course.” The SWF is
thus openly playing the role of what the me-
dia describes as “kingmaker” and it certainly
seems content to play hard-to-get. Reportedly,
QH may not even weigh in until after the
Xstrata board issues a statement expected on
September 24.
The kingmaker role underscores another po-
tentially decisive point: that, as an SWF, QH is
rich enough, and expansive enough, to take it
or leave it. In late August, Glasenberg assumed
the same position when he said that Xstrata
was “not a must-do deal.” But Glasenberg
blinked on September 10. QH is not likely to.
For companies and their boards, QH is thus
a new kind of activist investor, one that has
seemingly endless options and immeasurable
leverage. It’s a dazzling prospect of what the
future may hold when we consider another
essential point: that no one in the investment
arena takes a longer-term view of things than
Weekly
Fred Krebs, Senior Advisor at Clearspire LLC and the Association of Corporate Counsel discusses
the current “golden age” for general counsel—an era in which their influence and impact on the
business community has never been more significant. With this higher profile comes intensified
scrutiny, even as new resource challenges demand that general counsel identify new ways to get
the most out of their outside law firm relationships.
crisis
litigationFinancial coMMunications
corPorate & rePutationPuBlic aFFairs
sign uP today
Fred kreBson the role of general counsel
SWFs. If Qatar’s holdings in Xstrata suffer be-
cause this deal falls through, Qatar can and will
ride it out.
Yet Qatar’s precedent-setting role in the Glen-
core bid suggests new challenges ahead for the
SWFs as well. The 12th largest SWF in the world
has just taken a step beyond quiet power, to the
noisier public role of activist investor. No one
in the U.S. or Europe is raising national security
concerns as a result. It is fair to say, however,
that Qatar’s conspicuously aggressive role in
this deal presages additionally more aggressive
SWF positions in the future.
At the very least, SWFs can revisit how they will
represent themselves in the years ahead if and
when such positions do indeed become increas-
ingly aggressive and public. Power and promi-
nence increase incrementally but inexorably
and, in an uncertain political climate, it is wise to
make the world as comfortable in your presence
as possible. To that end, these emergent power
brokers should remind everyone that they have
the same rights as any other investor. If Carl
Icahn can make or break a deal, so can they.
At the same time, the SWFs have already been
shrewd enough to characterize their invest-
ment strategies as “opportunistic,” which is
precisely how the QIA describes its philosophy.
An opportunistic strategy is an unpredictable
one, happily so in the sense that there’s no
carefully devised plan, no multifaceted conspir-
acy to influence anyone’s foreign policy or buy
up the Eiffel Tower and ship it off to Doha.
Conversely, the SWFs can reinforce that assur-
ance by carefully communicating how and why
they do pick their investment targets, focusing
too on the diverse benefits for everyone; when,
for instance, their money supports needed
infrastructure projects. Xenophobic tensions
won’t go away in our lifetimes but it is always
prudent to turn as many enemies as possible
into stakeholders, no matter how untold the
wealth you currently enjoy.
Richard S. Levick, Esq., President and CEO of LEVICK,
represents countries and companies in the highest-stakes
global communications matters—from the Wall Street
crisis and the Gulf oil spill to Guantanamo Bay and the
Catholic Church.
“ Power and prominence increase incrementally but inexorably and, in an uncertain political climate, it is wise to make the world as comfortable in your presence as possible.”
L