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The suit seeks to stop the marketing and sale of Oreos to California children due to the hidden health ramifications of trans fats. The lawsuit, filed by public interest lawyer Stephen Joseph, claims that Kraft is opposed to listing the amount of trans fats on its labels.
'Unwarranted and unjustified'
Kraft spokesman Michael Mudd said Kraft "believes the lawsuit is unwarranted and unjustified, and we will defend ourselves vigorously." Mr. Mudd said Kraft twice filed comments with the Food and Drug Administration in support of including the fats -- often linked to high cholesterol, heart disease and diabetes -- on labels, a move he said the FDA has been looking into for years and is close to ruling on.
He acknowledged, however, that Kraft opposed adding a footnote about trans fat that would have said people should eat as little of it as possible because "we believe in providing context of what's on the label," Mr. Mudd said.
But while industry observers said the likelihood of a ruling in favor of Mr. Joseph is unlikely, just as was the case in a suit filed against McDonald's, one Wall Street analyst noted that regardless of any penalties paid, "this kind of thing in the press isn't helpful to companies in the food industry or their stock prices."
Kraft stocks opened Monday at $31.47 and closed at $31.18, possibly linked to the numerous mentions of the suit in the press, from CNN to the Los Angeles Times. Today, Kraft's stock price is up slightly at $31.25 in late-day trading.
Kraft has been exploring ways to reduce trans fatty acidss in Oreos and currently offers a reduced-fat version with less than half the trans fats of regular Oreos. But Mr. Mudd asserted that a recent study from the National Academy of Sciences' Institute of Medicine concluded that trans fatty acids are similar to saturated fat in their affect on blood cholesterol.
Joanne R. Lupton, Ph.D., the chair for the academy's Panel on Dietary Reference Intakes for Macronutrients, said saturated fat, trans fatty acids and cholesterol are all fats that provide no beneficial role in preventing chronic disease and actually raise the level of "bad" cholesterol linked to heart disease. As such, the study found that the maximum safe intake level for each would be zero, but she added that "all-out avoidance of them, however, would require extreme changes in the typical diet in the U.S. and Canada, and thus would make it difficult to meet other important nutritional guidelines." Instead, she said the study recommended keeping consumption of all three "as low as possible."