Monday, November 22, 2004

The Meat of the Latest Class-Action Scam

No wonder the Dustin Hoffman character in The Graduate was advised, "plastics". He must have been thinking of law school, according to this article--which happens to be an excellent example of the lack of basic economic literacy in journalism:

In a lawsuit filed in Seattle today, the Fred Meyer supermarket chain is accused of cheating consumers in five Western states, including Washington, by charging for the weight of packaging materials when it sets prices for meat products.

To individual consumers, the alleged loss amounts to pennies on the dollar per purchase; collectively, it adds up to more than $1 million per year in wrongful charges, the lawsuit asserts.

The suit focuses on the "tare weight" of meat products. Tare weight refers to the cellophane, soakers and plastic trays used to package meat. By state law, tare weight cannot be included in the purchase price, meaning the weight on the label should reflect only the net weight of the meat.

That is economic illiteracy. The law is an ass, as Dickens once put it. Cellophane, soakers, and plastic trays weigh virtually nothing, and have a trivial impact on the price of the cut of meat.

The customer can see right through the package and judge the size of the portion he is thinking about buying. And the sizes of the other cuts that are competing for his grocery dollars. Shoppers are not legally entitled to any particular price.

They have the freedom to compare a package that says it sells for $7.96 to one that says $8.55. How the store arrived at that pricing is irrelevant. If one doesn't find a piece of meat that seems to be worth the asking price one is free to move on to the vegetable section.

Or to the supermarket across the street.

Which brings us to what is relevant; Fred Meyer (Kroger) has the lowest grocery prices of all the major chains except Wal-Mart. Obviously they know a thing or two about efficiency, and pass that on to their customers.

If these lawyers are successful, that will obviously mean Fred Meyer will have to adopt less efficient packaging and weighing practices, which will drive up their cost of offering a cut of meat for sale. Meaning consumers will pay more for each cut than they do now.

But the lawyers will be laughing all the way to their 4 star restaurant celebration:

The suit seeks to represent all consumers who have purchased meat products from Fred Meyer over a period of years yet to be determined. Lawyers said that after their fees and possible nominal payment to [the nominal plaintiff], any proceeds could be distributed to a food bank or to a homeless shelter, or turned into in-store coupons good for a discount on meat.

Ah, for the good old days when the law didn't consider trifles.

No comments: