CNBC News Transcripts May 27, 2003 Tuesday

CNBC's CAPITAL REPORT. Once again, Alan Murray and Gloria Borger.

ALAN MURRAY, co-host:

Welcome back to CAPITAL REPORT.


And coming up in this half-hour, are Washington's power brokers joining the high-fat diet trend? We'll take you to the place to meet and eat in DC, The Palm.

MURRAY: There it is.

BORGER: There it is. Wish I were there.

That's coming up in about 10 minutes.

MURRAY: That's Gloria's favorite restaurant. She's the only person I know who does takeout from The Palm.

BORGER: Oh, my God.

MURRAY: But first, with obesity coming--quickly becoming one of the--America's leading health problems, are the courts becoming the battleground against fatty foods? And will attacking fat become an easy legal target like the tobacco industry?

Joining us now are John Banzhaf; he's a class-action attorney who has led the charge against fast-food companies and others. Also, Steven Grover, the top lobbyist for one of the most powerful groups in Washington, the National Restaurant Association.

Thank you both for being with us.

Mr. Banzhaf, I want to start with you. How can you sue people for providing fatty foods when the science seems to be unclear on whether fat is bad for you or not?

Professor JOHN BANZHAF (George Washington University; Attorney): Well, the overall movement is designed to use legal action as a weapon against obesity, a wide variety of different suits, different plaintiffs, different defendants, just as we did with tobacco, make a real dent in it. At the moment, there are seven fat suits which have been filed recently--we've won three; two we're close to winning.

And we sued fast-food manufacturers on the same theory that we sued tobacco manufacturers or people who make stepladders or electric hair dryers or dozens of other products. If you don't provide an appropriate warning, you don't provide adequate information, if people are hurt, not that the recipient doesn't bear some, maybe most of the responsibility, but increasingly juries are willing to say, 'The manufacturer bears some of it.' The interesting thing is a very recent survey says even today plaintiffs--prospective plaintiffs are about as willing to go for a plaintiff's verdict in a fat lawsuit as they are in a tobacco lawsuit.

BORGER: Well, Steven Grover, how would you respond to that? I'm going to go--I'm going to walk into yo--your restaurant or a restaurant...

MURRAY: Warn us.


MURRAY: Right.

BORGER: ...should you have a little warning?

MURRAY: Enter at your own risk.

Mr. STEVEN GROVER (National Restaurant Association): Well, I--I think we're--we're--we're talking what is tantamount to a bad fad diet here. A lot of lawyers want to sell it; they want to jump in. The fad diets haven't been successful, so now lawyers want to tell you how you can and can't eat, and they want to tell restaurateurs the kind of foods that you want to eat and--and what we can serve and what we can't serve.

Again, I think these lawsuits are ludicrous and they give frivolous a bad name.

BORGER: Well, wait a minute.

Prof. BANZHAF: ...(Unintelligible)...


Prof. BANZHAF: ...because that's exactly what they said about the tobacco suit. And we're not trying to tell anybody what they can't eat. What I'd like to see is when somebody goes into McDonald's and they look up at that menu board that it says, 'If you want a Quarter Pounder with cheese, it has so much fat content.'

BORGER: But tobacco has a warning on the--on the cigarette pack, right?

Prof. BANZHAF: And it didn't help them at all, because you have to have clear and conspicuous ones. Now the best of the restaurants, first of all, have no warnings at all, although in France McDonald's is now warning people, 'Don't eat out there more than once a week,' but they do not tell you when you go in there how much fat and how much'--so I'm not saying don't have the triple bacon cheeseburgers...

MURRAY: Right.

Prof. BANZHAF: ...I'm saying when people go in if you want them to exercise personal responsibility, tell them how much is in there, just as the information I get when I go into a food store and look at one can or the other. What's wrong with that?

Mr. GROVER: Well, this is typical. You want to put a warning label on almost everything. And the bottom line is--is that we all know it's about healthy lifestyle. It's about bol--balance, moderation and exercise. And the consumer will determine what food that they build within their healthy diet.

Prof. BANZHAF: Well--well, wait...

Mr. GROVER: There's nothing inherently bad about any food anywhere.

Prof. BANZHAF: Let--let--let--let's take one example that got a lot of publicity. I was certainly shocked to learn that chicken nuggets at McDonald's were--were fried in--in deep fat...

BORGER: ...(Unintelligible).

Prof. BANZHAF: ...and had more fat and calories than the beef.

MURRAY: ...(Unintelligible) chicken.

Mr. GROVER: Well, not necessarily in deep fat.

Prof. BANZHAF: Are--aren't I being mi...

Mr. GROVER: Not in all locations. And--and it may be that it had some tallow flavoring, but that was changed sometime back. It's mostly vegetable oil today. They're a fried product. I've never--I don't know anyone who thinks that chicken nuggets are a diet food. But can they be part of a balanced diet? Of course they can. You don't go out of balance.

Prof. BANZHAF: Fine, so just tell us what's in it, people can then put them into a balanced diet. But the judge himself ruled, and this was only several months ago, that Chicken McNuggets, what he called a McFrankenstein creation, mislead people into believing that they're low in fat and calories. They're higher than the Big Mac.

BORGER: But--but I--I guess I get--I get back to the original question, which is that the science is so imprecise here.

MURRAY: Maybe fat isn't so bad.

BORGER: Maybe fat isn't so bad.

Prof. BANZHAF: Now wait a minute. Yes, it's exactly the...

BORGER: Maybe it's OK to eat your steak.

Prof. BANZHAF: Give people the information. Now if somebody says, 'I'm an Atkins diet fan. I want much fat,' they'll know how much fat.

BORGER: Well...

Prof. BANZHAF: If they want low fat, they'll know to go low fat.

Mr. GROVER: The--the fact of the matter is--is the information is available. The vast majority of restaurants post that information either in their restaurant or on a Web site. And for those consumers who want the information, it's easily available. My wife has been on a diet for many years, and she doe--she counts points, and everybody'll know what it is.

Prof. BANZHAF: Well, let me give you some specific numbers.

Mr. GROVER: But there are books written...

BORGER: OK. We're just...

Mr. GROVER: ...and she knows exactly...

Prof. BANZHAF: I'll give you specific numbers. On the McDonald's Web site last night I was looking for the Mighty Kids Meal, because, according to some information, one of their meals has twice the amount of fat that I as an adult and you as an adult should have. Imagine what it is for an eight-year-old kid. The answers--I couldn't find that information on their Web site, it is not in their restaurant, and it certainly isn't where people are looking on that board. I've never seen anybody go to the back and look. I've never seen anybody come in with a list they printed out from a Web site. I see people standing up there looking at the board and looking at meal 1 vs. meal 8 and there's no information.

BORGER: Well, OK. Let's--John Banzhaf, Steven Grover, let's leave it right there. And when we come back, I think what we ought to be talking about is whether this question of what you eat and what you know about what you eat should be a matter of personal responsibility. So stay with us.


MURRAY: We've been talking about food tonight. Well, here's some big news today. Doughnut shops, it turns out, are the fastest-growing dining category nationwide. Look at this: 2002 sales $3.6 billion. That's a lot of doughnuts. That's up 9 percent from last year, twice as much growth as in other dining categories.

BORGER: I remember, Alan, on the McCain campaign all we ate were Krispy Kremes.

MURRAY: Krispy Kremes.

BORGER: Krispy Kreme doughnuts.

MURRAY: And after that advertisement, let's move on.

BORGER: All right. OK. Well, we're back here with our guests John Banzhaf and Steve Grover.

Thanks so much for being with us. Let me share with you something that you may actually agree on, and that is the price of obesity in this country. Sixty percent of US adults are either overweight or obese. There are 300,000 deaths a year from obesity-related health problems, and it costs $171 billion a year...

Mr. GROVER: That's 117.

BORGER: treat obesity. Tell me, whose fault is it? Is it the restaurants' fault, Mr. Banzhaf, or is this a matter of personal responsibility?

Prof. BANZHAF: Well, it'd be nice if it were personal responsibility, but the second part of that report is that most of that $117 billion cost is paid by people who are not obese in the form of higher taxes and higher health insurance. Therefore, the people who are obese are not paying most of it. One of the purposes of the lawsuit is to shift that. But we're not saying that the person who eats doesn't bear some responsibility, perhaps most responsibility. We are seeking to hold the restaurants responsible for their fair share. A recent report says they're responsible for 65 percent of the obesity epidemic. I think he says it's four out of 21, so I'll take 4/21sts of it...

Mr. GROVER: this...

BORGER: ...whatever the responsibility, let it pay for it.

MURRAY: Mr. Grover, at this point how big of a problem is this for the restaurant business? I mean, we're not talking about that many suits.

Mr. GROVER: Well, you know, we agree that there's an obesity problem. We also agree that it's about much more than blame, it's much more than fattening lawyers' wallets. It's about looking at healthy lifestyle. It's about balance, moderation and exercise. And I--I think this debate of--with the lawyers does nothing to address the real problem. Bottom line is Mr. Banzhaf would have you believe that he hasn't sued mothers yet, but you would assume he needs to do that for--for obesity because 17 meals are eaten at home and four meals are eat--a week are eaten in restaurants. But he's gone after the restaurants. Why? Because that's where the deep pockets are. That's where he can get money. That's where they can get money for the lawyers. And the bottom line: the lawyers win.

Prof. BANZHAF: But Alan, they are taken seriously because they're sponsoring a bill which would protect them.

BORGER: But...

Prof. BANZHAF: They sponsored a bill up on Capitol Hill to protect them from the lawsuits. So we can't, on the one hand be frivolous. On the other hand, you've got to go to Congress, 'Please protect us.'

BORGER: Well, I--I don't understand, though, really what you want the restaurants to do. When I go out to dinner, I don't want to know what's in that wonderful French dish that I am about to eat and enjoy and savor with my glass...

MURRAY: You prefer ...(unintelligible).

BORGER: ...of healthy red wine. I--but, I mean, do you want restaurants to say, next to every item on the menu, this is--you know, this is what's in this dish. This is how our chef prepares it, take it or leave it.

Prof. BANZHAF: I certainly--I certainly...

Mr. GROVER: Well, we have that. NLEA came in 13 years ago, and in every food that you buy at a grocery store it has the--now we've had skyrocketing obesity since we got the labels that he says will solve this problem. Again, it's a much more complex problem than of labels and warning signs, than blame of this food, this bad food, or that. What it is is it comes down to healthy lifestyles. It comes down to personal responsibility.

Prof. BANZHAF: But the first step is you've got to give the people the information. In foods we look on the cans. With fast food people go up there and they're looking at the signs. They're not looking at the back wall. They're not looking at pamphlets. They're not pulling something out of a--of a Web site. And if the question is are these suits going to continue and are they working? Well, again, we've won three out of the seven. Two more out of the seven we're close to winning. They are going to continue. And the very fact that lawyers are going to be making money out of them is exactly what we're counting on 'cause that's what made it with tobacco. These lawyers are not all bringing them...


Prof. BANZHAF: ...totally out of altruistic reasons. Of course, 'cause the last ...(unintelligible)

BORGER: Well, our next--our next special show...

Mr. GROVER: ...(Unintelligible).

MURRAY: All right.

BORGER: Our next special show...

(Unintelligible comments from assorted panelists)

BORGER: I'll tell you what. I'll tell you what, Mr. Banzhaf, our next special show will be on the rewards that trial lawyers reap as a result of these lawsuits. We'll do our...

(Unintelligible comments from assorted panelists)


Prof. BANZHAF: ...(Unintelligible) lawyer, and I don't make any money out of these suits, but I do support them.

BORGER: OK. John Banzhaf of GW Law School, we appreciate your being here.

And, Steven Grover...

Mr. GROVER: Thank you.

BORGER: ...of the National Restaurant Association, thanks for being with us.

MURRAY: And a small correction tonight. It is $117 billion spent on obesity related illnesses, not 171, as we said earlier.

OK. Coming up next, we'll introduce you to the man who can get you a table at Washington's Top Tower lunch--lunch spot and who knows DC's biggest--biggest beef eaters. And I can tell you, Gloria Borger is one of them.

BORGER: You're sitting next to one of them, right?

MURRAY: She is a carnivore of the first magnitude.

BORGER: But first, here's Brian Williams.

BRIAN WILLIAMS (NBC News): Thanks, folks.

And coming up at the top of the hour when we join you for "The News," some off-the-cuff remarks by Bill Clinton. The subject was political science, but he had two words to sum up George W. Bush's victory over his former veep, Al Gore. It's an interesting bit of the former president. We'll have it for you.

CAPITAL REPORT continues right after this.