Taco Bell declared victory Tuesday after an Alabama-based law firm dropped its class-action lawsuit that raised a beef with the meat filling served in the fast-food chain's tacos and burritos.
The two sides differed, though, on the result of the legal battle that had put Taco Bell on the defensive, prompting the popular chain to spend millions to defend its taco filling.
The law firm Beasley Allen, based in Montgomery, Ala., said it dropped the lawsuit after Taco Bell made changes to its marketing and product disclosure.
Greg Creed, Taco Bell CEO, countered that the chain made no changes to its products or advertising and didn't discuss possible changes with the plaintiff's lawyers. The chain said the allegations were "absolutely wrong" and the suit was voluntarily withdrawn by the firm.
"This is a victory for truth over fiction, and we're glad the lawyers voluntarily withdrew their case once they learned the truth," Creed said in a statement Tuesday.
Taco Bell spokesman Rob Poetsch said the chain always has reported its product ingredients on the company's website.
Taco Bell said no money was exchanged as a result of the suit being dropped.
In response to the suit, Taco Bell took out full-page ads in at least nine major newspapers, aired television spots and launched a YouTube campaign to proclaim its taco filling is 88 percent beef.
It spent between $3 million and $4 million in advertising to counter the accusations made in the lawsuit, Creed said.
He said he could not comment on any financial fallout for the fast-food company as a result of the lawsuit because the company is in a mandatory quiet period before releasing its earnings. Yum Brands will report its first-quarter earnings today.
Louisville-based Yum is also the parent of Pizza Hut and KFC. Taco Bell accounts for about 60 percent of Yum's profits in the U.S.
David C. Novak, Yum Brands chairman and CEO, said in early February that the lawsuit was having a "negative, short-term impact" on the chain. But he said the chain had "turned the tide" with its aggressive response.
Taco Bell says its taco filling contains 88 percent U.S. Agriculture Department inspected beef and the rest is water, spices and a mixture of oats, starch and other ingredients that contribute to what it calls the "quality of its product."
The company said it uses no extenders to add volume to the filling.
The false-advertising lawsuit, filed in federal court in California in January, alleged the chain's filling doesn't have enough beef to be called that. It alleged the meat mixture has binders and extenders and does not meet federal requirements to be labeled beef. The suit sought to make the company stop calling it "beef," and pay the suing law firm's bill.
Laura Ries, president of Ries & Ries, a marketing strategy firm based in Atlanta, said the chain had to respond to such serious allegations, but said the ads were simply "repeating the message that something was wrong."
"They probably fought back harder than they had to with all that massive advertising," she said.
The allegations caused some short-term problems, but in the long run likely won't damage the brand, Ries said.
"If you like Taco Bell, you're probably still going to like Taco Bell," she said.