All Market, Inc., the maker of Vita Coco coconut water, has reached an agreement to settle a nationwide class action lawsuit for $10 million.
The settlement class consists of consumers who purchased Vita Coco products between August 10, 2007, and the date the court approves the proposed settlement. Plaintiffs alleged in the complaint that All Market misrepresented the health benefits and nutritional content of Vita Coco products by marketing them as “super-hydrating,” “nutrient-packed” and “mega-electrolyte.”
Plaintiffs filed the false advertising class action lawsuit against All Market, Inc., doing business as Vita Coco, last year in the United States District Court for the Southern District of New York. According to plaintiff’s complaint, Vita Coco coconut water’s label falsely claims it contains “15 times the electrolytes found in sports drinks” and “is about hydration.” In addition to not containing as many electrolytes, plaintiffs allege the product is no more hydrating than a less expensive sports drink. Plaintiffs also claim that some of the Vita Coco products contain significantly less sodium and magnesium than advertised. According to the complaint, this allegation can be substantiated by a confidential witness who will testify that defendant knew for years that it misrepresented sodium and magnesium levels. In response to these allegations, Vita Coco denies any wrongdoing and claims it is agreeing to settle the class action lawsuit only to end costly and protracted litigation.
According to papers filed by the plaintiffs in support of the agreed-upon settlement, “The Stipulation provides for substantial economic relief to the putative class, including cash payments and product vouchers. Further, the Stipulation provides for non-monetary relief in the form of a program which will change the labels and advertising of Vita Coco Products to more clearly describe the variable nature of coconut water, as well as a quality control program which will ensure regular and independent testing. Vita Coco has additionally agreed to distribute to charitable organizations that promote healthy living a total of $3 million worth of Vita Coco products. The total value of the Stipulation is in excess of $10 million.”
The court issued a preliminary order approving the settlement on April 12, 2012. In the order, it certified the following class: “All persons or entities in the United States who made retail purchases of Vita Coco Products during the Settlement Class Period.” The court specifically excluded various parties from the settlement, including “Vita Coco’s employees, officers, directors, agents, and representatives;. . .those who purchased Vita Coco Products for the purpose of re-sale. . .[and] all persons who have been properly excluded from the Settlement Class.” The court also scheduled the final approval hearing for August 22, 2012.
To read the plaintiffs’ complaint, click here.
To read the court’s order preliminarily approving the settlement, click here.
Why it matters: Plaintiffs’ lawsuit illustrates the appetite of class counsel to pursue companies making health claims about their products. To avoid costly litigation, companies must have evidence to substantiate their health claims. If they cannot support their claims, retailers should carefully tailor their marketing campaigns to ensure they do not veer into class action litigation or a federal or state regulatory enforcement proceeding. Carefully creating these campaigns to avoid any misleading messages is essential to stay above the fray of litigation and enforcement.