Two consumer class actions alleging that “natural” claims were false and deceptive reached settlement deals recently, with Naked Juice agreeing to pay $9 million and ConAgra receiving judicial approval for a $3.2 million settlement.
California resident Natalie Pappas alleged that claims such as “All Natural” and “Non-GMO” on the label of Naked Juice products violated state consumer protection laws. The juices and smoothies actually contain unnatural and synthetic ingredients, according to the plaintiffs (four other suits were consolidated with Pappas’ complaint), because they contain ingredients such as ascorbic acid, niacinamide, and choline biturtrate, as well as ingredients made from genetically modified plants and organisms.
Two years and four rounds of mediation later, the parties agreed to settle the case. Naked Juice promised to provide a $9 million settlement fund out of which a national class of consumers can receive a full refund for purchased products, up to $75 with proof of purchase or between $5 and $45 without.
In addition, the company said it will redesign its labels to eliminate the “All Natural” claim and substantiate the “Non-GMO” language. The injunctive relief – valued at approximately $1.4 million – will pay for an independent testing organization to confirm the accuracy of the “Non-GMO” statement on product labels, a quality control manager to oversee the testing process for a period of five years, and an electronic database to track and verify product ingredients.
In a second deal, ConAgra reached an agreement over the claims made by subsidiary Alexia for its potato products. U.S. District Court Judge Phyllis J. Hamilton granted preliminary approval of a $3.2 million settlement fund for a national class of purchasers dating back to December 6, 2007.
The consolidated suits alleged that the use of the “All Natural” claim for frozen potato products (including waffle fries, potato bites, and several varieties of mashed potatoes) was central to the company’s marketing but misleading to consumers. Alexia’s potato products contained disodium dihydrogen pyrophosphate, or DDP, a synthetic chemical compound used to prevent discoloration in potatoes and registered as an abstract chemical, according to the complaint.
Under the terms of the settlement, Alexia will reformulate its products to live up to the “All Natural” claim. In lieu of DDP, the company agreed to use citric acid or another naturally sourced compound. Alexia reserved the right to use DDP at a future date if the Food and Drug Administration decides it can be used in conjunction with a “natural” label.
Class members will also be entitled to file a claim for a portion of the $2.5 million cash settlement fund and $700,000 voucher settlement fund. The plaintiffs in the consolidated cases can make one of three choices: a cash payment of $3.50 per product purchased with a maximum of 10 products or $35; food vouchers with a maximum savings of $3.75 per product up to a maximum of 10 products; or a combination of cash and vouchers, again maxing out at 10 products. Claims for five or fewer products simply need a class member’s contact information; for claims of six or more products, a receipt or other documentation (such as product packaging) is required.
To read the settlement agreement in Pappas v. Naked Juice Co., click here.
To read the settlement agreement in In re Alexia Foods, Inc., click here.