A class of consumers suing the bankrupt Kangadis Food Inc. over its allegedly misleading olive oil purity claims is now suing the owners of the company in a separate class action aimed at holding them accountable.

The initial suit against Kangadis Foods Inc. (KFI), also known as The Gourmet Factory, reportedly forced the company into bankruptcy in its fight against allegations that it deceptively marketed its Capatriti olive oil as 100% pure when it allegedly contains a chemically derived olive product called pomace. Kangadis maintains that the dispute has cost company $1.4 million in legal bills, and is expected to cost $750,000 more if it proceeds to a scheduled September trial.

The same class of consumers which brought the action against Kangadis Foods, defined as all persons in the United States who purchased Capatriti 100% Pure Olive Oil, brought a lawsuit against the owners of the now bankrupt company. They allege in their complaint that the company’s owners, should be held liable “…for their direct involvement in the unlawful scheme to pass off pomace oil as ‘Capatriti 100 percent pure olive oil,’ and also on a veil-piercing theory as these individual defendants have looted KFI of its assets to attempt to frustrate the certified class’ ability to collect on the judgment they will eventually obtain.”

The plaintiffs, Joseph Ebin and Yeruchem Jenkins, alleged in the 2013 Capatriti olive oil class action lawsuit against Kangadis Foods that pomace is “a byproduct extracted from leftover olive skins and pits using a combination of chemical solvents and high temperatures.” “Unsurprisingly,” the complaint continued, “because pomace can be obtained only through heating and solvent treatments, it does not appear in pure olive oil. And, although it comes from olives, it is not olive oil.” The new complaint against Kangadis owners charges that, “The mislabeling of Capatriti ‘100 percent pure olive oil’ renders the product completely worthless. By mislabeling its products, Gourmet Factory dupes consumers into purchasing something that is not olive oil.”

The owners of Kangadis Foods are accused of breach of contract, breach of the implied warranty of merchantability, deceptive acts or practices under New York law, violation of the New Jersey Consumer Fraud Act, negligent misrepresentation, and fraud. The new class action is Joseph Ebin et al. v. Kangadis Family Management LLC et al., case number 1:14-cv-01324 in the U.S. District Court for the Southern District of New York. The bankruptcy case is In Re: Kangadis Food Inc., case number 8-14-72649 in the U.S. Bankruptcy Court for the Eastern District of New York.

Tip: The expense of litigation should be taken into account when formulating marketing plans as it can have dire consequences for companies attempting to defend their marketing practices.