Diamond Foods, Inc. has agreed to settle the consumer-fraud class-action suits filed by plaintiffs in California and Florida alleging that the company falsely labels its Kettle Brand® chip products as “All Natural,” when they contain artificial, synthetic or genetically modified ingredients, or as “Reduced Fat” while referencing non-comparable foods. Klacko v. Diamond Foods, Inc., No. 14-80005 (U.S. Dist. Ct., S.D. Fla., motion for preliminary approval filed October 22, 2014). Details about one of two similar California lawsuits appear in Issue 510 of this Update. Under the agreement, the company would establish a $2.75-million fund for class member claims, pay the costs of class notice and administration up to $300,000 and agree not to oppose attorney’s fees, expenses and costs of $775,000.
Class members with proof of purchase would be able to recover up to $20, representing $1.00 for up to 20 purchases; those without proof of purchase would recover up to $10. Any residual amount would be applied toward the retail value of the company’s food products, which would be donated to Feeding America. Under the injunctive relief component of the agreement, the company would provide “natural promise” criteria to ingredient suppliers and require that they verify their ingredients comply with the promise. The company would also “create and maintain a database to track ingredients and ingredient suppliers,” conduct annual audits to ensure compliance, and “employ reasonable efforts to obtain Non-GMO [genetically modified organism] Project approval for all Products where eligibility for Non-GMO Project approval is practical.” Regarding “Reduced Fat” and “___% Less Fat” products, the company would “place the requisite comparison statement at the location on the packaging where the applicable claim is most prominently displayed.”