In the latest multimillion-dollar settlement of a false advertising class action challenging “natural” claims, Tom’s of Maine has agreed to pay $4.5 million in Florida federal court.
Multiple class actions were consolidated in the case, with plaintiffs alleging that Tom’s ran afoul of multiple state consumer protection laws and warranty statutes by using the term “natural” for various personal care products ranging from toothpaste to lip balm to deodorant. Tom’s claimed that “We do not use any synthetic flavors or fragrances. Our customers prefer the fresh, natural taste and smell of herbs, fruits and flowers (or no fragrance at all!).” But Tom’s used processed ingredients including xylitol and sodium lauryl sulfate, the plaintiffs alleged.
In their motion for preliminary approval of the deal, the plaintiffs told the court that the settlement satisfies the two goals of the litigation by providing redress to consumers and stopping Tom’s from further “continuing the systematic and continuing practice of disseminating the allegedly false and misleading information.”
With respect to the first goal, Tom’s agreed to create a non-reversionary fund of $4.5 million for class members, each of whom would receive $4 each for up to seven covered products, without proof of purchase. The class consisted of “hundreds of thousands” of product purchasers across the country dating back to March 25, 2009. If the number of claims exceeds or falls short of the available relief, the $4 will be proportionately reduced or increased on a pro rata basis.
As for the second goal, the company promised to provide information about each of the product ingredients on its website “in an easy-to-access manner,” and include a link on the front page for a three-year period. Tom’s will explain the company’s standards for the use of terms like “natural,” “sustainable,” and “responsible,” as set forth in its Stewardship Model.
To make its website consumer-friendly, Tom’s will provide its website address in a “conspicuous” location on all product packaging and, where practical, include language on its packaging about how to learn more about its Stewardship Model.
Tom’s also agreed to pay notice and administration expenses, $2,000 incentive awards for the named plaintiffs, and agreed not to object to a class counsel award of up to $1.5 million.
Calling the deal a “comprehensive and fair resolution” for the asserted claims, the plaintiffs requested that the court grant preliminary approval of the settlement. “[T]he root cause of the Actions will be resolved—Tom’s has changed its labeling and advertising to provide, in the most practical and conspicuous way possible, disclosures as to its definition of ‘natural’ so that consumers will receive the necessary notice to make informed decisions when purchasing the Covered Products,” the plaintiffs wrote. “Moreover, Tom’s has also agreed to compensate consumers who purchased the Covered Products prior to the modified disclosures, without requiring proof of purchase.”
To read the memorandum of law in support of preliminary approval of the settlement in Gay v. Tom’s of Maine, Inc., click here.
Why it Matters: Class action litigation challenging “natural” claims in advertising and labeling continues unabated, with Tom’s only the latest defendant to pay millions of dollars to settle a case. Church & Dwight paid almost $2 million in a suit over “natural” labeling for its deodorant while a suit over “natural” juice claims cost Naked Juice $9 million. In a statement, Tom’s emphasized that the deal “requires no change to our products, the claims we make on our current packaging, or our use of the term ‘natural,’” and that the company elected to settle “to maintain our focus on the consumers and communities we serve.”
