Recent Cases Highlight Uptick in Geographic Food and Beverage Labeling Claims

June 21, 2019

A series of recent headlines in the food and beverage world make it clear that consumers, or at least consumer class action attorneys and their clients, increasingly care where their food comes from and not just what’s in it.

This month, the Northern District of California granted preliminary approval of a settlement agreement in a suit over the origins of Kona Beer. This preliminary approval came a day after the Western District of Washington denied defendants’ motion to dismiss a suit alleging consumers were falsely led to believe Cascadian Farms products came from Washington state. These developments highlight not only the increasing prevalence of geographic origin claims, but also the risks manufacturers may run in tying their products to a particular geographic area.

In Broomfield v. Craft Brew Alliance, the court preliminarily approved a settlement expected to cost as much as $4.7 million to resolve claims that Kona Beer deceived consumers into believing its beer was brewed in Hawaii. In the suit, the plaintiffs alleged that Kona’s labels, which depicted traditionally Hawaiian images and bore names like Longboard Island Lager and Big Wave Golden Ale, gave consumers the impression the beer they bought came from Hawaii. In fact, the Kona Beer sold in the continental United States came from breweries in New Hampshire, Washington, Tennessee and Oregon. Following the district court’s certification of a class, the parties reached an agreement wherein Kona will pay claimants between $1.25 and $2.75 for each four-, six-, 12- and 24-pack purchased. As part of the agreement, class counsel could seek up to $2.9 million in additional fees and costs. Kona also agreed to change product labels to state where each Kona Beer was actually brewed.

A day before the Kona Beer preliminary approval, in the Western District of Washington, the court held that putative class plaintiffs in Reed v. General Mills stated a claim that defendants tricked them into believing 81 different Cascadian Farms frozen fruit and vegetable products came from the same small Washington farm. Instead, plaintiffs alleged, the produce actually (or at least substantially) came from large-scale farms around the globe. In making their claims, plaintiffs pointed to the brand name “Cascadian Farms,” as well as a Skagit Valley, Washington, emblem on the label inviting consumers to “VISIT OUR HOME FARM,” and a picturesque, rural background on the label. In denying defendants’ motion to dismiss, the court found that a reasonable consumer relying on the labels could plausibly conclude that all or substantially all of the ingredients in the products came from a bucolic farm in Washington. In fact, the court relied in part on the Broomfield court’s denial of a similar motion to dismiss, holding that the Skagit Valley logo was akin to a statement on Kona’s labels that invited consumers to “visit our brewery and pubs whenever you are in Hawaii.”

And the rate of geographic claims filed shows no sign of slowing. For instance, plaintiffs have alleged in a pair of suits that certain San Marzano tomatoes are not truly grown in the Agro Sarnese Nocerino region of Italy, while plaintiffs in another pair of class-action complaints charged that manufacturers deceptively labeled their allegedly inferior coffee products as coming from the Kona, Hawaii, region.

Both the Broomfield settlement and Reed decision show the high costs that could accompany label images and statements that give consumers the impression that products originate in a specific country, region or state. In evaluating labeling and marketing decisions, manufacturers should not only review any geographic claims explicitly made, but also assess whether the overall labeling and marketing give an impression of a geographic origin.