Call it the class-action assault on the products at the end of the alphabet.
Just days after news that rival coconut water company Vita Coco had settled a lawsuit surrounding the functional claims of its coconut waters, its chief rival, Zico, is facing a new lawsuit over the quality of its fast-growing concentrated line.
Additionally, another rising beverage company, Xing Tea, has also been named as a defendant in a separate class action suit. What the Zico and Xing suits have in common, however, is that they are class action suits filed under the California Consumer Protection Law, the same law that has given rise to a number of other recent lawsuits filed against consumer products companies. Frequently, the basis for the claim is that the plaintiffs allege that the manufacturer in some way lied about the functional capabilities or natural origins of the product.
For Zico, the case, filed in late October, is based on claims that the “from concentrate” nature of one of the company’s dual product lines, a Tetra Pak carton line with pure coconut water and a from-concentrate line packaged in plastic bottles, is an inferior product. According to the suit, Zico’s use of terms like “natural”, “pure premium” and “coconut water” fail to disclose that some of it is made from concentrate; additionally, the lawsuit charges Zico with failing to indicate in large enough letters on the front of the label that the PET products are made from concentrate.
“The suit is baseless,” said Zico founder and CEO Mark Rampolla.
Meanwhile, at Xing Tea, co-founder Tom LeBon also made it clear he planned to fight the claims against his company in court as well.
In the case of Xing, the suit focuses on the company’s use of citric acid in its ingredients — one that the lawsuit claims is not “all natural” even though Xing products are labeled as such. Additionally, the company is being sued for deceptive marketing practices over some of the fruit flavors that the green-tea based products employ; while the product comes in varieties like Green Tea with Pomegranate or Green Tea with Mango, according to the lawsuit, they do not contain actual fruit or actual juice. Xing’s ingredient panel does note that the products have “natural flavors” but according to the plaintiffs’ case, the consumer protection law requires more disclosure.
“The label does not say ‘green tea with natural pomegranate flavor,’ but states unqualifiedly that it is ‘green tea with pomegranate,’” according to the lawsuit, which called it a misleading claim.
Lebon called the lawsuit “frivolous” and said that he had recently had his ingredient supplier, Archer Daniels Midland Co., supply a letter indicating that the citric acid used in the tea was all-natural. As for the flavorings, according to Lebon, a similar complaint had been filed with the FDA and that agency had not found fault with the company.
“It’s really a frivolous suit and our lawyers think it will go away very quickly,” Lebon said.
Meanwhile, the general statutes under which both suits were filed, California’s Consumer Legal Remedies Act and California’s Unfair Competition Law, are fast becoming issues for food and beverage manufacturers, who believe that they are opening the door to even more lawsuits. According to one lawyer familiar with the statute, a suit in California also opens the door to actions in other states, creating a situation in which plaintiff’s attorneys are able to use the threat of legal action to extract settlements from defendants who are unwilling to pay for long court battles.
Recently, other companies like Muscle Milk and even big company-owned companies like Alexia Foods (ConAgra) and Kashi (Kellogg) have been named in similar state and, in some cases, federal claims.
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