Vita Coco Settles Class Action Suit for $10 Million

When Mike Kirban told attendees at BevNET Live in December that the biggest low the company experienced in 2011 was getting slapped with the company’s first class-action lawsuit, he hadn’t yet had to deal with the pain that comes from writing the check that makes it go away.

Yesterday, he did.

Kirban: Rite of passage complete?Vita Coco settled a national class action suit filed on behalf of consumers of the best-selling coconut water based on marketing claims concerning the product’s electrolyte content and overall ability to be, as the package claimed, “super hydrating.”

The settlement, negotiated with plaintiffs’ firm Labaton Sucharow LLP, was for $10 million. Of that settlement, $3 million will come from the donation of product for the next three years to charitable organizations, and the company will provide $2 million in refunds and vouchers for consumers who bought product from the company’s web site. The brand also agreed to change the wording on its packaging and provide better monitoring of the potential variations that can come from sourcing coconut water in different regions.

“Vita Coco is the largest brand in the hottest beverage category: coconut water,” Michael Kirban, the brand’s co-founder, said. “so attracting scrutiny was inevitable.  Class action suits are doing bigger business than coconut water in the U.S., that’s for sure.”

“Although we had strong legal and factual defenses to plaintiffs’ claims we felt it was in the company’s and our consumers’ best interest to resolve this case quickly so that we could get back to the business of producing and distributing the Vita Coco beverages that so many consumers nationwide enjoy every day,” Kirban added.

The suit was filed in August following disclosure that a scientific testing firm, consumerlab.com, had found significantly fewer electrolytes in tested samples of Vita Coco and O.N.E. Coconut Water than had been claimed on the package.

Kellie Lerner, one of the attorneys in the action, stated: “For the millions of consumers who pay for products that claim to improve their health, this settlement sends a message that companies will be held accountable when they exaggerate or misstate the health benefits of their products.”

Want to read the releases from both sides? Vita Coco’s statement is below. Labaton Sucharow’s can be found here.

 

Statement, February 8, 2011

In reply to news release: Labaton Sucharow LLP Secures $10 Million Settlement in Nationwide Class Action Against Maker of Vita Coco, Alleging Misleading and Deceptive Advertising

Contact:

Arthur Gallego, arthur@vitacoco.com, (917) 593-3097

All Market Inc., the makers of Vita Coco coconut water, are pleased that a recent class action suit against the company has been settled quickly with an emphasis on consumer compensation and charitable giving.

The suit was filed in August 2011 and settlement negotiations were completed in February 2012, approximately six months after the initial suit.

“Vita Coco is the largest brand in the hottest beverage category: coconut water,” says Michael Kirban, the brand’s co-founder, “so attracting scrutiny was inevitable. Class action suits are doing bigger business than coconut water in the U.S., that’s for sure.”

“Although we had strong legal and factual defenses to plaintiffs’ claims we felt it was in the company’s and our consumers’ best interest to resolve this case quickly so that we could get back to the business of producing and distributing the Vita Coco beverages that so many consumers nationwide enjoy every day,” continues Kirban.

Kirban emphasizes that the company stands by its promotion of Vita Coco as an excellent source of natural hydration and electrolyte replenishment, and remains committed to providing consumers with a healthy beverage. “Coconut water comes from nature and we will emphasize that even more going forward,” says Kirban. Consumers can expect to see new labeling that addresses the natural variability of coconut water starting in May 2012.

Well prior to the suit, Vita Coco already used the services of Covance, a global independent leader in Good Manufacturing Practice, as part of a wider Quality Control program for all Vita Coco beverage products. “We will continue to use Covance as well as other independent experts to ensure the integrity of our products,” says Kirban.

Additionally, the $3 million worth of Vita Coco products that the settlement provides to selected charities over the next three years will allow Vita Coco to continue its strong history of community involvement and cause-related support. Vita Coco has always supported worthwhile non-profit organizations, both large and small. Concludes Kirban: “Based on this settlement, we’ll make more substantial contributions to a number of organizations we feel support our own brand’s messaging of living a healthy lifestyle.”

Arthur Gallego
Gallego & Co. Brand Communications
(917) 593-3097 or ag@gallegoandco.com
www.gallegoandco.com