Judge Tosses Out “All-Natural” Lawsuit Against AriZona

AriZona Beverages can breathe a sigh of relief now that a federal judge has tossed out a long-running class-action lawsuit claiming that the company misrepresents its products as “all-natural.” In his ruling, U.S. District Judge Richard Seeborg decertified the class of consumers in the suit and stated that the plaintiffs did not introduce any evidence to prove their allegations that high fructose corn syrup (HFCS) and citric acid are artificial ingredients.

The lawsuit was one of several filed in recent years against beverage companies, ranging from entrepreneurial companies like Xing Tea marketer New Age Beverage Co. to PepsiCo and the Coca-Cola Co., Inc. each of which use the terms “natural” or “all-natural” in marketing and labeling for some of their brands. Plaintiffs in many of the cases allege that consumers are misled about the origins of the ingredients in the products.

In the AriZona lawsuit, which was first filed in March 2010, Judge Seeborg rejected the plaintiffs’ claim that “HFCS is not natural because patents have been issued for the process of producing it” and “that if HFCS were a naturally occurring substance such as ‘a new mineral discovered in the earth or a new plant found in the wild’ it would not be patentable,” is rhetoric as opposed to a valid argument, particularly considering that U.S. patent law is not permissible as evidence under federal guidelines.

Judge Seeborg also rejected the plantiffs’ allegations that AriZona is confusing consumers who do not know what “all-natural” means. The plaintiffs argued that testimony from co-founder Don Voltaggio about his decision to drop the phrase “a hundred percent natural” in AriZona’s marketing and begin using the terms “All Natural Tea,” “No Preservatives,” “No Artificial Color,” and “No Artificial Flavor” was an admission that the company’s labels confused the public. The judge stated that the testimony “does not demonstrate that it is probable that a significant portion of the consuming public could be confused by the ‘all natural’ labeling of defendants’ products.”

And while AriZona produced a range of evidence to counter the claims of the lawsuit, including an expert witness to testify that that HFCS and citric acid are indeed natural as well as letters from its suppliers indicating that the ingredients are natural, the judge noted that the plaintiffs failed to present a viable case and that their attorneys had not sufficiently addressed basic and mandatory legal standards.

“Defendants have established that they are entitled to summary judgment by showing that Plaintiffs have not introduced any evidence showing that HFCS or citric acid are artificial, nor have they produced any evidence from which damages may be assessed,” Judge Seeborg said. “Nor, at this late stage in the litigation, could plaintiffs obtain such evidence as discovery is closed.”

In a rather scathing rebuke, Judge Seeborg called the plaintiffs’ counsel “dilatory” and said that their efforts “did not begin to approach due diligence.”

“Plaintiffs had more than six months after the entry of the scheduling order to identify an expert, and failed to do so,” he said. “They then waited for nearly five more months after their deadline for doing so had passed to file a motion requesting that expert discovery be extended.

While the ruling is a significant win for AriZona, the result of the case and, in particular, Judge Seeborg’s rationale in dismissing the lawsuit, could work to the advantage of other beverage companies defending themselves in similar class-action lawsuits.  Justin Prochnow, an attorney with Greenberg Traurig LLP, who specializes in labeling and regulatory issues affecting the beverage industry, noted that the biggest takeaway from the case was the judge’s reasoning that a processed ingredient does not necessarily mean that it should be precluded from being called “natural.”

“The case gives other companies a good road map for defending themselves against possible arguments [in other lawsuits],” Prochnow said.