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Kashi agrees $5m ‘all-natural’ lawsuit settlement; Bear Naked to pay $325,000 to settle related suit

By Elaine WATSON , 08-May-2014

Kashi agrees $5m ‘all-natural’ lawsuit settlement; Bear Naked to pay $325,000 to settle related suit

Kellogg subsidiary Kashi has joined a growing list of big food companies that have agreed to stop using the term ‘all-natural’ to describe certain products in response to a tidal wave of civil litigation over the controversial term.

In a settlement filed in the southern district of California on May 2, Kashi said it would pay $5m to resolve a class action lawsuit accusing it of falsely advertising scores of products from GoLean bars to Kashi Pita Crisps as ‘all natural’ or with ‘nothing artificial’ when they in fact contained one or more of "an array of chemicals" which the plaintiffs argued a reasonable consumer would consider unnatural.

These included hexane-processed soy ingredients, pyridoxine hydrochloride (vitamin B6), calcium pantothenate (vitamin B5), ascorbic acid, calcium phosphate, glycerin, monocalcium phosphate, sodium phosphate, potassium bicarbonate, potassium carbonate, sodium acid pyrophosphate, sodium citrate, alpha tocopherol acetate, mixed tocopherols, tocopherol acetate, and/or xanthan gum.

PopChips, PepsiCo, and Trader Joe’s have all settled ‘all-natural’ suits

Like Trader Joe’s (which recently agreed a $3.4m settlement in an ‘all-natural’ lawsuit ), PopChips (which has just agreed to a $2.4m settlement over all-natural claims ), and PepsiCo (which agreed to a $9m settlement in a lawsuit over all-natural claims about Naked Juice in 2013 ), Kashi has not admitted liability.

However, it has opted to settle the lawsuit* filed in California by plaintiff Skye Astiana et al in 2011, in order to avoid the “expense, inconvenience and burden” of protracted litigation.

Under the terms of the settlement, which is subject to court approval, California consumers who purchased Kashi products labeled as 'All Natural' or 'Nothing Artificial' that contained any of the above 'challenged ingredients' between August 2007 and the settlement date will be entitled to 50 cents per pack with proof of purchase.

PopChips recently agreed to a $2.4m settlement over all-natural claims

Those without receipts can submit claims as well, but their recoveries are capped at $25 per household.

Kashi has also agreed to stop using the phrase 'All Natural' on products containing pyridoxine hydrochloride, calcium pantothenate and/or hexane-processed soy ingredients and will stop using 'Nothing Artificial' on products containing pyridoxine hydrochloride, alpha-tocopheral acetate and/or hexane-processed soy ingredients.

Separately, according to court papers filed the same day, Kashi’s Bear Naked subsidiary has agreed to pay $325,000 to settle similar allegations in a related class action suit.

U.S. District Judge Marilyn L. Huff certified both cases last year.

Loren Israelsen: ‘I think we're seeing the end of the golden age of natural’

While scores of ‘all-natural’ lawsuits are still moving through the courts, none have gone to trial, and several high-profile defendants have decided to settle in recent months.

Chart compiled by Anne Regan, a partner at Zimmerman Reed, Erik Connolly, a partner at Winston & Strawn, and Jeff White, a partner at Robinson & Cole

Speaking at a webinar on ‘all-natural’ civil litigation hosted by continuing legal education provider Perrin Conferences  in January, Erik Connolly, a partner in Winston & Strawn’s Chicago office, said these cases often dragged on for years, sapping defendants' resources and energy.

For example, motions to dismiss are often granted in part and denied in part, prompting plaintiffs to refile amended claims two or three times, and it’s rare that food companies can “declare a total victory” in the early stages of a case, said Connolly.

As for whether all this litigation is putting firms off making natural claims, recent data from Mintel  shows that the percentage of new products featuring natural claims in the US actually rose slightly to 14% in 2013 (from 12% in 2012).

However, speaking at the Natural Products Expo West show in March, United Natural Products Alliance (UNPA) president Loren Israelsen said things had changed in 2014, adding: "At the next Expo West you'll see the word 'natural' being used far less.

"I think we're seeing the end of the golden age of natural. We'll see more words like 'Simply' instead."

Justin Prochnow: ‘Unless you've literally pulled it out of the ground yourself and stuck it in a box, don't call it all-natural’

Speaking at the same event, Greenberg Traurig attorney Justin Prochnow said: "If you're using GMOs and making natural claims, there's a good chance you'll get sued." 

Justin Prochnow: I tell my clients that unless you've literally pulled it out of the ground yourself and stuck it in a box, don't call it all-natural."

Meanwhile, some “very erratic decisions” were coming out of the courts on this issue, he added: "I tell my clients that unless you've literally pulled it out of the ground yourself and stuck it in a box, don't call it all-natural." 

While defendants that are prepared to go the distance stand a reasonable chance of prevailing in these cases, he said: “After two years, and all that money, tell me if you think that's a win." 

The cases are Astiana et al. v. Kashi Co (lead plaintiff is now Bates), case number 3:11-cv-01967; and Thurston et al. v. Bear Naked Inc., case number 3:11-cv-02890, in the U.S. District Court for the Southern District of California.

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