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PopChips agrees $2.4m ‘all-natural’ lawsuit settlement; settlements also likely in Kashi and Bear Naked cases

By Elaine WATSON , 26-Feb-2014
Last updated on 26-Feb-2014 at 20:07 GMT2014-02-26T20:07:59Z

PopChips agrees $2.4m ‘all-natural’ lawsuit settlement; settlements also likely in Kashi and Bear Naked cases

Snack maker PopChips looks set to become the latest firm to stop using the term ‘all-natural’ to describe its products after agreeing to settle a lawsuit alleging it misled consumers by using the controversial term.

While most ‘all-natural’ lawsuits are still moving through the courts, several high-profile defendants have decided to settle in recent months, while other well-publicized cases* against Kashi and Bear Naked (both owned by Kellogg) also seem likely to end in settlements rather than going to trial.

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

However, it has opted to settle a class action lawsuit** filed in Missouri by plaintiffs Tonya Kelly and Brian Martens in April 2013 “in order to avoid further expense, inconvenience, risk, uncertainty, and burden resulting from continued litigation”.

PopChips will stop using the terms ‘all-natural’, ‘healthy’ and ‘healthier’

Under the settlement, which must be approved at a final hearing on March 13 in Kansas City, PopChips has agreed to create a fund of $2.4m enabling a nationwide class of consumers that reside in the US and purchased certain PopChips products between January 1, 2007 and November 14, 2013 to receive compensation of up to $20 per person.

The firm - which has carved a successful niche in the snacks market by applying techniques used to make rice cakes to potato chips (not fried or baked, but ‘popped’ using heat and pressure) - has also agreed to stop using the terms ‘all-natural’ , ‘healthy’, ‘healthier’ (among other things - click here ).

Instead it will use terms such as ‘naturally delicious’ and ‘natural flavors’ on its products, which contain less than half the fat of regular fried potato chips, claims the company.

It has also agreed to modify some non-GMO claims and replace them with claims that refer to specific ingredients, such as ‘made with non-GMO corn and canola oil’.

Kelly and Martens alleged that PopChips misled consumers by labeling and promoting its products as ‘all-natural’ when they were in fact “highly processed, contain numerous artificial and synthetic ingredients, including ingredients containing GMOs, and excessive amounts of fat”.

All-natural lawsuits peaked in 2012, but too early to detect if this is a trend

While the number of lawsuits filed against food and beverage manufacturers over ‘all-natural’ claims appeared to peak in 2012 and drop off again in 2013 (see chart, left), it’s too early for the industry to start celebrating just yet, say legal experts.

Speaking at a webinar on ‘all-natural’ civil litigation hosted by continuing legal education provider Perrin Conferences  last week, Erik Connolly, a partner in Winston & Strawn’s Chicago office, said that owing to the length of time it has taken for many of these cases to move through the courts, some legal firms may just be waiting to see how certain cases play out before filing fresh complaints.

Meanwhile, new data from Mintel shows that the percentage of new products featuring natural claims in the US rose slightly to 14% in 2013 (from 12% in 2012), suggesting that food marketers still believe ‘all-natural’ has pulling power with consumers. 

No all-natural cases have gone to trial… yet

Frustratingly for many food and beverage firms targeted in false advertising lawsuits, motions to dismiss are often granted in part and denied in part, and it’s very rare that food companies can “declare a total victory” at this stage in a case, said Connolly.

In the actions where a class is certified, meanwhile, defendants typically choose to settle, with no cases to date going to trial.

*One high-profile ‘all-natural’ false advertising lawsuit (homing in on hexane-processed soy ingredients), that now appears to be heading for a settlement is Thurston et al. v. Bear Naked, Inc (No. 3:11-cv-02890-H-BGS), with court documents filed on February 18 revealing the parties “hope to file the motion for preliminary approval of class settlement soon”.

Another big case - Astiana, et al. v. Kashi Company (No. 3:11-cv-01967-H-BGS) that also homes in on hexane-processed soy ingredients among other things - also appears to be heading to a settlement.

**The case is Tonya Kelly, et al. v Popchips Inc., No. 1316-CV11037, in the Circuit Court of Jackson County, Missouri, at Kansas City.

Click here to read more about the settlement. 

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