After four years of protracted litigation in the U.S. District Court for the Northern District of California (and an unsuccessful appeal to the Ninth Circuit to resolve complex issues of primary jurisdiction and federal preemption), the Hain Celestial Group entered into a $9.4 million class-action settlement with several plaintiffs who successfully alleged that the company falsely labeled as “organic” various cosmetic products sold under the brand names Jason and Avalon Organics.
The settlement followed a federal magistrate judge’s May 2015 orders that granted partial summary judgment to the plaintiffs on various aspects of claims brought under the California Organic Products Act, which generally requires that any cosmetic product sold, labeled and/or represented as “organic” must be comprised of at least 70% organic ingredients by weight. Among other things, the court’s orders made two key determinations that upped the ante on Hain to quickly settle the dispute before trial. In particular, the court determined that (i) 142 of Hain Celestial’s products were cosmetics for purposes of COPA and, hence, were subject to its organic-content labeling requirements; and (ii) a violation of COPA, if proven by the plaintiffs at trial, would alone establish materiality and likely deception under the California Unfair Competition Law (UCL) and reliance under the Consumers Legal Remedies Act (CRLA).
The court’s orders appear to have motivated the defendant to quickly resolve the dispute, which is not surprising given the potential for further liability under the UCL and CRLA.
The case is entitled Brown, et al. v. Hain Celestial Group Inc., No. 3:11-cv-3082 (N.D.Cal.). The court’s original ruling denying defendant’s motion to dismiss was published as Brown v. Hain Celestial Group, Inc., 913 F. Supp. 2d 881 (N.D.Cal. 2012). A copy of the final stipulation of settlement can be found here: https://www.hainorganiccosmeticslawsuit.com/documenthandler.ashx?docpath=/documents/stipulation_of_settlement.pdf