$9.35M Deal Reached in Hain ‘Organic' Care Product Suit

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By Julie A. Steinberg

Sept. 24 — Hain Celestial Group Inc. has agreed to a class settlement valued at $9.35 million to resolve allegations that it misled California consumers with “organic” representations on its Avalon Organics and Jason personal care products.

A hearing is set for Oct. 8 in the U.S. District Court for the Northern District of California on the plaintiffs' motion for preliminary approval.

The deal follows rulings by Magistrate Judge Laurel Beeler certifiying consumer classes and granting partial summary judgment to the plaintiffs on liability issues.

The 70 Percent Rule

Plaintiffs Rosminah Brown, Eric Lohela and Lauren Crivier said Hain violated a requirement of the California Organic Products Act (COPA) that cosmetic products labeled “organic” contain a minimum of 70 percent organically produced ingredients. That alleged violation gave rise to claims under various California consumer protection laws.

Under the settlement, Hain agreed to contribute $7.5 million into a class fund that will cover claims, attorneys' fees, class notice and incentive awards to named plaintiffs. The company also said it would spend $2 million for a coupon program. Because of costs such as printing, the program will yield coupons with $1.85 million in face value to claimants, according to the plaintiffs' Sept. 22 motion.

Class members who submit claim forms are eligible to receive a cash payment or a cash payment and coupons.

Members without receipts may receive 50 percent of the purchase price of each product, up to $50, in cash. Alternatively, they may receive up to $80 in cash and coupons (the payment will be calculated at a ratio of $1 cash to $4 in coupons). For class members who have receipts for the challenged products bought, there is no maximum for either cash or cash/coupon payments, according to the motion.

The settlement also provides for attorneys' fees and expenses not to exceed $4 million, and incentive awards of $7,500 each to plaintiffs Rosminah Brown and Eric Lohela; and $1,500 to plaintiff Lauren Crivier, who became part of the litigation later.

The agreement covers purchasers of Avalon Organics products in California between May 11, 2007, and May 11, 2011; and individuals who bought a Jason product in California from May 11, 2007, to Jan. 30, 2011.

The company removed a tagline that said, “Pure, Natural & Organic” from the Jason products in January 2011.

Compliance Efforts

Hain maintains it began efforts to bring its products into compliance with COPA at around the time this litigation began. Therefore, the settlement was intended to require Hain to disgorge profits it obtained during the time the products were allegedly mislabeled, the motion said.

The court certified separate classes of Avalon and Jason purchasers in November 2014, saying class membership could be determined by the plaintiffs' self-identification.

And in May 2015, the court granted the plaintiffs partial summary judgment on liability issues. It said mislabeling a cosmetic product as “organic” when its contents are less than 70 percent organic violates California law and “carries the plaintiffs a long way toward proving much of their case” under consumer protection laws.

The Lexington Law Group represents the plaintiffs.

Morrison & Foerster LLP represents Hain.

To contact the reporter on this story: Julie A. Steinberg in Washington at jsteinberg@bna.com

To contact the editor responsible for this story: Jeffrey D. Koelemay at jkoelemay@bna.com

The motion is available at http://www.bloomberglaw.com/public/document/Brown_et_al_v_The_Hain_Celestial_Group_Inc_Docket_No_311cv03082_N/5.