Whole Foods Fights Labeling Class Actions

SAN FRANCISCO (CN) - Whole Foods Market on Thursday tried to swat down two class actions claiming it falsely labels its baked goods as "all natural."

Lead plaintiff Mary Garrison filed two class actions against the grocery store chain, in 2013 and 2014, saying she and other customers paid premium prices for "all natural" cookies, muffins and other goods that contained synthetic ingredients.

In a Thursday hearing on Whole Foods' request for summary judgment, its attorneys said the plaintiffs failed to show how much they allegedly overpaid for the "all natural" products.

"The plaintiffs must satisfy all elements of their claims, including damages," Whole Foods attorney Jay Connolly said. "There's no evidence of a price premium attributable to the all-natural label."

But class attorney Molly DeSario said the evidence can be found in her clients' deposition testimony: that they paid $3 to $6 more, or 10 to 20 percent more, for products they believed contained only natural ingredients.

Class co-counsel Matthew Bainer said the plaintiffs' expert developed a method to calculate the "inherent value" of the all-natural label.

Bainer rebuffed Whole Foods' contention that the lawsuits should be thrown out because the plaintiffs did not take the extra, expensive step of computing the damages at an early stage in the litigation. No motions for class certification have been filed yet.

"We didn't pay our expert an extra $50,000 to calculate the amount, and the defendants want to rake us over the coals for that," Bainer told U.S. District Judge Vince Chhabria.

Whole Foods attorney Joseph Orzano said the mere claim that they would not have paid as much for a product is insufficient basis for litigation.

"They have to at least show there was a price premium," Orzano said.

Whole Foods' attorneys cited a 2011 ruling from the Southern District of New York, Weiner v. Snapple, which granted summary judgment to the defendants, as the plaintiffs had only "vague recollections" of where and when they bought "all natural"-labeled beverages and how much they paid for them.

Chhabria drew a distinction between that ruling and this case, saying Whole Foods has records on how much it charged for the products in question and how much consumers pay for comparable products that are not labeled "all natural."

The judge gave mixed signals on how he might rule.

Viewing the evidence in a light most favorable to the plaintiffs, Chhabria said, testimony that the plaintiffs overpaid for the baked goods was sufficient to establish standing.

But whether they can establish damages they suffered as a result of that injury is another question.

"I've never seen an opposition to summary judgment be successful when saying, 'I don't have the evidence now, but we will have it,'" Chhabria said.

DeSario said her clients' expert has developed a "range" on the value of the all-natural label and her clients testified about the exact amount they overpaid for the products.

The two sides also squabbled over whether the plaintiffs sued the correct Whole Foods entities.

Whole Foods' attorneys said the plaintiffs improperly sued the "bakehouse," which sells goods at cost to distributors that supply the stores with products.

Connolly said there is no evidence the bakehouse sold those products at a premium price or profited from their sale and distribution.

"The fact that one unit in the company isn't profiting, I don't see how that's relevant," Chhabria replied.

DeSario cited a slew of cases, including class actions against carmakers for auto defects, showing that manufacturers can be held liable for warranty and fraud claims.

"The manufacturer put the 'all natural' claim on the label," DeSario said. "You sue the manufacturer, not the dealership, for misrepresentation."

Chhabria ended the hearing after about two hours, recommended the parties take a second stab at mediation before he rules on the request for summary judgment.

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