BROOKLYN, N.Y. (Legal Newsline) - Harmless Harvest Inc. has agreed to pay nearly $1 million and change the labels on its coconut water products under a proposed class action lawsuit settlement.

The plaintiffs in the class action filed an unopposed motion for preliminary settlement approval in the U.S. District Court for the Eastern District of New York Dec. 27.

They said they believe the settlement is “fair, reasonable and adequate,” and should be preliminarily approved by Judge Joan M. Azrack.

The proposed settlement provides labeling changes and ongoing third-party monitoring of the accuracy of Harmless Harvest’s product labels.

In particular, the company has agreed to remove allegedly false and misleading statements of “100 percent Organic” and “Raw” from its products’ packaging, and will engage an independent third-party consultant for a period of two years from the effective date of the settlement. The consultant will review the product labels for ongoing accuracy and provide reports to class counsel.

The cost of the consulting fees will be borne by Harmless Harvest, according the proposed settlement’s terms.

Also, under the proposed settlement, the company has agreed to pay attorneys’ fees in the amount of $575,000. That amount includes incentive awards to the named plaintiffs of $20,000 total.

Harmless Harvest also has agreed to pay up to $350,000 in claims administration fees and notice costs.

“Plaintiffs believe that the Settlement provides an excellent recovery for Settlement Class Members and falls well within the range of reasonableness, such that preliminary approval is warranted,” the motion states.

The settlement comes not even a week after the class action lawsuit was filed against Harmless Harvest, on Dec. 23.

Plaintiffs Guoliang Ma, Elizabeth Peguero, Sharon Manier and Kin Fai Lau, on behalf of themselves and others similarly situated, accused Harmless Harvest of false and misleading representations on its coconut water product labels and in advertising campaigns.

The plaintiffs argued the company knew that “at least a significant portion” of its coconut supply had neither been 100 percent organic nor U.S. Department of Agriculture-certified organic.

“Specifically, Defendant purposefully and knowingly (i) purchased coconuts from coconut plantations which have no organic certification; (ii) purchased coconuts from street vendors whose source of supply is unknown; (iii) purchased ‘green-washed’ coconuts from ‘brokers’ who would certify that the coconuts are organic even though they are not; (iv) caused farmers to sign a ‘Farmer’s Agreement’ promising to use organic farming techniques without testing soil sample; and (v) conspired with the organic certifier Bioagricert in obtaining fraudulent organic certification,” they wrote in their complaint.

They argued Harmless Harvest tried to capitalize on American consumers’ growing interest in organic and raw foods and beverages, noting their health benefits.

Coconut water, in particular, is naturally hydrating with its rich electrolyte contents and low in calories, making it a natural alternative to sports drinks.

“In a matter of a mere decade, the industry of packaged coconut water has exploded into one of the fastest growing beverage categories in the United States grossing hundreds of millions of dollars a year,” the plaintiffs wrote in their complaint.

But supply can be an issue.

“Organic coconut farmlands do not just appear overnight,” the plaintiffs wrote. “Converting a coconut plantation from conventional to organic takes time -- organic certification requires that crops do not receive any synthetic chemicals including fertilizers or pesticides for three (3) years prior to the harvest of the crops.”

Not to mention so-called “raw” juices have a shorter lifespan -- because they are unpasteurized and untreated -- thus making them more expensive.

“Nonetheless, more and more consumers specifically seek out and pay the premium for raw juice because of the health benefits that live enzymes, probiotics, nutrients and vitamins offer over conventional, pasteurized products,” the plaintiffs noted. “Hoping to capture this growing market, Defendant made a series of representations which are specifically targeted at such values held dear by consumers.

“Defendant deceived and misled consumers into paying a sizable pricing premium that they would not have paid had they known the truth about Defendant’s products.”

A spokeswoman for Harmless Harvest said the company denies any wrongdoing and liability, but said it agreed to settle the lawsuit to end “costly and protracted” litigation.

“Like so many other food, beverage and consumer product companies facing distracting and unwarranted lawsuits today, we have reached a settlement with a plaintiffs’ law firm with the best interests of our consumers, employees and suppliers in mind,” said Whitney Spielfogel, director of communications for Harmless Harvest.

“If we had unlimited time and financial resources we would fight this case to the end in court, confident in the knowledge that we would prevail because our products are safe, wholesome and organic.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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