Settlement fund in stevia deceptive marketing lawsuit alleging Truvia is not ‘natural’ rises to $6.1m

02-Dec-2014 - Last updated on 02-Dec-2014 at 16:24 GMT

A court in Hawaii has approved a settlement between Cargill and a series of plaintiffs alleging it misled shoppers by marketing its Truvia consumer products (which contain stevia extract Reb-A and erythritol) as ‘natural’.

The Nov 26 agreement settles four class action lawsuits filed in 2013, and extends a settlement agreement we reported on last September. It also increases the settlement fund (for cash refunds or vouchers for consumers that bought Truvia products) from $5m to $6.1m, and awards attorneys fees and costs of up to $1.83m.

Extraction and processing methods mean a reasonable consumer would no longer consider Truvia to be ‘natural’

The lawsuits allege that Cargill misled shoppers by marketing its Truvia tabletop sweetener as ‘natural’ as the Reb-A steviol glycoside it contains is "highly chemical processed" and the bulking agent (erythritol) is “synthetically made”.

According to plaintiff Denise Howerton, while the Reb-A is derived from a natural source (the stevia leaf), the extraction and processing methods mean a reasonable consumer would no longer consider it to be ‘natural’. Meanwhile, erythritol, a zero calorie, tooth-friendly bulk sweetener, is “synthetically made”, she claimed.

Howerton’s lawsuit added: "Cargill manufactures Truvia's synthetic erythritol in a patented process by first chemically extracting starch from GM corn and then converting the starch to glucose through the biochemical process of enzymatic hydrolysis. The glucose is then fermented utilizing moniliella pollinis, a yeast."

A reasonable consumer, she argued, "understands a natural product to be one that does not contain man-made synthetic ingredients, is not subject to harsh chemical processes and is only minimally processed."

Are the changes Cargill has agreed to make ‘substantive’?

Under the settlement, Cargill does not admit liability, and still reserves the right to call Truvia a ‘natural sweetener' or 'Nature’s Calorie-Free Sweetener'.

However, it has agreed to make changes to its labeling and marketing, which attorneys representing the plaintiffs described as “substantive”. Specifically, Cargill agreed to:

Put a notice on its label directing consumers to the Truvia website for clarification about how the ingredients are made.
Clarify its “Nature’s Calorie-Free Sweetener” and “Truvia Natural Sweetener provides the same sweetness as two teaspoons of sugar” statements by adding an asterisk inviting consumers to look at the FAQ page of its website so they "can fully understand how the product is made and why Cargill believes it is natural".
Remove the phrase “similar to making tea” on Truvia consumer products (the lawsuit disputed whether the fermentation process used to obtain stevia extract was really similar to distilling tea in a teapot).

Melissa Wolchansky, attorney with Halunen & Associates in Minneapolis and a lead plaintiff’s attorney in the lawsuit, added: “The plaintiffs demanded that Cargill change its marketing to be more transparent with consumers about what was in Truvia and how it was manufactured. And that is exactly what Cargill agreed to do to settle the case.”

Cargill close up stevia leaf — According to a series of class action lawsuits filed in 2013, while the Reb-A in Truvia consumer products is derived from a natural source (the stevia leaf), the extraction and processing methods mean a reasonable consumer would no longer consider it to be ‘natural’

Cargill still gets to call Truvia 'natural'

So what do food law attorneys make of the settlement?

Truvia-tabletop-sweeteners — The FDA follows a 1993 policy that states: “[FDA] has not objected to the use of the term [‘natural’] on food labels provided it is used in a manner that is truthful and not misleading and the product does not contain added color, artificial flavors or synthetic substances.”

David L. Ter Molen, a partner in the Chicago offices of law firm Freeborn & Peters LLP, told FoodNavigator-USA that the fact Cargill can still call the products 'natural' - albeit with an asterisk - meant it was hard to see the settlement as a huge victory for the plaintiffs.

"A central premise for plaintiffs in many labeling 'all natural' class action lawsuits is that consumers can be misled by claims on the front of a product even if the alleged deception is dispelled by the ingredient list on the back of the package," he said.

"The settlement in this case runs contrary to this view by allowing 'natural' claims to continue while relegating 'substantive' labeling changes to asterisks that direct consumers to the FAQ section of Truvia’s website. That website is far less relevant to consumers when selecting a product at the grocery store than the ingredient list, so it is certainly unusual that plaintiffs would agree to this resolution given the nature of the claims."

As for the $6.1m settlement fund, he said: "It appears consistent with similar cases. What is unusual, however, is that those other cases usually involve more substantive labeling changes."

This is one of the highest settlements to date for a 'natural' labeling lawsuit

However, Rebecca Cross, a San Francisco-based attorney at BraunHagey & Borden LLP, noted that this is "one of the highest settlements to date for a 'natural' labeling lawsuit". The case was also "different than the typical, boilerplate complaints" in many other all-natural lawsuits in that the plaintiffs "alleged that Cargill misled consumers about how Truvia is manufactured, not simply that it misused the term natural", she added.

Rebecca Cross Landscape — Rebecca Cross: This is one of the highest settlements to date for a “natural” labeling lawsuit

"It is unfortunate that companies like Cargill are paying out seven-figure settlements. Where these cases are litigated, courts have refused to certify them for class treatment because there are no 'damages' to any of the plaintiffs."

Kristen Polovoy of Montgomery, McCracken, Walker & Rhoads LLP, said $6.1m was in the ballpark of other recent settlements in deceptive advertising cases such as Dreamfields Pasta ($7.9m); Kashi ($5m),Trader Joe’s ($3.38m), ConAgra ($3.2m), Barbara’s Bakery ($4m) and Red Bull ($13m).

She also noted that Merisant and Whole Earth Sweeteners recently agreed to pay $1.65m to settle a similar case over Pure Via stevia-based sweeteners (Angel Aguiar v Merisant Co) and add an asterisk on the packaging directing consumers to a website (click HERE).

Cargill: Truvia products are made from natural ingredients

Cargill, meanwhile, told us that it was pleased to have reached a settlement, but added: "We stand behind the labeling of our Truvia natural sweetener consumer products. Those products are made from natural ingredients and the labeling meets all applicable legal and regulatory guidelines.

"Putting this matter behind us enables us to focus all our attention on our products and our consumers which has always been our first priority. We are pleased to provide our consumers with more information about our product."

The case is: 14-cv-00218 in the US District Court for Hawaii