Frito-Lay Drops ‘All Natural’ Labels to Settle Class Action

Advertising Law

To settle a class action challenging advertising for chips and dip products touted as “made with all natural ingredients,” Frito-Lay North America, Inc., has agreed to change its labeling.

The consolidated litigation in New York federal court alleged that the defendant falsely and deceptively labeled and marketed various Tostitos, SunChips and Fritos Bean Dip products as “All Natural” when, in fact, the products were made from unnatural, genetically modified organisms (GMOs).

After more than five years of litigation—including discovery and multiple motions—the parties reached an agreement. Frito-Lay dodged payment to the class (although the company is responsible for $215,000 toward class notice, up to $1.9 million in counsel fees and representative awards for four named plaintiffs), instead agreeing to injunctive relief.

Acknowledging that the litigation was an “important factor” in its decision to modify the labeling and marketing challenged in the lawsuit, Frito-Lay will refrain from labeling, marketing or advertising the products at issue as “natural” or “Made With All Natural Ingredients” unless the Food and Drug Administration issues express guidance, or federal or state legislation is enacted authorizing use of a “natural” claim on a product containing GMO ingredients.

Further, the defendant will not make a non-GMO claim on the products unless the claim is certified by an independent third-party certification organization and will modify its website to direct consumers looking for non-GMO ingredients to the appropriate products.

In addition, “to protect consumers against the potentially misleading use of a ‘natural’ claim on the products for reasons other than the presence of GMOs in the products,” Frito-Lay will not label the products as “natural” for a period of five years, unless the ingredients are approved or determined as acceptable for products identified as “natural” by a federal agency or controlling regulatory body.

“The Settlement is fair, adequate and reasonable,” according to the plaintiffs’ memorandum of law in support of their unopposed motion for final approval of the settlement. “From the outset, Plaintiffs’ main objective in filing the lawsuit was to remedy the alleged deceptions in Frito-Lay’s marketing and labeling of the Products.”

Although the defendant could withstand a monetary judgment, the plaintiffs told the court the “substantial” injunctive relief agreed upon provided “significant and valuable benefits to the Class.” Even if the plaintiffs succeeded at trial, “the injunctive relief obtained is unlikely to be broader than that obtained in the Settlement and could, in fact, be narrower,” they argued.

Requesting final approval of the deal, the plaintiffs told the court that no objections have been filed to date.

To read the memorandum in Frito-Lay North America, Inc., All Natural Litigation, click here.

Why it matters: After almost six years of litigation, the parties reached a deal providing injunctive relief for the class in the form of “natural” claims being removed from the labeling of the challenged products.