`Court Finds Olive Oil Grades Mean Little to 'Ordinary' Consumers - Olive Oil Times

Court Finds Olive Oil Grades Mean Little to 'Ordinary' Consumers

Apr. 29, 2013
Virginia Brown Keyder

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Kangadis Food Inc., the olive oil com­pany being sued by the North American Olive Oil Association (NAOOA) has admit­ted that, at all rel­e­vant times prior” to the law­suit, its Capatriti brand 100% Pure Olive Oil” was not pure olive oil. It was olive pomace oil instead. NAOOA esti­mated Kangadis sells about one mil­lion tins of the prod­uct each year.

Olive pomace oil is a refined prod­uct extracted from the byprod­ucts of the first press­ing, the left­over olive pits and pulp, using high heat and chem­i­cal sol­vents. Olive pomace oil is not allowed in any grade of olive oil under any stan­dard in the world,” said Eryn Balch, exec­u­tive vice pres­i­dent of the NAOOA.

The case is ongo­ing. On April 25 an explana­tory opin­ion, by the US Court of the Southern District of New York in NAOOA v. Kangadis Food Inc. explained the Court’s rul­ing of April 19, which did four things:

1. It declined from stop­ping Kangadis (doing busi­ness as The Gourmet Factory” and sell­ing its oil under the brand name of Capatriti) from sell­ing 100% refined” as 100% pure” olive oil;

2. It ordered Kangadis to inform poten­tial con­sumers that tins packed before March 1, 2013 con­tained pomace;

3. It refrained from order­ing Kangadis to indi­cate on its web­site that it had mis­la­beled in the past; and

4. The rul­ing ordered NAOOA to post a $10,000 bond (com­mon in requests for injunc­tions in order to com­pen­sate the defen­dant for losses in case the plain­tiff fails to win the main case).

Kangadis claims, and the Court accepted, that no prod­uct packed after March 1, 2013, has con­tained pomace, but only 100% refined olive oil.”

The NAOOA ulti­mately wants com­pen­sa­tion for its mem­bers for Kangadis’s alleged vio­la­tions of: 1) the US 1947 Lanham Act, aka the Federal Trademark Act, which pro­hibits among other things false adver­tis­ing; and 2) New York General Business Law sec­tions 349 and 350 which pro­tect con­sumers against decep­tive acts and false adver­tis­ing.

To obtain a pre­lim­i­nary injunc­tion, NAOOA must show that it is likely to win the ulti­mate case and that they will suf­fer irrepara­ble harm if the pre­lim­i­nary injunc­tion is refused. To demon­strate such harm, it must show that its mem­bers are com­peti­tors and that there is a causal con­nec­tion between the false adver­tis­ing and its (mem­bers’) sales posi­tion. The Court accepts that such harm has occurred, but ques­tions whether there is the nec­es­sary like­li­hood of suc­cess in the ulti­mate action.

This is where the deci­sion is inter­est­ing and impor­tant. NAOOA does not seek to apply indus­try stan­dards, which are vol­un­tary and unen­force­able in any case. Its posi­tion rides on the claim that the decep­tive busi­ness prac­tices will be imper­mis­si­bly mis­lead­ing to con­sumers,” but the Court noted that it presents no extrin­sic evi­dence that the per­cep­tions of ordi­nary con­sumers align with these var­i­ous label­ing stan­dards.” The Court there­fore finds that NAOOA has failed to show a like­li­hood of suc­cess on the mer­its in the ulti­mate case, as is required for the grant­ing of a pre­lim­i­nary injunc­tion.

Olive oil indus­try insid­ers and cer­tain reg­u­la­tors likely would under­stand Kangadis’s (Pure Olive Oil) label to describe a blend con­tain­ing at least some vir­gin olive oil. But in the absence of any evi­dence to the con­trary, it is far from clear that an ordi­nary con­sumer, unfa­mil­iar with indus­try lingo, would per­ceive those terms the same way,” the Court wrote.

What the opin­ion reveals is some­thing that gets lit­tle air­ing: the olive oil mar­ket is divided into the cognoscenti (who know the stan­dards and pay the price for good olive oil) and the vast mar­ket of con­sumers for whom the basic deci­sion to buy olive oil rather than other oils under­stand­ably reflects the lim­its of their curios­ity and their bud­gets.

Consumer edu­ca­tion plays a strong role in suc­ceed­ing at the higher ends of the olive oil mar­ket. This court opin­ion should serve as a reminder that the high end does not rep­re­sent the entire range of olive oil con­sumers. NAOOA may well ulti­mately win com­pen­sa­tion for its mem­bers, but more informed ordi­nary” con­sumers would increase the like­li­hood of suc­cess for plain­tiffs seek­ing injunc­tive relief in the future.

A class action law­suit was filed against The Gourmet Factory, the com­pany that mar­kets Capatriti olive oil, on April 19 for mis­lead­ing and decep­tive mar­ket­ing.


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