Whole Foods Wins Partial Summary Judgment Against Yogurt Supplier

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Earlier this week, a Texas federal judge granted partial summary judgment in favor of WFM Private Label LP (Whole Foods) in a lawsuit the grocer filed against its supplier of Greek yogurt it sells under the Whole Foods Market 365 Everyday Value private label.

Whole Foods and 1048547 Ontario Inc. d/b/a Skotidakis Goat Farm (SGF) reportedly entered into an agreement in 2012 in which SGF agreed to supply Whole Foods with various Greek yogurt products.

The grocer says that, at the time of the contract, SGF provided nutritional information about the yogurt that was based on nutritional tests provided by a third-party laboratory company. The tests were reportedly performed in 2010 and 2011.

Whole Foods alleges that some of the products supplied by SGF had a higher sugar content than was disclosed on the product labels.

As a result of this allegedly inaccurate labeling, Whole Foods was hit with numerous consumer lawsuits, including 11 Greek yogurt class action lawsuits, and had to withdraw its Greek yogurt products from the market.

SGF reportedly failed to provide Whole Foods with updated test results that it received in September 2013 about some of its yogurt products.

These updated test results reportedly reflected a higher sugar content in some of the yogurt products than shown by the earlier tests. The 0% plain yogurt that SGF supplied to Whole Foods was reportedly one of the products that tested as having a higher sugar content.

Whole Foods says it contacted SGF in November 2013 after a customer inquired about the low sugar content of its plain yogurt products. SGF reportedly assisted Whole Foods with its response but failed to notify the grocer of the new test results.

In July 2014, Whole Foods was reportedly contacted by Consumer Reports about an upcoming article it would be publishing about the sugar content of Whole Foods Market 365 Everyday Value plain yogurt.

Consumer Reports told Whole Foods that product testing showed the plain yogurt contained five times the amount of sugar listed on the label.

Whole Foods contacted SGF seeking more information, and on the same day, SGF reportedly provided the grocer with the 2013 test results showing higher sugar content.

The Consumer Reports article was published on July 17, 2014, and Whole Foods voluntarily withdrew its product after confirming the sugar content exceeded the amount listed on the label.

According to court documents, SGF said it would pay for the cost of Whole Foods defending against the lawsuits, and it filed a lawsuit against the company that performed the nutritional testing of the yogurt products.

Whole Foods filed a crossclaim against SGF accusing the company of fraud and breach of contract. In Monday’s order, U.S. District Judge Sam Sparks disagreed with SGF’s argument that Whole Foods breached its agreement without cause, finding that Whole Foods actually had the right to cancel the vendor agreement “at any time for any reason.”

The judge also found that the payments SGF had made to Whole Foods did not cover the entire cost of the yogurt labeling lawsuits.

Judge Sparks did allow fraud claims to proceed over allegations SGF knew that updated testing showed the sugar content labeling was inaccurate but failed to disclose that information to Whole Foods.

The Whole Foods Yogurt Sugar Content Lawsuit is WFM Private Label LP v. 1048547 Ontario Inc. d/b/a Skotidakis Goat Farm, Case No. 1:14-cv-01013, in the U.S. District Court for the Western District of Texas, Austin Division.