Costco Class Action Filed Over Coconut Oil Mislabeling

Costco has been hit with a proposed class action lawsuit in California federal court alleging the warehouse retail giant mislabeled its coconut oil as being healthier than other oil and butter products.

Plaintiffs James Boswell and Malia Lavin filed the lawsuit accusing Costco Wholesale Corporation of breaching express and implied warranties and violating California business and civil codes. The plaintiffs allege that Costco’s brand of Kirkland Signature Organic Coconut Oil is advertised as being healthy, but the plaintiffs state this wasn’t the case and were damaged as a result of their purchase.

“Costco misleadingly labels and markets its Kirkland Coconut Oil as both inherently healthy, and a healthy alternative to butter and other oils, despite that it is actually  inherently unhealthy, and a less healthy alternative.”

The plaintiffs claim that consuming the saturated fat found in the Costco coconut oil increases the risk of cardiovascular disease and other illnesses such as stroke. They also say that Costco knows consumers will pay a premium for items that are considered healthy and has targeted its marketing campaign around this fact. The class action lawsuit cited a Nielsen’s 2015 Global Health & Wellness Survey which found that 88 percent of survey respondents were willing to pay more for healthier foods.

“Costco is well aware of this and therefore employs a marketing strategy intended to convince consumers that the Kirkland Coconut Oil is ‘healthy,’ despite that it is almost entirely composed of saturated fat,” the lawsuit states.

Both plaintiffs claim that they would have been willing to pay less, or perhaps would be unwilling to purchase the coconut oil at all had Costco not allegedly misrepresented the health benefits of the product.

“For these reasons, Costco’s Kirkland Coconut Oil was worth less than what Plaintiffs paid for it, and may have been worth nothing given its high total fat and saturated fat content, subjecting plaintiffs to increased risk of CHD, stroke, and other morbidity,” the complaint read. “Instead of receiving a product that had actual healthful qualities, Plaintiffs and the Class received a coconut oil which is not healthy, but rather its consumption causes increased risk of CHD, stroke, and other morbidity.”

In terms of relief, the plaintiffs are seeking an injunction to stop Costco from marketing the coconut oil “using the misleading tactics complained of,” launch a corrective advertising campaign, destroy any materials that are misleading and deceptive, restore amounts to consumers from its unjust enrichment, as well as pay restitution, damages and punitive damages as the law allows.

The Costco class action lawsuit was initially filed in California Superior Court but Costco filed to transfer the case to federal court because the proposed Class size would exceed more than one hundred members, at least one proposed Class Member would be a resident of a state other than California, and the total amount in controversy is in excess of $5 million dollars.

The plaintiffs are represented by Paul K. Joseph of the Law Office of Paul K. Joseph and Jack Fitzgerald, Trevor M. Flynn and Melanie Persinger of The Law Office of Jack Fitzgerald.

The Costco Coconut Oil Class Action Lawsuit is Boswell, et al. v. Costco Wholesale Corp, Case No. 3:16-cv-00278-DOC-DFM in the U.S. District Court for the Central District of California.

UPDATE: On June 6, 2016, a federal judge ruled that Costco will have to face a class action lawsuit that alleges its coconut oil labels are misleading to suggest that the product is “healthful and delicious,” when it is not actually healthier than other cooking oils.

UPDATE 2: On May 1, 2017, Costco proposed to pay a $775,000 settlement to resolve claims in a class action lawsuit alleging the grocery wholesaler misled customers by advertising its Kirkland coconut oil as healthy.

UPDATE 3: September 2017, the Costco coconut oil class action settlement is now open. Click here to file a claim.