Costco Will Pay $775K to Settle Coconut Oil Class Action Lawsuit

Costco proposes to pay a $775,000 settlement to resolve claims in a class action lawsuit alleging the grocery wholesaler misleads customers by advertising its Kirkland coconut oil as healthy.

Lead plaintiffs allege in their class action lawsuit that coconut oil is made up of unhealthy saturated fat, but Costco advertises huge quantities of the product as “healthy and delicious.”

According to the proposed settlement, the terms “healthy” and “health benefits” will be removed from the coconut oil packaging. Additionally, Costco will put $775,000 into a settlement fund to cover claims and other expenses.

“Following more than a year of discovery, multiple motions, and many informal settlement discussions, at a February 23, 2017 mediation, the parties reached a class action Settlement Agreement that provides substantial relief to the Class,” said the preliminary settlement approval motion filed with the federal court.

Consumers will be able to submit claims for purchases of 42.3 ounce jars of Kirkland coconut oil made between March 1, 2014 and June 30, 2016. The coconut oil was sold in a package made up of two jars. Costco will pay up to $3 per jar claimed by the consumer. According to documentation filed with the court, 1.72 million consumers may be entitled to make a claim.

“[D]efendants have agreed to no longer use the term ‘healthy’ (or variations) to advertise Kirkland Coconut Oil on the product’s label,” the settlement documentation states.

According to the motion for preliminary approval of the settlement, Costco will email approximately 790,000 Class Members and also send notice via regular mail.

“The Postcard and Email Notices will include a link to the Settlement Website, www.CostcoCoconutOilSettlement.com, where class members can view the Long-Form Notice, case documents, important dates, frequently-asked questions, and other information about the case and Settlement, and where they can make a claim or download an opt-out form,” said the motion.

The plaintiffs alleged in their class action lawsuit that Costco marketed Kirkland Signature Organic Coconut Oil as a healthy alternative to butter and other oils, but coconut oil is made of saturated fat that is inherently unhealthy and increases the risk of cardiovascular disease and other illnesses.

Costco asked the California federal court to dismiss the class action in June of last year. Costco argued that since the plaintiffs did not show that the coconut oil caused them any harm, they could not claim that the labeling of the product caused them to suffer.

U.S. District Judge David O. Carter rejected Costco’s motion noting that the plaintiffs had sufficiently established standing and had properly alleged that they relied on the label’s claims and lost money because of it.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

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. 8:16-cv-00278, in the U.S. District Court for the Central District of California.

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