Walmart, Target, Costco Facing Milk Labeling Lawsuit

A federal appeals court has ruled that Wal-Mart Stores Inc., Target Corp. and Costco Wholesale Corp. must face a lawsuit accusing them of selling store-branded milk mislabeled as organic.

A three-judge panel overturned a lower court’s dismissal of the claims against the companies, along with several other retailers and Boulder, Colo.-based Aurora Dairy Corp., businessweek.com reported. “Each defendant is alleged to have misrepresented the manner in which the dairy cows were raised and fed in violation of various state deceptive trade practices laws,” the appeals court said.

The consumers seek unspecified compensatory damages for having bought milk they allege wasn’t authentically organic, plus statutory and punitive awards.

Amy Reilly, a spokeswoman for Minneapolis-based Target, said she couldn’t comment on pending litigation. “We are confident that we provide organic products that meet our guests’ expectations,” she told businessweek.com.

Walmart spokesman Greg Rossiter said his company perceived the ruling as a vindication on the false-labeling claim. The Arkansas-based retail giant is “pleased that the court agreed that the dairy products were properly labeled as organic,” Rossiter told businessweek.com.

Aurora’s organic milk certification has never been suspended or revoked. While the U.S. Department of Agriculture had proposed doing so in April 2007, claiming “multiple cases” of using nonorganic cows to produce organic milk, the dispute was settled in August of that year with Aurora agreeing to “retire or remove some of its allegedly nonorganic cows,” the appellate panel said.

A lower-court judge ruled last year that a consolidated complaint filed by residents of five states was preempted by the federal regulations over organic foods.