Whole Foods' Overcharging Suit Returns

A year and a half after settling claims over the matter, Whole Foods Market is facing another class action accusing it of routinely overcharging New York customers for prepackaged foods, Reuters has reported.

The 2nd U.S. Circuit Court of Appeals in Manhattan said that a lower-court judge “erred in concluding that the plaintiff Sean John, a frequent purchaser of prepackaged cheese and cupcakes, had no right to sue” because he could not prove his claims for a specific purchase, the news outlet said. Circuit Judge Raymond Lohier noted that the plaintiff could face “significant evidentiary obstacles,” but is still allowed to sue even if he wasn't able to prove any of the products were labeled incorrectly.

John sued a month after New York's Department of Consumer Affairs (DCA) found that 80 percent of prepackaged items it tested from the Austin, Texas-based natural grocer had mislabeled weights, and 89 percent had failed to meet federal labeling standards. Overcharges ranged from 80 cents for pecan panko to $14.84 for coconut shrimp.

Whole Foods paid $500,000 – despite DCA's original demand of $1.5 million – in December 2015 for the settlement, which also included quarterly in-store audits, the implementation and enforcement of policies and procedures that require employees not to estimate the weight of a package, and training of all New York Whole Foods associates who weigh and label products. Despite the settlement, Whole Foods maintained that it “had in place preexisting pricing and weights/measures programs.”

The lawsuit comes at a time when Whole Foods is already struggling to reposition itself in an increasingly competitive market and deflationary times. Following calls from several investors to shake up operations or sell altogether, Whole Foods has unveiled an “accelerated path” for growth, supported by category management and pricing initiatives, enhanced marketing and Affinity programs, and “disciplined organic growth.” Additionally, the retailer named Keith Manbeck, veteran of retailer Kohl’s, its new CFO, and added five new board members while naming two current ones board chair and chair of the board’s nominating and governance committee.