In defending itself against a 2018 lawsuit that alleged the ingredients of LaCroix Sparkling Waters were “synthetic” and not “natural,” National Beverage Corp. notched two victories.
First, the putative class action suit in the U.S. District Court for the Northern District of Illinois was dismissed with prejudice, meaning it can’t be brought again. Second, the named plaintiff, Lenora Rice, and her counsel, expressly recanted the allegations.
The suit claimed LaCroix’s water contained four synthetic substances, two of which were listed in the code of federal regulations, court documents show. Rice further alleged independent lab testing commissioned by her counsel, Beaumont Costales LLC, disclosed the presence of ingredients in LaCroix that were not “natural,” according to a letter from Rice and her counsel retracting their claims.
National Beverage released the letter in conjunction with a Feb. 19 press release, announcing the dismissal of the suit.
“That laboratory has since confirmed in writing and separately under oath that its testing could not, and did not, determine whether the ingredients were ‘synthetic’ and made no finding as to the source of the ingredients it identified,” Rice and her counsel stated. “We do not dispute that those same ingredients can be derived naturally.”
Independent testing performed by another accredited lab, the letter added, verified “LaCroix’s flavor ingredients are 100% natural and free of any ‘synthetic’ sources.”
While Rice and Beaumont Costales wrote “they did not intend any harm to National Beverage Corp., its shareholders, retailers, and most importantly, its following of loyal consumers,” they acknowledged “harm was done.”
LaCroix is the flagship brand of National Beverage (NASDAQ: FIZZ), a manufacturer of sparling waters, energy drinks and carbonated soft drinks with FY19 sales of $1.01 billion.
Commenting on the dismissal of the case, a National Beverage spokesperson said in the press release, “This dismissal confirms our promise to demonstrate that these allegations had absolutely no merit and reaffirms that the company delivers a pure and innocent product.”
National Beverage previously accused Rice of a “public smear campaign” that was “malicious” and akin to “financial terrorism,” U.S. District Judge Joan Gottschall stated in a 2019 order, denying a motion to sanction Rice and her counsel for filing a “frivolous lawsuit.”
At least one other similar complaint was filed in January 2019 against National Beverage in the U.S. District Court for the Southern District of New York. The complaint alleged the company “has knowingly and intentionally misrepresented to consumers … the true nature and quality of the LaCroix product by claiming that the product is ‘all natural’ and ‘100% natural’ when in fact it is not.”
Citing a report from the Center for Applied Isotope Studies at the University of Georgia, the plaintiffs alleged “various flavors of the LaCroix product were found to be comprised of between 36% and 98% synthetic ingredients.”
Neither National Beverage nor a New York-based attorney for the plaintiffs, Mitchell Breit, responded to an emailed request for an update on the complaint. However, the beverage maker denied the claims in a statement shortly after the lawsuit in New York was filed.
In its annual report, National Beverage also addressed allegations in lawsuits that LaCroix’s products contain synthetic ingredients in violation of state consumer protection statutes.
“The company believes the litigation is without merit and will not have a material adverse effect on the company’s financial position, cash flows or results of operations,” National Beverage stated.