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Hain Celestial settles mislabeling lawsuit for nearly $10 million

Hain Celestial's headquarters in Lake Success is pictured

Hain Celestial's headquarters in Lake Success is pictured on Thursday, Sept. 24, 2015. Photo Credit: Barry Sloan

Hain Celestial Group Inc. has agreed to settle for nearly $10 million a class-action lawsuit in California alleging the company falsely labeled its Avalon Organics and Jason brand personal care products as organic.

After more than four years of litigation, the natural and organic food and personal care products company headquartered in Lake Success has agreed to contribute $7.5 million to a claims fund, which will be used to compensate California purchasers of the products. Hain Celestial will also disburse up to $2 million in coupons, issued in $2 denominations, redeemable within a year toward the purchase of any Avalon Organics or Jason brand cosmetics.

The settlement goes to consumers "who allegedly paid a premium over comparable personal care products that did not purport to be organic," the plaintiffs' attorney Mark N. Todzo of the San Francisco-based Lexington Law Group wrote in the settlement agreement submitted Monday to the U.S. District Court in San Francisco.

Hain Celestial officials declined to comment Wednesday. In court documents the company said it began to bring the products into compliance around the time the litigation was started. Hain set aside $5.725 million in the fourth quarter of fiscal 2015 and $1.975 million in prior years in connection with the settlement.

The lawsuit, filed in 2011, noted that the Jason branded products displayed the phrase "Pure, Natural & Organic," while Avalon product labels had "Organics" on them, but alleged they didn't meet the standards of California's Organic Products Act. That law requires that products represented as organic consist of at least 70 percent organic ingredients.

Hain Celestial acquired the cosmetic company Jason Natural Products Inc. in June 2004 for $23.9 million. It bought Avalon Organics in January 2007 for $120 million from North Castle Partners LLC, a private equity firm.

The settlement, which still needs court approval, will compensate people who purchased an Avalon Organics product in California between May 11, 2007, and May 11, 2011, and a Jason product in California from May 11, 2007, to Jan. 30, 2011. They will receive up to $50 in cash or up to $80 in cash and coupons.

The settlement funds will also be used to pay up to $4 million in attorneys' fees, up to $650,000 in administrative fees, and up to $16,500 to plaintiffs Rosminah Brown, Eric Lohela and Lauren Crivier. The remainder will be distributed to the California Consumer Protection Foundation and the Jesse Smith Noyes Foundation.

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