When I think of Pepsi, I think of Americana. While its original logo was red and white, it started distributing its soda in red, white and blue cans in 1941 to support the U.S. World War II effort. The cola company sponsors the Super Bowl halftime show. The beverage has been endorsed by some of the country’s biggest celebrities, including Michael Jackson, Ray Charles, Cindy Crawford, Britney Spears and Beyonce.
That’s why it was surprising to learn that PepsiCo is in hot water after being sued by a consumer alleging that the cola juggernaut misled consumers with claims of its tea being “Made in the USA.”
Trouble started brewing earlier this year when Garo Daldalian sued PepsiCo, Unilever, and Pepsi Lipton Tea Partnership, claiming the companies violated state and federal consumer protection laws. The case was filed in federal court in the U.S. District Court for the Central District of California.
Pepsi-Cola and Lipton Tea learned they were a good match when they first partnered in 1992, whereby Pepsi agreed to distribute single-serve Lipton Original and Lipton Brisk products.
The suit, which has become a class action, alleges the companies’ Pure Leaf tea was falsely labeled as “Brewed in USA,” despite containing foreign-sourced, grown or manufactured ingredients, primarily tea leaves. Daldalian argues that the labeling misleads consumers into believing the products are made entirely in the United States, influencing their purchasing decisions. He asserts that the beverage companies should have been aware of the strict regulations on “Made in USA” claims but chose to ignore them for financial gain.
According to the lawsuit, Daldalian purchased a six-pack of Pure Leaf Lemon Real Brewed Tea at a California grocery store believing it was made with U.S.-sourced ingredients. He claims he relied on the “Brewed in USA” label, which also featured U.S. flag imagery, reinforcing the impression that the product was of American origin. The lawsuit asserts that like Daldalian, consumers across the country paid a premium for the misleadingly labeled products, believing they were supporting American jobs and companies.
Court filings reflect that the main ingredient in Pure Leaf tea is tea leaves, which are actually imported from India, Kenya, Indonesia, or Sri Lanka. Even the vitamin C in some tea varieties allegedly comes from abroad.
Daldalian believes PepsiCo is steeped in controversy by violating California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law. It also alleges breach of express warranty, unjust enrichment, and both negligent and intentional misrepresentation.
He also contends that the companies violated the Federal Trade Commission’s “Made in USA” standard because the claims are unqualified express claims of American origin is false, unfair, or deceptive because the tea is substantially made with foreign ingredients. Finally, the lawsuit also argues that the combination of the “Brewed in USA” statement and the patriotic imagery of a tea drop adorned with an American flag motif near the “Brewed in USA” claim reinforces a false perception that the product is entirely made in the United States.
The plaintiff wants to represent all California consumers who purchased Pure Leaf products labeled “Brewed in USA” within the last four years and seeks damages, restitution and injunctive relief.
Lawyers for PepsiCo are purportedly going to chai to have the suit dismissed, but they’re preparing for oolong trial.
Reg Wydeven is a partner with the Appleton-based law firm of McCarty Law LLP. He can be reached at pcbusiness@postcrescent.com.
