Aurora Dairy has agreed to pay $7.5 million to settle consumer-fraud lawsuits brought because it misused the word "organic" in marketing claims for its milk.
Under the settlement, consumers who bought private-label milk from one of Aurora’s retail partners – including Wal-Mart, Target, Costco and Wild Oats – will be able to receive rebates of $30 with proof of purchase or $10 without proof of purchase. If the settlement is approved, a Web site will provide more details about how to file.
In agreeing to settle, Marc Peperzak, founder and CEO of Aurora, maintained that his company has not violated its organic certifications. Nor is it being required to change its packaging:
"Without exception, we have always produced organic dairy products without chemical fertilizers, synthetic pesticides, antibiotics and artificial growth hormones according to USDA organic standards," he says.
The first formal complaint against the company was filed in 2005 when the Cornucopia Institute discovered that the company confined as many as 4,400 milk cows on feedlots rather than grazing them – as is required to meet federal organic standards.
Aurora operates four dairy farms over more than 5,000 acres in Texas and Colorado, making it one of the largest dairy operations in the US.
Although the initial case was dismissed, federal regulators found credence in a second complaint – ruling that not only had Aurora "willfully" disregarded the grazing rules, it was also using non-organic subcontractors and bringing conventional cows into its production operations.
That opinion opened the door for a class-action lawsuit, heard in St. Louis district court on behalf of consumers in 30 states. The proposed settlement still needs to be approved by the judge hearing that case.
Meanwhile Aurora has been allowed to operate under a sort of probation while all this has been winding its way through the legal system, provided it made changes to its operations such as reducing its herd. For example, the herd at its Platteville, Colorado, facility was reduced to 800 cows from 4,400.
"Congress gave the USDA the authority to find scofflaws, in matters like the Aurora scandal, millions of dollars, and yank their organic certificates, effectively banning them from commerce, but they chose to side with the millionaires and investors operating Aurora rather than the thousands of family-scale dairy farmers that they had competitively injured," says Tony Azevedo, president of the Western Organic Dairy Producers Alliance.
The settlement will do little to help the cutthroat competition that exists between large-scale operations like Aurora and other giant operations, such as Dean Foods (which owns the Horizon label), but it does suggest that the USDA (for now at least) will more closely enforce the integrity of organic labels.
For more background and ratings for organic milk, see this Cornucopia Institute report:
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