Walmart, Target Settle Herbal Supplements Class Action Litigation

Consumers who accused national retail chains of selling herbal supplements that allegedly failed to contain the labeled ingredients have agreed to settle multi-district litigation, court records show.

The parties “represented that they have reached a settlement in all of the MDL [multi-district litigation] cases," according to a July 11 filing from the clerk in the U.S. District Court for the Northern District of Illinois.

Several putative class action lawsuits were filed against Target Corp., Walgreens Boots Alliance Inc., Wal-Mart Stores Inc. and NBTY Inc. after New York Attorney General Eric Schneiderman announced results in 2015 from testing of herbal supplements using DNA barcode technology.

The results, New York authorities said, could not verify that products contained the labeled herbs, such as Echinacea and St. John’s Wort, and the supplements were contaminated with undeclared substances. Only 21 percent of the product tests verified DNA barcodes from the plant species listed on the labels, according to New York authorities.

The probe, reported widely in the mainstream media including The New York Times, ignited criticism that the dietary supplement industry lacked adequate oversight and perpetrated a massive fraud.

Experts in the botanical industry questioned the accuracy of Schneiderman's tests, and they pointed out DNA can become degraded and lost during the processing of botanical extracts. Critics, nonetheless, cited the investigation as evidence that the supplement industry is in need of regulatory reforms.

GNC Holdings Inc. was initially among the defendants in the class action litigation, but the company maintained it manufactured its supplements in compliance with FDA regulations, and the lawsuits were eventually dismissed against the retailer.

Some companies, including GNC, have reached agreements with Schneiderman to incorporate DNA technology as part of their various testing methodologies to help ensure ingredients found in supplements correspond to the product labels.

In the class action litigation, two court filings entered by the clerk point to a settlement being reached. Had a settlement not been reached, the plaintiffs were up against a deadline of July 21 to file a third amended complaint.

Steve Berman, a lawyer in New York representing the plaintiffs, did not respond to a request for comment, nor did Target, Walmart and Walgreens. NBTY, which makes herbal supplements and changed its name to The Nature’s Bounty Co., also declined to comment.

Amy J. St. Eve, the federal judge overseeing the class action litigation, ruled in May that the plaintiffs could not seek injunctive relief in a second consolidated lawsuit, and she dismissed without prejudice certain claims for breach of warranties. But she denied the retailers’ request to strike the plaintiffs’ allegations regarding Schneiderman’s investigation and related materials, including a Feb. 3, 2015 press release announcing his findings.

“Defendants have not clearly articulated why they would suffer prejudice, and the allegations related to the NYAG’s study are relevant to the issues in this case," the judge wrote in her May 19 order.

But since the litigation has been settled, the questions of whether consumers of herbal supplements were actually defrauded, or got what they paid for, aren’t likely to be answered in the courts.