SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA CIVIL DIVISION DEAN MOSTOFI, SECOND AMENDED COMPLAINT

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1 Filed D.C. Superior Court 10/23/ :07PM Clerk of the Court SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA CIVIL DIVISION DEAN MOSTOFI, Plaintiff, v. SAFEWAY, INC. Case No.: 2011 CA B Judge Erik P. Christian Next Event: November 16, 2012 (Summary Judgment Motions Due) Defendant. SECOND AMENDED COMPLAINT 1. Dean Mostofi, on behalf of himself and for the benefit of the General Public of the District of Columbia pursuant to District of Columbia Code (k)(l), brings this action against Defendant, Safeway, Inc. ( Safeway ), and states as follows: PRELIMINARY STATEMENT 2. Defendant is a retailer who sells Bertolli Extra Virgin Olive Oil ( EVOO ) products in the District of Columbia. Defendant also manufactures and distributes its own brand of Safeway Select EVOO, which it sells in the District of Columbia. Defendant has been misleading and defrauding D.C. Consumers for years by representing that the olive oil they sell is extra virgin, when in fact it is not extra virgin or when Defendant has an insufficient basis to represent that the olive oil it sells is actually extra virgin. Defendant has also been misleading and defrauding D.C. Consumers by selling olive oil that claims to be imported from Italy, when in fact the product does not originate in Italy. 3. In this action, Plaintiff seeks to end Defendant s scheme of selling mislabeled EVOO to consumers in the District of Columbia ( D.C. Consumers ). Plaintiff seeks to recover damages for himself and for D.C. Consumers and to enjoin Defendant from continuing with its false, deceptive and unfair marketing and sale of olive oil that is not extra virgin or not

2 confirmed by Safeway to be extra virgin in violation of the District of Columbia Consumer Protection Procedures Act ( DCPPA ). Plaintiff also seeks to enjoin Safeway from selling Bertolli and Safeway Select EVOO that does not comply with its label claim of Imported from Italy. 4. Extra virgin is the top grade of olive oil, according to standards established by numerous organizations, including the California Olive Oil Council ( COOC ), the International Olive Council ( IOC ) and the United States Department of Agriculture ( USDA ). In addition to establishing chemistry standards for extra virgin olive oil, each of these entities require EVOO to meet a sensory standard the oil must have zero sensory defects and greater than zero fruitiness. 5. Certain representations in the marketplace certify that a retailer, supplier or manufacturer has taken steps to ensure a product s quality. For example, when gasoline is advertised as 91 Octane, that representation certifies that the manufacturer or retailer is certain the gasoline actually has that characteristic at the time it is purchased by a consumer. Similarly, the representation extra virgin certifies that the olive oil has certain quality, chemical composition, and taste characteristics at the time it is purchased by a consumer. 6. Consumers expect and believe that Extra Virgin Olive Oil is superior to ordinary olive oil in numerous respects, including its health benefits, quality, and taste. 7. According to a study by UC Davis, samples of Bertolli and Safeway Select failed to meet widely recognized standards for EVOO. Further, Plaintiff has commissioned his own testing of Bertolli and Safeway Select EVOO purchased by him from Safeway, which also indicates that Bertolli and Safeway Select brands fail to meet standards for EVOO. 2-

3 8. Defendant deceives consumers by claiming that the olive oil they are manufacturing and selling is assured to be of sufficient quality to call the product extra virgin olive oil, when in fact it is not extra virgin and when Defendant has an insufficient basis to represent that the olive oil it sells and/or manufactures is actually extra virgin. In addition, Defendant sells EVOO that is not packaged in a manner sufficient to ensure that the product, whose quality can deteriorate with time and exposure to light and become rancid, is sold to consumers at a level that still constitutes the product having the quality worthy of the classification of extra virgin. Lastly, claims by Defendant that the oils are imported from Italy are false and misleading. 9. In reality, at least a significant percentage of Defendant s EVOO products do not warrant the high standard of extra virgin and, therefore, are not worthy of the premium price charged. Though Defendant s olive oils do not meet the standards for being extra virgin, nor are they actually imported from or originated in Italy, Defendant nevertheless promotes and prices its products as such to unwitting customers. 10. When D.C. Consumers like Plaintiff purchase Bertolli and Safeway Select brand EVOO, they expect to purchase, with certainty, a bottle of truly extra virgin olive oil. Instead, Safeway s policies and practices ensure that every purchase of Bertolli and Safeway Select brand EVOO comes with a very high likelihood that the contents of a bottle are not truly extra virgin. Nonetheless, Safeway represents and prices its Bertolli and Safeway Select brand EVOO as if there is no risk to consumers of receiving an inferior product. This results in an unjust enrichment on the part of Defendant. THE PARTIES 3-

4 11. Plaintiff Dean Mostofi is an individual consumer and a resident of the state of Maryland, who, for his personal consumption, regularly purchases goods and services in the District of Columbia and from merchants located therein. Mostofi, over the past three years, has purchased what he believed to be Extra Virgin and/or imported from Italy EVOO from Safeway locations in the District of Columbia. 12. Defendant Safeway is incorporated in the state of California and is headquartered at 5918 Stoneridge Mall Road, Pleasanton, CA. Defendant is a merchant conducting business in the District of Columbia through its retail stores, one of which is located at 1855 Wisconsin Avenue Northwest, Washington, DC. Safeway markets, manufactures, distributes and sells consumer goods, including Bertolli and Safeway Select EVOO, to D.C. Consumers. JURISDICTION AND VENUE 13. This Court has jurisdiction over this action pursuant to the D.C. Code and (k)(1). 14. This Court has personal jurisdiction over Defendant pursuant to D.C. Code , D.C. Code and/or D.C. Code This Court has jurisdiction over Defendant because it is authorized to conduct, and in fact does conduct, substantial business in the District of Columbia. 16. Venue is proper in the District of Columbia as the acts upon which this action is based occurred in the District of Columbia. Plaintiff and D.C. Consumers purchased products marketed, distributed, manufactured and sold by Defendant in the District of Columbia, which were marketed and sold in violation of the District of Columbia s laws, and Plaintiff and D.C. Consumers were thereby injured and subjected to irreparable harm in this venue. 4-

5 17. Defendant received substantial compensation and profits from sales of mislabeled EVOO in the District of Columbia. Thus, Defendant s liability arose and continues in the District of Columbia. LEGAL FRAMEWORK 18. All conditions precedent to the filing of this case have been performed, have occurred, or have been satisfied. 19. The District of Columbia Consumer Protection Procedures Act ( CPPA ), D.C. Code et seq., prohibits unlawful trade practices. The prohibited trade practices include, in part, representing that goods or services have a source, sponsorship, approval, certification, accessories, characteristics, ingredients, uses, benefits or qualities that they do not have[.] D.C. Code (a). More generally, the CPPA prohibits misrepresentation that goods or services are of particular standard or quality, a misrepresentation of a material fact which has a tendency to mislead, a failure to state a material fact if such failure tends to mislead, the offering of goods or services without the intent to sell them as offered, the use of deceptive representations or designations of geographic origin in connection with goods or services, and misrepresentation that the subject of a transaction has been supplied in accordance with a previous representation. D.C. Code (d) (e),(f),(h), (t), and (u). 20. Additionally, the CPPA s extensive enforcement mechanisms apply not only to the unlawful trade practices proscribed by , but to all other statutory and common law prohibitions. Osbourne v. Capital City Mortgage Corp., 727 A.2d 322, (D.C. 1999). 21. The CPPA allows for treble damages, or $1,500 per violation, whichever is greater, as well as reasonable attorney s fees, punitive damages, an injunction against the unlawful trade practice, additional relief as may be necessary to restore the consumer money or 5-

6 property which may have been acquired by means of the unlawful trade practice, and any other relief the court deems proper. D.C. Code (k)(1). 22. Plaintiff brings this action on behalf of himself and as a Representative Plaintiff acting for the interests of the general public of the District of Columbia, seeking relief from Defendant's use of trade practices in violation of laws of the District of Columbia, pursuant to D.C. Code (k)(1). THE MOSTOFI PURCHASES 22. Plaintiff purchased Bertolli and Safeway Select products within the District of Columbia from Defendant, based on his belief that the products met the standard of being called extra virgin and were in fact imported from or originated in Italy. These beliefs were based on the explicit representations on the bottles that the products were Extra Virgin and a product of Italy. 23. For example, Plaintiff purchased a bottle of Bertolli from the Safeway store at 1855 Wisconsin Avenue NW Washington, DC on January 8, 2011 based upon the above representations. 24. For example, Plaintiff purchased a bottle of Safeway Select from the Safeway store at 1855 Wisconsin Avenue NW Washington, DC on January 8, 2011, based upon the above representations. 25. Plaintiff again purchased a bottle of Bertolli from the Safeway store at 1855 Wisconsin Avenue NW Washington, DC on August 21, 2011 based upon the above representations. 6-

7 26. Plaintiff again purchased a bottle of Safeway Select from the Safeway store at 1855 Wisconsin Avenue NW Washington, DC on August 21, 2011 based upon the above representations. 27. Plaintiff again purchased bottles of Bertolli from the Safeway store at 1855 Wisconsin Avenue NW Washington, DC on October 21, 2011 based upon the above representations. 28. Plaintiff again purchased bottles of Safeway Select from the Safeway store at 1855 Wisconsin Avenue NW Washington, DC on October 21, 2011 based upon the above representations. 29. The Bertolli bottles referenced above bore a label which stated: Imported From Italy. Extra Virgin Olive Oil. First Cold Pressing. 30. In fact, the EVOO contained in the Bertolli bottles was neither extra virgin nor imported from Italy. 31. The Safeway Select bottles referenced above bore a label which stated: Extra Virgin Olive Oil. Imported From Italy. Packed In Italy. 32. In fact, the EVOO contained in the Safeway Select bottles was neither extra virgin nor imported from Italy. THE IOC AND USDA STANDARDS 33. Extra Virgin Olive Oil sits at the pinnacle of the olive oil industry and it is considered the gold standard. The term Extra Virgin is defined by the IOC, the USDA, and the state of California, the United States largest domestic olive oil producer. 34. Since Defendant is an experienced retailer and manufacturer of EVOO and other food products, it clearly knows what the term Extra Virgin means. 7-

8 35. The IOC specifically defines Extra Virgin Olive Oil as: virgin olive oil which has a free acidity, expressed as oleic acid, of not more than 0.8 grams per 100 grams, and which meets certain sensory standards. 36. The IOC utilizes a protocol for its sensory testing which includes, but is not limited to, perception, sensation, and sensitivity. 37. Since 1948, the USDA has regulated olive oil grades and utilized both chemical and sensory standards to determine quality. 38. USDA standards define U.S. Extra Virgin Olive Oil as: virgin olive oil which has excellent flavor and odor (median of defects equal to zero and median of fruitiness greater than zero) and a free fatty acid content, expressed as oleic acid, of not more than 0.8 grams per 100 grams, and meets the additional requirements as outlined in the United States Standards for Grades of Olive Oil and Olive-Pomace Oil, 75 FR (April ), which sets forth the criteria to ascertain the grades of the oil using both chemical and sensory standards. 39. The state of California defines Extra Virgin Olive Oil as: virgin olive oil which has a free acidity, expressed as oleic acid, of not more than 0.8 grams per 100 grams of oil, has a peroxide value of not more than 20 mill equivalent peroxide oxygen per kilogram of oil and would meet sensory standards of extra virgin olive oil as determined by a state panel certified by the International Olive Oil Council, or, if the International Olive Oil Council ceases to certify taste panels, would meet the sensory standards of a taste panel that is operated by the University of California or California State University according to guidelines adopted by the International Olive Oil Council as of THE 2010 U.C. DAVIS STUDY AND 2011 FOLLOW-UP REPORT 8-

9 40. A June 2010 report (the Report ) by the University of California at Davis Olive Oil Center stated that [t]ests indicate that imported extra virgin olive oil often fails international and USDA standards, and confirmed the extent of the industry-wide deception carried out against D.C. Consumers. 41. The Report evaluated the oils based on standards and testing methods established by the IOC and USDA, as well as several newer standards and testing methods adopted in Germany and Australia. 42. The results of the tests indicated that the samples of imported olive oil labeled as extra virgin, and sold at retail locations in California, often did not meet international and US standards. Sensory tests showed that these failed samples had defective flavors such as rancid, fusty, and musty. 43. More specifically, the Report made the following findings: 69 percent of imported olive oil samples and 10 percent of California olive oil samples labeled as extra virgin olive oil failed to meet the IOC/USDA sensory (organoleptic) standards for extra virgin olive oil. The Australian sensory panel found that each of these samples contained a median of up to 3.5 sensory defects such as rancid, fusty, and musty and were classified at the lower grade of virgin. Sensory defects are indicators that these samples are oxidized, of poor quality, and/or adulterated with cheaper refined oils. The presence of any sensory defect precludes an olive oil from meeting the standard required for extra virgin olive oil. 31 percent of the imported samples that failed the sensory standards also failed the IOC/USDA standards for UV absorbance of oxidation products (K232 and K268), which indicates that these samples were oxidized and/or were of poor quality. 83 percent of the imported samples that failed the IOC/USDA sensory standards also failed the German/Australian DAGs standard. Two additional imported samples that met the IOC/USDA sensory standard for extra virgin failed the DAGs standard. An elevated level of DAGs indicates that the samples were oxidized, adulterated with cheaper refined oils, and/or of poor quality. 9-

10 44. The Report went on to note that the samples failed extra virgin standards for reasons that include one or more of the following: oxidation by exposure to elevated temperatures, light, and/or aging; adulteration with cheaper refined olive oil; poor quality oil made from damaged and overripe olives, processing flaws, and/or improper oil storage. 45. With specific regard to Bertolli tested, the Report found that all three samples tested by UC Davis failed the chemical analysis, and that all three of the samples tested by UC Davis failed the sensory assessment as well. 46. With specific regard to Safeway Select tested, the Report found that one of the three samples tested by UC Davis failed the chemical analysis, and two of the three samples tested by UC Davis failed the sensory assessment. 47. The results were a combined effort of research conducted by scientists at UC Davis and at the Australian Oils Research Laboratory, a governmental research center accredited by the International Olive Council in Madrid, whose product standards the new U.S. Department of Agriculture rules are generally based upon In April, 2011, UC Davis released a follow-up study. UC Davis again worked with the Australian Oils Research Laboratory to evaluate the quality of extra virgin olive oils sold on retail shelves in California. UC Davis and the Australian laboratory evaluated the oils based on standards and testing methods established by the IOC. 49. Additionally, the two laboratories analyzed the oils using two testing methods adopted in Germany and Australia. The Australian Olive Association adopted these tests to help 1 Los Angeles Times article entitled UC Davis researchers report that most common brands sold in California are mislabeled, which can cost consumers money and worse, by P.J. Huffstutter and Kristena Hansen, dated July 15,

11 detect extra virgin olive oils that were old and oxidized and not up to extra virgin olive oil standards. 50. The follow-up study found that based upon 18 samples of Bertolli EVOO, 11% of the samples failed at least one chemical testing that identifies EVOO, and 72% failed the sensory assessment performed by UC Davis. 51. With the follow-up study and The Report, the UC Davis research team analyzed a total of 186 extra virgin olive oil samples in the span of one year. In contrast, the IOC s quality control program assessed an average of 116 extra virgin olive oil samples per year purchased in the entire United States and Canada in the period. 52. Despite these findings, Defendant nonetheless has continued selling mislabeled or adulterated EVOO, or olive oil that Defendant has an insufficient basis to represent was actually extra virgin. 53. Defendant knows, or should know, that the Bertolli and Safeway Select brand EVOO it sells and manufactures, and which is labeled as extra virgin does not meet the state, national or international standards for extra virgin. PLAINTIFF S INDEPENDENT TESTING OF EVOO PURCHASED IN D.C. 54. Plaintiff tasted the contents of the bottles of EVOO he purchased on January 8, 2011 and August 21, 2011 from Safeway and immediately noticed that the oil tasted unlike true EVOO. 55. In addition, in October, 2011, Plaintiff commissioned Nancy Ellen Ash to convene a sensory tasting panel to evaluate samples of Bertolli and Safeway Select EVOO purchased at Safeway. Ms. Ash has participated on olive oil taste panels since 1998, and in

12 received certification as a taste panel supervisor by the Italian organization Organizzazione Nazionale Assaggiatori Olio Di Oliva (ONAOO). 56. Ms. Ash conducted an olive oil sensory evaluation using a panel of trained tasters and following the organoleptic assessment procedures established by the IOC. 57. All of the tasters who participated in the evaluation were also members of the California Olive Oil Council (COOC) Taste Panel and/or the University of California at Davis Olive Center Taste Panel, and therefore had significant experience with EVOO tasting and evaluation. 58. IOC Taste Panel procedures were followed during the assessment. For example, Oils were served in blue tasting glasses, each covered by a watch glass. Oils were warmed using a heating pad and served at the required temperature (between 78.8⁰F to 86⁰F). Oils were presented in random order. Individual scores were reported on IOC assessment score sheets using a scale of zero to 10. Panelists worked in a quiet room, separated from each other by white panels. Green Granny Smith apple slices and still and sparkling water were available for panelists to use to cleanse their palates in between samples. No information about the client or the samples was imparted to the panelists either before or after the session. 59. The panel found that [t]he primary attribute for [the Bertolli EVOO purchased from Safeway in the District of Columbia] sample was Rancid with the CVr below the 20% threshold. 60. Therefore, the Bertolli EVOO did not qualify as Extra Virgin Olive Oil. Instead, under the IOC standards it qualified only as Virgin Olive Oil. Under the USDA standards it qualified only as US Virgin Olive Oil. 61. The panel found that the Safeway Select EVOO purchased in the District of Columbia was a distinctly defective sample with the primary attribute of Rancid; all tasters 12-

13 perceived this negative attribute and the CVr was below the 20% threshold. Ten of the tasters also perceived the Fusty/Muddy Sediment defect while eight tasters identified an additional defect of Musty. 62. Therefore, the Safeway Select EVOO did not qualify as Extra Virgin Olive Oil. Instead, under the IOC standards it qualified only as Ordinary Virgin Olive Oil. Under the USDA standards it qualified only as Lampante Virgin Olive Oil the lowest classification of olive oil possible. 63. Thus, Plaintiff s independent testing confirms the results of the UC Davis reports and of Mr. Mostofi s personal testing. 64. Plaintiff s independent testing also indicates that the problem is widespread in D.C. Plaintiff s independent testing indicates that other bottles of Bertolli and Safeway Select EVOO sold in D.C. (at other stores) contain olive oil that is not extra virgin. CLEAR BOTTLES ENSURE THE PRODUCT WILL DEGRADE 65. It is a well known fact that Extra Virgin Olive Oil must be stored in a cool and dark environment. Sunlight or any bright light can activate chemical reactions inside the oil and will cause the oil to degenerate into undesirable chemical products. This ultimately causes total destruction of the Extra Virgin Olive Oil. In order to prevent the inevitable degradation of quality caused by light, many quality EVOO products are packed in dark-tinted glass bottles or other light-protective containers. 66. Bertolli and Safeway Select EVOO is packed in clear bottles. 67. Defendant does not adequately protect EVOO sold in its stores from light or other degrading influences. 13-

14 68. Moreover, upon information and belief, Defendant does not have an adequate policy for removing EVOO from store shelves after it has become degraded by light or other conditions. 69. According to a 2007 study by researchers at the National Agricultural Research Foundation, Institute of Technology of Agricultural Products, Greece and the Higher Technical Educational School, Department of Food Science, Thermi, Thessaloniki, Greece, olive oil exposed to light had significantly lower tocopherol, carotenoid and chlorophyll contents than did the same oils kept in the dark. Overall, the results obtained showed that the shelf life of the oils exposed to light is shorter than that of oils kept in the dark, and that after only 2 months of exposure to light the oils examined could no longer be considered as extra virgin. 70. Notwithstanding the foregoing facts, which are well-known by olive oil manufacturers and retailers, Defendant makes no effort to protect Bertolli and Safeway Select olive oil from exposure to light. As such, by the time Bertolli, Pompeian, and Safeway Select olive oil is sold to D.C. Consumers, it cannot be considered Extra Virgin Olive Oil, yet it is falsely labeled and priced as such. 71. Therefore, Defendant violates the DCCPA and the U.C.C. D.C. Code ( ), because its olive oil is not adequately contained, packaged, and labeled[.] 72. Defendant also makes false representations in the form of the best before date placed on the bottles. In fact EVOO packaged in clear bottles degrades more quickly than indicated by the best before date placed on bottles of Defendant s EVOO. STANDARDIZED INDUSTRY WRONGDOING 73. The detection of counterfeit olive oils is often complicated. No single test can accomplish the task. The two primary categories of testing are chemical and sensory. 14-

15 74. The accepted sensory standards require that the oils have zero defects and greater than zero fruitiness. For years, trained olive oil tasters who have served on recognized sensory panels have reported that much of the olive oil sold in the United States as Extra Virgin does not meet this standard. 75. Myriad media reports discuss widespread problems in the olive oil industry. 76. In 2000, the Canadian Food Inspection Agency tested 100 imported oils and found all but 20 were adulterated with other vegetable oils. 77. In 2003, the Italian Agricultural Ministry brought more than 1,000 cases of fraud, involving the mislabeling of olive oil to court. 78. In 2004, the New York Times reported that one of Italy s most famous brands, which was bottled in Lucca in Tuscany, actually contained oil from Spain, Greece and Tunisia. 79. In 2006, US Federal Marshals in New Jersey seized 65,000 liters of what was supposedly extra virgin olive oil. The oil was found to be almost entirely soybean oil. 80. In 2007, the President of Filippo Berio, one of Italy s leading brands of Tuscan oil admitted that only about 20% of the olives they used came from Italy. 81. In 2007, American supermarket chain Shoprite (U.S) recalled certain olive oils after it was discovered that they were counterfeit. 82. In 2008, the Daily Telegraph published an article entitled Italian Police Crack Down on Olive Oil fraud. The newspaper reported that 400 police officers had arrested 23 people and confiscated 85 farms for importing foreign oils that were then packaged and reexported as Italian Extra Virgin Olive Oil. 15-

16 83. In 2009 USA Today reported that, Martin Stutsman, a Consumer Safety Officer at the Federal Food and Drug Administration (FDA) told USA Today that Extra Virgin Olive Oil was one of the most frequently counterfeited foods. 84. In 2011, the author, Tom Mueller, published a book entitled Extra Virginity, which demonstrated brazen fraud in the olive oil industry, and which grew out of an article titled Slippery Business that Mr. Mueller wrote about olive oil in 2007 for The New Yorker. The book details how EVOO dealers along the supply chain frequently adulterate olive oil with lowgrade vegetable oils and add artificial coloring. Mr. Mueller cites an Italian producer who suggests that 50 percent of the olive oil sold in America is, to some degree, fraudulent. DEFENDANT HAS AN INSUFFICIENT BASIS TO CLAIM THE OLIVE OIL IT IS SELLING IS EXTRA VIRGIN 85. Defendant manufactures and sells Safeway Select EVOO and it sells Bertolli olive oil products, all of which are distributed on a nationwide basis. Upon information and belief, products manufactured, sold and distributed in District of Columbia are identical to products manufactured, sold and distributed throughout the United States. extra virgin. 86. Defendant has an insufficient basis to represent that the olive oil it sells is actually 87. Because the term extra virgin is a term that has meaning to consumers and to competitors, the term is only properly attached to products that are in fact extra virgin. Defendant s sale of products which are not extra virgin and for which an insufficient basis exists for Defendant to represent that the products are actually extra virgin is a deceptive business practice prohibited by the DCPPA. 88. Bertolli and Safeway Select EVOO did not have adequate substantiation for the labeling and marketing claims made. 16-

17 THE IMPORTED FROM ITALY LABEL CLAIMS ARE FALSE AND MISLEADING 89. Part 134, Chapter 1 of Title 19 of the Code of Federal Regulations sets forth regulations implementing the country of origin marking requirements and exceptions of section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), together with certain marking provisions of the Harmonized Tariff Schedule of the United States (19 U.S.C. 1202) C.F.R requires that: In any case in which the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appear on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchaser as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by Made in, Product of, or other words of similar meaning. 91. Bertolli and Safeway Select EVOO violates 19 C.F.R when they state on their labels imported from Italy because those olive oils are in fact the product of countries other than Italy. 92. Bertolli EVOO is marketed with labels on the front in large bold font that states Imported from Italy. 93. On the back of the package of Bertolli, in much smaller font, the label indicates that the oil is not actually from Italy. Instead it is from numerous other countries, and is only packaged in Italy: Product contains select high quality extra virgin olive oils from the countries indicated by the letters below. I=Italy, GR=Greece, E=Spain, TU=Tunisia, MA=Morocco, CL=Chile, AG=Argentina, AU=Australia. 94. Safeway Select EVOO is marketed with labels on the side in large font that states Imported From Italy. 17-

18 95. On the back of the package of Safeway Select bottles, in much smaller font, the label indicates that the oil is not actually from Italy, instead it is from numerous other countries, and is only packaged in Italy. 96. U.S. Customs and Border Protection ( CBP ), Department of Homeland Security, has consistently held that blending a product from one country with the same product of another country does not constitute a substantial transformation which would justify a country of origin claim based on the manufacturing location of a certain product. With specific regard to olive oil, in HQ , dated April 27, 1998, CBP determined that the blending of Spanish olive oil with Italian olive oil in Italy does not result in a substantial transformation of the Spanish product that would allow it to become an Italian product. 97. The country of origin claims made on Bertolli and Safeway Select bottles mislead D.C. Consumers, including Plaintiff, by prominently making an Italian origin claim on the front of the EVOO bottle, while placing in small print on the back of the bottle information as to the actual non-italian origin of the olive oil. PLAINTIFF AND D.C. CONSUMERS HAVE BEEN DAMAGED 98. Though Bertolli and Safeway Select EVOO does not meet the standard of extra virgin and Defendant has an insufficient basis to represent that the olive oil it sells actually is extra virgin, and does not in fact originate in Italy, Defendant continues to market these products with advertising and labeling that represents the products to have these qualities. 99. D.C. Consumers have been duped by Defendant and they have not received the benefit of their bargains. Plaintiff and D.C. Consumers have sought to purchase real Extra Virgin Olive Oil but instead have received lesser quality olive oil falsely labeled as EVOO, or olive oil that Defendant has an insufficient basis to represent is actually extra virgin. Plaintiff 18-

19 and D.C. Consumers also sought to purchase EVOO that originated in Italy, but instead received EVOO that did not By making these false claims, Defendant has convinced unwary consumers to pay a high price for a product which is lesser quality olive oil falsely labeled and priced as EVOO, or is olive oil that Defendant has an insufficient basis to represent is actually extra virgin. As evidenced by the previously-cited Los Angeles Times article, so-called extra virgin olive oil is sold for almost 80% more than it is worth Defendant prices EVOO at a higher price point than Virgin or other grades of olive oil. The false representations made with respect to Bertolli and Safeway Select EVOO have allowed Defendant to achieve higher sales and profits than it would have otherwise achieved without the aid of such false or unsupported representations D.C. Consumers like Plaintiff have been willing to pay the higher price for Extra Virgin Olive Oil and Italian-origin EVOO because they believe that such EVOO has health benefits, superior taste and quality, and other benefits When D.C. Consumers like Plaintiff purchase Bertolli and Safeway Select brand EVOO, they expect to purchase, with certainty, a bottle of truly extra virgin olive oil. Instead, Safeway s policies and practices ensure that every purchase of Bertolliand Safeway Select brand EVOO comes with a very high risk that the contents of a bottle are not truly Extra virgin. In other words, every purchase of Bertolli and Safeway Select brand EVOO comes with significant risk, but Safeway represents and prices the Bertolli and Safeway Select brand EVOO it sells as if there is no risk to consumers of receiving an inferior product. 19-

20 104. Defendant s practices, as alleged in this Complaint, constitute unfair or deceptive acts or practices, and the making of false advertisements, in or affecting commerce, in violation of Sections 5(a) and 12 of the Federal Trade Commission Act Defendant s display and offer for sale of mislabeled, adulterated, or improperly tested olive oil as discussed in this Complaint is misleading and likely to deceive Defendant s conduct violates public policy Defendant s conduct constitutes violations of the laws asserted herein Defendant has engaged in false and deceptive trade practices Plaintiff and D.C. Consumers have sustained monetary loss because they have purchased mislabeled or adulterated olive oil, or olive oil that Defendant has an insufficient basis to represent is actually extra virgin in reliance on Defendant s false and misleading representations Plaintiff and D.C. Consumers are entitled to declaratory and injunctive relief Plaintiff and D.C. Consumers have suffered and may continue to suffer actual and present economic damages as a result of Defendant s actions because they have expended funds to buy mislabeled/adulterated olive oil products at premium prices from Defendant This case is actionable pursuant to D.C. Code (k)(1) Defendant s conduct violated D.C. Code Defendant s conduct violated D.C. Code 28: Defendant s conduct violated D.C. Code 28: Defendant s olive oil products were not merchantable Plaintiffs and members of the public are entitled to damages and attorneys fees. 20-

21 3905(k)(1)(C) Defendant should pay punitive damages pursuant to D.C. Code Defendant should be ordered to restore to the public all of the monies which may have been acquired by means of Defendant s unlawful trade practices. COUNT I VIOLATION OF D.C. CONSUMER PROTECTION PROCEDURES ACT (Misrepresentation and Omissions of Material Fact Regarding Extra Virgin ) 120. Plaintiff incorporates the allegations of the preceding paragraphs as though fully set forth herein, and alleges further: 121. The D.C. Consumer Protection Procedures Act (CPPA) provides that it is a violation, whether or not any consumer is in fact misled, deceived or damaged thereby, for any person to, among other things: (a) represent that goods or services have a source, sponsorship, approval, certification, accessories, characteristics, ingredients, uses, benefits, or quantities that they do not have; (d) represent that goods or services are of particular standard, quality, grade, style, or model, if in fact they are of another; (e) misrepresent as to a material fact which has a tendency to mislead; (f) fail to state a material fact if such failure tends to mislead; (h) advertise or offer goods or services without the intent to sell them or without the intent to sell them as advertised or offered; (u) represent that the subject of a transaction has been supplied in accordance with a previous representation when it has not; 122. EVOO is a consumer good within the meaning of the CPPA, D.C. Code (a) (2) and (7). 21-

22 123. Defendant violates the CPPA by selling Bertolli and Safeway Select olive oil as extra virgin olive oil when, in fact, it is not extra virgin olive oil and/or has not been properly tested to ensure it is extra virgin olive oil Defendant s unfair and deceptive practices are likely to mislead and have misled D.C. Consumers acting reasonably in the circumstances and violate DC Code Defendant has violated the Act by engaging in the unfair and deceptive practices as described herein, which offend public policies and are immoral, unethical, unscrupulous and substantially injurious to consumers Plaintiff and D.C. Consumers have been aggrieved by Defendant s unfair and deceptive trade practices in that they have purchased falsely labeled, adulterated, or improperly tested EVOO at inflated prices The damages suffered by Plaintiff and D.C. Consumers were directly and proximately caused by the deceptive, misleading and unfair practices of Defendant as more fully described herein Plaintiff and D.C. Consumers have purchased olive oil from Defendant, falsely believing that it was certain to be EVOO with its intended and well known health benefits Defendant s misrepresentations and omissions of material fact constitute unlawful trade practices in violation of the CPPA, D.C. Code (a), (d), (e), (f), (h) and (u) By and through the aforesaid unlawful trade practices Defendant has violated Plaintiff and D.C. Consumers right to be free from unlawful trade practices, which is a statutory right conferred by the CPPA. Defendant has injured Mostofi and D.C. Consumers and obtained monies from Plaintiff and D.C. Consumers to which Defendant is not entitled. 22-

23 131. Plaintiff, for himself and on behalf of the General Public of the District of Columbia, hereby seeks treble damages or statutory damages in the amount of $1,500 per violation, whichever is greater, pursuant to D.C. Code (k)(1). Plaintiff and the general public of the District of Columbia further seek punitive damages, reasonable attorneys fees and all costs plus interest. COUNT II VIOLATION OF D.C. CONSUMER PROTECTION PROCEDURES ACT (Misrepresentation and Omissions of Material Fact Regarding Italian Origin) 132. Plaintiff incorporates the allegations of the preceding paragraphs as though fully set forth herein, and alleges further: 133. The D.C. Consumer Protection Procedures Act (CPPA) provides that it is a violation, whether or not any consumer is in fact misled, deceived or damaged thereby, for any person to, among other things: (a) represent that goods or services have a source, sponsorship, approval, certification, accessories, characteristics, ingredients, uses, benefits, or quantities that they do not have; (d) represent that goods or services are of particular standard, quality, grade, style, or model, if in fact they are of another; (e) misrepresent as to a material fact which has a tendency to mislead; (f) fail to state a material fact if such failure tends to mislead; (h) advertise or offer goods or services without the intent to sell them or without the intent to sell them as advertised or offered; and (t) use deceptive representations or designations of geographic origin in connection with goods or services; 134. EVOO is a consumer good within the meaning of the CPPA, D.C. Code (a) (2) and (7). 23-

24 135. Bertolli and Safeway Select EVOO is marketed with labels on the front or side in large bold font that state Imported from Italy. Those representations are false and/or misleading The issue of whether a product is produced in or imported from a specific country is very important to consumers and competitors, and is governed by strict regulations and laws. The Federal country-of-origin marking statute requires importers to clearly label the imported product in a manner that allows the consumer to readily determine the country of origin: Except as hereinafter provided, every article of foreign origin (or its container, as provided in subsection (b) hereof) imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. 19 U.S.C The enabling regulations of the country of origin statute directly address and strictly prohibit the type of deceptive country-of-origin labeling used on Bertolli and Safeway Select, EVOO. Specifically, 19 C.F.R requires that if the name of a country appears on the label, and the product was not manufactured or produced in that country, the label must include the actual country of origin in close proximity to the country mentioned in at least a comparable size. In any case in which... the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appear on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchaser as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by Made in, Product of, or other words of similar meaning 19 C.F.R (emphasis added) 138. Defendant misleads D.C. Consumers, including Plaintiff, in violation of (t) by selling EVOO with prominent Italian origin claims on the front or side of the EVOO 24-

25 bottle, while placing in small print on the back of the bottle information as to the actual origin of the olive oil Defendant s unfair and deceptive practices are likely to mislead and have misled D.C. Consumers acting reasonably in the circumstances and violate DC Code Defendant has violated the Act by engaging in the unfair and deceptive practices as described herein, which offend public policies and are immoral, unethical, unscrupulous and substantially injurious to consumers Plaintiff and D.C. Consumers have been aggrieved by Defendant s unfair and deceptive trade practices in that they have purchased EVOO falsely labeled as originating in Italy at inflated prices The damages suffered by Plaintiff and D.C. Consumers were directly and proximately caused by the deceptive, misleading and unfair practices of Defendant as more fully described herein Plaintiff and D.C. Consumers have purchased olive oil from Defendant, falsely believing that it was EVOO that originated in Italy Defendant s misrepresentations and omissions of material fact constitute unlawful trade practices in violation of the CPPA, D.C. Code (t) By and through the aforesaid unlawful trade practices Defendant has violated Plaintiff and D.C. Consumers right to be free from unlawful trade practices, which is a statutory right conferred by the CPPA. Defendant has injured Mostofi and D.C. Consumers and obtained monies from Plaintiff and D.C. Consumers to which Defendant is not entitled Plaintiff, for himself and on behalf of the General Public of the District of Columbia, hereby seeks treble damages or statutory damages in the amount of $1,500 per 25-

26 violation, whichever is greater, pursuant to D.C. Code (k)(1). Plaintiff and the general public of the District of Columbia further seek punitive damages, reasonable attorneys fees and all costs plus interest. COUNT III VIOLATION OF D.C. CONSUMER PROTECTION PROCEDURES ACT (Manufacturing and/or Selling Consumer Goods in a Condition and Manner Inconsistent with D.C. Law Extra Virgin ) 147. Plaintiff incorporates the allegations of the paragraphs above as though fully set forth herein, and alleges further: 148. The CPPA provides that it is an unlawful trade practice, and a violation of the act, to sell consumer goods in a condition or manner not consistent with that warranted by operation of sections 28:2-312 through 318 of the District of Columbia Code (referring to portions of the District s version of the Uniform Commercial Code (UCC)) Section 313 of the D.C. UCC (DC Code 28:313) Provides: (1) Express warranties by the seller are created as follows: (a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise. (b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description. (c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model. (2) It is not necessary to the creation of an express warranty that the seller use formal words such as warrant or guarantee or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement 26-

27 purporting to be merely the seller's opinion or commendation of the goods does not create a warranty Section 314 of the D.C. UCC (D.C. Code ) provides: (a) Unless excluded or modified a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind. Under this section the serving for value of food or drink to be consumed either on the premises or elsewhere is a sale. (b) Goods to be merchantable must be at least such as (i) In the case of fungible goods, are of fair average quality within the description; and (ii) Are fit for the ordinary purposes for which such goods are used; and (iii) Are adequately contained, packaged, and labeled as the agreement may require; and (iv) Conform to the promises or affirmations of fact made on the container, or label, if any These warranties are both expressed and implied in every sale of Defendant s products in the District and have not been excluded or modified Plaintiff and D.C. Consumers have purchased olive oil products from Defendant covered by Defendant s Express Warranties and the Implied Warranty of Merchantability and Plaintiff and D.C. Consumers have been and continue to be adversely affected by Defendant s failure to honor its warranties Falsely labeled EVOO products sold by the Defendant are not merchantable because they are: (a) not fit for the ordinary purpose for which such goods are used; (b) not adequately labeled; 27-

28 (c) do not conform to the promises or affirmations of fact made on the container or label and statements of fact made in advertisements for EVOO products and through industry funded marketing campaigns; and (d) are not adequately packaged Defendant s breaches of its Express Warranties and the Implied Warranty of Merchantability, and its sale of consumer goods in a condition and in a manner inconsistent with D.C. law and contrary to the operation and requirements of federal law constitute unlawful trade practices, which violate the rights of Plaintiff and D.C. Consumers protected by the CPPA, D.C. Code (x) Plaintiff and each D.C. Consumer formed a contract with Defendant at the time Plaintiff and D.C. Consumers purchased olive oil. The terms of the contract included the promises and affirmations of fact made on EVOO product labels and through EVOO marketing campaigns as described hereinabove. The product labeling and advertising constitutes express warranties, became part of the basis of the bargain, and is part of a standardized contract between Plaintiff and D.C. Consumers on the one hand and Defendant on the other Defendant breached the terms of the contract, including the Express Warranties with Plaintiff and D.C. Consumers by providing falsely labeled or adulterated olive oil, or olive oil that Defendant had an insufficient basis to represent was actually extra virgin As a direct result of Defendant s breach of its contract and warranties Plaintiff and D.C. Consumers have been damaged in the amount of the purchase price of the products they purchased Defendant s olive oil is adulterated pursuant to D.C. Code (2)(K), (L) and (M), thus it is sold in a manner inconsistent with D.C law and in violation of the CPPA. 28-

29 159. D.C. Code (k)(1) provides: A person, whether acting for the interests of itself, its members, or the general public, may bring an action under this chapter in the Superior Court of the District of Columbia seeking relief from the use by any person of a trade practice in violation of a law of the District of Columbia and may recover or obtain the following remedies: (a) treble damages, or $1, per violation, whichever is greater, payable to the consumer; (b) reasonable attorney's fees; (c) punitive damages; (d) an injunction against the use of the unlawful trade practice; (e) in representative actions, additional relief as may be necessary to restore to the consumer money or property, real or personal, which may have been acquired by means of the unlawful trade practice; or (f) any other relief which the court deems proper Defendant s practices violated D.C. Code , which is actionable both individually and in a representative action under D.C. Code (k)(1) Defendant violated the D.C. Consumer Protection Procedures Act by, among other things, selling consumer goods in a condition or manner not consistent with the express warranties and implied warranties of merchantability provided in D.C. Code through 318, as alleged in detail hereinabove Plaintiff individually and on behalf of D.C. Consumers seeks actual damages for economic and/or statutory injuries caused by these violations in an amount to be determined at trial Plaintiff is entitled to have these damages trebled pursuant to the D.C. Code (k)(1)(A), but in no case awarded damages should be less than $1, per violation. 29-