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Another Reason Retailers Need A System To Make Sure That Any Onion Labeled Sweet Actually Is Sweet:
They May Get Sued If They Don’t

Jim Prevor’s Perishable Pundit, December 9, 2010

We’ve been blowing a trumpet on the problem that is caused by the sale of onions that are ordinary onions yet are marketed as “sweet onions” We’ve included several pieces in this series:

Sweet Onion Fraud

Pundit’s Mailbag — Retail Specifications Needed For Sweet Onions

Pundit’s Mailbag — With Proper Science And Marketing, Onions Could Be Sold As Mild, Medium Or Hot

Now Richard Goldfarb, an attorney at Stoel Rives who does work on food safety and other issues related to the trade and who we mentioned many times, including here, here, picked up on our work on sweet onions and cleverly associated the controversey over the use of the term “sweet” in onions with the decision of Ben & Jerry’s to drop its use of the term “all natural.”

Seems Ben & Jerry’s has gotten sued over its use of the term, although it is a most questionable lawsuit. The issue, of course, is what precisely would render a food “unnatural” — cooking, for example? Or a combination with another item that also is a natural substance.

It is an interesting discussion and you can read about the lawsuit here. It reminded us much of the discussion over organic standards. Although organic has a scientific definition, the standards that allow a product to be certified organic have little to do with that definition. There are substances that are organic — say arsenic — which can’t be used in organic agriculture and there are things having nothing to do with organic — say irradiation or genetically modified seed — that are prohibited in organic production. In effect, the word “organic” is being redefined — at least in commerce — as whatever the National Organic Standards Board happens to endorse.

Richard Goldfarb is not too hot on the idea that one has a cause of action against Ben & Jerry’s for utilizing cocoa that has been processed a bit, but he thinks that the term “sweet” as used in relation to onions may be more meaningful than the term “natural” is in ice cream production:

“Sweet” … is a whole different kettle of onions… there is no government standard for which onions may be labeled “sweet.” As a Washingtonian, when I think of a sweet onion, I think of Walla Walla onions, but I was surprised to learn that besides those and the Vidalia onions of Georgia and the Maui onions of Hawaii, there are also sweet onions grown in Nevada, Florida, Texas and New Mexico. And that just covers the United States.

Our friend Jim Prevor, the Perishable Pundit, has written about the sweet onion issue under the headline “Sweet Onion Fraud.” He had updates here and here as well. He posits that the lack of any government standard for what is a “sweet” onion allows anyone to label any onion as sweet. Buyers looking for the best price will buy anything labeled sweet, and consumers will pay a premium for a false label.

Being Jim, he does not just rail at the injustice, he suggests three possible solutions:

• Government imposed standards

• A trade group setting its own standards and applying them to trademarked goods

• Grocery chains setting procurement standards

Each of these has its challenges, of course. As we noted, it took the AMS over 60 years to redo its olive oil standards; can that overworked agency really be expected to decide what is a sweet onion quickly?

While a trademarked name and industry standards can be effective (and there are marks for particular sweet onions), especially if marketing dollars are used to promote the mark, there is often a spillover effect that can be counterproductive. As the realtors will tell you, you can work a long time promoting a mark but the public’s confusion that any real estate agent is a realtor won’t go away. The public just doesn’t spend a lot of time on the distinctions, and the difference between a trademarked sweet onion and any other onion labeled “sweet” may not adequately enter the public brain. Moreover, it’s perfectly possible for a truly sweet onion to be grown and sold without the mark, just as a real estate agent who is not a realtor may follow the realtor’s code of conduct but just not have joined the organization.

Buyers of onions should certainly include specifications for sweetness in their procurement. If done with producer input, this might solve many of the problems. If imposed, it might leave some growers of demonstrably sweet onions out in the cold.

I am, however, less pessimistic that someone who buys an ordinary onion incorrectly labeled “sweet” has no recourse against its seller. Unlike “natural,” and recognizing that there may be close cases, if we take the situation where someone simply takes an ordinary onion and slaps a “sweet” label on it and charges a premium for it, I am confident the buyer can reject the onions, or revoke his acceptance of the onions and sue for damages.

The key to this is the lesser-known big brother to the warranty of merchantability, the express warranty. This is contained in Section 2-313 of the UCC. It 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 purporting to be merely the seller’s opinion or commendation of the goods does not create a warranty.

So if a purchase order labels the goods “sweet onions” and they’re not, the express warranty is breached. If the seller puts a “sweet” label on the goods, and they’re not, the express warranty is breached. If the seller says “these are sweet onions” and charges a premium for them, and they’re not sweet, the express warranty is breached.

It does not require a legal standard or expert testimony to determine that an ordinary onion is not sweet, any more than it requires expert testimony to prove that something that is orange is not red. There’s actually a case, Martel v. Duffy-Mott Corp., that holds exactly that in connection with the warranties of merchantability and fitness for a particular purpose. Again, at the margins, we can all argue over whether this or that onion is sweet, but if a sweet onion is about 6-15% sugar and a regular onion is 3-5% sugar, it shouldn’t be hard to tell the difference, or to get a jury to tell the difference.

It is an interesting question. It may point out another reason why retailers need to act — and quickly — on this matter.

Richard Goldfarb points out that there are warranties intrinsic in the sale of items and one of those is the express warranty. Basically, if a seller says the item is something — a Red Delicious apple, certified organic, California-grown garlic, a Northwest pear or, yes, sweet onions — the seller is issuing a kind of warranty.

The fact that some of these assertions may be more clear than others — what states qualify as a producer of Northwest pears, for example — does not mean that the warranty doesn’t exist. A pear grown in, say, Florida, would clearly not qualify even if Montana is a question mark. This is what juries are for.

Alas, in terms of our articles, the problem with this line of thinking is that it presumes something that is only rarely so — that the retailers are being hoodwinked by suppliers.

There are reputable suppliers of sweet onions, and most major buyers know who they are. It is also easy to order testing and to vet suppliers. Finally, the expense of a rejection is great and even without formal standards just the serious threat that inspectors are going to possibly reject based on sweetness would surely have an impact.

The problem, though, is not so much that retailers are being hoodwinked by suppliers as that various retail buyers are complicit with shippers in buying cheap onions, labeled as sweet, so they can hoodwink consumers without the retailer itself having to commit a fraud.

Now, normally, an individual consumer, defrauded in this way, is not going to do anything much about it. The damages are too small, the standard too uncertain. The consequence is — as we have mentioned before — consumers less likely to buy sweet onions.

But Richard Goldfarb, by implication, points to another possible consequence. We live in the age of the class action lawsuit. Although individuals would find the case impractical to litigate, each of those signs or ads at retail promoting “sweet onions” is an express warranty.

How long will it be before some clever lawyer notes that consumers are being defrauded and brings a class action lawsuit to get them back their money — plus a bit extra for the ruined salad or hamburger in which that onion was used.

We’ve been urging retailers to make sure they have explicit standards so that they can make sure they only provide their consumers with sweet onions that will delight the consumers.

We read Richard Goldfarb’s piece to add a new sense of urgency. Retailers better have explicit standards to make sure sweet onions are the real McCoy, so they can present these standards in court when a class action suit alleging widespread consumer fraud is brought and the retailers are called to testify.

Many thanks to Richard Goldfarb and Stoel Rives for providing insight on this important issue.

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