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10/13/2015 / By Carol Young
Whole Foods’ shareholders are not happy with the members of the board, and are expressing their anger with a good old-fashioned lawsuit. On September 11, 2015, shareholder Bryan O’Malley sued both past and current officers and directors of Whole Foods for “breach of fiduciary duty and unjust enrichment.”
Whole Foods came under fire when the New York City Department of Consumer Affairs conducted an investigation into overcharging violations. The DCA found that New York City stores “routinely overstated the weights of its pre-packaged products – including meats, dairy and baked goods – resulting in customers being overcharged.” The mislabeled weights happened so frequently that the DCA decided that the problem was systemic. To make matters worse, the Whole Foods blunder was also considered one of the worst cases of labeling inaccuracy that the inspectors had ever seen.
DCA Commissioner Julie Menin said, “Our inspectors tell me this is the worst case of mislabeling they have seen in their careers…Whole Foods has the money and resources to ensure greater accuracy and to correct what appears to be a widespread problem—the city’s shoppers deserve to be correctly charged.”
This isn’t the first time Whole Foods has been in trouble for pricing irregularities. In California, Whole Foods had to pay nearly $800,000 in penalties for overcharging its customers. Investigators in California discovered that the weight from the containers at the food bars were not tared properly, meaning the weight of the container was not deducted from the total weight of food purchased. Also, some pre-packaged foods had weights on the label that were not accurate, while other items that should have been priced by the pound (deli foods, for example) were instead sold at a single price.
Citing the company’s “reckless disregard” toward its company’s shareholders, O’Malley is taking the organic food giant to task! The problem with Whole Foods this time is not that customers lost money but that the shareholders of Whole Foods stock lost money when, on July 20, 2015, the common stock fell 11.61 percent, following the damning revelations.
O’Malley’s representatives accused Whole Foods of inflating their value in the complaint that was submitted to the Travis County Court: “As a result of the individual defendants’ materially misleading statements, failure to implement, maintain, or follow (or take reasonable steps to cause the company’s officers to follow) adequate internal controls, and failure to discharge their fiduciary duties to Whole Foods and its shareholders, Whole Foods stock traded at inflated levels during the relevant period. However, after the above revelations seeped into the market, the price of Whole Foods stock was hammered and plummeted 13.71 percent on extremely high trading volume, causing millions of dollars of losses to the company’s shareholders.”
Predictably, Whole Foods CEOs Walter Robb and John Mackey responded to the complaints by passing the buck. In a video they say that part of the problem was inadequate training, and that they would address the oversight by retraining their staff. And if you discover that you have been overcharged for an item then you get it for free! All you need to do is bring your own scale to Whole Foods for a completely legal five-finger discount.
Whole Foods is feigning innocence again, but the fact of the matter is that the company has been sued several times in the past, and has also been called out for being untruthful on their stance on GMO products.
If this isn’t enough to make you jump off the Whole Foods bandwagon then consider this: In one California Whole Foods store, $6 bottles of “asparagus water” lined the store’s shelves. These infused bottles of water contained stalks of asparagus, and Whole Foods claimed that the nutrients from the asparagus were absorbed by the water. Right… So instead of eating a few stalks of asparagus at $3.99 a pound, people instead should spend $6 on a few spindly stalks of asparagus soaking in filtered water?
Whole Foods may take some of their customers for complete fools but we know our readers know better than to buy overpriced bottles of soggy GMO vegetables.
Sources:
Tagged Under: shareholders, Whole Foods
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