Real Free-Roaming Cows (photo by Emily Roesly, courtesy of morguefile.com)

In a scandal now ensnaring some of the nations leading retailers, a series of lawsuits have been filed accusing Wal-Mart, Costco, Target, Safeway, and Wild Oats of consumer fraud for marketing suspect organic milk.

The legal filings in federal courts come on the heels of class action lawsuits against Aurora Dairy Corporation, based in Boulder, Colorado. The suits against Aurora and the grocery chains allege consumer fraud, negligence, and unjust enrichment concerning the sale of organic milk. This past April, Aurora officials received a notice from the USDA detailing multiple and “willful” violations of federal organic law that were found by federal investigators.

“This is the largest scandal in the history of the organic industry,” said Mark Kastel of The Cornucopia Institute, a Wisconsin-based farm policy research group. Cornucopia’s investigation in 2005, first alerted USDA investigators to the improprieties occurring at Aurora. “Aurora was taking advantage of the consumer’s good will in the marketplace toward organics, and the USDA has allowed this scofflaw-corporation to continue to operate,” Kastel added.

Aurora, with $100 million in annual sales, provides milk that is sold as organic and packaged as private label, store-brand products for many of the nation’s biggest chains. In addition to Wal-Mart, Target, Costco, Safeway, and Wild Oats, Aurora serves as supplier to 15 other national and regional chains.

The stores sell Aurora's milk under their own in-house brand names, such as Costco's Kirkland and Target's Archer Farms, in cartons marked "USDA organic," typically with pictures of pastures or other bucolic scenes.

"That's not even close to the reality of where this milk was coming from," said Steve Berman, a Seattle lawyer whose firm is among those suing. "These cows are all penned in factory-confinement conditions."

Independent investigators at the USDA concluded earlier this year that Aurora—with five dairy facilities in Colorado and Texas, each milking thousands of cows—had 14 “willful” violations of federal organic regulations.

Cornucopia points out that Aurora is a "horrible aberration," and that the vast majority of all organic dairy products are produced with high integrity. In a scorecard published last year, and available on their web site, Cornucopia rates over 90% of organic name-brand dairy products as truly subscribing to the letter and spirit of the law.

"We have learned that Wild Oats and the Publix supermarket chain in Florida are no longer buying milk from Aurora,” stated Kastel. "In addition, the nation's largest distributor of natural and organic products, United Natural Foods, Inc. (UNFI) has also secured an alternative source for their Woodstock Farms brand."

“Aurora’s actions have injured the reputation of the more than 1500 legitimate organic dairy farmers who are faithfully following federal organic rules and regulations,” noted Kastel. “We cannot allow these families to be placed at a competitive disadvantage.”

Mark Pepperzak, Aurora CEO, said, "The allegations in this smear campaign against AOD are based on false information and, therefore, completely unfounded."

"It is unconscionable that the USDA allowed Aurora to continue, after making millions of dollars, in this ‘ethics-based’ industry, when they had concluded that Aurora willfully violated the law," Kastel added. "However, there is a higher authority in terms of organic integrity than the USDA—that's the organic consumer. And they are about to make their voices heard through the courts."

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