Hawaiian Host is accused of false advertising for mainland-made treats

Hawaii is well known for chocolate-covered macadamia nuts, but where some of these treats are made is the subject of litigation potentially representing thousands of mainland consumers.

Two law firms filed a lawsuit in California late last year alleging a Hawaii company that claims to be the original producer of chocolate-covered mac nuts misled mainland customers about where many products were made.

New York-based Faruqi &Faruqi LLP, along with California-based The Wand Law Firm, filed the lawsuit contending that Hawaiian Host was making candies in California for mainland distribution while leading customers there to believe the products were made in Hawaii.

The litigation, which seeks more than $5 million, is similar to a case the same law firms brought against Kona Brewing Co. in 2017, which resulted in the beer company paying small rebates to many customers and much more to the litigators.

Honolulu-based Hawaiian Host claims to produce more premium chocolate-covered mac nuts than anyone else in the world. The company, however, has been in a financial bind since the coronavirus pandemic last year shattered tourism in Hawaii from which the company derives much of its sales.

Annual revenue for Hawaiian Host was around $140 million before the pandemic, and this year the company has projected sales around $100 million.

In January while facing potential bankruptcy, a group of local and mainland investors bought Hawaiian Host for an undisclosed price from a charitable trust established by the company’s founders.

The company said at the time the recapitalization would lead to improved facilities, expanded online sales and new products. However, Hawaiian Host has not yet paid all of its past-due debts, including $322,643 owed to Hawaii’s biggest mac nut farm, Hawaiian Macadamia Nut Orchards LP, according to a lawsuit filed last month in state court.

The litigation over where Hawaiian Host products sold on the mainland are made was filed in November and accuses Hawaiian Host — which trademarked the phrase “Hawaii’s gift to the world” — of false advertising on numerous products including Alohamacs, Maui Caramacs, Kona Caramacs, Founder’s Collection, Macnut Crunch, Coconut Caramacs and Toffeemacs.

The complaint states the company’s product packaging is designed to reinforce a “misconception” of being made in Hawaii by using images of hibiscus flowers, palm trees, beaches, outrigger canoes and Hawaii landmarks along with other references to Hawaiian culture. The company’s name on the packaging is also followed by “Honolulu, HI 96817 USA.”

“These representations, taken in isolation and as a whole, create the impression in consumers that the Hawaiian Host products are made in Hawaii,” the complaint said. “As such, plaintiffs and other consumers purchased the Hawaiian Host products reasonably believing that they are made in Hawaii.”

The lawsuit was filed on behalf of Alison Toy, a California resident, and Andrea Ward, a Colorado resident, who claim they bought Hawaiian Host products they believed were made in Hawaii.

Toy and Ward would have paid significantly less for the products or not have bought them at all had they known the products were made in California, according to the complaint, which seeks class-action status to represent thousands of other consumers who bought Hawaiian Host products on the mainland.

“Defendant deceptively packages the Hawaiian Host products as being made in Hawaii in order to exploit strong consumer sentiment for Hawaiian-made goods,” the lawsuit claims. “Indeed, the Hawaiian Host products are synonymous with Hawaii and they are unique because consumers believe they are from Hawaii.”

The complaint cites a 2003 Pacific Business News story in which a Hawaiian Host sales and marketing executive is quoted as saying that a company factory in Los Angeles makes products for mainland and international markets while a Honolulu plant makes products for the Hawaii market.

Hawaiian Host established a factory in California in 1980, but said in January the facility closed last year as part of an effort to sustain the business, which was established in 1960.

The survival effort also included Hawaiian Host selling its Honolulu production plant for $30 million while maintaining operations under a lease, attempts to settle past-due bills at a discount and receiving a $5.3 million forgivable federal Paycheck Protection Program loan.

Hawaiian Host representatives did not respond to requests for comment on the consumer lawsuit.

The company has yet to file an answer in court. However, the case file shows that deadlines to file an answer have been extended due to settlement negotiations.

In the Kona Brewing case, a settlement was reached in 2019, and the beer maker agreed to modify product packaging given that its draft beer was made in Hawaii while its canned and bottled beers were made on the mainland.

The Kona Brewing settlement also involved paying lawyers representing the plaintiffs $2.9 million.

Consumers in the Kona Brewing case were eligible to receive $1.25 for past purchases of a four-pack or six-pack and $2.75 for a case, with a per-household cap of $10 for customers without any proof of purchase or $20 with proof of purchase.