A federal court judge in Honolulu is allowing a claim to move forward alleging deceptive trade practices by Meadow Gold Dairies and the mainland dairy partners it works with.

U.S. District Court Judge Leslie Kobayashi ruled Wednesday that Hawaii Foodservice Alliance asserted plausible claims in its suit that the dairies labeled their products in such a way that causes confusion about their origin.

In its lawsuit the local food distributor said that misleading labels and related promotions and advertising, such as Meadow Gold’s iconic Lani Moo mascot, violate the Lanham Act, which allows civil actions against parties that purposely advertise products with the intention of deceiving consumers and influencing purchasing decisions.

The court also acknowledged a Hawaii Foodservice Alliance claim of deceptive trade practices under Hawaii state law against the same mainland suppliers is equally plausible and may proceed as alleged because the labels and statements on their products could lead consumers to believe that their products originated from Hawaii.

The court denied without prejudice two counts against the mainland suppliers based on grounds they may not have controlled or been involved in the design of their products.

That only serves to highlight the potential liability of Meadow Gold Dairies in its actions, said Chad Buck, CEO of Hawaii Foodservice Alliance.

Meadow Gold could not be reached for comment Friday.

“We believe that Hawaii farmers and ranchers need to be protected from mainland agricultural products masquerading as local,” Buck said in a statement.

“No farmer will invest in local production if imported counterfeits, masquerading as local products, are allowed to compete against them. We believe that this type of deceptive packaging and marketing harms our state’s efforts to become more sustainable and food secure,” he said.

On its website, Meadow Gold describes itself as an island tradition, having provided milk, ice cream and juice to Hawaii “with aloha” for more than 120 years.

The lawsuit claims the deceptive practices date back to when the Meadow Gold brand and assets were sold in April 2020 to Bahman Sadeghi, a Hawaii island dairy farmer.

At the time, Sadeghi was praised for stepping in to prevent the local company from going under. But the lawsuit alleges that after the sale, milk from California- based Hollandia Dairy, Heritage Distributing Co. and Saputo Dairy Foods USA was being sold under the Meadow Gold Dairies brand with labels that proclaim “Hawaii’s Dairy” and “Made With Aloha.”

After the sale of Meadow Gold Dairies, Sadeghi told Pacific Business News that while the company was processing milk from a local dairy, it was also using milk shipped from the mainland. Sadeghi also acknowledged that other dairy products, such as the ice cream, were produced on the mainland as well.

Buck said the company is deceiving the Hawaii consumer by charging a local premium for an imported product.

“Today, if you walk into a grocery store on Oahu, you will find Meadow Gold milk products from California with packaging that includes ‘Hawaii’s Dairy,’ ‘Made with Aloha!’ and some Meadow Gold products from California that even include a story about how Meadow Gold started as Oahu Dairymen’s Association which was founded in 1897,” he said.