Costco is being sued in a proposed nationwide class action that accuses the Issaquah-based retailer of misleading customers by selling its Kirkland Signature tequila as “100% de Agave” even though it allegedly contains other types of alcohol, according to a federal lawsuit filed Friday in Seattle.
The 54-page complaint, filed in U.S. District Court for the Western District of Washington, names Costco Wholesale Corp. and its tequila supplier, Santa Lucia Corporate Distillery of Mexico, as defendants.
The lawsuit claims both companies knowingly participated in a fraudulent scheme to profit from tequila that was falsely certified and marketed as pure agave.
Plaintiffs say Costco violated federal racketeering laws and multiple state consumer protection acts by misleading customers about the contents and quality of the Kirkland Signature tequila.
According to the complaint, Costco and its partners created what plaintiffs call an “Adulterated Tequila Enterprise,” a network of manufacturers, bottlers, and marketers that worked together to falsely label and sell tequila as “100% de Agave.”
The lawsuit alleges Costco “possessed exclusive knowledge” that the tequila was adulterated, concealed that information from consumers, and continued to sell it at a premium price.
The plaintiffs say Costco’s alleged conduct amounts to a pattern of racketeering activity under federal law (RICO) and that it extracted “hundreds of millions if not billions of dollars” from consumers who believed they were buying an authentic agave product.
The case includes separate claims under Washington’s Consumer Protection Act and California’s Consumers Legal Remedies Act.
In Washington, plaintiffs allege Costco engaged in “unfair or deceptive acts” that violated state law by misleading consumers about the purity and certification of the tequila.
The complaint says Costco’s actions were “immoral, unethical, oppressive, or unscrupulous” and caused “substantial injury to consumers.”
In California, plaintiffs accuse Costco of violating state consumer and advertising laws by misrepresenting the tequila’s ingredients, quality, and origin.
The California complaint cites multiple sections of the state’s Civil Code and Business and Professions Code, which prohibit false or misleading advertising.
“Costco knew that the Kirkland Tequila Products were adulterated with non-agave alcohol and should not have been certified, labeled, and/or marketed as ‘100% de Agave,’” the complaint states.
It also alleges the retailer’s marketing materials “were likely to deceive a significant portion of the general consuming public.”
The lawsuit seeks to represent a nationwide class of consumers who purchased the Kirkland Signature tequila.
It asks for compensatory and punitive damages, restitution, and court orders requiring Costco to stop selling mislabeled products and correct its marketing.
The plaintiffs argue that individual lawsuits would be too costly given the price of the tequila and the complexity of the claims.
Instead, they say a class action is the most efficient way to hold Costco accountable and ensure consumers are reimbursed.
Costco has not yet responded publicly to the lawsuit.
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