Meadow Gold Dairies writes on its website that it has been providing Hawaii with milk for the past 120 years, but a federal lawsuit is challenging that claim, alleging the company’s milk is actually being produced in California.

The lawsuit filed against Meadow Gold Dairies on Wednesday in the U.S. District Court of Hawaii by food distributor Hawaii Foodservice Alliance stems from when the brand and its assets were sold in April 2020 to Bahman Sadeghi, a Big Island dairy farmer. The complaint alleges that after the sale, milk from California- based Hollandia Dairy and Heritage Distributing Co. was being sold under the Meadow Gold Dairies brand with labels that proclaim “Hawaii’s Dairy” and “Made With Aloha.”

The lawsuit also alleges that Meadow Gold Dairies does not own any cows in Hawaii.

The Hawaii Foodservice Alliance said the 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 provide false advertising for products with the intention of deceiving consumers and influencing purchasing decisions.

“We believe that local farmers, ranchers, and local food production need to be protected from mainland products masquerading as local,” said Hawaii Foodservice Alliance CEO Chad Buck in a statement.

“We also believe that deceiving the Hawaii consumer and charging a local premium for a mainland product harms the Hawaii consumer and our state’s efforts to become more sustainable and food secure.”

Meadow Gold Dairies also produces other dairy products and local favorites such as POG (passion- orange-guava) juice.

Meadow Gold did not respond to a Honolulu Star-Advertiser request for comment.

However, immediately after the 2020 sale of Meadow Gold Dairies to Sadeghi, he 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, was produced on the mainland as well.

Coincidentally, a draft environmental assessment for Meadow Gold Dairies’ proposed expansion of its Hilo facility was published Tuesday by the state Office of Planning and Sustainable Development. The document says the expansion is necessary “to ensure the continued local production of milk and other dairy products on Hawaii Island, while supporting on-island dairy farms by providing a demand for milk.”

The federal lawsuit claims the false advertising has diverted revenue away from local dairy farmers who are losing out on customers who prefer to purchase milk produced in Hawaii and buy Meadow Gold milk thinking it’s from local farms.

The complaint acknowledges the Meadow Gold brand has sold locally produced milk in the past, but not since April 2020.

Murray Clay, president of Ulupono Initiative, a group that advocates for locally produced food, compared the situation to the Kona coffee industry, which saw similar issues with false advertising.

“We believe Hawaii residents prefer fresh, local products when they have the option and the premium is reasonable, but imported products designed to look local undermine consumer choice,” he said.

“In addition, similar to other product areas, such as Hawaii’s coffee industry, ensuring truth in advertising and packaging best practices helps maintain the strength of the Hawaii brand, while honoring our hard-working farmers, ranchers and others brave enough to dedicate their livelihoods to food production here in the islands.”

In 2019, 22 wholesalers, including Costco and Walmart, settled a class-action lawsuit with hundreds of Hawaii coffee farmers after passing off lower-quality coffee beans as premium Kona coffee.

That lawsuit also used the Lanham Act as the basis of its complaint, asserting the wholesalers were falsely advertising the origin of their coffee, diverting revenue away from local coffee farmers. The eligible local coffee farmers were able to claim about $14,000 each.

Jeri Kahna, a retired administrator in the state Department of Agriculture’s Quality Assurance Division, said he wants to see stronger laws in Hawaii protecting locally agricultural items.

“Other states have strict laws protecting agriculture in their state and the use of the state’s name in marketing or packaging unless the statement is true,” he said.

“If our state doesn’t take protecting agriculture seriously, why would anyone bother trying to farm or ranch if any import can market as locally produced and compete directly against you?”