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Walmart, Target, Bed Bath & Beyond to face lawsuit over falsely labeled cotton

Walmart Inc., Target Corp. and Bed Bath & Beyond Inc. must face a lawsuit alleging they sold falsely labeled linens, according to a May 20 court filing.

The plaintiffs are accusing the companies of falsely labeling linens as "100% Egyptian Cotton" or "100% Long-Staple Egyptian cotton" despite having questions about their origin. They claim they overpaid for mislabeled cotton produced by Indian textile company Welspun India Ltd.

In his decision, U.S. District Judge Vincent Briccetti in New York said consumers may pursue breach of warranty and negligent misrepresentation claims against the retailers and Welspun USA, as well as fraud claims against the Welspun unit. The court, however, dismissed fraud claims against the retailers due to a lack of "strong interference of fraudulent intent."

Consumers in California and New York were permitted to sue the retailers under their respective states' consumer protection laws.

The retailers sold Welspun's "Egyptian" cotton under the Fieldcrest, Royal Velvet, Better Homes and Gardens, Canopy, Crowning Touch and Perfect Touch brands despite being aware of the mislabeling, according to the complaint filed Aug. 29, 2016.

Target and Bed Bath & Beyond knew of the mislabeling for several months, while Walmart knew about it since 2008, according to the documents.

Walmart, Bed Bath & Beyond and Welspun did not immediately respond to requests for comment from S&P Global Market Intelligence. Target declined to comment.