Egyptian Cotton Lawsuit: Walmart, Target, Bed Bath & Beyond Sued Over Fake Egyptian Cotton Linens

A lawsuit claiming that Walmart (WMT), Target (TGT), and Bed Bath & Beyond (BBBY) sold linens that were falsely labeled as “100% Egyptian Cotton” or “100% Long-Staple Egyptian cotton” even though the retailers questioned their authenticity will move forward according to a ruling by a federal judge on Monday, Reuters reported.

Plaintiffs in the lawsuit contend that they, as well as consumers nationwide, overpaid for the Egyptian cotton linens that were mislabeled and produced by Welspun India Ltd. To be considered genuine Egyptian cotton, it must be grown on the banks of the Nile River and should carry the Egyptian cotton authenticity logo – a cotton symbol inside a black triangle - as designated by the Cotton Egypt Association.

U.S. District Judge Vincent Briccetti ordered the retailers to face the lawsuit, allowing the plaintiffs in the case to seek breach of warranty and negligent misrepresentation claims against the retailers and U.S. division of Welspun. The 39-page decision by Judge Briccetti also allows the plaintiffs to make fraud claims against Welspun but not against Target, Walmart, and Bed Bath & Beyond.

The cotton linens in question were sold under the Fieldcrest, Royal Velvet, Better Homes and Gardens, Canopy, Crowning Touch, and Perfect Touch brands, according to court documents. The complaint also alleges that Walmart knew as far back as 2008 that cotton was mislabeled while Target and Bed Bath & Beyond knew for several months. The retailers sold the cotton through 2016.

Shares of Target stock were up 0.93 percent as of 1:36 p.m. ET on Tuesday while shares of Walmart stock were down 0.38 percent and shares of Bed Bath & Beyond stock were up 0.83 percent at the same time.