'New Mexico chili' at the center of New York lawsuit

ALBUQUERQUE, N.M. — Where peppers are grown matters – that's according to a new lawsuit in New York.

"Just like Idaho potatoes, just like Florida oranges, New Mexico chile means New Mexico-grown and processed, packed chili peppers," said New York attorney Spencer Sheehan. "It's really not a complicated case."

The class action lawsuit filed Monday alleges Florida-based Badia Spices deceived customers by selling fraudulently labeled packages of "New Mexico chili." The packages (pictured below) appear to include small, dried red peppers and clearly say New Mexico on the label. The lawsuit notes the Indigenous-style artwork on the packaging could also be seen as false advertising.

While not directly referenced in the lawsuit, some New Mexicans may argue the most egregious error is the spelling of "chili" instead of chile.

Despite the clear label, product information on the company's website reveals the peppers comes from Mexico — not New Mexico.

"This case is based upon a regular person," Sheehan said, referencing the Staten Island woman featured in the lawsuit. "This person goes to the supermarket, and they see a product labeled New Mexico chili peppers, and they expect that that's going to be what it says it's going to be."

The lawsuit states the woman purposefully bought the peppers believing they were from New Mexico. It's not clear how or when the woman learned they were not authentic, but the lawsuit argues she paid a premium price for a lower-quality product. The suit states the woman paid $6.99 for a 6-ounce bag of the peppers at some point between June 2020 and now.

The "New Mexico chili" peppers were still on sale on the company's website Thursday for similar prices.

"It's not fair to consumers, and it's not fair to the New Mexico chile farmers and growers of many generations who have seen their businesses wither, unfortunately, because of the excess imports from other countries," Sheehan said.

Sheehan believes the packaging is unfairly using the prestigious New Mexico chile reputation to sell Mexican peppers. The lawsuit argues that violates New York's consumer protection laws – which are meant to shield customers from fraudulent marketing and advertising.

The lawsuit is demanding Badia Spices pay more than $5 million. Sheehan says that amount is based on the company's likely sales of the peppers and potential damages across the country. It's not clear how many stores are currently selling the mislabeled peppers.

"These cases, like this particular case, are really the only way that we can as consumers say to a company that this shouldn't happen," Sheehan said.

KOB 4 was not able to reach someone at Badia Spices Thursday.

The New Mexico Chile Association says fraudulently labeled chile products are a major issue for New Mexico's chile industry.

"As the marketing and the branding of New Mexico chile has grown, we’ve seen this problem grow exponentially," said Travis Day, executive director of the state's chile association. "It's significantly cheaper for businesses to purchase chile out of Mexico because it's less input cost, and then they turn around and they slap the New Mexico name on it."

Day says those products are often sold at equal or higher prices than authentic New Mexico chile products. He says those are profits that should be coming back to New Mexico's chile farmers.

New Mexico state lawmakers passed the Green Chile Advertising Act in 2011 to combat misleading marketing in New Mexico. Day says that law inspired the New Mexico Certified Chile trademark which identifies products made with authentic New Mexico chile. Day believes a federal law may be needed to combat fraudulent products as New Mexico's chile industry continues to expand beyond the state.

"We’re hoping in the near future to see some sort of legislation to protect New Mexico chile," Say said. "In the short term, we’re asking consumers to help us out by looking again, for that New Mexico certified trademark."