Springtime For Poland A class-action suit raises questions: Does Poland Spring water come from springs? And can you drown lawyers in it? Please?
(FORTUNE Magazine) – If you've had a sip of Poland Spring Natural Spring Water over the past seven years, then you, like me, are a plaintiff in a class-action suit that recently settled. (Congratulations!) If you have Poland Spring delivered to your home, the company sent you a letter saying not to worry--all parties now agree that Poland Spring is natural spring water after all. The settlement is pretty standard: next to undetectable benefits for us--some discount coupons and whatnot--and $1.35 million in cash for the plaintiffs attorneys.
Reassuring though it was, the letter was not, strictly speaking, accurate. The settling plaintiffs lawyer did not actually concede that Poland Spring Natural Spring Water was spring water. He agreed, rather, to stop challenging that labeling. In fact, based on the evidence presented to the judge who approved the settlement, the most anyone can confidently say about Poland Spring--the nation's leading brand of spring water--is that geologists disagree about whether it's spring water.
You may think that spring water is water that springs from the ground. But a company like Poland Spring, which sold 380 million gallons in 2002, can't dip each plastic bottle it sells into some spring-fed brook. Nor should it. Once spring water reaches the surface, it becomes what hydrogeologists call, logically enough, surface water. Surface water is not pristine. Dead leaves fall in it. Bugs swim in it.
What we really want to drink is spring water moments before it's sprung. The old way to capture pre-sprung spring water was to build a box, or catchment, into the ground around the mouth of the spring. A better and safer way, many moderns contend, is to drill a borehole and tap into the groundwater as it's still flowing toward the spring mouth, capturing the water far from the contaminants of the earth's surface.
There's a catch, though. If you use a borehole, the spring water is so deep underground when you capture it--maybe 50 to 70 feet--that you'll need a pump to get it to the surface. Using a pump is fine, say purists--except then you're really selling well water. It may taste great and be perfectly healthy, but it doesn't happen to be "spring" water, as they see it. How, such purists wonder, does the bottler know he's even pumping the same water that goes to the spring?
In 1995 the Food and Drug Administration ruled that water extracted from boreholes could be called "spring water." But it required bottlers to be able to demonstrate that there was a "hydraulic connection" between the water coming from the borehole and the water coming from the spring.
Last year an assortment of people with gripes and suspicions about Poland Spring and its gigantic corporate parent, Nestle SA, began venting to a plaintiffs lawyer named Jan Schlichtmann. He was the subject of Jonathan Harr's 1995 bestseller, A Civil Action (John Travolta played him in the movie), which chronicled his claim that well water in Woburn, Mass., had been contaminated by toxic dumping, causing town residents to come down with leukemia. But while the alleged injury in Woburn was cancer, the alleged injury at Poland Spring is--what exactly? If borehole water is the same as spring water, who cares if it actually would have flowed out of the spring? Answer: Purists do. Borehole drilling can foul the environment, they say, and pumps can draw in contaminated water. In any case, if a marketer claims to be selling spring water, the product has to be spring water.
Poland Spring water goes all the way back to 1845, when a legend arose that water from springs near Poland, Maine, 25 miles north of Portland, had miraculous medicinal properties. A spa was built. Over the years Ulysses Grant, William Howard Taft, Mae West, and Babe Ruth stayed at its 300-room hotel. Then taking the waters fell out of fashion, and for a generation people drank martinis.
In the mid-1970s, Perrier launched a massive marketing campaign to get Americans drinking water again. In 1980 it bought the small, bankrupt company that was then bottling water at Poland Spring. In 1992, Perrier was acquired by Nestle.
When Perrier took over the Poland Spring site, it was drawing water not from the original spring at the top of Ricker Hill but from boreholes a couple of thousand feet away, near a pond at the base of the hill. It continued to call its product "natural spring water" on the assumption that the pond was fed by underwater springs and that the boreholes were tapping into that source.
In 1992, as Poland Spring extended its markets, state regulators from Georgia pressed for more proof that it was really spring water. Hired by Poland Spring, six geologists in scuba gear swam to the bottom of the pond, documenting changes in rock cover that, they said, showed where subaqueous springs were venting. They drove pipes and gauges into the bottom of the pond to measure upward pressure and take groundwater samples.
Yep, they concluded. There were springs down there, they were hydraulically linked to the borehole, and the water from each was chemically equivalent. Georgia was happy, and Poland Spring continued to market "spring water."
As demand bloomed, Poland Spring drilled boreholes at three more (alleged) spring sources: Garden Spring, about five miles from Poland Spring; Hollis, about 29 miles away; and Fryeburg, about 31 miles away. Poland Spring also stepped on toes. Small spring owners found it hard to compete. Some hoped to sell their operations to Nestle but were rebuffed.
In 2002 several "people in the know," as a plaintiffs lawyer describes them, approached Schlichtmann. He launched an investigation, retaining a hydrogeologist who concluded that Poland Spring had never even convincingly established that there were springs at the bottom of the pond--let alone that they were hydraulically linked to its boreholes. The hydrogeologist also alleged that Garden Spring was manmade, not "natural"--created when workers, excavating a gravel pit long ago, inadvertently struck the water table.
Schlichtmann enlisted two big-time class-action lawyers: Tom Sobol of Boston, who helped win $10 billion from the tobacco industry for the states of Massachusetts and New Hampshire, and Garve Ivey of Birmingham, Ala. They hired three more geologists. According to Ivey and Sobol, all four geologists then concluded that none of the Poland Spring sources were providing "natural spring water" from their boreholes. (At least two of them now concede, however, that water from one source, Hollis, does meet the FDA definition.)
Schlichtmann, Sobol, and Ivey approached Nestle early in 2003 to see if they could strike a settlement without having to go to court. In February, Nestle entered secret mediation talks with the lawyers, who were jointly representing a prospective class of Poland Spring consumers and four small competitor spring companies.
But Sobol and Ivey feared, they say, that Schlichtmann was selling out the interests of the class to get a quick payoff for the competitor clients and himself. In mid-June, Sobol and Ivey bolted from the mediations and, on their own, filed class actions against Nestle in Connecticut, Massachusetts, and New Jersey. Furious, Schlichtmann sued Sobol and Ivey on behalf of two of the competitor companies--which both wanted to pursue a settlement--alleging violations of ethical duties and confidences. Sobol and Ivey countersued for defamation. A third competitor, Vermont Pure Holdings, sided with Sobol and Ivey. In August it brought a false-advertising suit against Poland Spring in federal court in Boston.
Schlichtmann appears to have outmaneuvered the mutineers. He invited a new class-action attorney, Robert Foote, into the case. On July 29, Foote filed a class action against Nestle in state court in Geneva, Ill. Three weeks later, Foote and Nestle announced a settlement, apparently on terms very like those that Schlichtmann had originally contemplated. A state judge approved that settlement on Nov. 4. If the settlement holds up--Sobol and Ivey are challenging it on appeal--Nestle may be able to win dismissals of all the other class actions around the country. Nestle would then still face Vermont Pure's suit, but Nestle has moved to dismiss that one on the ground that its claims are preempted by the regulatory framework governing bottled-water sales and practices.
Bill Miller of the National Spring Water Association had foreseen just this sort of morass back in 1993, when he urged the FDA to ban borehole extraction of spring water. It's not that Miller doubts it can be done properly. In fact, he says, Poland Spring may be doing it properly. (Miller's not involved in the suits.) But once you permit borehole extraction, you inevitably invite complex, expensive swearing contests between purported experts.
"It's so simple," says Miller. "Spring water comes from a spring. Well water comes from a well. There. You've solved the controversy."