By Samuel López | USA Herald

Costco Wholesale Corporation is facing a proposed class-action lawsuit that appears, at first glance, to be another fight over food-label wording. Dig deeper, however, and the case exposes a strange gap between what federal regulations say and what the Food and Drug Administration currently chooses to enforce.

Illinois resident Mason Maldonado filed Maldonado v. Costco Wholesale Corporation, Case No. 2:26-cv-03702, on September 30 in the U.S. District Court for the Western District of Washington. Costco is headquartered in Issaquah, Washington.

Maldonado alleges Costco marketed its Kirkland Signature Hydration Electrolyte Drink Mix as sugar-free, even though allulose is listed as the first ingredient. According to the complaint, he would not have purchased the product — or would have paid less — had he understood what it contained.

Here is where the case gets far more interesting.

Allulose is not merely an artificial sweetener like aspartame. Chemically, it is a monosaccharide. The FDA recognizes that it behaves differently in the body than traditional sugars and contributes only about 0.4 calories per gram, compared with roughly four calories per gram for ordinary sugar. The agency therefore exercises enforcement discretion allowing manufacturers to exclude allulose from the “Total Sugars” and “Added Sugars” declarations on Nutrition Facts labels. It must still be counted as a carbohydrate.

But enforcement discretion is not the same thing as rewriting a regulation.

That distinction became critical in July when the U.S. Court of Appeals for the Seventh Circuit decided Franco v. Chobani. Chobani had sold yogurt advertised as sugar-free despite containing four grams of allulose per serving.

The appellate court ruled that the federal regulation defining Total Sugars covers all free mono- and disaccharides. Since allulose is a monosaccharide, the court concluded that allulose is a sugar under that regulation. More importantly, the court said FDA guidance allowing companies to omit allulose from the Nutrition Facts sugar calculation represents an enforcement policy — not a change to the underlying legal definition.

That is the part of Costco's new lawsuit consumers should watch.

The Seventh Circuit decision does not automatically decide Maldonado's case. Costco's lawsuit was filed in Washington, within the Ninth Circuit, so the Chobani ruling is not controlling precedent there. But its reasoning can still be persuasive, particularly because the Seventh Circuit relied heavily on the text of the FDA's own regulation and the agency's position presented to the court.

Costco may also have substantial defenses. The ingredient list reportedly identifies allulose, and Costco can point to FDA guidance permitting companies to exclude allulose from declared Total Sugars. The company could argue that consumers are being given the information needed to make an informed decision and that allulose's metabolic effects are dramatically different from traditional sugar.

The plaintiff, however, can make a simpler argument: “sugar-free” is an absolute statement.

That leaves a federal judge with a question that could reach far beyond one Costco drink mix — whether a company can legally tell consumers a product is sugar-free when an ingredient qualifies chemically as sugar under the governing regulation, even while the FDA has chosen not to enforce certain labeling requirements against it.

That conflict between the rulebook and the regulator's enforcement policy may ultimately be far more important than the ingredient itself.

About the Author

Samuel López is a reporter and news correspondent for USA Herald who has written for the publication since 2022. López is also a seasoned legal professional with more than two decades of experience analyzing state and federal litigation, complex civil claims, regulatory issues and consumer disputes. His legal background informs USA Herald's coverage of class actions, corporate liability and the regulatory questions often hidden beneath consumer-product litigation.

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