Costco Lawsuit Response Preservatives Claim , “Fatally Flawed” and 157 Million Chickens Sold — Why Costco Is Fighting Back Hard

The rotisserie chicken department of any Costco warehouse takes up great space close to the back of the building. This is a purposeful merchandising choice because the $4.99 price, which hasn’t changed since 2009, serves as a loss leader meant to draw customers through the entire shop. Warm and fragrant, the birds emerge from industrial rotisseries, packed in transparent plastic containers, and sold at a rate of over 157 million units annually worldwide.

That figure was revealed during Costco’s January 2026 annual meeting. In the same month, two women from California filed a class action lawsuit, claiming that the birds’ “No Preservatives” signage was deceptive. The plaintiffs made a specific argument: the chicken includes carrageenan and sodium phosphate, both of which serve as preservatives regardless of the FDA’s classification.

Attorney Charles Sipos used the term “fatally flawed” in Costco’s answer, which was submitted as a request to dismiss on June 4, 2026, in the U.S. District Court for the Southern District of California. The FDA’s ingredient classification system forms the basis of the defense. The FDA lists carrageenan as a thickening, emulsifier, or stabilizer. Uses for sodium phosphate include emulsifying, leavening, and curing.

The FDA’s official definition of a chemical preservative, which includes compounds that prevent microbial development through particular methods, does not include either. Costco contends that the plaintiffs are confusing functional food chemistry with the legal meaning of the term as it appears in federal rules and that “no preservatives” is an accurate statement under the regulatory framework that regulates food labeling. August 13 is the date of the dismissal hearing.

What Costco did prior to the filing of the dismissal motion complicates the company’s position. Six days after the complaint was filed, on January 28, 2026, Costco informed USA TODAY that the “no preservatives” signs had been taken down from the stores. That is an important detail. The week following a lawsuit, a business that is certain that its labeling was correct and that it has little legal risk usually doesn’t stop advertising.

Regardless of the regulatory arguments Costco makes, plaintiffs’ lawyers will almost surely point to the removal of the signs as an acknowledgment that the claim was at least problematic. The removal of the signs creates a counter-narrative that is hard to ignore, but the move to dismiss aims to settle the matter on the merits of the FDA classification claim.

The primary legal challenge in this case is not exclusive to Costco; it concerns whether an ingredient’s functioning characteristics are more important than its official classification. The wave of “all natural” labeling lawsuits that have resulted in court decisions and settlements in the food and beverage sector over the past ten years shares a similar trend. The same conflict is present in the Gatorade citric acid case: a challenged classification of an ingredient, a clean-label marketing claim based on that classification, and plaintiffs claiming that customers were misled about what was actually in the beverage.

One reason these cases continue to be filed is because courts disagree on how to address this tension. The gap between “how the agency categorises something” and “how a reasonable consumer understands a label” has shown to be significantly wider than food corporations would want, and the FDA’s categorization system was not created with class action litigation in mind.

As the hearing date of August 13 draws near, there’s a sense that the food sector will eagerly monitor the outcome of Costco’s request to dismiss. If the FDA-classification defense is successful, it offers businesses contesting similar allegations a useful road map. If it doesn’t, it implies that the functional argument—what an ingredient truly does, not what the regulatory code names it—has greater legal support than industry legal teams have been presuming. They’re still selling rotisserie chickens. There is no signage. The case is still in its early phases.