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Spat Over ‘Healthy Pasta’ Settles for $7.9 Million

(CN) - Allegations that Dreamfields pasta was falsely advertised as a healthy alternative to traditional pasta will cost a Post Foods subsidiary $7.9 million to settle, a federal judge ruled.

Joseph Mirakay, Louis Messina, Michael Elefterakis and John Gembinski filed the class action against Dakota Growers Pasta Co. Inc. last year in New Jersey.

In addition to claiming that Dakota deceptively markets, advertises and sells Dreamfields pasta as a healthy alternative, the class said Dakota misstated that the product has a lower glycemic index than traditional pasta, and that it contains only 5 grams of digestible carbohydrates.

The parties went to mediation in December, along with Jesse Weiss who filed a similar suit in Minnesota, and ultimately reached a $5 million settlement.

U.S. District Judge Joel Pisano gave the class action settlement final approval Monday.

The deal entitles class members to $1.99 for each Dreamfields box bought online, or reimbursement for up to 15 boxes bought in store.

If the claims submitted amount to less than $5 million, however, each class member will receive as much as 50 percent more than his or her purchase price.

Rather than have residual funds revert to Dakota, moreover, the settlement calls for them to be donated on a cy pres basis to the American Diabetes Association.

Dakota also agreed - for one year from the date of the final order - to remove all packaging claiming Dreamfields has a lower glycemic index than traditional pastas, the ability to reduce spikes in blood glucose levels and only 5 grams of digestible carbs.

The company must also pay an additional $2.9 million in attorneys' fees and costs, and an aggregate incentive award of $20,000 to the class representatives.

Judge Pisano noted that class members received notice of the settlement website via nearly 339,000 emails; Better Homes & Gardens, People, and Good Housekeeping; 350 million ads on AOL, Facebook and Twitter; and a press release to more than 5,000 news outlets.

Plus, the Diabetes Association notified more than 234,000 members, the ruling states.

"As of Sept. 9, 2014, this website had been visited approximately 213,311 times," the unpublished ruling states. "This notice program has fully informed members of their rights and benefits under the settlement, and all required information has been fully and clearly presented to class members. Accordingly, this widespread and comprehensive campaign provides sufficient notice under the circumstances."

Objections that Dakota's website and product boxes should have contained the notice failed to sway the judge. Pisano also rejected calls for supermarkets, drug stores, heart associations and diabetic associations to disseminate notice.

In denying a motion to file a sur-reply, Pisano said the mere 12 objections "from the class is a strong indication of the reaction of the class which favors settlement."

The ruling calls the requested attorneys' fee figure "comparable to fees typically awarded in analogous cases and is fair and reasonable in relation to the settlement amount, particularly when the value of the injunctive relief is taken into consideration."

Post Holdings Inc., which bought Dakota from former defendant Viterra Inc. in January 2014, reported net sales of $633.0 million, including $394.8 million from acquisitions, for the fiscal quarter ended June 30, 2014.

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