(CN) - The Quaker Oats Co. can pay $1.4 million to reformulate its products and ensure compliance with its labels about trans fat content, a federal judge ruled.
Robert Chacanaca and Victor Guttmann had brought the first class action in San Jose, Calif., complaining that Chewy Granola Bars actually contain "dangerous amounts" of trans fat, "a toxic additive that causes heart disease, cancer and type 2 diabetes."
Though the granola bars are labeled as having "0g Trans Fat," the class claimed that the actual content is deceptively omitted because the products contain partially hydrogenated oil (PHO).
The plaintiffs moved in late December for preliminary approval of a settlement with Quaker Oats. The deal emphasizes that Quaker Oats "vigorously denies" the allegations and "stands by its products and marketing," but has agreed to injunctive relief at a cost of approximately $1.4 million.
"Defendant agrees to remove PHOs by December 31, 2015 from the Oatmeal to Go and Instant Quaker Oatmeal Products that currently contain PHOs, and not to reintroduce PHOs into those products for a period of ten years," the motion states. "Defendant has informed us that the cost of reformatting these products is approximately $1.4 million. With respect to the other products at issue in the litigation, defendant agrees not to introduce PHOs for a period of ten years into Quaker Chewy Bars (which do not currently contain PHOs), as well as the Instant Quaker Oatmeal Products that do not currently contain PHOs. Finally, defendant agrees, that unless it is in early compliance with the provision requiring removal of PHOs from the products that currently contain them, by December 31, 2014, it will cease making the statement 'contains a dietarily insignificant amount of trans fat' on the label of any product containing 0.2 grams or more of artificial trans fat per serving."
U.S. District Judge Richard Seeborg approved the deal last week, finding that the settlement class meets all requirements under Federal Rule of Civil Procedure 23.
"The settlement agreement and the settlement it incorporates appear fair, reasonable, and adequate, the terms of which are within the range of reasonableness," Seeborg wrote. "The settlement agreement was entered into at arms'-length by experienced counsel after extensive negotiations spanning months, including with the assistance of a third party mediator, Judge Leo S. Papas (Ret.). The settlement agreement is not the result of collusion."
Nearly 50 different flavors of the Quaker bars and oatmeal at issue are named in the decision. Varieties of Instant Oatmeal and Chewy and Oatmeal to Go bars include Raspberry Streusel, Banana Bread, Nestle Butterfinger and 90 Calorie Low Fat Honey Nut.
Quaker is to pay up to $120,000 to cover the cost of notifying all potential class members, the ruling states.
A fairness hearing is scheduled for May 8, according to the ruling.
The judge advised class members to check the settlement website regularly for updates and further details on deadlines for filing exclusions and objections. That website is password protected at the time of litigation.
Guttmann will serve as a class representive alongside Sonya Yrene and Rebecca Yumul. Seeborg appointed Gregory Weston and Jack Fitzgerald of The Weston Firm PC and Ronald Marron of the Law Offices of Ronald A. Marron, APLC, as class counsel.
It is uncertain how the settlement will affect similar claims pending against Quaker Oats in Chicago.
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