(CN) - The Quaker Oats Co. has agreed to pay $1.4 million to settle a class action that claimed it willfully mislabeled granola bars as trans-fats free when in fact they were not, a federal judge ruled.
Robert Chacanaca and Victor Guttmann filed a class action against Quaker Oats in San Jose, Calif., alleging that Chewy Granola Bars deceptively labeled as having "0g Trans Fat" actually contain "dangerous amounts" of the "toxic additive."
Indeed, the granola bars are tainted with partially hydrogenated oil (PHO), which causes heart disease, cancer and type 2 diabetes, the plaintiffs claim.
But Quaker Oats "vigorously denies" the allegations and "stands by its products and marketing," according to the plaintiffs' motion for preliminary settlement approval.
The company nonetheless agreed to injunctive relief at a cost of approximately $1.4 million, and U.S. District Judge Richard Seeborg preliminary approved the deal Feb. 12, under which Quaker must pay up to $120,000 to cover the cost of notifying all potential class members.
Under the settlement, "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 plaintiffs' motion states.
Quaker also agreed to not introduce PHOs into bars which do not already contain the oils, for the next ten years, according to the motion.
By the end of this year, the company must "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,'" the motion states.
Judge Seeborg approved the final settlement Tuesday, finding that it is "fair, reasonable, and adequate, with terms that are within the range of reasonableness. The settlement agreement was entered into at arms'-length by experienced counsel and after extensive negotiations spanning months. The settlement agreement is not the result of collusion."
The court concluded "the complexity, expense and likely duration of the litigation favor settlement -- which provides meaningful benefits on a much shorter time frame than otherwise possible -- on behalf of the class."
"The support of class counsel, who are highly skilled in class action litigation such as this, and the plaintiffs, who have participated in this litigation and evaluated the settlement agreement, also favor final approval," according to the ruling.
Under the settlement, the plaintiffs released all "claims for personal injury that resulted in actual bodily harm" relating to the granola bars, the ruling states.
About 50 different flavors of Quaker's Instant Oatmeal and Chewy and Oatmeal to Go bars are named in the decision, including Reduced Sugar Cookies & Cream, Weight Control Maple & Brown Sugar, Nestle Crunch, and 90 Calorie Low Fat Chocolate Chunk.
In a separate order
, Seeborg tossed aside objections filed by plaintiffs Chacanaca and Amy Yang, finding that the fee award "in no sense" diminishes the cash available to the class.
"In essence, the objections reduce to a complaint that a fee award is improper in the absence of a cash recovery by class members, or that more favorable settlement terms might have been obtainable," Seeborg wrote. "The parties have shown, however, that a settlement providing only injunctive relief is appropriate here given the value of that relief and the limited possibility of recovering damages and distributing them in an economically-feasible manner."
The judge also refused to seal the litigation, which might impact similar claims pending against Quaker Oats in Chicago.