Kyla Asbury Aug. 6, 2014, 9:56am

SAN JOSE, Calif. (Legal Newsline) - The Quaker Oats Co. has agreed to a $1.4 million settlement in a class action lawsuit claiming it mislabeled its products as transfats free when they weren't.

The Quaker Oats Co.'s products were allegedly labeled as having zero transfats, when they contained partially hydrogenated oil, which can cause heart disease, cancer and Type 2 Diabetes.

Quaker agreed to remove the partially hydrogenated oil by Dec. 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, according to the settlement documents filed June 12 and finalized on July 29.

Quaker also agreed not to introduce PHOs for a period of 10 years into Quaker Chewy Bars, as well as the Instant Quaker Oatmeal products that do not currently contain PHOs.

"The estimated cost of reformulating these products is approximately $1.4 million," the settlement document states.

Attorneys fees and costs in the amount of $760,000 will be awarded to class counsel, according to the document.

Each of the three settlement class representatives will receive a $750 incentive award.

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.

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.

Seeborg approved the final settlement, 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 lawsuit was first filed on Feb. 3, 2010, and the settlement was preliminarily approved on Feb. 12.

Victor Guttmann, Sonya Yrene and Rebecca Yumul claimed Quaker falsely labeled its products and caused them harm in the process.

"Quaker falsely markets its products as healthful, despite the fact that they have dangerous levels of artificial trans fat, a toxic food additive banned in many parts of the world," the complaint stated.

U.S. District Court for the Northern District of California case number: 5:10-cv-00502

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