Facts

Scott Miller and Steve Leyton filed a class action against Ghirardelli Chocolate Co. on behalf of others who purchased the Ghirardelli Classic White Chips or any other product labeled as "all natural."

PLAINTIFFS' CONTENTIONS:
Plaintiffs alleged that defendant engaged in false advertising, unfair trade practices, and fraud in connection with the marketing and sale of its "White Chips" and other "all natural"-labeled products. Plaintiffs claimed that consumers were deceived into believing that defendant's white chips product actually contained white chocolate, and that its other products were, in fact, all natural, when they were not. Plaintiffs brought statutory and common law claims for unfair competition, false advertising, fraud, misrepresentation, and others.

DEFENDANT'S CONTENTIONS:
Defendant denied all allegations that its labels did not comply with regulations, and that a class action was appropriate. Defendant argued that the ingredient list on the package clearly disclosed the ingredients and the product was not labeled "white chocolate." Defendant contended that consumers who read the label were not misled into believing that the White Chips were something else. Moreover, Ghirardelli argued that it made label changes without any impact on sales or price, proving that the portions of the label complained of were not material to consumers. According to the defense, Ghirardelli settled this litigation to avoid further burden, expense and interference with ongoing business operations.

Result

Ghirardelli agreed to settle the lawsuit for $5.25 million, which entitled each class member to obtain $1.50 per purchase of Ghirardelli White Chips and $0.75 per purchase of any of the approximately 72 other Ghirardelli products advertised as "All Natural." Class members who fail to provide proof of purchase are subject to a $24 maximum, while those who provide adequate proof are not subject to such a limitation. Ghirardelli also agreed to make changes to its labels, as part of the settlement.