This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.
| 1 minute read

What is the cost of mis-labeling your product? It can be as much as $7.8 million-plus.

When a client hires me to defend a class action involving allegations of a false or misleading product label, they often ask me what their exposure is. And it's a good question. The "damage" suffered by an individual plaintiff in a labeling case is arguably nominal or non-existent. Each putative class member unquestionably received value for their purchase; the litigation therefore focuses on the amorphous concept of how much the consumer would have paid if the product was labeled correctly. While such amounts are almost certainly small, when multiplied out over a nationwide class-action, and doubled or sometimes tripled based on violations of state consumer protection laws (which often include attorneys' fees provisions), the hypothetical damages amounts can grow quickly.

Celsius Holdings, Inc., the maker of beverages Celsius Live Fit, Celsius Heat, Celsius BCAA+Energy, Celsius with Stevia, and powdered drink mixes Celsius On-The-Go and Flo Fusion, has settled a federal lawsuit filed in New York involving a nationwide class of consumer-purchasers for $7.8 million, with $2.6 million in counsel compensation, because these products were labeled "no preservatives" when they included citric acid. Citric acid is understood to be a preservative by the FDA and others, the suit said. The suit also claimed that while citric acid can provide a tart flavor, its inclusion in these products was intended it to extend their shelf life. On top of that, the citric acid in these products likely wasn't of the naturally occurring variety found in fruit, but chemically manufactured instead.

This is the largest settlement of its kind in the food and beverage space. And in addition to the monetary payout to the class and its counsel, Celsius will remove the "no preservatives" language from the subject products -- which adds additional costs to the resolution of the case. 

So now I have a tangible answer to my client's question about how much exposure they have in a successful false or misleading labeling case. "A lot."

"The settlement ... [is] one of the largest food and beverage false advertising class action settlements on record, and the largest ever involving a "no preservatives" claim," class counsel said. "It also achieves cessation of the challenged 'no preservatives' front label attribute, and thus fulfills the dual purpose of the consumer protection laws: labeling changes that protect consumers, and cash restitution to the class."


labeling, no preservatives, litigation