Post Cereal Class Action Settlement Results in $15M Payment Over Claims “Natural” Labels Were Misleading

A federal judge has approved a class action settlement that will result in a payment of $15 million by Post Foods, as well as an agreement to change false and misleading nutritional labels provided on several of its popular cereal products.

The Post cereal settlement agreement was tentatively approved by a California Judge last week, resolving claims that the manufacturer of Raisin Bran and Honey Bunches made false and misleading claims that the products were “wholesome”, “smart” and “nutritious”, despite high levels of sugar additives.

The class action lawsuit was filed against Post Foods in 2016, by Debbie Krommenhock and Stephen Hadley, raising allegations that the company deceptively markets and sells multiple high-sugar cereal products as healthy and without high fructose corn syrup, intentionally misleading consumers to increase profits when in fact they contain higher amounts of sugar than displayed on the nutritional labels..

Plaintiffs argued that certain cereal products included under the complaint contained up to 16g of sugar per 59g servings, which represents 27% of the energy coming from sugar. The products listed in the lawsuit included Raisin Bran, Bran Flakes, Great Grains (and its predecessor, Selects), Honey Bunches of Oats Cereal and Granola, Shredded Wheat Honey Nut and Crunch!, Alpha-Bits, Golden Crisp, Honeycomb, and Waffle Crisp.

Krommenhock and Hadley claimed these levels of sugar additives hardly fall under a consumer’s perception of healthy and wholesome, and accused Post of using a policy and practice of marketing high-sugar cereals with health and wellness claims.

While the FDA has yet to establish official definitions for terms like “healthy”, “wholesome” and “nutritious”, or regulate the amount of sugar products these labels can contain, plaintiff’s argued consumers are left to overwhelmingly rely on health claims made by the manufacturers when making healthy choice selections.

Following more than four years of litigation, and just a few months before trial was scheduled to start, Judge William H. Orrick gave preliminary approval to an agreement reached by the parties to settle the case, which will result in Post Foods Inc. establishing a $15 million class settlement fund.

Class members included in the settlement include consumers who bought certain cereal varieties between August 29, 2012, and November 2, 2020. The estimated average cash award is expected to be $14.25 per consumer.

In addition to the monetary fund, Post Foods LLC agrees to refrain from using certain labeling claims including “Less Processed,” “Natural,” “Healthy,” “Nutritious,” and “Wholesome” if the products contain more than 10% of the cereal’s calories come from added sugar.

The food industry says it wants the FDA to create an official definition for label claims including the word “healthy”, especially as sugar labeling lawsuits have been on the rise in recent years.

In 2019, Kellogg reached a $20 million settlement agreement after multiple lawsuits were filed against the manufacturer over the company’s use of the phrase “lightly sweetened” on its Frosted Mini-Wheats and Smart Start cereals. Kellogg similarly agreed under the settlement to refrain from using the words “healthy”, “wholesome”, “nutritious”, or “benefits”, and to remove the phrases “Heart Health” and “Lightly Sweetened” from the boxes of Smart Start, Raisin Bran and Frosted Mini-Wheats cereals.