(Photo: Jason Doiy/ALM)

Ghirardelli Chocolate Co. has agreed to pay $5.25 million and make certain label changes to settle a class action that accused the San Francisco-based chocolatier of misleading consumers about its Ghirardelli Classic White Chips.

Plaintiffs Scott Miller and Steve Leyton and defendant Ghirardelli outlined the terms of their agreement in a motion for preliminary approval of the proposed settlement filed with the U.S. District Court for the Northern District of California in San Francisco on Aug. 20.

Read the proposed settlement here.

Miller filed a complaint against Ghirardelli in August 2012, alleging the company was liable for false advertising, unfair trade practices and fraud when it marketed and sold “White Chips” and several other Ghirardelli-brand products as being “white” or “white chocolate flavored” when they didn’t contain any white chocolate, cocoa or cocoa butter.

Plaintiff Leyton intervened in the case making similar claims as Miller about the white chips. He also alleged Ghirardelli had falsely labeled the white chips and other products as “all natural” and gave notice that he intended to file these additional claims in a separate complaint.

According to the motion, Ghirardelli has agreed to make some label changes for three years following the final approval of the settlement including not to use the phrases “baking chocolate” or “chocolate indulgence” on the packaging of white chips and not to use the phrase “all natural” on any product.

The company will pay $5.25 million into a common fund to pay, among other things, the plaintiffs’ attorney fees of $1.67 million as well as the monetary claims of class members.

The refund amount for consumers is $1.50 for each package of White Chips and 75 cents for each other product purchase, the parties state in their motion. There is a limit of $24 per household for claimed purchases without proof of purchase, and no cap for claimed purchases with proof of purchase.