Dreamfields Pasta
Dreamfields Pasta ()

A pasta manufacturer that landed in hot water over claims that its product is suitable for low-carbohydrate diets is working towards a $7.9 million settlement of a class-action suit.

Dakota Growers Pasta Co., under an agreement preliminarily approved by a federal judge in Trenton, N.J., would pay $5 million to consumers in refunds for purchases of Dreamfields, which is touted as causing lower increase in blood sugar than conventional pasta.

The company would also pay the plaintiff attorney fees of $2.9 million.

U.S. District Judge Joel Pisano on May 9 certified a class of persons who bought boxes of Dreamfields with labels referring to “glycemic index” or “digestible carbs” after February 2004.

He set Sept. 24 as the date for a fairness hearing on the settlement.

The plaintiffs allege that the Carrington, N.D., company has no scientific support for its claims about the lower glycemic value of its products, which cost more than twice as much as Barilla, SanGiorgio, Muellers or Ronzoni pasta.

Dakota Growers allegedly claimed that Dreamfields’ glycemic index—which measures the rate of blood sugar increase after consumption—is 65 percent lower than other pasta because of a special manufacturing process.

It further claimed Dreamfields contains five grams of digestible carbohydrates per two-ounce serving and has the ability to reduce or control spikes in blood glucose levels.

The company said its assertions were supported by its own scientific studies but no reports of such studies were ever made public, the suit charged

Further, the plaintiffs cited a study by University of Minnesota researchers, finding that blood sugar levels in test subjects eating Dreamfields rose at almost exactly the same rate as those in subjects eating conventional pasta.

The plaintiffs sued for unjust enrichment, breach of warranty under the Magnuson-Moss Warranty Act, and violation of consumer protection laws in New Jersey, New York, California and Michigan, the states where the four class representatives reside.

The settlement was reached in a 12-hour mediation session on Dec. 10, 2013, with Garrett Brown Jr., retired chief judge of the U.S. District Court for the District of New Jersey, who is now with JAMS.

The settlement would reimburse buyers for purchases of up to 15 boxes of Dreamfields at $1.99 a box. Brown said in a declaration that the $5 million fund to be created “appears to represent at least 100 percent relief on a per-box basis to most members of the settlement class, an extraordinary result.”

Any funds left over after class members are paid would go to the American Diabetes Association.

The settlement also calls for the company to remove from product labels allegedly misleading language about the products’ effects on blood sugar levels.

Brown said that relief presented challenges because the negotiations took place while Dakota Growers was being sold by its current parent, Glencore Xstrata of Switzerland. The buyer, Post Holdings of St. Louis, agreed to keep the labeling revisions in effect for one year after final approval of the settlement.

The settlement includes a provision allowing the company to withdraw from it, rendering it null and void, if more than a certain number of class members choose to opt out. The parties seek permission to keep the number required to trigger that provision confidential.

Another clause bars parties and counsel from talking to the media about the settlement, except to say the litigation has been satisfactorily resolved.

Plaintiff counsel are John Zaremba of Zaremba Brownell & Brown in New York, Brian Penny of Goldman Scarlato Karon & Penny in Wayne, Pa., William Federman of Federman & Sherwood in Oklahoma City, and Charles Branham III of Branham Law Group in Dallas.

The defense lawyers are Michael Davis, of Sidley Austin in Chicago, and Lorna Dotro, of Couglin Duffy in Morristown.

Contact the reporter at ctoutant@alm.com.