Energy drink brand Celsius reached a $7.8 million settlement agreement late last month with a consumer group that claimed the drink’s front-of-can “No Preservatives” callout was misleading due to the product’s inclusion of citric acid. A judge approved the settlement on Wednesday.
The case was originally filed in 2021 in New York District Court. The suit alleged similar complaints as a 2019 filing, also against Celsius, in a California Superior Court. The two cases were joined in the New York court under a single class action suit.
“The class action will resolve any and all claims purchasers may have with respect to the labeling of these products and Celsius has agreed, as part of the Settlement, to change its labeling,” according to an information page about the settlement, posted by the plaintiff’s legal team.
The suit applies to all Celsius products purchased since January 1, 2015 including Celsius Live Fit, Celsius Heat, Celsius BCAA+Energy, Celsius with Stevia, as well as Celsius On-The-Go and Flo Fusion powdered drinks.
Celsius maintains that it did not admit to any wrongdoing and that the settlement was reached to avoid the potential cost and injury of going to trial. The judge’s order also reaffirms this stance and concludes that: “By entering this Order, the Court does not make any determination as to the merits of this case. Preliminary approval of the Settlement Agreement is not a finding or admission of liability by Defendant.”
Class members have 81 days to submit a claim and be entered into the settlement class. A final hearing will be held on March 31, 2023 to approve that the agreement was fair, reasonable, and adequate as well as approve the reimbursement of the plaintiff’s attorneys’ fees.
The news comes during a busy week for Celsius in the courtroom. On Tuesday, the beverage brand submitted a motion to dismiss a 2021 case brought by its shareholders in a Florida District Court, alleging the company’s executives attempted to inflate revenue by misstating the costs of its employee stock compensation program.
Lead plaintiffs include the City of Atlanta Police Officers’ Pension Plan and City of Atlanta Firefighters’ Pension Plan. Plaintiffs allege the company gave employees generous stock awards to minimize its own compensation costs; however, controversy arose when Celsius’ stock value increased to an “all-time high,” employees departed the company and the brand delayed the stock option payouts.
According to the plaintiffs, that delay allowed the company to report an inflated net income in the second and third quarters of 2021 while Celsius claims it had misinterpreted its non-cash expenses related to share-based compensation. During discussions with auditors, the company said it realized the mistake and reissued statements to correct the error.
Celsius argued in the motion to dismiss that shareholders have been unable to prove this was anything more than an accounting mistake.