The Quaker Oats Co., a division of PepsiCo, has agreed to pay US$1.4m to settle a class action lawsuit claiming it deliberately and incorrectly labelled Quaker-branded products as being free from trans fats.

A class action suit, filed by Robert Chacanaca and Victor Guttmann in San Jose, California, alleged various Quaker products are labelled as having zero grams of trans fats, when the product contains “dangerous amounts” of the “toxic additive”.

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According to the plaintiffs, Quaker chewy granola bars contain partially hydrogenated oil (PHOs), which has been linked to an increased risk of heart disease, cancer and type-2 diabetes. About 50 different flavours of Quaker’s instant oatmeal, chewy and oatmeal to go bars are named in the legal filings, including reduced sugar cookies & cream; weight control maple & brown sugar; and 90-calorie low-fat chocolate chunk.

According to a motion for preliminary settlement approval, Quaker “vigorously denies” the allegations and “stands by its products and marketing”. However, the company has moved to settle the lawsuit at a cost of around $1.4m.

Under the settlement, Quaker also agreed to remove PHOs by the end of 2015 from oatmeal-to-go and instant Quaker oatmeal products. Quaker added it would not reintroduce PHOs into bars that do not already contain the oils for the next ten years.

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By the end of this year, the company must “cease making the statement ‘contains a dietarily insignificant amount of trans fat’ on the label of any product containing 0.2 grams or more of artificial trans fat per serving,” the motion stated.

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A spokesperson for the brand did not respond to requests for further comment.

The settlement was approved by Judge Richard Seeborg, who deemed it to be “fair, reasonable and adequate”.