Diet Aid Maker Settles Labeling Suits

EAST RUTHERFORD, N.J.CCA Industries Inc. (AMEX:CAW), manufacturer and marketer of beauty aids and diet supplements, has settled a pair of lawsuits that alleged labeling for certain CCA products were false and misleading. CCA reported it will pay $2.5 million to settle a class action lawsuit filed last September in Superior Court of Los Angeles (Denise Wally vs. CCA Industries, Inc.) and a potential New Jersey suit, both involving the companys Mega-T products, including Mega-T Ultra, Mega-T Plus, Mega-T Effervescent and Mega-T Green Tea. The payment will be entered into a common fund for disbursement according to the anticipated final order of settlement from the court.

According to a federal filing from CCA, settlement class members submitting a valid claim are eligible for a $10 payment for each Mega-T product purchased for personal use during the period set forth in the class action. The primary plaintiffs in both cases, Denise Wally (LA) and Lauren Fleischer (NJ) may file for a $5000 payment as class representatives. Any money left over in the fund after all claims are paid would go to the American Diabetes Association and the Lymphoma Research Foundation.

In addition to the consumer reimbursement penalty, CCA also agreed not to make such false and misleading statements unless it has reliable scientific evidence to substantiate the statements. The company also agreed to change its Mega-T line packaging, although it is permitted to continue selling Mega-T in its current packaging until Oct. 31, 2010.

The Company denies all of the allegations of any wrongdoing and liability in regard to its advertising, however the board of directors believed that in the light of the costs, risks and the substantial disruption of its business by the litigation, that it was in the best interests of the Company to settle the case. The settlement will have no effect on the operations of the Company, stated Dunnan Edell, president of CCA, who noted the settlement payment will be taken as a charge against the second quarter 2010 earnings. This would be a one-time expense, and fortunately, due to the Companys strong financial position, the settlement should have no substantial effect on the Companys business going forward.