The energy drink company Celsius Holdings, Inc. is most commonly known for their calorie-burning beverages first introduced to the marketplace in 2005. However the company’s revenue didn’t start drastically increasing until the start of 2021. By the end of the year their sales topped over $300 million, and have continued to increase sense reporting a triple-digit increase in sales during the first 9 months of 2022. In August 2022, PepsiCo invested $550 million into the company, their long-term distribution agreement with Celsius CEO John Fieldly means PepsiCo now has 8.5% stake in the company and a seat on the board.
Despite the growth of the company Celsius has been in hot water lately as they have been involved in multiple recent lawsuits. In 2021 rapper Flo Rida and his production company, Strong Arm Productions filed a lawsuit against Celsius accusing the company of owing him millions for an endorsement deal that ran from 2014 to 2018. After a five-day trial the jury found Celsius guilty of breaching an endorsement deal and fraudulently hiding information, Flo Rida won $82.6 million in damages.
More recently Celsius agreed to a $7.8 million class action lawsuit filed in November regarding false advertising accusations of which the company has denied. Their agreement means that those who have proof of purchasing a Celsius beverage or powdered drink between January 1, 2015 and November 23, 2022 could be eligible for up to $250 from the settlement.
A class-action lawsuit is a civil lawsuit in which a plaintiff sues a defendant or a number of defendants on behalf of a group of people all with relatively common issues in dispute. Class action lawsuits can be brought in state or federal court depending on if the case involves state or federal laws. Class actions are most practical for the plaintiffs as they require just one set of witnesses, experts, and documents. This typically results in a cheaper and a less complex legal process.
The lawsuit alleged that Celsius Holdings, Inc. “labels its products misleadingly” and describes them as “containing ‘no preservatives’” even though they contain citric acid. The company denied the claims and asserted that the ingredient is used as a flavor rather than a preservative. The court did not rule in favor of either party; instead the two parties agreed to a settlement to avoid the complications of a lawsuit. The final approval hearing for the Celsius settlement is scheduled for March 31, 2023.
