The suit, launched in October 2009, questioned the way Danone Inc. marketed its Activia yogurt products and DanActive probiotic drink products.
Lead plaintiff Emmanuelle Sonego challenged claims that the products helped regulate digestion or boosted the immune system.
Danone says it has agreed to pay $1.7 million — or between $15 and $50 per claimant — to people who bought the products between April 1, 2009, and Nov. 6, 2012.
The settlement is still subject to approval by Quebec Superior Court at a hearing on Nov. 6.
Danone says it stands by its products and denies any wrong-doing, but has agreed to reword parts of the labels on the contested products.
Spokeswoman Anne-Julie Maltais said phrases such as "clinically proven" will be softened to more broadbased claims such as "clinical studies show."
The health claims will also be followed with the caveat "as part of a balanced diet and healthy lifestyle," she added.
"It's a yogurt. It's a healthy product," Maltais said in a telephone interview. "We still believe in it and we stand by the many clinical studies that support the benefits of our products."
Lawyers representing plaintiffs in the class action did not immediately respond to requests for comment.
The settlement agreement document said claimants can receive up to $50 in compensation from Danone if they are able to provide proof of purchase.
Those who do not have old receipts or other supporting documents may still make a claim, but are entitled to no more than $15. Sonego herself will receive $5,000, the agreement said.
This is not the first time Danone has come under fire for its advertising practices on Activia and DanActive products.
In September 2009, U.S. subsidiary Danone Co. agreed to pay US$35 million, or up to $100 per claimant, to its U.S. customers. The company again denied misrepresenting the products, but agreed to modify its labels to downplay specific health claims.
Canadians wishing to join the class action lawsuit can learn more at http://www.collectiva.ca/en/dossiers/DanoneInc.php